Audit 355987

Federal Agency: U.S. Department of Health and Human Services Federal Program: Special Programs for the Aging, Title IV, and Title II, Discretionary Projects – ALN 93.048 Criteria An organization should have a strong system of internal control that includes review of general disbursements and payroll transactions for proper classification and allowability in accordance with the terms and conditions of the award agreements and federal regulations. Uniform Guidance section 200.430, paragraph (i) standards for documentation of personnel expenses requires that charges to federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must (i) be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable and properly allocated; (ii) be incorporated into the official records of the non-federal entity; (iii) reasonably reflect the total activity for which the employee is compensated by the non-federal entity, not exceeding 100 percent of compensated activities; (iv) encompass both federally assisted and all other activities compensated by the nonfederal entity on an integrated basis, but may include the use of subsidiary records as defined in the non-federal entity’s written policy; (vi) comply with the established accounting policies and practices of the non-federal entity; (vii) support the distribution of the employee’s salary or wages among specific activities or cost objectives if the employee works on more than one federal award; a federal award and 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; and (viii) budget estimates alone do not qualify as support for charges to federal awards but may be used for interim accounting purposes. Condition and Context Salaries and wages of employees charged or allocated to the grant were not supported by formal records that accurately reflected the work performed. During our testing of four payroll transactions, we noted three timesheets had no formal approval and the Organization recorded amounts based on budgeted estimates rather than actual amounts for all four payroll transaction tested. For those payroll transactions tested, two transactions were overcharged by $563 and two were undercharged by $527 resulting in a net overcharge to the grant of $36. The sample was not intended to be, and was not, a statistically valid sample. Questioned Costs Unknown Cause Payroll costs charged to the grant were approximated for budgetary purposes which was utilized for reporting; however, a subsequent review of time and effort for the individuals allocated to the grant and evaluation of allowability of costs incurred was not performed, which resulted in inaccurate amounts charged to the grant. Effect or Potential Effect Because the actual time spent by certain employees was not appropriately charged to the grant, the amounts charged to the grant could be under or overcharged and unallowable. Identification as a Repeat Finding 2023-002 Recommendation We recommend the Organization implement a process and related controls related to review and approval of payroll expenditures for allowability in accordance with the terms of the grant award and federal regulations. Payroll amounts charged to the grant should be based on actual time and effort reported by the employee working on the grant and related documentation maintained by the Organization to support those amounts. The Organization should implement a review process over recording time and effort for payroll transactions, for proper classification and allowability. Views of Responsible Officials and Planned Corrective Action Management agrees with the finding and has taken corrective action by formally adopting controls which will track the employee’s actual time spent. These controls were placed in service during the year ended June 30, 2024, but were not in place for the entire year.

Federal Agency: U.S. Department of Health and Human Services Federal Program: Special Programs for the Aging, Title IV, and Title II, Discretionary Projects – ALN 93.048 Criteria Uniform Guidance 2 CFR 200, Section 200.318 requires the Organization to maintain and use its own documented procurement procedures which reflect applicable federal, state and local laws and regulations, provided that the procurements conform to applicable federal law and the standards identified in 2 CFR 200, Sections 200.318 through 200.327. Condition and Context The Organization’s current documented procurement policy does not contain all the required elements identified within the Uniform Guidance. Questioned Costs None Cause The Organization was not aware of all the procurement requirements under the Uniform Guidance. Effect or Potential Effect The Organization may procure goods and services that do not comply with the requirements under the Uniform Guidance, including not following required specific procurement methods, conducting procurement transactions that do not provide full and open competition, and entering into transactions that have conflicts of interest, among others. Recommendation The Organization should adopt a formal procurement policy that complies with 2 CFR 200, Sections 200.318 through 200.327. Views of Responsible Officials and Planned Corrective Action Management will review the requirements under the Uniform Guidance relating to procurement and establish a formal policy and related procedures to comply with those requirements.

Federal Agency: U.S. Department of Health and Human Services Federal Program: Special Programs for the Aging, Title IV, and Title II, Discretionary Projects – ALN 93.048 Criteria An organization should have a strong system of internal control that includes review of general disbursements and payroll transactions for proper classification and allowability in accordance with the terms and conditions of the award agreements and federal regulations. Uniform Guidance section 200.430, paragraph (i) standards for documentation of personnel expenses requires that charges to federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must (i) be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable and properly allocated; (ii) be incorporated into the official records of the non-federal entity; (iii) reasonably reflect the total activity for which the employee is compensated by the non-federal entity, not exceeding 100 percent of compensated activities; (iv) encompass both federally assisted and all other activities compensated by the nonfederal entity on an integrated basis, but may include the use of subsidiary records as defined in the non-federal entity’s written policy; (vi) comply with the established accounting policies and practices of the non-federal entity; (vii) support the distribution of the employee’s salary or wages among specific activities or cost objectives if the employee works on more than one federal award; a federal award and 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; and (viii) budget estimates alone do not qualify as support for charges to federal awards but may be used for interim accounting purposes. Condition and Context Salaries and wages of employees charged or allocated to the grant were not supported by formal records that accurately reflected the work performed. During our testing of four payroll transactions, we noted three timesheets had no formal approval and the Organization recorded amounts based on budgeted estimates rather than actual amounts for all four payroll transaction tested. For those payroll transactions tested, two transactions were overcharged by $563 and two were undercharged by $527 resulting in a net overcharge to the grant of $36. The sample was not intended to be, and was not, a statistically valid sample. Questioned Costs Unknown Cause Payroll costs charged to the grant were approximated for budgetary purposes which was utilized for reporting; however, a subsequent review of time and effort for the individuals allocated to the grant and evaluation of allowability of costs incurred was not performed, which resulted in inaccurate amounts charged to the grant. Effect or Potential Effect Because the actual time spent by certain employees was not appropriately charged to the grant, the amounts charged to the grant could be under or overcharged and unallowable. Identification as a Repeat Finding 2023-002 Recommendation We recommend the Organization implement a process and related controls related to review and approval of payroll expenditures for allowability in accordance with the terms of the grant award and federal regulations. Payroll amounts charged to the grant should be based on actual time and effort reported by the employee working on the grant and related documentation maintained by the Organization to support those amounts. The Organization should implement a review process over recording time and effort for payroll transactions, for proper classification and allowability. Views of Responsible Officials and Planned Corrective Action Management agrees with the finding and has taken corrective action by formally adopting controls which will track the employee’s actual time spent. These controls were placed in service during the year ended June 30, 2024, but were not in place for the entire year.

Federal Agency: U.S. Department of Health and Human Services Federal Program: Special Programs for the Aging, Title IV, and Title II, Discretionary Projects – ALN 93.048 Criteria Uniform Guidance 2 CFR 200, Section 200.318 requires the Organization to maintain and use its own documented procurement procedures which reflect applicable federal, state and local laws and regulations, provided that the procurements conform to applicable federal law and the standards identified in 2 CFR 200, Sections 200.318 through 200.327. Condition and Context The Organization’s current documented procurement policy does not contain all the required elements identified within the Uniform Guidance. Questioned Costs None Cause The Organization was not aware of all the procurement requirements under the Uniform Guidance. Effect or Potential Effect The Organization may procure goods and services that do not comply with the requirements under the Uniform Guidance, including not following required specific procurement methods, conducting procurement transactions that do not provide full and open competition, and entering into transactions that have conflicts of interest, among others. Recommendation The Organization should adopt a formal procurement policy that complies with 2 CFR 200, Sections 200.318 through 200.327. Views of Responsible Officials and Planned Corrective Action Management will review the requirements under the Uniform Guidance relating to procurement and establish a formal policy and related procedures to comply with those requirements.