Finding 9042 (2023-003)

Significant Deficiency

Requirement

Questioned Costs

Year

2023

Accepted

2024-01-18

Audit: 12371

Organization: The Wellbeing Initiative, Inc. (NE)

Auditor: Hbe LLP

AI Summary

Core Issue: The Organization drew funds before actually incurring the related expenditures, violating cash management rules.
Impacted Requirements: This noncompliance breaches Title 2 CFR §200.305, which mandates that expenses must occur before requesting reimbursements.
Recommended Follow-Up: The Organization should enhance its internal controls over cash management to ensure compliance with all cash management criteria.

Finding Text

Noncompliance and Significant Deficiency in Internal Controls over Compliance for Cash Management Identification data: U.S. Department of Health and Human Services (HHS) – Mental and Behavioral Health Education and Training Grants, Assistance Listing No. 93.732, Agreement Identifying No. M0142518. Criteria: Title 2 CFR §200.305 establishes the criteria for cash management requirements for states and non-Federal entities other than states. This includes non-Federal entities utilizing the reimbursement method and requires that expenditures were incurred prior to the date of the reimbursement request. Condition: The Organization drew funds before expenditures were incurred. Cause: A breakdown in the Organization’s internal controls over cash management did not allow the Organization to meet the reporting requirements of the program. Effect or potential effect: The control deficiency is a significant deficiency that prevented the Organization from complying with the cash management requirements of the program. Identification of a Repeat Finding: New finding. Recommendation: The Organization should review its system of internal control over cash management to determine improvements that can be made to ensure the Organization has processes for remaining in compliance with all cash management criteria identified above. Views of Responsible Officials: The Organization misunderstood the directions given by the Grants Management Specialist in this instance. The Organization has reviewed the requirements of Compliance for Cash Management and has controls in place to ensure those requirements are followed.

Corrective Action Plan

2023-003 - Noncompliance and Significant Deficiency in Internal Controls over Compliance for Cash Management Corrective Action Plan: Wellbeing Initiative has reviewed Title 2 CFR §200.305 and updated the Internal Controls Policy and Procedure Manual to include the following policy. Other policies and procedures have been implemented and used since the incident to prevent the erroneous draw of funds prior to their expenditure. Item 10.3. Cash Management- : Criteria for cash management requirs non-Federal entities to utilize the reimbursement method and requires that expenditures were incurred prior to the date of the reimbursement request. Funds drawn from the Federal Payment Management System are deposited into a separate account and transferred to the appropriate account for reimbursement of previously accrued expenses. As allowable by grant guidelines the organization may drawdown funds in advance for expenditures to be made within the next 72 hours and meet the following requirements: i. Be limited to the minimum amounts needed to cover allowable project costs ii. Be timed in accordance with the actual immediate cash requirements of carrying out the approved project iii. Not be made to cover future expenditures Anticipated Completion Date: Completed 11/16/2023 Responsible: Chief Executive Team Danielle Smith and Sadie Thompson

Other Findings in this Audit

9040 2023-001

Significant Deficiency
9041 2023-002

Significant Deficiency
585482 2023-001

Significant Deficiency
585483 2023-002

Significant Deficiency
585484 2023-003

Significant Deficiency

Programs in Audit

ALN	Program Name	Expenditures
93.732	Mental and Behavioral Health Education and Training Grants	$384,653
93.243	Substance Abuse and Mental Health Services_projects of Regional and National Significance	$307,316
93.136	Injury Prevention and Control Research and State and Community Based Programs	$267,787