COLORADO BEHAVIORAL HEALTHCARE COUNCIL

2019-001 Grants Management As discussed in detail at Finding 2019-003, the Organization does not have documented policies and procedures for grants management or procurement. Missing or incomplete policies and procedures increase the risk of financial statements being misstated or not in compliance with the terms of a grant including but not limited to charging unallowable costs to the grant and/or contracting with vendors that are suspended or debarred.

2019-002 Accrued Expenses Condition: $166,361 of grant expenditures were recognized in the wrong fiscal years. Criteria: At the end of every accounting period, there will be some vendor/subrecipient invoices that have not yet been approved for payment. As a result, these amounts will not have been entered into accounts payable. A review should be performed to determine whether a liability and an expense have been incurred during monthly cut-off procedures. When liabilities are identified, the amounts should be recorded as accrued expenses. The Organization should establish and document grant management policies and procedures including a procurement manual that complies with the applicable grant agreements, applicable laws and regulations, and the Uniform Guidance. Cause: The Organization?s cut-off procedures to ensure expenditures are recorded in the appropriate accounting period was not adequate to detect significant errors. Effect: Understatement of accrued expenses. Recommendation: The Organization should strengthen internal controls over the expenditure cycle. Subsequent disbursements should be reviewed and evaluated thoroughly for accrual. In alignment with the Organization?s practice for revenue recognition, the date of email approval of a deliverable for subrecipients appears to be when they have substantially delivered the goods and services under the contract agreement. Views of Responsible Officials and Planned Corrective Actions: Internal controls will be improved by recognizing expenses in the same period as the disbursements. We will document these procedural changes if we have this type of funding again.

2019-003 Grants Management Condition: The Organization does not have documented policies and procedures for grants management or procurement. Criteria: According to 2 CFR 200.302(b), The financial management system of each non-Federal entity must provide for written procedures to implement the requirements of ?200.305 and written procedures for determining the allowability of costs in accordance with Subpart E?Cost Principles and the terms and conditions of the Federal award. Additionally, 2 CFR 200.303(a) states that the non-Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Cause: Current policies and procedures are not documented and are incomplete. Effect: Missing or incomplete policies and procedures increase the risk of financial statements being misstated or not in compliance with the terms of a grant including but not limited to charging unallowable costs to the grant and/or contracting with vendors that are suspended or debarred. Recommendation: The Organization should establish and document grant management policies and procedures including a procurement manual that complies with the applicable grant agreements, applicable laws and regulations, and the Uniform Guidance. Views of Responsible Officials and Planned Corrective Actions: Internal controls will be improved by recognizing expenses in the same period as the disbursements. We will document these procedural changes if we have this type of funding again.

2019-004 Accounting for Expenditures and Supporting Documentation Condition: During our audit, we found the following errors while testing federal grant expenditures: ? $166,361 of costs charged were recorded in the wrong fiscal years ? Some costs charged were based on projections, not actual costs ? Some supporting documentation was missing documented review/approval for payment Criteria: According to 2 CFR 200.302(b)(3), The financial management system of each non-Federal entity must provide records that identify adequately the source and application of funds for federally-funded activities. These records must contain information pertaining to Federal awards, authorizations, obligations, unobligated balances, assets, expenditures, income and interest and be supported by source documentation. Additionally, 2 CFR 200.453 (b) states, purchased materials and supplies must be charged at their actual prices, net of applicable credits. Also according to 2 CFR 200.34(a), expenditures may be reported on a cash or accrual basis, as long as the methodology is disclosed and is consistently applied. Cause: The Organization was not aware of the requirements of the Uniform Guidance with regards to direct costs. Additionally, procedures in place did not account for subrecipient expense accruals and review and approval procedures were not strictly enforced at times. Effect: Allowable costs could potentially be overpaid or underpaid, or costs could be disallowed and required to be paid back to the Federal awarding agency. Recommendation: The Organization should strengthen internal controls over the expenditure cycle. Subsequent disbursements should be reviewed and evaluated thoroughly for accrual. In alignment with the Organization?s practice for revenue recognition, the date of email approval of a deliverable for subrecipients appears to be when they have substantially delivered the goods and services under the contract agreement. The Organization should establish what is considered allowable direct costs for Federal awards and retain support including documented review and approval for actual costs rather than charge budgeted amounts to a Federal award. Views of Responsible Officials and Planned Corrective Actions: Internal controls will be improved by recognizing expenses in the same period as the disbursements. We will document these procedural changes if we have this type of funding again.

2019-005 Compensation for Personal Services Condition: The Organization?s time and effort records did not support amounts charged to the Federal award for one employee. Charges consisted of a budgeted percentage of wages rather than actual hours worked on the grant. Criteria: According to 2 CFR 200.430(i)(1)(vii), Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. Records must 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 a 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. Cause: Timesheets kept by the employee did not account for 100% of the employee?s time; therefore, we were unable to confirm the percentage of time spent on Federal funding versus other cost objectives. Secondly, time spent on the Federal award fluctuated from week to week, which is appropriate; however, the portion of wages charged to the grant was a consistent ten percent indicating charges were based on budgeted amounts instead of tracked time and effort records. Effect: Allowable costs could potentially be overpaid or underpaid, or costs could be disallowed and required to be paid back to the Federal awarding agency. Recommendation: The Organization should establish policies and procedures to support a system of internal control which provides a reasonable assurance that charges to Federal awards for salaries and benefits are accurate, allowable, and properly allocated. Views of Responsible Officials and Planned Corrective Actions: Internal controls will be improved by recognizing expenses in the same period as the disbursements. We will document these procedural changes if we have this type of funding again.

2019-006 Subawards to Subrecipients Condition: The following information was not provided in the subawards with Community Mental Health Centers (CMHC): ? Federal award identification number ? Federal award date ? CFDA number and name ? Identification of whether the award is research and development Criteria: According to 2 CFR 200.331(a), All pass-through entities must ensure that every subaward is clearly identified to the subrecipient as a subaward and includes certain information as well as all the requirements imposed by the pass-through entity on the subrecipient so that the Federal award is used in accordance with Federal statutes, regulations, and the terms and conditions of the award. Cause: The Organization did not ensure that all required information and applicable requirements were communicated to subrecipients in the subawards. Effect: The Organization did not identify the required elements of the subaward to the subrecipients, increasing the risk of noncompliance. Recommendation: We recommend that the Organization modify and strengthen its current policies and procedures to ensure that all required award information and applicable requirements are communicated to subrecipients at the time of subaward in accordance with 2 CFR 200.331(a). Views of Responsible Officials and Planned Corrective Actions: Internal controls will be improved by recognizing expenses in the same period as the disbursements. We will document these procedural changes if we have this type of funding again.

2019-007 Cash Management Procedures Condition: In some cases, expenditure reimbursements were requested prior to remitting payments to subrecipients. Criteria: According to 2 CFR 200 Appendix XI Compliance Supplement 3.2-C, regarding the reimbursement method of payment, the non-Federal entity must disburse funds for program purposes before requesting payment from the Federal awarding agency or pass-through entity. Cause: Drawdown procedures were not in compliance with requirements of the Uniform Guidance. Effect: Excess funds could be drawn down and not expended. Recommendation: The Organization should establish internal controls to ensure that the persons responsible comply with cash management compliance requirements of the Uniform Guidance. Views of Responsible Officials and Planned Corrective Actions: Internal controls will be improved by recognizing expenses in the same period as the disbursements. We will document these procedural changes if we have this type of funding again.

GSA_MIGRATION