U.S. Department of Health and Human Services Leading Edge Acceleration Projects (LEAP) in Health Information Technology - 93.345 Award# 90AX0034/01-00 Criteria or Specific Requirement – Allowable Costs/Cost Principles/Cash Management Federal regulations state that “charges to federal awards for salaries and wages, must be based on records that accurately reflect the work performed.” The regulations also state that “the records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated” and “budget estimates alone do not qualify as support for charges to federal awards” (2 CFR 200.430(i)). Additionally, costs may not be included as a cost of any other federally-financed program in either the current or a prior period (2 CFR 200.403(f)). Non-federal entities must minimize the time elapsing between the transfer of funds from the U.S. Treasury or pass-through entity and disbursement by the non-federal entity for direct program or project costs and the proportionate share of allowable indirect costs, whether the payment is made by electronic funds transfer, or issuance or redemption of checks, warrants, or payment by other means (2 CFR Section 200.305(b)).issuance or redemption of checks, warrants, or payment by other means (2 CFR Section 200.305(b)). Condition – During our test work over the LEAP grant, we noted the Organization did not have time and activity records with sufficient detail per federal regulations to support its compensation and fringe benefit expenses. Additionally, it appeared a substantial portion of certain employee's time was 100% charged to the LEAP award; however, may have also been included on other federal awards and been reimbursed. Lastly, indirect costs were charged to the federal program on the salary expenses which were not fully supported as required by the Uniform Guidance. Cause – There is a lack of understanding of the requirements of the time and activity reports and a lack of detail tracking by project of personnel time. Effect – Based on testing completed, the Organization did not have sufficient procedures to record and verify employees time and activity throughout fiscal year 2023. This resulted in the Organization drawing down funds for unsupported expenses. Questioned Costs – Total questioned costs are $278,735. This includes $192,231 of all salaries and benefits charged to the award which lacked documentation to support the charge and allocation to the grant and $86,504 in indirect costs charged on these related expenses. Context - There was a total of $192,231 in salaries and fringe benefits charged to the LEAP award during the year ended June 30, 2023 which encompassed six employees. One hundred percent of the employees were reviewed and none had proper documentation to support the charge and allocation to the grant (e.g ., daily time and activity records, etc.). Per discussions with management and further review, the amounts charged to the grant were based on the approved budget for the position and the internal allocation performed each payroll period. Additionally, it is uncertain how much of these employees' were also charged to other federally financed programs during the year. Identification as a Repeat Finding, if applicable – Not applicable Recommendation – We recommend that management utilize a time and activity method which meets the requirements of federal regulations. We also recommend employees and their supervisors are provided training on the requirements. Views of Responsible Official and Planned Corrective Actions – Management agrees with finding. See corrective action plan.
U.S. Department of Health and Human Services Leading Edge Acceleration Projects (LEAP) in Health Information Technology - 93.345 Award #90AX0034/01-00 Criteria or Specific Requirement – Procurement and Suspension and Debarment In accordance with 2 CFR Section 200.320, a non-federal entity must have and use documented procurement procedures consistent with the standards of Sections 200.317 - 200.320. These standards include a micro-purchase threshold of $10,000 and policies for formal procurement and non-competitive procurement. Additionally, in accordance with 2 CFR Section 180.220, when a non-federal entity enters into a covered transaction with an entity at a lower tier, the non-federal entity must verify that the entity, as defined in 2 CFR Section 180.995 and agency adopting regulations, is not suspended or debarred or otherwise excluded from participating in the transaction. Condition – The Organization's Procurement Policy and Procedure is not in alignment with the requirements of 2 CFR Section 200.320. The policy does not document different procurement methods for various levels of purchases nor does it outline guidance on what are acceptable procurement methods, documentation to be retained, etc. Additionally, formalized documentation supporting the Organization is in compliance with policies and regulations supporting its procurement decisions did not exist. Lastly, there was no suspension and debarment check completed prior to purchases made with federal funds. Cause – The Organization's procurement policies are not in accordance with the Uniform Guidance, nor are there controls in place to ensure policies are followed, and lastly, there are no controls to ensure suspension and debarment checks are performed on vendors receiving federal funds. Effect – Federal funds could be used to make an unauthorized purchase including paying an entity that is suspended or debarred. Questioned Costs – Total questioned costs of $233,700 was identified and represents the value of reimbursements submitted for contracted services under one agreement which the procurement process could not be supported in line with the Uniform Guidance. Context – One purchase of $233,700 out of a total of multiple purchases totaling $239,391 subject to procurement requirements in 2023 was selected for testing. The Organization could not provide documentation supporting their purchase adhered to requirements for formal procurement or noncompetitive procurement outside of a general budget approval from the grantor. Furthermore, a check of the vendor's suspension and debarment status prior to the purchase was not completed. Identification as a Repeat Finding, if applicable – Not applicable Recommendation – Policies and procedures should be modified to ensure that procurement policies are in alignment with federal regulations, support for procurement decisions are maintained and suspension and debarment checks on vendors are performed prior to making purchases with federal funds and are in alignment with the Uniform Guidance requirements. Views of Responsible Official and Planned Corrective Actions – Management agrees with finding. See corrective action plan.
U.S. Department of Health and Human Services Leading Edge Acceleration Projects (LEAP) in Health Information Technology - 93.345 Award #90AX0034/01-00 Criteria or Specific Requirement – Reporting Per 2 CFR 200.303, the non-federal entities receiving federal awards (i.e ., auditee management) must establish and maintain internal control design to reasonably ensure compliance with federal statutes, regulations, and the terms and conditions of the federal award. Per the LEAP agreement, paragraph 18, semi-annual Federal Financial Reports (FFR) are to be submitted each year due April 30 and October 31 as well as complete quarterly FFR Cash Transaction Reports. Per 2 CFR 200.303, the non-Federal entities receiving federal awards (i.e., auditee management) establish and maintain internal control design to reasonably ensure compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition – During our test work over the LEAP grant, we noted the Organization did not timely file required reports nor were the original reports filed properly reconciled and in agreement with general ledger records. Cause – The Organization's controls to ensure reports are filed timely and accurately were not operating effectively. Effect – Required reports are not being submitted timely or accurately. Questioned Costs – None noted. Context – One out of the two semi-annual reports selected for testing was submitted on December 7, 2022 rather than the due date of October 31. Additionally, the amounts in the reports for cash receipts and disbursements did not reconcile to underlying records for the period. Additionally, management indicated none of the quarterly FFR Cash Transaction Reports were filed. The sample was not intended to be, and was not, a statistically valid sample. Identification as a Repeat Finding, if applicable – Not applicable Recommendation – We recommend the Organization implement a process that includes tracking the timely submission of reports and incorporate a review and reconciliation process to the underlying grant and accounting records. Views of Responsible Official and Planned Corrective Actions – Management agrees with finding. See corrective action plan.