African American Child Wellness Institute

ALN 93.958 Block Grants for Community Mental Health Services Pass-through Entity Identification Number GRK 213195 U. S. Department of Health and Human Services Minnesota Department of Human Services Finding 2023-001 Compliance Requirement: Allowable Costs/Cost Principles Type of Finding: Material Weakness Criteria: OMB’s Uniform Guidance requires non-federal entities to establish and maintain an effective financial reporting system over federal awards that provides reasonable assurance that the awards are being managed in compliance with federal statutes, regulations and the terms and conditions of the federal award. Condition: Expenses charged to the federal grant cannot be traced into the Organization’s general ledger. Invoices submitted to the pass-through agency for reimbursement also cannot be traced into the general ledger. Cause: The Organization did not establish cost centers in its general ledger that would have allowed direct expenses to be charged or indirect expenses to be allocated to each of its federal grants. Because accrual basis accounting was not in use, invoices to the pass-through agency for the reimbursement of these costs were not recorded in general ledger. Effect or Potential Effect: There is no way to determine which specific expenses incurred by the Organization were included in costs that were charged to the federal grant. As such, the Organization is not in compliance with federal regulations regarding allowable costs. Questioned Costs: Unknown Repeat Finding: This finding is a repeat finding (see prior year finding number 2022-001) Recommendation: The Organization should consider hiring an in-house accountant, expand its financial management team, and obtain additional training on Uniform Guidance and federal grant management and create a system of financial reporting to record expenditures directly to each federal grant award. Views of Responsible Officials: American Child Wellness Institute, Inc. is in agreement with the audit finding.

ALN 93.958 Block Grants for Community Mental Health Services Pass-through Entity Identification Number GRK 213195 U. S. Department of Health and Human Services Minnesota Department of Human Services Finding 2023-002 Compliance Requirement: Allowable Costs/Cost Principles Type of Finding: Material Weakness Criteria: OMB’s Uniform Guidance requires that charges to federal awards for personnel expenses must be based on records that accurately reflect the work performed, which must be supported by a system of internal control that provides reasonable assurance that the charges are accurate, allowable, and properly allocated and reasonably reflect the total activity for every employee (salary or hourly) who charges time to the federal grant. Condition: Employee time sheets do not identify the hours charged to each federal grant, and do not identify hours worked by employees on non-federal grants. Cause: The Organization’s time sheets are not designed so that time worked on specific federal grants and other non-federal projects, can be recorded accurately. The dependence on outsourced accounting personnel prevented management from receiving training specific to the Standards for Documentation of Personnel Expenses contained within OMB Uniform Guidance that would have enabled them to comply with this requirement. Effect or Potential Effect: The Organization is not in compliance with federal regulations regarding time and effort reporting. Employee costs charged to the federal grant cannot be compared to recorded hours for verification or to invoices submitted to the Pass-through agency for payment. Questioned Costs: Unknown Repeat Finding: This is a repeat finding (see prior year finding number 2022-002) Recommendation: The Organization should hire an in-house accountant and obtain additional training on Uniform Guidance and federal grant management, to create a system of time and effort reporting that will meet the Standards for Documentation of Personnel Expenses included in OMB Uniform Guidance. Views of Responsible Officials: African American Child Wellness Institute, Inc. is in agreement with the audit finding.

ALN 93.958 Block Grants for Community Mental Health Services Pass-through Entity Identification Number GRK 213195 U.S. Department of Health and Human Services Minnesota Department of Human Services Finding 2023-003 Compliance Requirement: Allowable Costs/Cost Principles Type of Finding: Material Weakness Criteria: OMB’s Uniform Guidance requires nonfederal entities to establish and maintain effective internal control over federal awards that provides reasonable assurance that the awards are being managed in compliance with federal statutes, regulations, and the terms and conditions of the federal award, and permit the preparation of reliable financial statements and Federal Reports. Condition: The system used for processing transactions does not include documentation that transactions have been reviewed for compliance with OMB regulations, before they are charged to a federal grant. In a population of 60 transactions, there was no documentation of any control step that would prevent a transaction that should not be charged to a federal grant, from being charged to a federal grant in error. Cause: The Organization’s staff did not receive training on OMB Uniform Guidance guidelines to understand the need for internal control over compliance and how this should be documented. Effect or Potential Effect: The system in place is not effective to prevent an unallowable cost from being charged to a federal grant. Questioned Costs: Unknown Repeat Finding: This finding is a repeat finding (see prior year finding number 2022-004) Recommendation: The Organization should establish an in-house accounting staff and have them obtain additional training on Uniform Guidance and federal grant management so that a system of internal control over compliance can be installed. Views of Responsible Officials: American Child Wellness Institute, Inc. is in agreement with the audit finding.

ALN 93.958 Block Grants for Community Mental Health Services Pass-through Entity Identification Number GRK 213195 U. S. Department of Health and Human Services Minnesota Department of Human Services Finding 2023-004 Compliance Requirement: Reporting Type of Finding: Material Weakness Criteria: Per CFR Subpart F, the audit, data collection form, and the reporting package must be submitted within 30 calendar days after receipt of report, or nine months after the end of the audit period. Condition: The report for the year ended December 31, 2022, was not filed within the required report submission period. Cause: This condition can be attributed to the lack of understanding of federal requirements within the Organization and its Board of Directors. Effect: Tardiness in financial reporting prevents management from identifying and addressing errors and issues in a timely manner. Late submission of reports to the Clearinghouse prevents the organization from maintaining compliance with OMB guidelines. Questioned Costs: None Repeat Finding: No Recommendation: The Organization must give a higher priority to its financial reporting cycle, to avoid tardy submissions and the challenges this creates. Management’s Response: American Child Wellness Institute, Inc. is in agreement with the audit finding.

ALN 93.958 Block Grants for Community Mental Health Services Pass-through Entity Identification Number GRK 213195 U. S. Department of Health and Human Services Minnesota Department of Human Services Finding 2022-001 Noncompliance – Allowable Costs/Cost Principles Material Weakness Criteria: OMB’s Uniform Guidance requires nonfederal entities to establish and maintain an effective financial reporting system over federal awards that provides reasonable assurance that the awards are being managed in compliance with federal statutes, regulations and the terms and conditions of the federal award. Condition: The Organization did not create and install a system of financial reporting for federal funds that would record expenses charged to each federal grant into a cost center as those expenses were incurred. Cause: The Organization changed accounting services during 2022 and did not establish cost centers in its general ledger that would have allowed expenses to be charged or allocated to each of its federal grants. Additionally, the financial management of the Organization does not have adequate training on OMB Uniform Guidance guidelines and federal grant management to prioritize and maintain an accounting system that complies with this requirement. Effect or Potential Effect: Expenses charged to the grant and reported to the pass-through agency cannot be traced into the accounting records. Questioned Costs: Unknown Repeat Finding: N/A Recommendation: The Organization’s financial management team should obtain additional training on Uniform Guidance and federal grant management and create a system of financial reporting to record expenditures directly to each federal grant award. Views of Responsible Officials: American Child Wellness Institute, Inc. is in agreement with the audit finding.

ALN 93.958 Block Grants for Community Mental Health Services Pass-through Entity Identification Number GRK 213195 U. S. Department of Health and Human Services Minnesota Department of Human Services Finding 2022-002 Noncompliance - Allowable Costs/Cost Principles Material Weakness Criteria: OMB’s Uniform Guidance requires that charges to federal awards for personnel expenses must be based on records that accurately reflect the work performed, which must be supported by a system of internal control that provides reasonable assurance that the charges are accurate, allowable, and properly allocated and reasonably reflect the total activity for every employee (salary or hourly) who charges time to the federal grant. Condition: The Organization’s system of time and effort reporting is not designed to meet the requirements of OMB Uniform Guidance. Timesheets were not maintained by salaried employees who charged time to the federal grant. Cause: The Organization’s staff did not receive training specific to the Standards for Documentation of Personnel Expenses contained within OMB Uniform Guidance that would have enabled them to comply with this requirement. Effect or Potential Effect: Employee costs charged to the federal grant cannot be compared to recorded hours for verification. Questioned Costs: None Repeat Finding: N/A Recommendation: The Organization’s staff should obtain additional training on Uniform Guidance and federal grant management and create a system of time and effort reporting that will meet the Standards for Documentation of Personnel Expenses included in OMB Uniform Guidance. Views of Responsible Officials: African American Child Wellness Institute, Inc. is in agreement with the audit finding.

ALN 93.958 Block Grants for Community Mental Health Services Pass-through Entity Identification Number GRK 213195 U. S. Department of Health and Human Services Minnesota Department of Human Services Finding 2022-003 Noncompliance - Activities Allowed/Unallowed Material Weakness Criteria: OMB’s Uniform Guidance requires that all non-federal entities implement a process designed to provide reasonable assurance regarding the achievement of effective and efficient operations, reliability of reporting for internal and external use, and compliance with applicable laws and regulations (internal controls). Condition: The system of internal control in use during the year did not consistently provide supporting documentation sufficient to verify expenditures. Also, the performance of important control procedures is not documented when performed. Cause: The Organization did not establish a document retention and destruction policy that would have retained supporting documentation for all expenditures for a period sufficient for them to be audited. The internal controls are not designed comprehensively to require documentation of major control steps. Effect or Potential Effect: For a sample of 40 expenditures, only 18 contained supporting documentation sufficient to verify that the item was an actual expense of the Organization. The review of the monthly bank account reconciliation is not documented. Questioned Costs: Unknown Repeat Finding: N/A Recommendation: The Organization should implement a written document retention and destruction policy and apply it consistently. Internally produced documents should not be substituted as support for items paid to vendors. Thus, policies should be revised to mandate that all vendors and contractors submit their request for payment using the vendor’s invoice, statement, or signed timesheet. The performance of primary control procedures such as the review of the bank reconciliation should be documented. Views of Responsible Officials: African American Child Wellness Institute, Inc. is in agreement with the audit finding.

ALN 93.958 Block Grants for Community Mental Health Services Pass-through Entity Identification Number GRK 213195 U.S. Department of Health and Human Services Minnesota Department of Human Services Finding 2022-004 Allowable Costs/Costs Principles Material Weakness Criteria: OMB’s Uniform Guidance requires nonfederal entities to establish and maintain effective internal control over federal awards that provides reasonable assurance that the awards are being managed in compliance with federal statutes, regulations, and the terms and conditions of the federal award, and permit the preparation of reliable financial statements and Federal Reports. Condition: The Organization did not design, document, and implement a system of internal control over compliance that meets the requirements of OMB Uniform Guidance. Cause: Organization’s staff did not receive training on OMB Uniform Guidance guidelines specific to internal control over compliance. Effect or Potential Effect: There is no system in place that would prevent an unallowable cost from being charged to a federal grant. Questioned Costs: Unknown Repeat Finding: N/A Recommendation: The Organization’s staff should obtain additional training on Uniform Guidance and federal grant management and create a system of internal control over compliance. Views of Responsible Officials: African American Child Wellness Institute, Inc. is in agreement with the audit finding.