Finding Text
#2021-005 – Material Weakness – Reporting
Opioid STR Grant ALN 93.788
Criteria
The Organization’s agreements with the Department of Military and Veterans Affairs (DMVA) requires the Organization to submit monthly progress reports no later than 13 business days after the end of each month.
Per the agreements with the Drug and Alcohol Programs, "Unless otherwise specified elsewhere in this Grant Agreement, the following shall apply. Grantee shall submit monthly invoices within 30 days from the last day of the month within which the work is performed. The final invoice shall be submitted within 45 days of the Grant Agreement’s termination date. The Department will neither honor nor be liable for invoices not submitted in compliance with the time requirements in this paragraph unless the Department agrees to an extension of these requirements in writing. The Grantee shall be reimbursed only for services acceptable to the Department."
Condition
During the audit we noted that three monthly reports filed with the DMVA were not properly approved by management and there was no date to indicate that the reports were filed within the appropriate period required by the grant agreements.
During our audit, we noted that the Organization reallocated expenses across budget line items without a formal budget modification or tracking of the reallocation. The reallocations were not properly documented and resulted in unsupported expenditures charged to the grant programs.
During our testing, we noted several payments charged to the grant in one month which were not paid until the subsequent month. The Organization reports on a cash basis for grant purposes. One of these payments was made for $11,541 in January 2021 and as such has been included on the Schedule of Expenditures of Federal Awards for the year ended December 31, 2021. However, the expense was charged to the grant on the December 2020 monthly report.
Cause
The Organization does not have proper internal controls which include the review and approval of monthly reports filed with granting agencies for accuracy and completeness. These policies and procedures should also ensure that all reports are filed within the timeframe in accordance with the grant contract. The Organization also lacks a formal process for budget modifications and tracking of related expense adjustments.
Effect
The potential effect of not having proper review and approval of monthly reports is the potential for errors in the reports that would be caught by an independent review and improper reporting to the granting agencies. Reports not submitted within the required timeframe may not be approved for reimbursement.
Questioned Costs
None
Perspective Information
We reviewed a sample of reports filed with the Pennsylvania DMVA and the Drug and Alcohol Program. The finding represents errors noted in three of the four reports reviewed.
Identification as a repeat finding
A similar issue was noted in prior year finding #2020-005.
Recommendation
We recommend that the Organization implement policies and procedures to include a second independent review of the monthly reports filed with the granting agencies for accuracy and completeness. Monthly reports should be properly signed and dated to indicate this review and timely filing of the reports. Additionally, the reports should be filed on the correct basis of accounting and only include expenses of the period for which they are filed.
View of responsible officials and planned corrective action
As of 2023 we will be adding the following policy to the fiscal manual and to the operations manual to read as follows: All monthly program reports shall be completed by the coordinator and sent to the Deputy Director for approval, once approved they will be sent to the Fiscal Coordinator. The Fiscal Coordinator will then complete the billing amount and fiscal narrative then the report will be reviewed by the Deputy Director. Once approved the report will be presented to the Executive Director for final review, approval and signature and date placed on each report before it is sent to the funder. All program coordinators will complete a JFT outcomes report that is placed in an electronic reporting system and these reports will be reviewed quarterly by the Deputy Director. The Deputy Director does data analysis and these reports are placed in narrative form by the Deputy Director quarterly and the year-end report. These are shared with the funders according to the reporting requirements in the grant. All reports must be to funders by the 15th of the following month, unless otherwise stated in funder contract.
The following policy will also be added to the fiscal manual: All budget modifications will be written up on the budget modification form and sent to the funder electronically once approved the form will be notated and include the funders signature, written on the form verbal communication from the funder, or a copy of the email with funder approval.
The following policy will also appear in the fiscal manual: All purchases will be made and reported on the proper month of billing. All purchases will be tracked as stated in the manual by an entry in the fiscal journal (Quick Books), paid, receipt and documentation will be filed under the proper grant and the proper month.