BRAZOS VALLEY COUNCIL ON ALCOHOL AND SUBSTANCE ABUSE

Section 2 - Federal and State Award Findings and Questioned Costs Significant Deficiency 2024-001 Payroll costs were allocated to incorrect programs Prevention and Treatment of Substance Abuse, CFDA #93.959, Pass-Through Grant #HHS000539700192 Criteria: In accordance with Uniform Guidance (2 CFR § 200.430g), payroll costs must be charged accurately to federal awards and should be supported by records that appropriately reflect the work performed. Condition: Payroll costs reported for the associated programs under pass-through grant #HHS000539700192 totaling approximately $30,242 were erroneously charged to the incorrect program. Cause: The issue was caused by coding errors in the accounting system during payroll processing. The responsible personnel mistakenly allocated the employees' hours to incorrect program codes for certain employees and pay periods without adequate review and reconciliation to the source timesheets. Effect: Payroll costs for the individual programs under CFDA #93.959, Pass-Through Grant #HHS000539700192 were overstated in total by approximately $30,242. Questioned Costs: Approximately $30,242 Context: The finding was isolated to payroll costs and for only certain employees and pay periods, and no findings were identified related to other non-personnel direct or indirect costs or other compliance requirements. Repeat Finding: No Recommendation: We recommend that the Organization strengthen internal controls over payroll cost allocations, including adding an additional layer of review over payroll and ensuring the payroll data in the accounting system is properly reconciled to the employees' timesheets each pay period. Additionally, as possible, we recommend configuring validation controls in the accounting system to help prevent employees from being charged to incorrect program codes. Views of Responsible Officials and Planned Corrections Actions: Management agrees with the audit finding and a response is included in the corrective action plan.

Section 3 - Federal and State Award Findings and Questioned Costs Significant Deficiency Indirect Cost Rate Prevention and Treatment of Substance Abuse, CFDA #93.959, Pass-Through Grant #HHS000539700192 Criteria: The Organization is required to utilize a state-issued provisional rate to allocate indirect costs to the associated programs. Condition: Indirect costs reported for the associated programs under pass-through grant #HHS000539700192 exceeded the state-issued rate for the year ended August 31, 2023 by approximately $66,560. Cause: The Organization implemented a new accounting system in fiscal year 2023, and the indirect allocations were configured to automatically run in the system. However, the configuration was not set up to appropriately bifurcate the indirect cost rate amounts from unreportable expenses, resulting in an overstatement of indirect costs reported for the programs. Additionally, there was not an adequate review process in place by management to detect this specific issue. Effect: Expenditures for CFDA #93.959, Pass-Through Grant #HHS000539700192 were overstated by approximately $66,560 related to disallowed indirect costs. Questioned Costs: Indirect costs for CFDA #93.959, Pass-Through Grant #HHS000539700192, totaling approximately $66,560. Context: The finding was isolated to indirect costs only and no findings were identified related to direct costs or other compliance requirements. Additionally, this was the first year the state-issued indirect cost rate was effective for BVCASA, and the Organization has not had a history of any findings related to unallowable expenses in the last several years. Repeat Finding: No Recommendation: Implement review process to recalculate indirect cost rate allocated by the system each month to ensure the amounts are in compliance with the state-issued rate prior to reporting. Views of Responsible Officials and Planned Corrections Actions: Management agrees with the audit finding and a response is included in the corrective action plan.