SERV Centers of New Jersey, Inc.

Program: U.S. Department of Health and Human Services, Substance Abuse and Mental Health Services Administration, Center for Mental Health Services, CCBHC, Partners in Wellness. CFDA No. 93.829. ? Criteria or specific requirement: The CCBHC program requires the Organization to comply with 45 CFR 75. Specifically, this code section requires that charges for personnel expenses must be based on records that reflect the work performed and be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable and properly allocated. ? Condition: The personnel costs charged to the CCBHC grant were based on actual salaries, however, for those employees who were not charged 100% to the CCBHC grant, the allocated time was based on budgeted estimates, rather than actual time. ? Effect: There is potential for the personnel costs to be under or over reported because of the lack of a time and effort reporting system in place. ? Cause: The methodology for allocating salaries based on budgeted estimates rather than actual time spent was done in approval with the Budget liaison with whom SERV?s budget director worked with in preparing the CCBHC budget. ? Recommendation: We recommend that a process be implemented where time sheets are maintained to support allocation of personnel costs based on which program an individual is working on. ? Views of responsible officials and planned corrective actions: Management is in agreement with the finding. See Corrective Action Plan.

A new process for salary allocation will be reviewed and developed to ensure proper reporting of related expense. This process will provide assurance of correct reporting and ease of validation.

2020-003

Program: U.S. Department of Health and Human Services, Substance Abuse and Mental Health Services Administration, Center for Mental Health Services, CCBHC, Partners in Wellness. CFDA No. 93.829. ? Criteria or specific requirement: The CCBHC program requires the Organization to comply with 45 CFR 75. Specifically, this code section requires that the Organization establish and maintain effective internal controls over the awards. This includes having sufficient documentation to support all expenses charged to the grant. ? Condition: Of a sample of 25 transactions, 1 transaction could not be supported by any invoices or purchase orders. Further, 6 transactions were missing the check request form, which is part of the Organization?s internal control system to support allocations made to the grant. Effect: There is potential for costs that were reimbursed without having the supporting documentation in place. ? Cause: There was a lack of consistent adherence to approvals within the accounts payable function due to staff vacancies and turnover. ? Recommendation: We recommend that a process be implemented where all expenses and transactions charged to the grant are supported by invoices, check requests and/or purchase orders. ? Views of responsible officials and planned corrective actions: Management is in agreement with the finding. See Corrective Action Plan.

A new procedure for processing and accuracy of records is in development. The addition of a new general ledger and financial reporting system should help to facilitate this upgrade. The addition of a purchase order system is anticipated.

The personnel costs charged to the CCBHC grant were based on actual salaries, however, for those employees who were not charged 100% to the CCBHC grant, the allocated time was based on budgeted estimates, rather than actual time.

Identifying Number: 2020-003 Finding: The personnel costs charged to the CCBHC grant were based on actual salaries, however, for those employees who were not charged 100% to the CCBHC grant, the allocated time was based on budgeted estimates, rather than actual time. Contact Person Responsible for Corrective Action: Don Holford, CFO Corrective Action Taken or Planned: Personnel costs charged to the CCBHC grant who are not 100% funded will be allocated based on the amount of time they spend in the program. Timesheet information will be used to verify the allocation of such costs. Anticipated Completion Date: May 2021.