Audit 372860

2024-003 - IMMUNIZATION COOPERATIVE AGREEMENTS- INTERNAL CONTROLS - LACK OF SUPPORT FOR PAYROLL APPROVALS - ALN #93.268 – SIGNIFICANT DEFICIENCY FINDING TYPE: SIGNIFICANT DEFICIENCY Finding 2024-003 Federal Program: FAIN: IMMUNIZATION COOPERATIVE AGREEMENT NH23IP922623 ALN: 93.268 Year(s): 2024 Federal Agency: U.S. Department of Health and Human Services Pass Through Agency: North Dakota Department of Health Questioned Cost: $0 Condition Upper Missouri District Health Unit does not have documented approval of the payroll transactions to ensure that the expenditures are allowable to the Immunization Cooperative Agreements program and are coded to the proper grant. Effect There is an increased risk that Upper Missouri District Health Unit charged unallowable expenditures to the grant. Cause Upper Missouri District Health Unit does not have consistent procedures in place to approve payroll. Criteria "Standards for Internal Control in the Federal Government" (Green Book) requires management to design, implement, and operate internal controls to achieve its objectives related to operations, reporting, and compliance. Management is to design appropriate types of control activities for the entity's internal control system. Control activities help management fulfill responsibilities and address identified risk responses in the internal control system. Uniform Guidance 2 CFR 200.303(a) states “The non-Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in "Standards for Internal Control in the Federal Government" issued by the Comptroller General of the United States or the "Internal Control Integrated Framework", issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Context The majority of the expenses charged to the grant during the audit period were relating to payroll expenses. During the audit, it was discovered that the district does not have documented procedures relating to the approval of payroll transactions to ensure the expenditures are allowable and coded to the proper grant. 100% of reimbursement requests that were reviewed were found to be lacking payroll approval. In total, there were 19 reimbursement requests totaling $246,778 of expenses that were paid during the audit period. This appears to be a systematic problem as no proper controls are in place. Where sampling was performed, the audit used a non-statistical sampling method. Repeat Finding No. Recommendation We recommend Upper Missouri District Health Unit establish and maintain internal controls over its payroll approval process and procedures in compliance with the Uniform Guidance 2 CFR 200.303(a) and the Green Book. Upper Missouri District Health Unit’s Response See corrective action plan.