Finding Text
Federal Agency: U.S. Department of Health and Human Services Federal Program: 93.558, Temporary Assistance for Needy Families Cluster Criteria or Specific Requirement - OMB Circular A-122, Costs Principles for Non-Profit Organizations requires specific compliance with the provisions of allowable costs and activities. The Organization is responsible for having internal controls designed to ensure compliance with this provision. Additionally, the Organization may only charge to the federal award, allowable costs incurred during the period of performance. Condition - During our testing of non-payroll expenditures, we identified expenditures that were incurred outside of the award contract period of performance and included in reimbursement requests submitted to the pass-through agency. Cause - The Organization did not maintain proper adherence to internal controls over the federal program as it relates to tracking and allocating the expenditures of federal awards. This includes allocating costs incurred outside of the contract period to the federal program and requesting reimbursement from the agency. The pass-through agency allows the Organization to report expenditures on both a cash and accrual basis, if reimbursement requests of those expenditures are not duplicated. This could lead to confusion when requesting reimbursements for expenditures that may fall outside of the period of performance covered by the award contract. Effect - Noncompliance with the allowable costs and activities of the federal award as described in both the award contract and OMB Circular A-122, Cost Principles for Non-Profit Organizations, could result in reimbursement denials and ultimately lead to the payback of costs or loss of future funding. Questioned Costs - Immaterial amount. Context - As part of our audit procedures, we sampled a total of 24 non-payroll expenditures incurred to test internal controls over compliance and compliance with the allowable costs and activities of federal awards. During our testing of non-payroll expenditures, we noted the following deviations: -Three selections in our statistically valid sample included costs incurred outside of the period ofperformance covered by the award contract for the period from July 2021 through September2021. Repeat Finding - This is a repeat finding from the prior year. See prior year finding 2021-002. Recommendation - We recommend procedures be implemented by the Organization to track and report expenditures eligible for reimbursement based on when it is incurred and retain all related supporting documentation. Additionally, the Organization should choose one basis of reporting (cash or accrual) and apply consistently to expenditures submitted for reimbursement.