Northern Lakes Community Mental Health Authority

Finding 2024-004 – PROCUREMENT (repeat finding) Type: Material Weakness in Internal Control/Noncompliance. Program: ALN 93.493 Congressional Directives Grant Name: Access to Behavioral Crisis Services Grantor Number: FG-22-099 Criteria: Pursuant to 2 CFR 200.320, when a procurement transaction under a Federal award exceeds the simplified acquisition threshold, formal procurement methods are required. Pursuant to 2 CFR 200.214 and 2 CFR part 180, prior to entering into a covered transaction, a nonfederal entity must verify that the person with whom they intend to do business is not suspended, debarred, or otherwise excluded or disqualified.” Condition: The CMHSP did not follow the formal procurement methods outlined in 2 CFR 200.320 prior to entering into a contract for services under the grant. Also, the CMHSP did not verify that the vendor was not suspended, debarred, or otherwise excluded or disqualified in accordance with 2 CFR requirements prior to entering into a contract for services under the grant. Cause: This condition was caused by an insufficient internal control process for procurement including 1) requirement/review and approval of formal bid, and 2) review for suspension and debarment. Effect: The CMHSP purchased several items pursuant to a contract that did not go through a formal bid process or have evidence of review for suspension and debarment. Questioned Cost: $340,014 Context: One contract was paid from grant funds. The questioned cost shown above reflects the amount paid from grant funds for the year pursuant to this contract which did not go through a formal bid process or have evidence of review for suspension and debarment. Upon subsequent review, it was determined that the vendor was not suspended, debarred, or otherwise excluded or disqualified. Recommendation: We recommend that the CMHSP review their internal controls and make necessary changes to ensure that procurements adhere to the requirements of 2 CFR 200. Management’s Resp: We are in agreement with this finding.

Finding 2024-005 – REPORTING (repeat finding) Type: Material Weakness in Internal Control/Noncompliance. Program: ALN 93.493 Congressional Directives Grant Name: Access to Behavioral Crisis Services Grantor Number: FG-22-099 Criteria: Pursuant to 2 CFR 200.328(c), “The recipient or subrecipient must submit financial reports as required by the Federal award.” According to the closeout requirements of the Federal award, recipients must, “Reconcile financial expenditures to the reported total disbursement and charges in PMS.” Condition: The CMHSP did not file the required annual Federal Financial Report as required for this grant. Cause: This condition was caused by an insufficient internal control process for grant reporting. Effect: Reporting requirements required by the grant were not met. Questioned Cost: None. Context: Amounts received as Federal reimbursement, as detailed in PMS, were supported by the CMHSP’s internal records. However, the final report of expenses was never submitted. Recommendation: We recommend that the CMHSP review their internal controls and make necessary changes to ensure that reports are filed in accordance with the grant requirements. Management’s Resp: We are in agreement with this finding.

Finding 2024-006 – CASH MANAGEMENT (repeat comment) Type: Significant Deficiency in Internal Control. Program: ALN 93.493 Congressional Directives Grant Name: Access to Behavioral Crisis Services Grantor Number: FG-22-099 Criteria: Pursuant to 2 CFR 200.303, recipients must, “Establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient or subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the 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 (COSO).” Condition: The CMHSP has established internal controls relating to approvals of cash requests. However, during testing, we noted that cash requests did not contain evidence of required review and approvals. Cause: This condition was caused by an insufficient internal control process for review and approval of cash requests. Effect: Cash requests submitted prior to review and approval are at risk of reporting incorrect information. Questioned Cost: None. Context: Although amounts listed in the cash requests were supported by the CMHSP’s internal records, the requests did not contain evidence of approvals. Recommendation: We recommend that the CMHSP review their internal controls and make necessary changes to ensure that cash requests are reviewed and approved prior to submission. Management’s Resp: We are in agreement with this finding.

Finding 2024-007 – CASH MANAGEMENT Type: Significant Deficiency in Internal Control. Program: ALN 93.958 Block Grants for Community Mental Health Services Grant Name: COVID 19 - BH Workforce Stabilization Fund - ARPA Grantor Number: E20240268-00 Criteria: Pursuant to IV.C. of the grant agreement, “…FSRs must be submitted on a monthly basis, no later than 30 days after the close of each calendar month. The Monthly FSRs must reflect total actual program expenditures, up to the total agreement amount.” Condition: The CMHSP did file FSRs for reimbursement. However, during testing it was noted that expenses listed in 1 of the 4 monthly FSRs tested were not supported by the CMHSP’s internal records. Cause: This condition was caused by an insufficient internal control process for cash management. Effect: Requirements for reimbursement pursuant to the grant document were not met. Questioned Cost: None. Context: Amounts received as Federal reimbursement for 1 of 4 months were not supported by the CMHSP’s internal records. However, the final report of expenses for this grant did agree with the CMHSP’s annual expenses. Recommendation: We recommend that the CMHSP review their internal controls and make necessary changes to ensure that expenses listed in reports are supported by the CMHSP’s internal records. Management’s Resp: We are in agreement with this finding.

Finding 2023-004 – PROCUREMENT Type: Material Weakness in Internal Control/Noncompliance. Program: ALN 93.493 Congressional Directives Criteria: Pursuant to 2 CFR 200.320, when a procurement transaction under a Federal award exceeds the simplified acquisition threshold, formal procurement methods are required. Pursuant to 2 CFR 200.214 and 2 CFR part 180, prior to entering into a covered transaction, a nonfederal entity must verify that the person with whom they intend to do business is not suspended, debarred, or otherwise excluded or disqualified.” Condition: The CMHSP did not follow the formal procurement methods outlined in 2 CFR 200.320 prior to entering into contracts for services under the grant. Also, the CMHSP did not verify that the vendors were not suspended, debarred, or otherwise excluded or disqualified in accordance with 2 CFR requirements prior to entering into a contract for services under the grant. Cause: This condition was caused by an insufficient internal control process for review and approval of procurements/check for suspension and debarment. Effect: The CMHSP purchased several items that did not have the proper documentation/support of the procurement process. Questioned Cost: $749,624 Context: Three contracts were paid from grant funds. The questioned costs shown above reflect the amount paid from grant funds for the year pursuant to those contracts. Also, upon subsequent review, it was determined that the vendor was not suspended, debarred, or otherwise excluded or disqualified. Recommendation: We recommend that the CMHSP review their internal controls and make necessary changes to ensure that purchases adhere to the CMHSP’s procurement policy. Management’s Resp: We are in agreement with this finding.

Finding 2023-005 – REPORTING Type: Material Weakness in Internal Control/Noncompliance. Program: ALN 93.493 Congressional Directives Criteria: Pursuant to 2 CFR 200.328(c), “The recipient or subrecipient must submit financial reports as required by the Federal award.” According to the closeout requirements of the Federal award, recipients must, “Reconcile financial expenditures to the reported total disbursement and charges in PMS.” Condition: The CMHSP did not reconcile financial expenditures shown in the Federal Financial Report to the total disbursement and charges in PMS. Cause: This condition was caused by an insufficient internal control process for review and approval of grant reports. Effect: Federal share of expenditures listed on the Federal Financial Report were overstated by $361,981. Questioned Cost: None. Context: Amounts received as Federal reimbursement, as detailed in PMS, were supported by the books and records of the CMHSP. However, the final report of expenditures was overstated by $361,981. Recommendation: We recommend that the CMHSP review their internal controls and make necessary changes to ensure that reports adhere to the grant requirements. Management’s Resp: We are in agreement with this finding.

Finding 2023-006 – CASH MANAGEMENT Type: Significant Deficiency in Internal Control. Program: ALN 93.493 Congressional Directives Criteria: Pursuant to 2 CFR 200.303, recipients must, “Establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient or subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the 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 (COSO).” Condition: The CMHSP has established internal controls relating to approvals of cash requests. However, during testing, we noted that cash requests did not contain evidence of required review and approvals. Cause: This condition was caused by an insufficient internal control process for review and approval of cash requests. Effect: Cash requests submitted prior to review and approval are at risk of reporting incorrect information. Questioned Cost: None. Context: Although amounts listed in the cash requests were supported by the books and records, the requests did not contain evidence of approvals. Recommendation: We recommend that the CMHSP review their internal controls and make necessary changes to ensure that cash requests are reviewed and approved prior to submission. Management’s Resp: We are in agreement with this finding.

2020-001: Activities Allowed/Allowable Costs - Significant deficiency in internal control over compliance/immaterial noncompliance Program: CFDA #93.778 Medical Assistance Program; OBRA/PASARR Criteria: 2 CFR 200.403(e) states: ?Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: Be determined in accordance with generally accepted accounting principles (GAAP), except, for state and local governments and Indian tribes only, as otherwise provided for in this part.? Condition: During testing it was noted that wages charged to the program had not been updated for cost-of-living raises paid to the employees during the year. Cause/Effect: This condition appears to be the result of a lack of sufficient review of payroll rates charged to the grant. Expenses were underreported in the amount of $7,998. Questioned Cost: None. Recommendation: We recommend that the CMHSP update spreadsheets used to track payroll related costs for all grants on a monthly basis to ensure that the most recently approved pay rates are used to charge expenses to the grant. View of Responsible Official: Management is in agreement with this recommendation

2020-002: Activities Allowed/Allowable Costs - immaterial noncompliance Program: CFDA #93.778 Medical Assistance Program; OBRA/PASARR Criteria: 2 CFR 200.403(e) states: ?Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: Be determined in accordance with generally accepted accounting principles (GAAP), except, for state and local governments and Indian tribes only, as otherwise provided for in this part.? Condition: During testing it was noted that a rate charged for contracted services was based on an approved rate from 2014 and had not been updated to the new rate. Cause/Effect: This condition appears to be the result of a lack of sufficient review of contract rates charged to the grant. Expenses were underreported in the amount of $406. Questioned Cost: None. Recommendation: We recommend that the CMHSP update policies and procedures to ensure that the most recently approved contract rates are used to charge expenses to the grant. View of Responsible Official: Management is in agreement with this recommendation

2020-003: Activities Allowed/Allowable Costs - immaterial noncompliance Program: CFDA #93.778 Medical Assistance Program; NFTI Criteria: 2 CFR 200.403(g) states: ?Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (g) Be adequately documented?. Condition: During testing it was noted that there was not adequate support for an item charged to the NFTI grant. Cause/Effect: Management oversight. Questioned Cost: $30. Recommendation: We recommend that the CMHSP make the necessary changes to assure that all documentation be maintained according to their policy. View of Responsible Official: Management is in agreement with this recommendation

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