Finding Text
2021-003 Allowable and Unallowable Activities and Allowable Costs
Federal Agency: U.S. Department of Health and Human Services
Federal Program Name: Provider Relief Fund
Assistance Listing Numbers: 93.498
Award Period: January 1, 2020 through June 30, 2021
Type of Finding:
• Material Weakness in Internal Control over Compliance
• Material Noncompliance (Modified Opinion)
Criteria or specific requirement: According to § 75.302 Financial management and standards for financial management systems of 45 CFR Part 75, the non-federal entity’s financial management systems, including records documenting compliance with federal statutes, regulations, and the terms and conditions of the federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions. Further, the financial management system of each non-federal entity must provide accurate, current, and complete disclosure of the financial results of each federal award or program in accordance with the reporting requirements. According to § 75.303 Internal controls of 45 CFR Part 75, the non-federal entity must 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.
Condition: We noted the Family Practice lacked a financial management system and the internal control system to demonstrate compliance with requirements related to allowable and unallowable activities and allowable costs.
Questioned costs: Unknown
Context: The Family Practice incurred and allocated expenses for reimbursement by the grant but was unable to provide adequate detail for selection and testing of the source documentation required by the auditor to verify compliance.
Cause: Management oversight. The Family Practiced lacked established internal controls and procedures over financial grant management to ensure submitted reports are complete, agree to supporting records and documentation, and are properly maintained in the files of the Family Practice.
Effect: Inability to support compliance with the grant and a potential loss of federal funding
Recommendation: We recommend the Family Practice design controls and procedures to ensure submitted reports and the documentation used to prepare the reports are properly maintained in the files of the Family Practice.
Views of responsible officials: There is no disagreement with the audit finding.