Audit 333141

FY End
2023-12-31
Total Expended
$4.01M
Findings
30
Programs
5
Organization: Shalom Health Care Center, Inc. (IN)
Year: 2023 Accepted: 2024-12-17

Organization Exclusion Status:

Checking exclusion status...

Findings

ID Ref Severity Repeat Requirement
515081 2023-001 Material Weakness Yes Allowable Costs/Cost Principles
515082 2023-001 Material Weakness Yes Allowable Costs/Cost Principles
515083 2023-001 Material Weakness Yes Allowable Costs/Cost Principles
515084 2023-001 Material Weakness Yes Allowable Costs/Cost Principles
515085 2023-001 Material Weakness Yes Allowable Costs/Cost Principles
515086 2023-003 Significant Deficiency - P
515087 2023-003 Significant Deficiency - P
515088 2023-003 Significant Deficiency - P
515089 2023-003 Significant Deficiency - P
515090 2023-003 Significant Deficiency - P
515091 2023-004 Material Weakness - A
515092 2023-004 Material Weakness - A
515093 2023-004 Material Weakness - A
515094 2023-004 Material Weakness - A
515095 2023-004 Material Weakness - A
1091523 2023-001 Material Weakness Yes Allowable Costs/Cost Principles
1091524 2023-001 Material Weakness Yes Allowable Costs/Cost Principles
1091525 2023-001 Material Weakness Yes Allowable Costs/Cost Principles
1091526 2023-001 Material Weakness Yes Allowable Costs/Cost Principles
1091527 2023-001 Material Weakness Yes Allowable Costs/Cost Principles
1091528 2023-003 Significant Deficiency - P
1091529 2023-003 Significant Deficiency - P
1091530 2023-003 Significant Deficiency - P
1091531 2023-003 Significant Deficiency - P
1091532 2023-003 Significant Deficiency - P
1091533 2023-004 Material Weakness - A
1091534 2023-004 Material Weakness - A
1091535 2023-004 Material Weakness - A
1091536 2023-004 Material Weakness - A
1091537 2023-004 Material Weakness - A

Programs

Contacts

Name Title Type
KHFLGQQEMLF5 Michael A Nino Auditee
3172697198 Amanda Meko Auditor
No contacts on file

Notes to SEFA

Title: BASIS OF PRESENTATION Accounting Policies: Expenditures reported on the Schedule Expenditures of Federal Awards are reported on the accrual basis of accounting. Such expenditures are recognized following the cost principles contained in Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, wherein certain types of expenditures are not allowable or are limited as to reimbursement. Pass-through entity identifying numbers are presented where available. De Minimis Rate Used: N Rate Explanation: The Center has not elected to use the 10 percent de minimis indirect cost rate as allowed under the Uniform Guidance. The accompanying Schedule of Expenditures of Federal Awards includes the federal grant activity of Shalom Health Care Center, Inc (the Center). and is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards. Therefore, some amounts presented in this schedule may differ from amounts presented in, or used in the preparation of, the basic financial statements.
Title: FEDERAL LOAN PROGRAMS Accounting Policies: Expenditures reported on the Schedule Expenditures of Federal Awards are reported on the accrual basis of accounting. Such expenditures are recognized following the cost principles contained in Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, wherein certain types of expenditures are not allowable or are limited as to reimbursement. Pass-through entity identifying numbers are presented where available. De Minimis Rate Used: N Rate Explanation: The Center has not elected to use the 10 percent de minimis indirect cost rate as allowed under the Uniform Guidance. The Center did not have any federal loan programs during the year ended December 31, 2023.

Finding Details

Finding 2023-001, Material Weakness - Allowable Costs and Cash Management Identification of federal program : U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES 93.224 and 93.527 Health Center Program Cluster Criteria: 2CFR200.302(b) requires federal award recipients to maintain a financial management system that provides for the identification of all federal awards received and expended as well as accurate, current and complete disclosure of the financial results of each federal award program in addition to comparison of expenditures with budget amounts for each federal award. Condition: The Organization was unable to generate reports from its accounting system detailing expenditures incurred by federal award. In addition, the Organization was also unable to provide reports distinguishing federal award expenditures from non-federal award expenditures. Effect: Management drew down federal funds based on payroll estimations. Payroll expenses had to be manually compiled for the entire year to substantiate personnel costs charged to all grants. Management created spreadsheets to identify the details of non-payroll expenditures incurred under federal awards. Cause: A significant amount of payroll and other expenses were not coded to grants within the accounting system. Time records and invoices allocated to specific grants were not entered into the accounting system under the actual account segment for the funding source and were left in the general operating fund. Staff turnover in the fiscal department contributed to the breakdown in internal controls and process. Questioned costs: None Repeat finding: Yes Recommendation: We recommend that the Organization implement accounting processes and controls over financial reporting to ensure accurate financial reporting. Oversight responsibilities should include review of financial reporting by grants (segments) to verify proper posting and allocation of costs. Views of responsible officials and planned corrective actions: See attached corrective action plan.
Finding 2023-001, Material Weakness - Allowable Costs and Cash Management Identification of federal program : U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES 93.224 and 93.527 Health Center Program Cluster Criteria: 2CFR200.302(b) requires federal award recipients to maintain a financial management system that provides for the identification of all federal awards received and expended as well as accurate, current and complete disclosure of the financial results of each federal award program in addition to comparison of expenditures with budget amounts for each federal award. Condition: The Organization was unable to generate reports from its accounting system detailing expenditures incurred by federal award. In addition, the Organization was also unable to provide reports distinguishing federal award expenditures from non-federal award expenditures. Effect: Management drew down federal funds based on payroll estimations. Payroll expenses had to be manually compiled for the entire year to substantiate personnel costs charged to all grants. Management created spreadsheets to identify the details of non-payroll expenditures incurred under federal awards. Cause: A significant amount of payroll and other expenses were not coded to grants within the accounting system. Time records and invoices allocated to specific grants were not entered into the accounting system under the actual account segment for the funding source and were left in the general operating fund. Staff turnover in the fiscal department contributed to the breakdown in internal controls and process. Questioned costs: None Repeat finding: Yes Recommendation: We recommend that the Organization implement accounting processes and controls over financial reporting to ensure accurate financial reporting. Oversight responsibilities should include review of financial reporting by grants (segments) to verify proper posting and allocation of costs. Views of responsible officials and planned corrective actions: See attached corrective action plan.
Finding 2023-001, Material Weakness - Allowable Costs and Cash Management Identification of federal program : U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES 93.224 and 93.527 Health Center Program Cluster Criteria: 2CFR200.302(b) requires federal award recipients to maintain a financial management system that provides for the identification of all federal awards received and expended as well as accurate, current and complete disclosure of the financial results of each federal award program in addition to comparison of expenditures with budget amounts for each federal award. Condition: The Organization was unable to generate reports from its accounting system detailing expenditures incurred by federal award. In addition, the Organization was also unable to provide reports distinguishing federal award expenditures from non-federal award expenditures. Effect: Management drew down federal funds based on payroll estimations. Payroll expenses had to be manually compiled for the entire year to substantiate personnel costs charged to all grants. Management created spreadsheets to identify the details of non-payroll expenditures incurred under federal awards. Cause: A significant amount of payroll and other expenses were not coded to grants within the accounting system. Time records and invoices allocated to specific grants were not entered into the accounting system under the actual account segment for the funding source and were left in the general operating fund. Staff turnover in the fiscal department contributed to the breakdown in internal controls and process. Questioned costs: None Repeat finding: Yes Recommendation: We recommend that the Organization implement accounting processes and controls over financial reporting to ensure accurate financial reporting. Oversight responsibilities should include review of financial reporting by grants (segments) to verify proper posting and allocation of costs. Views of responsible officials and planned corrective actions: See attached corrective action plan.
Finding 2023-001, Material Weakness - Allowable Costs and Cash Management Identification of federal program : U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES 93.224 and 93.527 Health Center Program Cluster Criteria: 2CFR200.302(b) requires federal award recipients to maintain a financial management system that provides for the identification of all federal awards received and expended as well as accurate, current and complete disclosure of the financial results of each federal award program in addition to comparison of expenditures with budget amounts for each federal award. Condition: The Organization was unable to generate reports from its accounting system detailing expenditures incurred by federal award. In addition, the Organization was also unable to provide reports distinguishing federal award expenditures from non-federal award expenditures. Effect: Management drew down federal funds based on payroll estimations. Payroll expenses had to be manually compiled for the entire year to substantiate personnel costs charged to all grants. Management created spreadsheets to identify the details of non-payroll expenditures incurred under federal awards. Cause: A significant amount of payroll and other expenses were not coded to grants within the accounting system. Time records and invoices allocated to specific grants were not entered into the accounting system under the actual account segment for the funding source and were left in the general operating fund. Staff turnover in the fiscal department contributed to the breakdown in internal controls and process. Questioned costs: None Repeat finding: Yes Recommendation: We recommend that the Organization implement accounting processes and controls over financial reporting to ensure accurate financial reporting. Oversight responsibilities should include review of financial reporting by grants (segments) to verify proper posting and allocation of costs. Views of responsible officials and planned corrective actions: See attached corrective action plan.
Finding 2023-001, Material Weakness - Allowable Costs and Cash Management Identification of federal program : U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES 93.224 and 93.527 Health Center Program Cluster Criteria: 2CFR200.302(b) requires federal award recipients to maintain a financial management system that provides for the identification of all federal awards received and expended as well as accurate, current and complete disclosure of the financial results of each federal award program in addition to comparison of expenditures with budget amounts for each federal award. Condition: The Organization was unable to generate reports from its accounting system detailing expenditures incurred by federal award. In addition, the Organization was also unable to provide reports distinguishing federal award expenditures from non-federal award expenditures. Effect: Management drew down federal funds based on payroll estimations. Payroll expenses had to be manually compiled for the entire year to substantiate personnel costs charged to all grants. Management created spreadsheets to identify the details of non-payroll expenditures incurred under federal awards. Cause: A significant amount of payroll and other expenses were not coded to grants within the accounting system. Time records and invoices allocated to specific grants were not entered into the accounting system under the actual account segment for the funding source and were left in the general operating fund. Staff turnover in the fiscal department contributed to the breakdown in internal controls and process. Questioned costs: None Repeat finding: Yes Recommendation: We recommend that the Organization implement accounting processes and controls over financial reporting to ensure accurate financial reporting. Oversight responsibilities should include review of financial reporting by grants (segments) to verify proper posting and allocation of costs. Views of responsible officials and planned corrective actions: See attached corrective action plan.
Finding 2023-003, Significant Deficiency Over Financial Reporting Identification of federal program : U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES 93.224 and 93.527 Health Center Program Cluster Criteria : In accordance with 2CFR200.510(b) Auditees are responsible for the preparation of the Schedule of Expenditures of Federal Awards (SEFA) that includes the total federal awards expended. The auditee is also responsible to ensure the SEFA includes cluster names, a list of individual Federal programs within the clusters and total for the clusters. Condition : The Organization provided a SEFA that did not identify the Health Center Program Cluster and all federal awards included within that cluster. In addition, the SEFA included an award that was not a federal award. Cause : Management has not implemented effective internal controls surrounding the preparation of the SEFA. Potential effect : Failure to appropriately identify total federal awards expended and clusters could result in inappropriate selection of major programs or inaccurate audit coverage needed in a single audit. Questioned costs: None. Recommendation: We recommend that the Organization implement accounting processes and controls over financial reporting to ensure accurate preparation of the SEFA. Views of responsible officials and planned corrective actions: Although Management agrees with what is written and recommended, Management disagrees with the identification of this issue as a significant deficiency. In the past, the SEFA was conducted by auditors. The regulation changed and for the last three years Shalom has been preparing for the SEFA. During these three years, previous auditors have made changes and adjustments but never identified this matter as a significant deficiency. Therefore, Management believes this matter should be a note rather than a significant weakness.
Finding 2023-003, Significant Deficiency Over Financial Reporting Identification of federal program : U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES 93.224 and 93.527 Health Center Program Cluster Criteria : In accordance with 2CFR200.510(b) Auditees are responsible for the preparation of the Schedule of Expenditures of Federal Awards (SEFA) that includes the total federal awards expended. The auditee is also responsible to ensure the SEFA includes cluster names, a list of individual Federal programs within the clusters and total for the clusters. Condition : The Organization provided a SEFA that did not identify the Health Center Program Cluster and all federal awards included within that cluster. In addition, the SEFA included an award that was not a federal award. Cause : Management has not implemented effective internal controls surrounding the preparation of the SEFA. Potential effect : Failure to appropriately identify total federal awards expended and clusters could result in inappropriate selection of major programs or inaccurate audit coverage needed in a single audit. Questioned costs: None. Recommendation: We recommend that the Organization implement accounting processes and controls over financial reporting to ensure accurate preparation of the SEFA. Views of responsible officials and planned corrective actions: Although Management agrees with what is written and recommended, Management disagrees with the identification of this issue as a significant deficiency. In the past, the SEFA was conducted by auditors. The regulation changed and for the last three years Shalom has been preparing for the SEFA. During these three years, previous auditors have made changes and adjustments but never identified this matter as a significant deficiency. Therefore, Management believes this matter should be a note rather than a significant weakness.
Finding 2023-003, Significant Deficiency Over Financial Reporting Identification of federal program : U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES 93.224 and 93.527 Health Center Program Cluster Criteria : In accordance with 2CFR200.510(b) Auditees are responsible for the preparation of the Schedule of Expenditures of Federal Awards (SEFA) that includes the total federal awards expended. The auditee is also responsible to ensure the SEFA includes cluster names, a list of individual Federal programs within the clusters and total for the clusters. Condition : The Organization provided a SEFA that did not identify the Health Center Program Cluster and all federal awards included within that cluster. In addition, the SEFA included an award that was not a federal award. Cause : Management has not implemented effective internal controls surrounding the preparation of the SEFA. Potential effect : Failure to appropriately identify total federal awards expended and clusters could result in inappropriate selection of major programs or inaccurate audit coverage needed in a single audit. Questioned costs: None. Recommendation: We recommend that the Organization implement accounting processes and controls over financial reporting to ensure accurate preparation of the SEFA. Views of responsible officials and planned corrective actions: Although Management agrees with what is written and recommended, Management disagrees with the identification of this issue as a significant deficiency. In the past, the SEFA was conducted by auditors. The regulation changed and for the last three years Shalom has been preparing for the SEFA. During these three years, previous auditors have made changes and adjustments but never identified this matter as a significant deficiency. Therefore, Management believes this matter should be a note rather than a significant weakness.
Finding 2023-003, Significant Deficiency Over Financial Reporting Identification of federal program : U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES 93.224 and 93.527 Health Center Program Cluster Criteria : In accordance with 2CFR200.510(b) Auditees are responsible for the preparation of the Schedule of Expenditures of Federal Awards (SEFA) that includes the total federal awards expended. The auditee is also responsible to ensure the SEFA includes cluster names, a list of individual Federal programs within the clusters and total for the clusters. Condition : The Organization provided a SEFA that did not identify the Health Center Program Cluster and all federal awards included within that cluster. In addition, the SEFA included an award that was not a federal award. Cause : Management has not implemented effective internal controls surrounding the preparation of the SEFA. Potential effect : Failure to appropriately identify total federal awards expended and clusters could result in inappropriate selection of major programs or inaccurate audit coverage needed in a single audit. Questioned costs: None. Recommendation: We recommend that the Organization implement accounting processes and controls over financial reporting to ensure accurate preparation of the SEFA. Views of responsible officials and planned corrective actions: Although Management agrees with what is written and recommended, Management disagrees with the identification of this issue as a significant deficiency. In the past, the SEFA was conducted by auditors. The regulation changed and for the last three years Shalom has been preparing for the SEFA. During these three years, previous auditors have made changes and adjustments but never identified this matter as a significant deficiency. Therefore, Management believes this matter should be a note rather than a significant weakness.
Finding 2023-003, Significant Deficiency Over Financial Reporting Identification of federal program : U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES 93.224 and 93.527 Health Center Program Cluster Criteria : In accordance with 2CFR200.510(b) Auditees are responsible for the preparation of the Schedule of Expenditures of Federal Awards (SEFA) that includes the total federal awards expended. The auditee is also responsible to ensure the SEFA includes cluster names, a list of individual Federal programs within the clusters and total for the clusters. Condition : The Organization provided a SEFA that did not identify the Health Center Program Cluster and all federal awards included within that cluster. In addition, the SEFA included an award that was not a federal award. Cause : Management has not implemented effective internal controls surrounding the preparation of the SEFA. Potential effect : Failure to appropriately identify total federal awards expended and clusters could result in inappropriate selection of major programs or inaccurate audit coverage needed in a single audit. Questioned costs: None. Recommendation: We recommend that the Organization implement accounting processes and controls over financial reporting to ensure accurate preparation of the SEFA. Views of responsible officials and planned corrective actions: Although Management agrees with what is written and recommended, Management disagrees with the identification of this issue as a significant deficiency. In the past, the SEFA was conducted by auditors. The regulation changed and for the last three years Shalom has been preparing for the SEFA. During these three years, previous auditors have made changes and adjustments but never identified this matter as a significant deficiency. Therefore, Management believes this matter should be a note rather than a significant weakness.
Finding 2023-004, Material Weakness, Allowable Costs Identification of federal program : U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES 93.224 and 93.527 Health Center Program Cluster Criteria: 2 CFR 200.430(i) requires the auditee to establish and maintain effective internal control over the allocation of personnel expenses whereby charges to Federal awards for personnel-related expenditures are supported by official records of 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 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. Budget estimates alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that: The non-federal entity's system of internal controls includes processes to review after-the-fact interim charges made to a Federal award based on budget estimates. All necessary adjustment must be made such that the final amount charged to the Federal award is accurate, allowable and properly allocated. Condition: Payroll expenses were charged to the award based on budget estimates. Cause: The Organization uses a spreadsheet, prepared annually, to document the allocation of personnel costs charged across federal and other awards and indirect cost centers. Time and effort reports were not maintained or reviewed to support the allocation of personnel costs. Effect: The Organization was unable to provide documentation of time and effort for personnel who were not 100% charged to the federal award. Questioned costs: None. Context: Total compensation charged to federal awards was tested for 9 out of 88 total employees charged to federal awards. 7 of the 9 employees tested were charged to more than one federal award, non-federal awards or other indirect cost centers. Total personnel costs allocated to the Health Center Cluster were $3,800,769. Recommendation: We recommend that the Organization implement periodic time and effort reports to track employee allocations among federal awards, non-federal awards and indirect cost centers. We recommend that time and effort reports be reviewed by employee supervisors to ensure employee allocations are reflective of actual work performed and payroll allocation changes are made timely to reflect changes in employee duties. All necessary adjustments should be made to financial records to reflect the final amount charged to the Federal award reflects actual work performed. Views of responsible officials and planned corrective actions: See attached corrective action plan.
Finding 2023-004, Material Weakness, Allowable Costs Identification of federal program : U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES 93.224 and 93.527 Health Center Program Cluster Criteria: 2 CFR 200.430(i) requires the auditee to establish and maintain effective internal control over the allocation of personnel expenses whereby charges to Federal awards for personnel-related expenditures are supported by official records of 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 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. Budget estimates alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that: The non-federal entity's system of internal controls includes processes to review after-the-fact interim charges made to a Federal award based on budget estimates. All necessary adjustment must be made such that the final amount charged to the Federal award is accurate, allowable and properly allocated. Condition: Payroll expenses were charged to the award based on budget estimates. Cause: The Organization uses a spreadsheet, prepared annually, to document the allocation of personnel costs charged across federal and other awards and indirect cost centers. Time and effort reports were not maintained or reviewed to support the allocation of personnel costs. Effect: The Organization was unable to provide documentation of time and effort for personnel who were not 100% charged to the federal award. Questioned costs: None. Context: Total compensation charged to federal awards was tested for 9 out of 88 total employees charged to federal awards. 7 of the 9 employees tested were charged to more than one federal award, non-federal awards or other indirect cost centers. Total personnel costs allocated to the Health Center Cluster were $3,800,769. Recommendation: We recommend that the Organization implement periodic time and effort reports to track employee allocations among federal awards, non-federal awards and indirect cost centers. We recommend that time and effort reports be reviewed by employee supervisors to ensure employee allocations are reflective of actual work performed and payroll allocation changes are made timely to reflect changes in employee duties. All necessary adjustments should be made to financial records to reflect the final amount charged to the Federal award reflects actual work performed. Views of responsible officials and planned corrective actions: See attached corrective action plan.
Finding 2023-004, Material Weakness, Allowable Costs Identification of federal program : U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES 93.224 and 93.527 Health Center Program Cluster Criteria: 2 CFR 200.430(i) requires the auditee to establish and maintain effective internal control over the allocation of personnel expenses whereby charges to Federal awards for personnel-related expenditures are supported by official records of 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 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. Budget estimates alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that: The non-federal entity's system of internal controls includes processes to review after-the-fact interim charges made to a Federal award based on budget estimates. All necessary adjustment must be made such that the final amount charged to the Federal award is accurate, allowable and properly allocated. Condition: Payroll expenses were charged to the award based on budget estimates. Cause: The Organization uses a spreadsheet, prepared annually, to document the allocation of personnel costs charged across federal and other awards and indirect cost centers. Time and effort reports were not maintained or reviewed to support the allocation of personnel costs. Effect: The Organization was unable to provide documentation of time and effort for personnel who were not 100% charged to the federal award. Questioned costs: None. Context: Total compensation charged to federal awards was tested for 9 out of 88 total employees charged to federal awards. 7 of the 9 employees tested were charged to more than one federal award, non-federal awards or other indirect cost centers. Total personnel costs allocated to the Health Center Cluster were $3,800,769. Recommendation: We recommend that the Organization implement periodic time and effort reports to track employee allocations among federal awards, non-federal awards and indirect cost centers. We recommend that time and effort reports be reviewed by employee supervisors to ensure employee allocations are reflective of actual work performed and payroll allocation changes are made timely to reflect changes in employee duties. All necessary adjustments should be made to financial records to reflect the final amount charged to the Federal award reflects actual work performed. Views of responsible officials and planned corrective actions: See attached corrective action plan.
Finding 2023-004, Material Weakness, Allowable Costs Identification of federal program : U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES 93.224 and 93.527 Health Center Program Cluster Criteria: 2 CFR 200.430(i) requires the auditee to establish and maintain effective internal control over the allocation of personnel expenses whereby charges to Federal awards for personnel-related expenditures are supported by official records of 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 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. Budget estimates alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that: The non-federal entity's system of internal controls includes processes to review after-the-fact interim charges made to a Federal award based on budget estimates. All necessary adjustment must be made such that the final amount charged to the Federal award is accurate, allowable and properly allocated. Condition: Payroll expenses were charged to the award based on budget estimates. Cause: The Organization uses a spreadsheet, prepared annually, to document the allocation of personnel costs charged across federal and other awards and indirect cost centers. Time and effort reports were not maintained or reviewed to support the allocation of personnel costs. Effect: The Organization was unable to provide documentation of time and effort for personnel who were not 100% charged to the federal award. Questioned costs: None. Context: Total compensation charged to federal awards was tested for 9 out of 88 total employees charged to federal awards. 7 of the 9 employees tested were charged to more than one federal award, non-federal awards or other indirect cost centers. Total personnel costs allocated to the Health Center Cluster were $3,800,769. Recommendation: We recommend that the Organization implement periodic time and effort reports to track employee allocations among federal awards, non-federal awards and indirect cost centers. We recommend that time and effort reports be reviewed by employee supervisors to ensure employee allocations are reflective of actual work performed and payroll allocation changes are made timely to reflect changes in employee duties. All necessary adjustments should be made to financial records to reflect the final amount charged to the Federal award reflects actual work performed. Views of responsible officials and planned corrective actions: See attached corrective action plan.
Finding 2023-004, Material Weakness, Allowable Costs Identification of federal program : U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES 93.224 and 93.527 Health Center Program Cluster Criteria: 2 CFR 200.430(i) requires the auditee to establish and maintain effective internal control over the allocation of personnel expenses whereby charges to Federal awards for personnel-related expenditures are supported by official records of 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 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. Budget estimates alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that: The non-federal entity's system of internal controls includes processes to review after-the-fact interim charges made to a Federal award based on budget estimates. All necessary adjustment must be made such that the final amount charged to the Federal award is accurate, allowable and properly allocated. Condition: Payroll expenses were charged to the award based on budget estimates. Cause: The Organization uses a spreadsheet, prepared annually, to document the allocation of personnel costs charged across federal and other awards and indirect cost centers. Time and effort reports were not maintained or reviewed to support the allocation of personnel costs. Effect: The Organization was unable to provide documentation of time and effort for personnel who were not 100% charged to the federal award. Questioned costs: None. Context: Total compensation charged to federal awards was tested for 9 out of 88 total employees charged to federal awards. 7 of the 9 employees tested were charged to more than one federal award, non-federal awards or other indirect cost centers. Total personnel costs allocated to the Health Center Cluster were $3,800,769. Recommendation: We recommend that the Organization implement periodic time and effort reports to track employee allocations among federal awards, non-federal awards and indirect cost centers. We recommend that time and effort reports be reviewed by employee supervisors to ensure employee allocations are reflective of actual work performed and payroll allocation changes are made timely to reflect changes in employee duties. All necessary adjustments should be made to financial records to reflect the final amount charged to the Federal award reflects actual work performed. Views of responsible officials and planned corrective actions: See attached corrective action plan.
Finding 2023-001, Material Weakness - Allowable Costs and Cash Management Identification of federal program : U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES 93.224 and 93.527 Health Center Program Cluster Criteria: 2CFR200.302(b) requires federal award recipients to maintain a financial management system that provides for the identification of all federal awards received and expended as well as accurate, current and complete disclosure of the financial results of each federal award program in addition to comparison of expenditures with budget amounts for each federal award. Condition: The Organization was unable to generate reports from its accounting system detailing expenditures incurred by federal award. In addition, the Organization was also unable to provide reports distinguishing federal award expenditures from non-federal award expenditures. Effect: Management drew down federal funds based on payroll estimations. Payroll expenses had to be manually compiled for the entire year to substantiate personnel costs charged to all grants. Management created spreadsheets to identify the details of non-payroll expenditures incurred under federal awards. Cause: A significant amount of payroll and other expenses were not coded to grants within the accounting system. Time records and invoices allocated to specific grants were not entered into the accounting system under the actual account segment for the funding source and were left in the general operating fund. Staff turnover in the fiscal department contributed to the breakdown in internal controls and process. Questioned costs: None Repeat finding: Yes Recommendation: We recommend that the Organization implement accounting processes and controls over financial reporting to ensure accurate financial reporting. Oversight responsibilities should include review of financial reporting by grants (segments) to verify proper posting and allocation of costs. Views of responsible officials and planned corrective actions: See attached corrective action plan.
Finding 2023-001, Material Weakness - Allowable Costs and Cash Management Identification of federal program : U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES 93.224 and 93.527 Health Center Program Cluster Criteria: 2CFR200.302(b) requires federal award recipients to maintain a financial management system that provides for the identification of all federal awards received and expended as well as accurate, current and complete disclosure of the financial results of each federal award program in addition to comparison of expenditures with budget amounts for each federal award. Condition: The Organization was unable to generate reports from its accounting system detailing expenditures incurred by federal award. In addition, the Organization was also unable to provide reports distinguishing federal award expenditures from non-federal award expenditures. Effect: Management drew down federal funds based on payroll estimations. Payroll expenses had to be manually compiled for the entire year to substantiate personnel costs charged to all grants. Management created spreadsheets to identify the details of non-payroll expenditures incurred under federal awards. Cause: A significant amount of payroll and other expenses were not coded to grants within the accounting system. Time records and invoices allocated to specific grants were not entered into the accounting system under the actual account segment for the funding source and were left in the general operating fund. Staff turnover in the fiscal department contributed to the breakdown in internal controls and process. Questioned costs: None Repeat finding: Yes Recommendation: We recommend that the Organization implement accounting processes and controls over financial reporting to ensure accurate financial reporting. Oversight responsibilities should include review of financial reporting by grants (segments) to verify proper posting and allocation of costs. Views of responsible officials and planned corrective actions: See attached corrective action plan.
Finding 2023-001, Material Weakness - Allowable Costs and Cash Management Identification of federal program : U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES 93.224 and 93.527 Health Center Program Cluster Criteria: 2CFR200.302(b) requires federal award recipients to maintain a financial management system that provides for the identification of all federal awards received and expended as well as accurate, current and complete disclosure of the financial results of each federal award program in addition to comparison of expenditures with budget amounts for each federal award. Condition: The Organization was unable to generate reports from its accounting system detailing expenditures incurred by federal award. In addition, the Organization was also unable to provide reports distinguishing federal award expenditures from non-federal award expenditures. Effect: Management drew down federal funds based on payroll estimations. Payroll expenses had to be manually compiled for the entire year to substantiate personnel costs charged to all grants. Management created spreadsheets to identify the details of non-payroll expenditures incurred under federal awards. Cause: A significant amount of payroll and other expenses were not coded to grants within the accounting system. Time records and invoices allocated to specific grants were not entered into the accounting system under the actual account segment for the funding source and were left in the general operating fund. Staff turnover in the fiscal department contributed to the breakdown in internal controls and process. Questioned costs: None Repeat finding: Yes Recommendation: We recommend that the Organization implement accounting processes and controls over financial reporting to ensure accurate financial reporting. Oversight responsibilities should include review of financial reporting by grants (segments) to verify proper posting and allocation of costs. Views of responsible officials and planned corrective actions: See attached corrective action plan.
Finding 2023-001, Material Weakness - Allowable Costs and Cash Management Identification of federal program : U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES 93.224 and 93.527 Health Center Program Cluster Criteria: 2CFR200.302(b) requires federal award recipients to maintain a financial management system that provides for the identification of all federal awards received and expended as well as accurate, current and complete disclosure of the financial results of each federal award program in addition to comparison of expenditures with budget amounts for each federal award. Condition: The Organization was unable to generate reports from its accounting system detailing expenditures incurred by federal award. In addition, the Organization was also unable to provide reports distinguishing federal award expenditures from non-federal award expenditures. Effect: Management drew down federal funds based on payroll estimations. Payroll expenses had to be manually compiled for the entire year to substantiate personnel costs charged to all grants. Management created spreadsheets to identify the details of non-payroll expenditures incurred under federal awards. Cause: A significant amount of payroll and other expenses were not coded to grants within the accounting system. Time records and invoices allocated to specific grants were not entered into the accounting system under the actual account segment for the funding source and were left in the general operating fund. Staff turnover in the fiscal department contributed to the breakdown in internal controls and process. Questioned costs: None Repeat finding: Yes Recommendation: We recommend that the Organization implement accounting processes and controls over financial reporting to ensure accurate financial reporting. Oversight responsibilities should include review of financial reporting by grants (segments) to verify proper posting and allocation of costs. Views of responsible officials and planned corrective actions: See attached corrective action plan.
Finding 2023-001, Material Weakness - Allowable Costs and Cash Management Identification of federal program : U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES 93.224 and 93.527 Health Center Program Cluster Criteria: 2CFR200.302(b) requires federal award recipients to maintain a financial management system that provides for the identification of all federal awards received and expended as well as accurate, current and complete disclosure of the financial results of each federal award program in addition to comparison of expenditures with budget amounts for each federal award. Condition: The Organization was unable to generate reports from its accounting system detailing expenditures incurred by federal award. In addition, the Organization was also unable to provide reports distinguishing federal award expenditures from non-federal award expenditures. Effect: Management drew down federal funds based on payroll estimations. Payroll expenses had to be manually compiled for the entire year to substantiate personnel costs charged to all grants. Management created spreadsheets to identify the details of non-payroll expenditures incurred under federal awards. Cause: A significant amount of payroll and other expenses were not coded to grants within the accounting system. Time records and invoices allocated to specific grants were not entered into the accounting system under the actual account segment for the funding source and were left in the general operating fund. Staff turnover in the fiscal department contributed to the breakdown in internal controls and process. Questioned costs: None Repeat finding: Yes Recommendation: We recommend that the Organization implement accounting processes and controls over financial reporting to ensure accurate financial reporting. Oversight responsibilities should include review of financial reporting by grants (segments) to verify proper posting and allocation of costs. Views of responsible officials and planned corrective actions: See attached corrective action plan.
Finding 2023-003, Significant Deficiency Over Financial Reporting Identification of federal program : U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES 93.224 and 93.527 Health Center Program Cluster Criteria : In accordance with 2CFR200.510(b) Auditees are responsible for the preparation of the Schedule of Expenditures of Federal Awards (SEFA) that includes the total federal awards expended. The auditee is also responsible to ensure the SEFA includes cluster names, a list of individual Federal programs within the clusters and total for the clusters. Condition : The Organization provided a SEFA that did not identify the Health Center Program Cluster and all federal awards included within that cluster. In addition, the SEFA included an award that was not a federal award. Cause : Management has not implemented effective internal controls surrounding the preparation of the SEFA. Potential effect : Failure to appropriately identify total federal awards expended and clusters could result in inappropriate selection of major programs or inaccurate audit coverage needed in a single audit. Questioned costs: None. Recommendation: We recommend that the Organization implement accounting processes and controls over financial reporting to ensure accurate preparation of the SEFA. Views of responsible officials and planned corrective actions: Although Management agrees with what is written and recommended, Management disagrees with the identification of this issue as a significant deficiency. In the past, the SEFA was conducted by auditors. The regulation changed and for the last three years Shalom has been preparing for the SEFA. During these three years, previous auditors have made changes and adjustments but never identified this matter as a significant deficiency. Therefore, Management believes this matter should be a note rather than a significant weakness.
Finding 2023-003, Significant Deficiency Over Financial Reporting Identification of federal program : U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES 93.224 and 93.527 Health Center Program Cluster Criteria : In accordance with 2CFR200.510(b) Auditees are responsible for the preparation of the Schedule of Expenditures of Federal Awards (SEFA) that includes the total federal awards expended. The auditee is also responsible to ensure the SEFA includes cluster names, a list of individual Federal programs within the clusters and total for the clusters. Condition : The Organization provided a SEFA that did not identify the Health Center Program Cluster and all federal awards included within that cluster. In addition, the SEFA included an award that was not a federal award. Cause : Management has not implemented effective internal controls surrounding the preparation of the SEFA. Potential effect : Failure to appropriately identify total federal awards expended and clusters could result in inappropriate selection of major programs or inaccurate audit coverage needed in a single audit. Questioned costs: None. Recommendation: We recommend that the Organization implement accounting processes and controls over financial reporting to ensure accurate preparation of the SEFA. Views of responsible officials and planned corrective actions: Although Management agrees with what is written and recommended, Management disagrees with the identification of this issue as a significant deficiency. In the past, the SEFA was conducted by auditors. The regulation changed and for the last three years Shalom has been preparing for the SEFA. During these three years, previous auditors have made changes and adjustments but never identified this matter as a significant deficiency. Therefore, Management believes this matter should be a note rather than a significant weakness.
Finding 2023-003, Significant Deficiency Over Financial Reporting Identification of federal program : U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES 93.224 and 93.527 Health Center Program Cluster Criteria : In accordance with 2CFR200.510(b) Auditees are responsible for the preparation of the Schedule of Expenditures of Federal Awards (SEFA) that includes the total federal awards expended. The auditee is also responsible to ensure the SEFA includes cluster names, a list of individual Federal programs within the clusters and total for the clusters. Condition : The Organization provided a SEFA that did not identify the Health Center Program Cluster and all federal awards included within that cluster. In addition, the SEFA included an award that was not a federal award. Cause : Management has not implemented effective internal controls surrounding the preparation of the SEFA. Potential effect : Failure to appropriately identify total federal awards expended and clusters could result in inappropriate selection of major programs or inaccurate audit coverage needed in a single audit. Questioned costs: None. Recommendation: We recommend that the Organization implement accounting processes and controls over financial reporting to ensure accurate preparation of the SEFA. Views of responsible officials and planned corrective actions: Although Management agrees with what is written and recommended, Management disagrees with the identification of this issue as a significant deficiency. In the past, the SEFA was conducted by auditors. The regulation changed and for the last three years Shalom has been preparing for the SEFA. During these three years, previous auditors have made changes and adjustments but never identified this matter as a significant deficiency. Therefore, Management believes this matter should be a note rather than a significant weakness.
Finding 2023-003, Significant Deficiency Over Financial Reporting Identification of federal program : U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES 93.224 and 93.527 Health Center Program Cluster Criteria : In accordance with 2CFR200.510(b) Auditees are responsible for the preparation of the Schedule of Expenditures of Federal Awards (SEFA) that includes the total federal awards expended. The auditee is also responsible to ensure the SEFA includes cluster names, a list of individual Federal programs within the clusters and total for the clusters. Condition : The Organization provided a SEFA that did not identify the Health Center Program Cluster and all federal awards included within that cluster. In addition, the SEFA included an award that was not a federal award. Cause : Management has not implemented effective internal controls surrounding the preparation of the SEFA. Potential effect : Failure to appropriately identify total federal awards expended and clusters could result in inappropriate selection of major programs or inaccurate audit coverage needed in a single audit. Questioned costs: None. Recommendation: We recommend that the Organization implement accounting processes and controls over financial reporting to ensure accurate preparation of the SEFA. Views of responsible officials and planned corrective actions: Although Management agrees with what is written and recommended, Management disagrees with the identification of this issue as a significant deficiency. In the past, the SEFA was conducted by auditors. The regulation changed and for the last three years Shalom has been preparing for the SEFA. During these three years, previous auditors have made changes and adjustments but never identified this matter as a significant deficiency. Therefore, Management believes this matter should be a note rather than a significant weakness.
Finding 2023-003, Significant Deficiency Over Financial Reporting Identification of federal program : U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES 93.224 and 93.527 Health Center Program Cluster Criteria : In accordance with 2CFR200.510(b) Auditees are responsible for the preparation of the Schedule of Expenditures of Federal Awards (SEFA) that includes the total federal awards expended. The auditee is also responsible to ensure the SEFA includes cluster names, a list of individual Federal programs within the clusters and total for the clusters. Condition : The Organization provided a SEFA that did not identify the Health Center Program Cluster and all federal awards included within that cluster. In addition, the SEFA included an award that was not a federal award. Cause : Management has not implemented effective internal controls surrounding the preparation of the SEFA. Potential effect : Failure to appropriately identify total federal awards expended and clusters could result in inappropriate selection of major programs or inaccurate audit coverage needed in a single audit. Questioned costs: None. Recommendation: We recommend that the Organization implement accounting processes and controls over financial reporting to ensure accurate preparation of the SEFA. Views of responsible officials and planned corrective actions: Although Management agrees with what is written and recommended, Management disagrees with the identification of this issue as a significant deficiency. In the past, the SEFA was conducted by auditors. The regulation changed and for the last three years Shalom has been preparing for the SEFA. During these three years, previous auditors have made changes and adjustments but never identified this matter as a significant deficiency. Therefore, Management believes this matter should be a note rather than a significant weakness.
Finding 2023-004, Material Weakness, Allowable Costs Identification of federal program : U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES 93.224 and 93.527 Health Center Program Cluster Criteria: 2 CFR 200.430(i) requires the auditee to establish and maintain effective internal control over the allocation of personnel expenses whereby charges to Federal awards for personnel-related expenditures are supported by official records of 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 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. Budget estimates alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that: The non-federal entity's system of internal controls includes processes to review after-the-fact interim charges made to a Federal award based on budget estimates. All necessary adjustment must be made such that the final amount charged to the Federal award is accurate, allowable and properly allocated. Condition: Payroll expenses were charged to the award based on budget estimates. Cause: The Organization uses a spreadsheet, prepared annually, to document the allocation of personnel costs charged across federal and other awards and indirect cost centers. Time and effort reports were not maintained or reviewed to support the allocation of personnel costs. Effect: The Organization was unable to provide documentation of time and effort for personnel who were not 100% charged to the federal award. Questioned costs: None. Context: Total compensation charged to federal awards was tested for 9 out of 88 total employees charged to federal awards. 7 of the 9 employees tested were charged to more than one federal award, non-federal awards or other indirect cost centers. Total personnel costs allocated to the Health Center Cluster were $3,800,769. Recommendation: We recommend that the Organization implement periodic time and effort reports to track employee allocations among federal awards, non-federal awards and indirect cost centers. We recommend that time and effort reports be reviewed by employee supervisors to ensure employee allocations are reflective of actual work performed and payroll allocation changes are made timely to reflect changes in employee duties. All necessary adjustments should be made to financial records to reflect the final amount charged to the Federal award reflects actual work performed. Views of responsible officials and planned corrective actions: See attached corrective action plan.
Finding 2023-004, Material Weakness, Allowable Costs Identification of federal program : U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES 93.224 and 93.527 Health Center Program Cluster Criteria: 2 CFR 200.430(i) requires the auditee to establish and maintain effective internal control over the allocation of personnel expenses whereby charges to Federal awards for personnel-related expenditures are supported by official records of 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 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. Budget estimates alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that: The non-federal entity's system of internal controls includes processes to review after-the-fact interim charges made to a Federal award based on budget estimates. All necessary adjustment must be made such that the final amount charged to the Federal award is accurate, allowable and properly allocated. Condition: Payroll expenses were charged to the award based on budget estimates. Cause: The Organization uses a spreadsheet, prepared annually, to document the allocation of personnel costs charged across federal and other awards and indirect cost centers. Time and effort reports were not maintained or reviewed to support the allocation of personnel costs. Effect: The Organization was unable to provide documentation of time and effort for personnel who were not 100% charged to the federal award. Questioned costs: None. Context: Total compensation charged to federal awards was tested for 9 out of 88 total employees charged to federal awards. 7 of the 9 employees tested were charged to more than one federal award, non-federal awards or other indirect cost centers. Total personnel costs allocated to the Health Center Cluster were $3,800,769. Recommendation: We recommend that the Organization implement periodic time and effort reports to track employee allocations among federal awards, non-federal awards and indirect cost centers. We recommend that time and effort reports be reviewed by employee supervisors to ensure employee allocations are reflective of actual work performed and payroll allocation changes are made timely to reflect changes in employee duties. All necessary adjustments should be made to financial records to reflect the final amount charged to the Federal award reflects actual work performed. Views of responsible officials and planned corrective actions: See attached corrective action plan.
Finding 2023-004, Material Weakness, Allowable Costs Identification of federal program : U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES 93.224 and 93.527 Health Center Program Cluster Criteria: 2 CFR 200.430(i) requires the auditee to establish and maintain effective internal control over the allocation of personnel expenses whereby charges to Federal awards for personnel-related expenditures are supported by official records of 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 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. Budget estimates alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that: The non-federal entity's system of internal controls includes processes to review after-the-fact interim charges made to a Federal award based on budget estimates. All necessary adjustment must be made such that the final amount charged to the Federal award is accurate, allowable and properly allocated. Condition: Payroll expenses were charged to the award based on budget estimates. Cause: The Organization uses a spreadsheet, prepared annually, to document the allocation of personnel costs charged across federal and other awards and indirect cost centers. Time and effort reports were not maintained or reviewed to support the allocation of personnel costs. Effect: The Organization was unable to provide documentation of time and effort for personnel who were not 100% charged to the federal award. Questioned costs: None. Context: Total compensation charged to federal awards was tested for 9 out of 88 total employees charged to federal awards. 7 of the 9 employees tested were charged to more than one federal award, non-federal awards or other indirect cost centers. Total personnel costs allocated to the Health Center Cluster were $3,800,769. Recommendation: We recommend that the Organization implement periodic time and effort reports to track employee allocations among federal awards, non-federal awards and indirect cost centers. We recommend that time and effort reports be reviewed by employee supervisors to ensure employee allocations are reflective of actual work performed and payroll allocation changes are made timely to reflect changes in employee duties. All necessary adjustments should be made to financial records to reflect the final amount charged to the Federal award reflects actual work performed. Views of responsible officials and planned corrective actions: See attached corrective action plan.
Finding 2023-004, Material Weakness, Allowable Costs Identification of federal program : U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES 93.224 and 93.527 Health Center Program Cluster Criteria: 2 CFR 200.430(i) requires the auditee to establish and maintain effective internal control over the allocation of personnel expenses whereby charges to Federal awards for personnel-related expenditures are supported by official records of 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 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. Budget estimates alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that: The non-federal entity's system of internal controls includes processes to review after-the-fact interim charges made to a Federal award based on budget estimates. All necessary adjustment must be made such that the final amount charged to the Federal award is accurate, allowable and properly allocated. Condition: Payroll expenses were charged to the award based on budget estimates. Cause: The Organization uses a spreadsheet, prepared annually, to document the allocation of personnel costs charged across federal and other awards and indirect cost centers. Time and effort reports were not maintained or reviewed to support the allocation of personnel costs. Effect: The Organization was unable to provide documentation of time and effort for personnel who were not 100% charged to the federal award. Questioned costs: None. Context: Total compensation charged to federal awards was tested for 9 out of 88 total employees charged to federal awards. 7 of the 9 employees tested were charged to more than one federal award, non-federal awards or other indirect cost centers. Total personnel costs allocated to the Health Center Cluster were $3,800,769. Recommendation: We recommend that the Organization implement periodic time and effort reports to track employee allocations among federal awards, non-federal awards and indirect cost centers. We recommend that time and effort reports be reviewed by employee supervisors to ensure employee allocations are reflective of actual work performed and payroll allocation changes are made timely to reflect changes in employee duties. All necessary adjustments should be made to financial records to reflect the final amount charged to the Federal award reflects actual work performed. Views of responsible officials and planned corrective actions: See attached corrective action plan.
Finding 2023-004, Material Weakness, Allowable Costs Identification of federal program : U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES 93.224 and 93.527 Health Center Program Cluster Criteria: 2 CFR 200.430(i) requires the auditee to establish and maintain effective internal control over the allocation of personnel expenses whereby charges to Federal awards for personnel-related expenditures are supported by official records of 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 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. Budget estimates alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that: The non-federal entity's system of internal controls includes processes to review after-the-fact interim charges made to a Federal award based on budget estimates. All necessary adjustment must be made such that the final amount charged to the Federal award is accurate, allowable and properly allocated. Condition: Payroll expenses were charged to the award based on budget estimates. Cause: The Organization uses a spreadsheet, prepared annually, to document the allocation of personnel costs charged across federal and other awards and indirect cost centers. Time and effort reports were not maintained or reviewed to support the allocation of personnel costs. Effect: The Organization was unable to provide documentation of time and effort for personnel who were not 100% charged to the federal award. Questioned costs: None. Context: Total compensation charged to federal awards was tested for 9 out of 88 total employees charged to federal awards. 7 of the 9 employees tested were charged to more than one federal award, non-federal awards or other indirect cost centers. Total personnel costs allocated to the Health Center Cluster were $3,800,769. Recommendation: We recommend that the Organization implement periodic time and effort reports to track employee allocations among federal awards, non-federal awards and indirect cost centers. We recommend that time and effort reports be reviewed by employee supervisors to ensure employee allocations are reflective of actual work performed and payroll allocation changes are made timely to reflect changes in employee duties. All necessary adjustments should be made to financial records to reflect the final amount charged to the Federal award reflects actual work performed. Views of responsible officials and planned corrective actions: See attached corrective action plan.