Finding 973020 (2023-003)

Department of Health and Human Services Federal Financial Assistance Listing 93.958, All Awards Block Grants for Community Mental Health Services Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Cash Management, and Period of Performance Significant Deficiency in Internal Control over Compliance Criteria: 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 the terms and conditions of the federal award. Condition: There was no formal documentation of review and approval of wage rates prior to submission of the reimbursement request to SAMHSA for all employees selected for testing. There was no formal documented review for the calculation of indirect costs prior to the submission of the reimbursement request to SAMHSA for three months selected for testing. There was no formal documented review of reimbursement requests prior to submission to SAMHSA for three months selected for testing. Cause: Washburn Center has designed internal controls over these areas; however, the controls were not formally documented. Effect: Failure to perform an independent review of expenses and draws submitted could result in a reasonable possibility that Washburn Center would not detect errors in the normal course of performing duties and correct them in a timely manner. Questioned Costs: None reported. Context: Nine employees out of 26 total were selected for testing for the program which made up $143,251 in payroll costs out of $471,807 total payroll costs. Four calculations of indirect costs out of 12 monthly calculations were selected for testing for the program which made up $16,154 indirect costs out of $47,329 total indirect costs. Four requests for reimbursement submissions out of 12 total submissions were selected for testing for the program. Repeat Finding from Prior Years: Yes, Finding 2022-04 Recommendation: We recommend the procedures related to activities allowed or unallowed, allowable costs/cost principles, cash management, and period of performance be reviewed with applicable program employees to ensure the control process is properly followed and documentation is retained to support compliance with program requirements. Views of Responsible Officials: Management agrees with the finding.