Audit 381653

Finding 2024-003 – Allowable Costs/Activities Allowed or Unallowed/Period of Performance – Significant Deficiency Name of Federal Agency: Department of Health and Human Services Federal Program Name: COVID-19: Child Care and Development Block Grant (CCDF Cluster) Assistance Listing Number: 93.575 Federal Award Identification Number and Year: 2101NYCSC6 Name of Pass-through Entity: New York State Office of Children and Family Services Criteria In accordance with 2 CFR 200.303(a), the Organization must establish and maintain effective internal controls over Federal awards. The internal controls established should be in compliance with the Internal Control Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and properly documented. Condition & Context During our procedures, we noted the following instances when internal controls were not implemented in accordance with documented policies: 1. 2 out of 11 invoices tested for other than personnel services did not have documented and approved allocations showing expenses were designated for respective CCDF Cluster grants. 2. 1 out of 11 invoice tested for other than personnel services was supported by a journal entry that was entered and approved by the same individual. 3. 8 out of 40 timesheets tested for payroll expenses did not reflect accurate allocations for respective CCDF Cluster grants. Further, there were no documented and approved allocations for these items. Cause Internal controls over other than personnel services and payroll expenditures were not properly performed. Effect or Potential Effect Costs charged to the program may not be allowable under Uniform Guidance and costs may be recorded to the improper period. Questioned Costs None Identification as a Repeat Finding This finding is not a repeat finding. Recommendation We recommend the Organization consistently enforce its internal controls over other than personnel services and payroll expenditures to ensure that all allocations are reasonably evaluated, reviewed, and approved by the appropriate supervisor. We recommend the Organization enforce its internal controls and proper segregation of duties to ensure all journal entries are created and reviewed by separate individuals. Views of Responsible Officials The issue noted primarily reflects isolated lapses in documentation and oversight during a period of staff transition. Since that time, management has reinforced internal controls over both payroll and non-personnel expenditures to ensure that allocations are properly documented, reviewed, and approved before posting. In addition, all staff involved in charging costs to federal grants are being retrained on documentation standards and cost allocation procedures. The two OTPS invoices cited by the auditors were for overhead costs (payroll processing fees and general liability insurance) that are allocated based on allocation percentages and typically do not go through a separate approval process. The Agency is reinforcing supervisory review to ensure journal entries are created and approved by separate individuals and the accounting system was updated to prevent all staff members (without exception) from initiating and approving entries.