Finding 966105 (2023-003)

Finding 2023-003: Internal Controls over Cash Management Federal Grantor: U.S. Department of Health and Human Services Pass-Through Grantor: Illinois Department of Human Services Federal Program: Block Grants for Prevention and Treatment of Substance Abuse (93.959) Federal Award Year: Year ended June 30, 2023 Criteria: Title 2 U.S. Code of Federal Regulations (CFR) Part 200.303(c) requires non-Federal entities to establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission. Condition: During our testing, we noted that internal controls over the Federal award were not properly designed over the cash management compliance requirement. NCBHS is funded under the reimbursement method, and we were not able to test internal controls over the review of cash reimbursement requests submitted to the grantor. Cause: NCBHS management stated that cash reimbursement requests were reviewed prior to submission to the grantor, but there was no verifiable evidence that the reviews took place. Effect: Internal controls over Federal awards that are not properly designed increases the risk of noncompliance with the types of compliance requirements identified as subject to audit in the OMB Compliance Supplement. Questioned Costs: None Context: We tested 6 cash reimbursement requests and noted that there was no evidence of review for any of the requests. Repeat Finding: No Recommendation: We recommend that management develop a formal policy for documenting internal control activities. Views of Responsible Officials: NCBHS agrees with the recommendation.