Audit 375786

Agency: U.S. Department of Health and Human Services Federal Assistance Listing Number: 93.243 Substance Abuse and Mental Health Services Projects of Regional and National Significance Criteria: In accordance with 2 CFR §200.430(i) of the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), compensation for personal services charged to federal awards must be based on records that accurately reflect the work performed. When budget estimates are used for interim accounting purposes, they must: produce reasonable approximations of the activity actually performed, be reconciled to actual effort on a regular basis, and be adjusted in a timely manner to reflect significant changes in work activity. Documentation may include timesheets, effort certifications, payroll distribution reports, and other personnel activity records, and must be reviewed and approved by authorized personnel. Condition and Context: The Organization did not maintain documentation evidencing a hindsight review of employee working hours to verify alignment between actual hours worked and budgeted hours. This oversight was noted in instances where payroll costs for individual employees were allocated across multiple federal programs. While a time and effort certification was lacking for the items included in our sample, there was evidence of work performed on the grants and the amounts allocated aligned closely to the budget. Questioned Costs: We were unable to quantify an amount of questioned costs. While a time and effort certification was lacking for the items included in our sample, there was evidence of work performed on the grants and the amounts allocated aligned closely to the budget. Therefore, we were unable to quantify the amount of questioned costs. Cause: The Organization has not established or enforced formal policies and procedures requiring the documentation of time and effort for employees. Effect: The lack of documentation of hindsight review increases the risk of inaccurate payroll cost allocations and potential noncompliance with federal grant requirements. Recommendation: The Organization should update its policies and procedures to require and document a formal hindsight review of employee working hours. This review should verify that actual hours worked align with budgeted hours, particularly in cases where payroll costs are allocated across multiple federal programs. The updated procedures should include clear guidelines for conducting and retaining evidence of such reviews to support accurate cost allocations and ensure compliance with federal grant requirements.