Compliance Requirement: Activities Allowed or Unallowed and Allowable Costs/Cost Principles
Information on the Major Federal Program:
Federal agency: U.S. Department of Health and Human Services
Pass-through entity: Council of Medical Specialty Societies
Assistance listing number: 93.083
Assistance listing name: COVID-19 Prevention of Disease, Disability, and Death through Immunization and Control of Respiratory and Related Diseases
Award number: 1NH231P922656-01-00
Award name: Improving adult immunization rates for COVID-19, influenza and routine adult vaccination through partnerships with medical subspecialty societies
Award year: 9/30/2021 – 9/30/2026
Criteria - The Uniform Guidance in 2 CFR Appendix IV to Part 200 contains the requirements for development and submission of indirect cost rate proposals and cost allocation plans for nonprofit organizations.
The guidance defines a provisional rate as a temporary indirect cost rate applicable to a specified period which is used for funding, interim reimbursement, and reporting indirect costs on federal awards pending the establishment of a final rate for the period. A final rate is defined as an indirect cost rate applicable to a specified past period which is based on the actual costs of the period. Provisional and final rates must be negotiated and a final rate will be established and upward or downward adjustments will be made based on the actual allowable costs incurred for the period involved.
Organizations that have previously established indirect cost rates must submit a new indirect cost proposal to the cognizant agency for indirect costs within six months after the close of each fiscal year. The results of each negotiation must be formalized in a written agreement between the cognizant agency for indirect costs and the nonprofit organization.
In addition to the above, indirect costs charged to federal awards should conform to the allowability of cost principles in 2 CFR Part 200, Subpart E.
Condition – In fiscal year 2023, the College applied indirect costs to the major program using provisional rates established for fiscal year 2016. These rates were formalized in a written agreement with the cognizant agency on February 25, 2014. Since this agreement, the College has neither negotiated a final rate for the provisional rate nor submitted any indirect cost proposals, as required under 2 CFR Appendix IV to Part 200 of the Uniform Guidance. In the absence of submitting an indirect cost proposal, the College also did not:
- Calculate the actual indirect costs for 2023 and compare them to the indirect costs charged to the major program using the provisional rates from fiscal year 2016, to determine any necessary upward or downward adjustments for 2023.
- Ascertain which accounts or transactions were included in the indirect cost pool for the major program in 2023, and verify if they were allowable according to the cost principles outlined in 2 CFR Part 200, Subpart E.
- Determine which accounts or transactions were included in the base of the indirect cost rate for the major program in 2023.
Cause – The College's existing policies, procedures, and internal controls were inadequate to effectively manage and ensure compliance with the Uniform Guidance requirements pertaining to indirect costs, as specified in the aforementioned criteria. This hindered the College's ability to properly oversee and adhere to the established guidelines, leading to stated non-compliance.
Questioned Costs – There are $279,030 of known questioned costs related to the items presented in the condition above. This amount represents the total indirect costs presented in the Schedule.
Context – This is a condition identified per review of the College’s compliance with the allowable costs/cost principles provisions of the Uniform Guidance. The prevalence of this finding is detailed in the condition section above.
Effect – The College failed to submit indirect cost proposals, finalize its provisional indirect rate, and calculate actual indirect costs for 2023 and compare them to the indirect costs charged using the provisional rates, to determine any necessary upward or downward adjustments for 2023.
Repeat Finding – This is not a repeat finding.
Recommendation – Develop and implement comprehensive policies, procedures and controls for managing and monitoring indirect costs, including the submission of updated indirect cost proposals and negotiation of final rates with the cognizant agency. Conduct regular reviews and updates of indirect cost rates to ensure they reflect actual costs and comply with the cost principles outlined in 2 CFR Part 200, Subpart E.
Views of Responsible Officials – Questioned costs of $279,030 does not necessarily imply that the entire amount is unallowable and a further review is required to determine the portion, if any, that is unallowable under the Uniform Guidance. Consequently, some or all of the $279,030 may ultimately be found allowable and compliant with federal regulations. Management acknowledges the finding and recommendation presented. Processes and controls over federal awards will be enhanced by annually recalculating the indirect cost recovery rate. Management will assign an individual to review costs in the indirect cost pool to ensure they are allowable and will also submit an updated cost proposal to the cognizant agency and negotiate a final rate.
Compliance Requirement: Activities Allowed or Unallowed and Allowable Costs/Cost Principles
Information on the Major Federal Program:
Federal agency: U.S. Department of Health and Human Services
Pass-through entity: Council of Medical Specialty Societies
Assistance listing number: 93.083
Assistance listing name: COVID-19 Prevention of Disease, Disability, and Death through Immunization and Control of Respiratory and Related Diseases
Award number: 1NH231P922656-01-00
Award name: Improving adult immunization rates for COVID-19, influenza and routine adult vaccination through partnerships with medical subspecialty societies
Award year: 9/30/2021 – 9/30/2026
Criteria – The Uniform Guidance in 2 CFR 200.430 states that charges to federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must be supported by a system of internal controls which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Such charges should reasonably reflect the total activity for which the employee is compensated by the non-federal entity, not exceeding 100% of compensated activities.
Condition – Payroll costs amounting to approximately $97,000 were over-allocated to the federal award for the year ended December 31, 2023 resulting from allocation of some payroll costs for hours not worked on the federal award. The federal award is a cost reimbursement grant and the over-allocation resulted in the federal award being charged more than the actual hours spent on the award. Reimbursement requests to the federal agency in 2024 were reduced by these over-allocated and unallowable costs of 2023.
Cause – The non-compliance was due to inadequate internal controls over the allocation of payroll costs to federal awards. Specifically, the College did not have sufficient review processes in place to ensure that payroll costs were accurately allocated according to the work performed on the federal award. This discrepancy was identified by the College’s own controls during the year-end review of the Schedule, but after the costs had been over-allocated and billed to the cognizant agency. Corrective action was subsequently taken to adjust the amount charged and billed under the federal award in the following year by the over-allocated amount in 2023.
Questioned Costs – There are approximately $97,000 of known questioned costs related to the items presented in the condition above.
Context – The over-allocation of payroll costs was identified by the College during review of the Schedule after year end, which resulted in non-compliance with activities allowed or unallowed and allowable costs/cost principles. The prevalence of this finding is detailed in the condition section above.
Effect – The over-allocation of payroll costs to federal awards may lead to improper use of federal funds.
Repeat Finding – This is not a repeat finding.
Recommendation – The College should strengthen its internal controls over the allocation of payroll costs to federal awards. This includes implementing a review process to ensure that payroll costs are accurately allocated based on the work performed and are supported by appropriate documentation. Additionally, the College should provide training to its personnel on the requirements of the Uniform Guidance related to allowable costs and cost principles.
Views of Responsible Officials – Management acknowledges the finding and recommendation presented. Management will improve staff knowledge of Uniform Guidance through additional training on allowable costs and compliance. Payroll costs will be based on certified actual hours, verified by the Controller for accuracy. Quarterly reviews by the Technical and Internal Controls Accountant will ensure payroll costs match certified hours, maintaining compliance.
Compliance Requirement: Procurement and Suspension and Debarment
Information on the Major Federal Program:
Federal agency: U.S. Department of Health and Human Services
Pass-through entity: Council of Medical Specialty Societies
Assistance listing number: 93.083
Assistance listing name: COVID-19 Prevention of Disease, Disability, and Death through Immunization and Control of Respiratory and Related Diseases
Award number: 1NH231P922656-01-00
Award name: Improving adult immunization rates for COVID-19, influenza and routine adult vaccination through partnerships with medical subspecialty societies
Award year: 9/30/2021 – 9/30/2026
Criteria – The Uniform Guidance in 2 CFR 200.320 sets forth the standards for procurement by non-federal entities. Specifically, for small purchases, which are defined as those that exceed the micro-purchase threshold but do not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-federal entity. The entity must maintain records sufficient to detail the history of the procurement including the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Further, when the internal procurement thresholds set by the non-federal entity are lower than Uniform Guidance mandated thresholds, the more stringent or lower thresholds are to be followed.
Condition – The College's federal procurement manual defines small purchases as acquisition of goods and services that exceed $3,000 but are under the simplified acquisition threshold of $150,000 in a fiscal year. It requires that for such purchases, the College must obtain current price and rate quotations from at least three or more adequate and qualified vendors/suppliers. However, for one procurement sample out of six tested, quotations were not obtained from at least three vendors and procurement was made based on prior experience with the chosen vendor.
Cause – The College failed to comply with its internal control policies and procedures with regards to federal procurement, resulting in the College making a small purchase without ensuring that the procurement process was competitive and the best possible price was obtained for the purchase.
Questioned Costs – There are $20,000 of known questioned costs related to the items presented in the condition above.
Context – This is a condition identified per review of the College’s compliance with its federal procurement manual and requirements of procurement, suspension and debarment of the Uniform Guidance using a non-statistical sample. The prevalence of this finding is detailed in the condition section above.
Effect – Failure to comply with the College’s internal procurement policies and with requirements under Uniform Guidance increases the risk of uncompetitive pricing and potential misuse of federal funds.
Repeat Finding – This is not a repeat finding.
Recommendation – The College should provide training to its procurement personnel on the requirements of the College’s own federal procurement manual as well as on the Uniform Guidance procurement requirements. Additionally, the College should implement a review process to ensure that all small purchases comply with the requirement to obtain price or rate quotations from an adequate number of qualified sources.
Views of Responsible Officials – Management acknowledges the finding and recommendation presented. Management will enhance federal grant personnel skills through re-training on procurement policies and Uniform Guidance. The Privacy and Research Compliance Officer will ensure quotes are obtained from qualified sources, and the Legal Department will draft contracts only after confirming compliance. These steps ensure informed purchasing and responsible use of federal funds.
Compliance Requirement: Activities Allowed or Unallowed and Allowable Costs/Cost Principles
Information on the Major Federal Program:
Federal agency: U.S. Department of Health and Human Services
Pass-through entity: Council of Medical Specialty Societies
Assistance listing number: 93.083
Assistance listing name: COVID-19 Prevention of Disease, Disability, and Death through Immunization and Control of Respiratory and Related Diseases
Award number: 1NH231P922656-01-00
Award name: Improving adult immunization rates for COVID-19, influenza and routine adult vaccination through partnerships with medical subspecialty societies
Award year: 9/30/2021 – 9/30/2026
Criteria - The Uniform Guidance in 2 CFR Appendix IV to Part 200 contains the requirements for development and submission of indirect cost rate proposals and cost allocation plans for nonprofit organizations.
The guidance defines a provisional rate as a temporary indirect cost rate applicable to a specified period which is used for funding, interim reimbursement, and reporting indirect costs on federal awards pending the establishment of a final rate for the period. A final rate is defined as an indirect cost rate applicable to a specified past period which is based on the actual costs of the period. Provisional and final rates must be negotiated and a final rate will be established and upward or downward adjustments will be made based on the actual allowable costs incurred for the period involved.
Organizations that have previously established indirect cost rates must submit a new indirect cost proposal to the cognizant agency for indirect costs within six months after the close of each fiscal year. The results of each negotiation must be formalized in a written agreement between the cognizant agency for indirect costs and the nonprofit organization.
In addition to the above, indirect costs charged to federal awards should conform to the allowability of cost principles in 2 CFR Part 200, Subpart E.
Condition – In fiscal year 2023, the College applied indirect costs to the major program using provisional rates established for fiscal year 2016. These rates were formalized in a written agreement with the cognizant agency on February 25, 2014. Since this agreement, the College has neither negotiated a final rate for the provisional rate nor submitted any indirect cost proposals, as required under 2 CFR Appendix IV to Part 200 of the Uniform Guidance. In the absence of submitting an indirect cost proposal, the College also did not:
- Calculate the actual indirect costs for 2023 and compare them to the indirect costs charged to the major program using the provisional rates from fiscal year 2016, to determine any necessary upward or downward adjustments for 2023.
- Ascertain which accounts or transactions were included in the indirect cost pool for the major program in 2023, and verify if they were allowable according to the cost principles outlined in 2 CFR Part 200, Subpart E.
- Determine which accounts or transactions were included in the base of the indirect cost rate for the major program in 2023.
Cause – The College's existing policies, procedures, and internal controls were inadequate to effectively manage and ensure compliance with the Uniform Guidance requirements pertaining to indirect costs, as specified in the aforementioned criteria. This hindered the College's ability to properly oversee and adhere to the established guidelines, leading to stated non-compliance.
Questioned Costs – There are $279,030 of known questioned costs related to the items presented in the condition above. This amount represents the total indirect costs presented in the Schedule.
Context – This is a condition identified per review of the College’s compliance with the allowable costs/cost principles provisions of the Uniform Guidance. The prevalence of this finding is detailed in the condition section above.
Effect – The College failed to submit indirect cost proposals, finalize its provisional indirect rate, and calculate actual indirect costs for 2023 and compare them to the indirect costs charged using the provisional rates, to determine any necessary upward or downward adjustments for 2023.
Repeat Finding – This is not a repeat finding.
Recommendation – Develop and implement comprehensive policies, procedures and controls for managing and monitoring indirect costs, including the submission of updated indirect cost proposals and negotiation of final rates with the cognizant agency. Conduct regular reviews and updates of indirect cost rates to ensure they reflect actual costs and comply with the cost principles outlined in 2 CFR Part 200, Subpart E.
Views of Responsible Officials – Questioned costs of $279,030 does not necessarily imply that the entire amount is unallowable and a further review is required to determine the portion, if any, that is unallowable under the Uniform Guidance. Consequently, some or all of the $279,030 may ultimately be found allowable and compliant with federal regulations. Management acknowledges the finding and recommendation presented. Processes and controls over federal awards will be enhanced by annually recalculating the indirect cost recovery rate. Management will assign an individual to review costs in the indirect cost pool to ensure they are allowable and will also submit an updated cost proposal to the cognizant agency and negotiate a final rate.
Compliance Requirement: Activities Allowed or Unallowed and Allowable Costs/Cost Principles
Information on the Major Federal Program:
Federal agency: U.S. Department of Health and Human Services
Pass-through entity: Council of Medical Specialty Societies
Assistance listing number: 93.083
Assistance listing name: COVID-19 Prevention of Disease, Disability, and Death through Immunization and Control of Respiratory and Related Diseases
Award number: 1NH231P922656-01-00
Award name: Improving adult immunization rates for COVID-19, influenza and routine adult vaccination through partnerships with medical subspecialty societies
Award year: 9/30/2021 – 9/30/2026
Criteria – The Uniform Guidance in 2 CFR 200.430 states that charges to federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must be supported by a system of internal controls which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Such charges should reasonably reflect the total activity for which the employee is compensated by the non-federal entity, not exceeding 100% of compensated activities.
Condition – Payroll costs amounting to approximately $97,000 were over-allocated to the federal award for the year ended December 31, 2023 resulting from allocation of some payroll costs for hours not worked on the federal award. The federal award is a cost reimbursement grant and the over-allocation resulted in the federal award being charged more than the actual hours spent on the award. Reimbursement requests to the federal agency in 2024 were reduced by these over-allocated and unallowable costs of 2023.
Cause – The non-compliance was due to inadequate internal controls over the allocation of payroll costs to federal awards. Specifically, the College did not have sufficient review processes in place to ensure that payroll costs were accurately allocated according to the work performed on the federal award. This discrepancy was identified by the College’s own controls during the year-end review of the Schedule, but after the costs had been over-allocated and billed to the cognizant agency. Corrective action was subsequently taken to adjust the amount charged and billed under the federal award in the following year by the over-allocated amount in 2023.
Questioned Costs – There are approximately $97,000 of known questioned costs related to the items presented in the condition above.
Context – The over-allocation of payroll costs was identified by the College during review of the Schedule after year end, which resulted in non-compliance with activities allowed or unallowed and allowable costs/cost principles. The prevalence of this finding is detailed in the condition section above.
Effect – The over-allocation of payroll costs to federal awards may lead to improper use of federal funds.
Repeat Finding – This is not a repeat finding.
Recommendation – The College should strengthen its internal controls over the allocation of payroll costs to federal awards. This includes implementing a review process to ensure that payroll costs are accurately allocated based on the work performed and are supported by appropriate documentation. Additionally, the College should provide training to its personnel on the requirements of the Uniform Guidance related to allowable costs and cost principles.
Views of Responsible Officials – Management acknowledges the finding and recommendation presented. Management will improve staff knowledge of Uniform Guidance through additional training on allowable costs and compliance. Payroll costs will be based on certified actual hours, verified by the Controller for accuracy. Quarterly reviews by the Technical and Internal Controls Accountant will ensure payroll costs match certified hours, maintaining compliance.
Compliance Requirement: Procurement and Suspension and Debarment
Information on the Major Federal Program:
Federal agency: U.S. Department of Health and Human Services
Pass-through entity: Council of Medical Specialty Societies
Assistance listing number: 93.083
Assistance listing name: COVID-19 Prevention of Disease, Disability, and Death through Immunization and Control of Respiratory and Related Diseases
Award number: 1NH231P922656-01-00
Award name: Improving adult immunization rates for COVID-19, influenza and routine adult vaccination through partnerships with medical subspecialty societies
Award year: 9/30/2021 – 9/30/2026
Criteria – The Uniform Guidance in 2 CFR 200.320 sets forth the standards for procurement by non-federal entities. Specifically, for small purchases, which are defined as those that exceed the micro-purchase threshold but do not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-federal entity. The entity must maintain records sufficient to detail the history of the procurement including the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Further, when the internal procurement thresholds set by the non-federal entity are lower than Uniform Guidance mandated thresholds, the more stringent or lower thresholds are to be followed.
Condition – The College's federal procurement manual defines small purchases as acquisition of goods and services that exceed $3,000 but are under the simplified acquisition threshold of $150,000 in a fiscal year. It requires that for such purchases, the College must obtain current price and rate quotations from at least three or more adequate and qualified vendors/suppliers. However, for one procurement sample out of six tested, quotations were not obtained from at least three vendors and procurement was made based on prior experience with the chosen vendor.
Cause – The College failed to comply with its internal control policies and procedures with regards to federal procurement, resulting in the College making a small purchase without ensuring that the procurement process was competitive and the best possible price was obtained for the purchase.
Questioned Costs – There are $20,000 of known questioned costs related to the items presented in the condition above.
Context – This is a condition identified per review of the College’s compliance with its federal procurement manual and requirements of procurement, suspension and debarment of the Uniform Guidance using a non-statistical sample. The prevalence of this finding is detailed in the condition section above.
Effect – Failure to comply with the College’s internal procurement policies and with requirements under Uniform Guidance increases the risk of uncompetitive pricing and potential misuse of federal funds.
Repeat Finding – This is not a repeat finding.
Recommendation – The College should provide training to its procurement personnel on the requirements of the College’s own federal procurement manual as well as on the Uniform Guidance procurement requirements. Additionally, the College should implement a review process to ensure that all small purchases comply with the requirement to obtain price or rate quotations from an adequate number of qualified sources.
Views of Responsible Officials – Management acknowledges the finding and recommendation presented. Management will enhance federal grant personnel skills through re-training on procurement policies and Uniform Guidance. The Privacy and Research Compliance Officer will ensure quotes are obtained from qualified sources, and the Legal Department will draft contracts only after confirming compliance. These steps ensure informed purchasing and responsible use of federal funds.