GRAND LAKE MENTAL HEALTH CENTER, INC.Non-Profit

Department of Health and Human Services, Assistance Listing No. 93.829 Section 223 Demonstration Programs to Improve Community Mental Health Services, 1H79SM083255‐01, 2/15/2022 – 2/14/2023; Assistance Listing No. 93.696, Certified Community Behavioral Health Clinics Expansion Grants, 1H79SM087079‐ 01/1H79SM087007‐01, 9/30/2022 – 9/29/2023 Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Matching, Level of Effort, and Earmarking Material Weakness in Internal Control over Compliance and Material Noncompliance Criteria: Per Uniform Guidance (2 CFR Section 200.430(i), Standards for Documentation of Personnel Expenses) as it relates to federal grants: (1) Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (ii) Be incorporated into the official records of the non‐Federal entity; (iii) Reasonably reflect the total activity for which the employee is compensated by the non‐Federal entity, not exceeding 100% of compensated activities (for IHE, this per the IHE's definition of IBS); (iv) Encompass federally‐assisted and all other activities compensated by the non‐ Federal entity on an integrated basis, but may include the use of subsidiary records as defined in the non‐Federal entity's written policy; (v) Comply with the established accounting policies and practices of the non‐Federal entity (See paragraph (h)(1)(ii) above for treatment of incidental work for IHEs.); and (vii) Support the distribution of the employee's salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non‐Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. 2 CFR Part 200, OMB Compliance Supplement, defines Level of Effort as follows: Level of effort includes requirements for (a) a specified level of service to be provided from period to period, (b) a specified level of expenditures from non‐federal or federal sources for specified activities to be maintained from period to period, and (c) federal funds to supplement and not supplant non‐federal funding of services Condition: The Center could not readily provide the appropriate documentation to support the allocations of compensation applicable to the referenced programs for actual time worked, or to support allowable costs or that the level of effort requirements, as outlined in the grant contracts, were achieved. Cause: The process used to track employee payroll does not adequately track the allocations of payroll or time worked to the respective activities or federal programs. As a result, certain expenditures were inappropriately claimed as program expenditures, but could not be substantiated for purposes of allowable costs or level of effort. Effect: The Center is at risk for noncompliance with allowable activities and allowable costs, as well as level of effort requirements. Questioned costs: $872,088 in payroll was identified as allowable costs for Section 223, Demonstration Programs to Improve Community Mental Health Services, which could not be substantiated. $1,187,041 in payroll was identified as allowable costs for Certified Community Behavioral Health Clinics Expansion Grants, which could not be substantiated. Context: A nonstatistical sampling of 40 out of over 14,000 transactions were selected for testing of Activities Allowed and Unallowed, and Allowable Costs/Cost Principles, in Section 223, Demonstration Programs to Improve Community Mental Health Services, which accounted for $114,123 of $1,187,041 total program expenditures. 2 of 2 employees were tested with respect to level of effort requirements as outlined in the program contract, but supporting information could not be provided. A nonstatistical sampling of 25 out of 206 transactions were selected for testing of Activities Allowed and Unallowed, and Allowable Costs/Cost Principles, in Certified Community Behavioral Health Clinics Expansion Grants, which accounted for $139,829 of $910,628 total program expenditures. 4 of 4 employees were tested with respect to level of effort requirements as outlined in the program contracts, but supporting information could not be provided. Repeat Finding From Prior Year: No Recommendation: Controls should be put in place to ensure that expenditures of program funds allocated through payroll expense are reviewed and approved by program management and are properly allocated based on time and activities worked consistent with the grant requirements. Additionally, level of effort requirements as made known in grant contracts should be substantiated by payroll allocation or other records. Views of Responsible Officials: We agree with the finding. See additional response in the Corrective Action Plan.

Finding 2019-001 Department of Health and Human Services CFDA 93.829 Certified Community Behavioral Health Center Expansion Procurement, Suspension, and Debarment Material Weakness in Internal Control Over Compliance Criteria: The Organization must establish and maintain effective internal control over federal awards that provides reasonable assurance that the Organization is managing the federal awards in compliance with federal statutes, regulations and terms and conditions of the federal award. Management is responsible for establishing procedures for procurement of equipment, real property, and other services funded by federal funds. The procurement records and files for purchases in excess of the simplified acquisition threshold (set at $100,000) shall include at the minimum: 1. Basis for contractor selection; 2. Justification for lack of competition when competitive bids are not obtained; and 3. Basis for award cost or price For procurements above $3,500, and up to the simplified acquisition threshold, informal purchasing procedures are acceptable, but price or rate quotes must be obtained from and adequate number of qualified sources and kept on file. It is up to the Center?s discretion, as reflected in your written policy, to determine the adequate number of qualified sources (i.e. any number greater than one) and the methods of obtaining the price or rate quotes. In addition, award recipients must not utilize any vendor which is suspended or debarred or is otherwise excluded from the central contractor registry. Condition: The Organization has not updated documented internal controls for compliance with the procurement, suspension and debarment compliance requirement of Uniform Guidance as noted above. Cause: The Organization does not have a written policy related to procurement or established procedures in place related to suspension and debarment as newly required by the Uniform Guidance. Effect: Inadequate controls over this area of compliance result in an environment where it is reasonably possible that the Center would not have the required documentation in place and would not be able to detect and correct noncompliance in a timely manner. Questioned Costs: None reported. Context: No updated policy exists as newly required by the Uniform Guidance. Two purchases between the micro-purchase threshold and the simplified acquisition threshold were selected for testing for suspension and debarment. Such purchases were not listed as under the suspended and debarred entities. However, no controls were performed to check these vendors prior to the use of those vendors. Repeat Finding from Prior Years: No Recommendation: We recommend that implementing a system of internal controls over the procurement, suspension and debarment compliance requirements, including a formal policy in accordance with Uniform Guidance. Views of Responsible Officials: Management agrees with the finding.

GSA_MIGRATION