Finding 2024-001: Payroll Allocations
Information on the Federal Program: 93.073 - Centers for Disease Control and Prevention: Birth Defects and Developmental Disabilities, Prevention and Surveillance. See Finding 2024-001.
Criteria or Specific Requirement: Under Uniform Guidance (2 CFR Part 200), specifically § 200.430 (Compensation – Personal Services), labor costs must be allocated to programs based on actual time worked by employees on those specific programs. The guidance also mandates that overtime pay must be allocated in proportion to the time worked across the different programs. Failure to properly allocate employee time and overtime costs could result in non-compliance with Federal grant requirements, misreporting of program costs, and inaccurate financial statements.
Condition: During the audit for the fiscal year ended June 30, 2024, it was found that employee time worked, including overtime hours, was not being properly allocated to the various programs. Specifically, overtime hours worked by employees were not included in the program allocations, resulting in the misallocation of labor costs. In several cases, overtime worked by employees on specific programs was omitted or incorrectly allocated, leading to a misrepresentation of actual program costs.
Cause: Overtime hours were excluded from program allocations entirely.
Effect or Potential Effect: Due to incorrect allocation of hours, including overtime, the financial statements inaccurately reflect the costs of various programs or projects. Many programs, especially those funded by grants or other restricted funding sources, require accurate reporting of labor costs. The failure to allocate overtime to the appropriate programs could result in non-compliance with the terms of those grants or funding agreements, potentially leading to audits, penalties, or the loss of funding.
Questioned Costs: None.
Context: CHADD misallocated time to programs for any employee that worked overtime for the fiscal year ending June 30, 2024.
Identification as a Repeat Finding, if Applicable: Not applicable.
Recommendation: The payroll system should be updated to automatically calculate and allocate overtime hours to the correct program or project. This should be integrated with the standard time allocation processes, ensuring that overtime pay is properly distributed across programs.
Finding 2024-002: Procurement. Information on the Federal Program: 93.073 - Centers for Disease Control and Prevention: Birth Defects and Developmental Disabilities, Prevention and Surveillance
Criteria or Specific Requirement: Title 2 U.S. Code of Federal Regulations (CFR) Part 200, paragraph 318 “General procurement standards” states that the non-Federal entity must use its own documented procurement procedures which reflect applicable State, local, and tribal laws and regulations, provided that the procurements conform to applicable Federal law and the standards. Furthermore, paragraph 319 “Competition” states that all procurement transactions must be conducted in a manner providing full and open competition consistent with these standards.
Condition: CHADD has a procurement policy, which requires full and open competition for purchases of goods and services in excess of a certain threshold. We noted instances where procurement procedures were not performed on certain purchases in excess of the threshold during the fiscal year.
Cause: CHADD did not adhere to its procurement policy in that it failed to perform the prescribed procurement procedures throughout the fiscal year.
Effect or Potential Effect: Purchases of goods and services could be made above the prevailing market rates if the prescribed procurement procedures are not adhered to, and thus, there lies the potential that CHADD will not receive the best value for its purchases. The procurement process should also allow for an evaluation of potential conflicts of interest with prospective vendors and contractors. Furthermore, failure to perform the proper procurement procedures could result in disallowance of Federal expenditures based on lack of fair competition.
Questioned Costs: None.
Context: CHADD failed to adhere to its procurement policy on certain transactions, and hence, noncompliance with Federal standards. Our audit work in this area consisted of substantive testwork over transactions above a defined threshold from select expense accounts that were charged to the Federal program. We consider our samples to be representative of the respective populations, and thus, are statistically valid samples. The issue is considered systemic in nature.
Identification as a Repeat Finding, if Applicable: Not applicable.
Recommendation: We recommend that CHADD ensure its policy is distributed and communicated in a formal manner to its employees, and that management properly enforce compliance with its policy. All procurement actions should be clearly documented in writing and maintained in the vendor or contractor files.
Finding 2024-001: Payroll Allocations
Information on the Federal Program: 93.073 - Centers for Disease Control and Prevention: Birth Defects and Developmental Disabilities, Prevention and Surveillance. See Finding 2024-001.
Criteria or Specific Requirement: Under Uniform Guidance (2 CFR Part 200), specifically § 200.430 (Compensation – Personal Services), labor costs must be allocated to programs based on actual time worked by employees on those specific programs. The guidance also mandates that overtime pay must be allocated in proportion to the time worked across the different programs. Failure to properly allocate employee time and overtime costs could result in non-compliance with Federal grant requirements, misreporting of program costs, and inaccurate financial statements.
Condition: During the audit for the fiscal year ended June 30, 2024, it was found that employee time worked, including overtime hours, was not being properly allocated to the various programs. Specifically, overtime hours worked by employees were not included in the program allocations, resulting in the misallocation of labor costs. In several cases, overtime worked by employees on specific programs was omitted or incorrectly allocated, leading to a misrepresentation of actual program costs.
Cause: Overtime hours were excluded from program allocations entirely.
Effect or Potential Effect: Due to incorrect allocation of hours, including overtime, the financial statements inaccurately reflect the costs of various programs or projects. Many programs, especially those funded by grants or other restricted funding sources, require accurate reporting of labor costs. The failure to allocate overtime to the appropriate programs could result in non-compliance with the terms of those grants or funding agreements, potentially leading to audits, penalties, or the loss of funding.
Questioned Costs: None.
Context: CHADD misallocated time to programs for any employee that worked overtime for the fiscal year ending June 30, 2024.
Identification as a Repeat Finding, if Applicable: Not applicable.
Recommendation: The payroll system should be updated to automatically calculate and allocate overtime hours to the correct program or project. This should be integrated with the standard time allocation processes, ensuring that overtime pay is properly distributed across programs.
Finding 2024-002: Procurement. Information on the Federal Program: 93.073 - Centers for Disease Control and Prevention: Birth Defects and Developmental Disabilities, Prevention and Surveillance
Criteria or Specific Requirement: Title 2 U.S. Code of Federal Regulations (CFR) Part 200, paragraph 318 “General procurement standards” states that the non-Federal entity must use its own documented procurement procedures which reflect applicable State, local, and tribal laws and regulations, provided that the procurements conform to applicable Federal law and the standards. Furthermore, paragraph 319 “Competition” states that all procurement transactions must be conducted in a manner providing full and open competition consistent with these standards.
Condition: CHADD has a procurement policy, which requires full and open competition for purchases of goods and services in excess of a certain threshold. We noted instances where procurement procedures were not performed on certain purchases in excess of the threshold during the fiscal year.
Cause: CHADD did not adhere to its procurement policy in that it failed to perform the prescribed procurement procedures throughout the fiscal year.
Effect or Potential Effect: Purchases of goods and services could be made above the prevailing market rates if the prescribed procurement procedures are not adhered to, and thus, there lies the potential that CHADD will not receive the best value for its purchases. The procurement process should also allow for an evaluation of potential conflicts of interest with prospective vendors and contractors. Furthermore, failure to perform the proper procurement procedures could result in disallowance of Federal expenditures based on lack of fair competition.
Questioned Costs: None.
Context: CHADD failed to adhere to its procurement policy on certain transactions, and hence, noncompliance with Federal standards. Our audit work in this area consisted of substantive testwork over transactions above a defined threshold from select expense accounts that were charged to the Federal program. We consider our samples to be representative of the respective populations, and thus, are statistically valid samples. The issue is considered systemic in nature.
Identification as a Repeat Finding, if Applicable: Not applicable.
Recommendation: We recommend that CHADD ensure its policy is distributed and communicated in a formal manner to its employees, and that management properly enforce compliance with its policy. All procurement actions should be clearly documented in writing and maintained in the vendor or contractor files.