Finding 2023-001
material weaknessother matters
- Program
- BLOCK GRANTS FOR COMMUNITY MENTAL HEALTH SERVICES (93.958); BLOCK GRANTS FOR PREVENTION AND TREATMENT OF SUBSTANCE ABUSE (93.959)
- Compliance requirement
- Other
- FAC record
- FY2023 audit on fac.gov
Finding text from the filing
Finding Number: 2023-001- Schedule of Expenditures of Federal Awards (SEFA) Preparation – Material Weakness
Assistance Listing Numbers: 93.958 and 93.959 Federal Agency: U.S. Department of Health and Human Services Award Numbers: Unknown Award Year: October 1, 2022 – September 30, 2023 Pass-Through Entity: Care 1st Health Plan
Criteria: Non-federal entities in receipt of federal funds must comply with the requirements of 2 CFR 200.303(a), which require an entity to establish and maintain effective internal control over the federal award to ensure compliance with federal statutes, regulations, and the terms and conditions of the federal award. This includes properly identifying all federal awards subject to the Uniform Guidance and fairly presenting the required information in the schedule of expenditures of federal awards.
Condition: Subsequent to the issuance of the Audit Report on the Consolidated Financial Statements and Supplementary Information for the year ended September 30, 2023, it was discovered that there was an omission of two federal grants with expenditures totaling $1,591,715 from the schedule of expenditures of federal awards.
Cause: The Organization did not communicate with Care 1st Health Plan regarding the details of certain contracts to determine the amounts were subject to the Uniform Guidance and were to be included on the schedule of expenditures of federal awards. In addition, Care 1st Health Plan became the Regional Behavioral Health Authority for the Northern Arizona region effective October 1, 2022. Due to this transition, various changes occurred causing uncertainties with classifications of certain types of federal awards as subrecipient awards versus as contractor payments.
Effect: The schedule of expenditures of federal awards was understated by $1,591,715, which resulted in the restatement of the previously issued schedule of expenditures of federal awards to correct the omission.
Questioned Costs: Not applicable.
Recommendation: We recommend that all funding contracts are carefully reviewed to determine whether amounts awarded should be classified as contractor payments or as subrecipient payments. If there is any uncertainty, we recommend that the Organization contact the funding source for clarification.
Views of responsible officials: The Organization concurs with the recommendations. See Corrective Action Plan.