Audit 363112

Agency: U.S. Department of Health and Human Services Federal Assistance Listing Number: 93.243, Substance Abuse and Mental Health Services Criteria: The Organization is required to maintain effective internal controls over compliance to support that amounts charged to federal contracts for reimbursement represent actual costs incurred. Expenditures charged to grants should be properly recorded and accounted for in order to permit the preparation of reliable financial statements and federal reports. Statement of Condition: The Organization over allocated an employee's time to the program during the current year. The Organization's internal controls over compliance did not detect and correct the amounts requested for reimbursement. Questioned Costs: The known questioned costs are $5,740. Context: We tested forty individual transactions that charged payroll to the program. The forty transactions tested consisted of time charged by nine employees. A total of twenty-eight employees charged time to the program. Of the employees tested, one employee was miscalculated by management resulting in incorrect amounts being charged to the program. The sample size was not a statistical sample. Effect: The Organization charged more to the program for the employee for reimbursement than was allowable. Cause: The Organization did not have effective controls in place to review and approve payroll allocations and expenditures charged to programs and additional expenses were submitted. Recommendation: The Organization should review their internal control processes to ensure timely review and approval of all payroll related allocations and expenditures, including those charged to grants, to facilitate accurate financial and grant reporting. Management's Response: The Organization acknowledges the finding. This was an isolated clerical error made by the staff responsible for preparing the reimbursement documentation. Although an employee already fully allocated to other programs was mistakenly included in the claim, the Organization had sufficient allowable personnel expenses from other staff who were not fully allocated to federal programs. These resources could have been properly used to support the claim. Program operations continued without disruption and were not affected in any way, as there were adequate personnel costs available to sustain the program throughout the period. To prevent recurrence, the Organization is reviewing and strengthening its internal review procedures related to grant allocations and payroll backup. Additional training and oversight will be provided to ensure that future claims are accurately supported by allowable personnel costs.

Agency: U.S. Department of Health and Human Services Federal Assistance Listing Number: 93.243, Substance Abuse and Mental Health Services Criteria: The Organization is required to maintain effective internal controls over compliance to support that amounts charged to federal contracts for reimbursement represent actual costs incurred. Expenditures charged to grants should be properly recorded and accounted for in order to permit the preparation of reliable financial statements and federal reports. Statement of Condition: The Organization over allocated an employee's time to the program during the current year. The Organization's internal controls over compliance did not detect and correct the amounts requested for reimbursement. Questioned Costs: The known questioned costs are $5,740. Context: We tested forty individual transactions that charged payroll to the program. The forty transactions tested consisted of time charged by nine employees. A total of twenty-eight employees charged time to the program. Of the employees tested, one employee was miscalculated by management resulting in incorrect amounts being charged to the program. The sample size was not a statistical sample. Effect: The Organization charged more to the program for the employee for reimbursement than was allowable. Cause: The Organization did not have effective controls in place to review and approve payroll allocations and expenditures charged to programs and additional expenses were submitted. Recommendation: The Organization should review their internal control processes to ensure timely review and approval of all payroll related allocations and expenditures, including those charged to grants, to facilitate accurate financial and grant reporting. Management's Response: The Organization acknowledges the finding. This was an isolated clerical error made by the staff responsible for preparing the reimbursement documentation. Although an employee already fully allocated to other programs was mistakenly included in the claim, the Organization had sufficient allowable personnel expenses from other staff who were not fully allocated to federal programs. These resources could have been properly used to support the claim. Program operations continued without disruption and were not affected in any way, as there were adequate personnel costs available to sustain the program throughout the period. To prevent recurrence, the Organization is reviewing and strengthening its internal review procedures related to grant allocations and payroll backup. Additional training and oversight will be provided to ensure that future claims are accurately supported by allowable personnel costs.