Finding Text
Department of Housing and Urban Development
Federal Financial Assistance Listing/ALN 93.958
Block Grants for Community Mental Health Services
All Awards
Activities Allowed or Unallowed; Allowable Costs and Cost Principles; and Cash Management
Significant Deficiency in Internal Control over Compliance
Criteria - 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and conditions of the federal award.
Condition - The Organization did not have adequate internal controls to ensure costs requested for reimbursement were eligible under program requirements. Time incurred on a different program was included in error when summarizing payroll costs.
Cause – Due to oversight by management, payroll expenses that were not allowable were reimbursed by the award.
Effect - The Organization’s internal controls failed to properly identify expenses for reimbursement.
Questioned Costs - None Reported.
Context/Sampling - A nonstatistical sample of 5 reimbursements out of 9 total reimbursements were selected for expense testing. 1 out of the 5 reimbursements included unallowed expenses. These transactions totaled $2,969 of $102,247 costs tested.
Repeat Finding from Prior Year(s) - No.
Recommendation - Management should implement internal controls to ensure all costs requested for reimbursement are qualifying expenses.
Views of Responsible Officials – Management agrees with the finding.