Audit 385042

Finding 2025-001: Direct Costs – Compensation Grantor: Department of Health and Human Services Award Name: High Impact HIV Prevention and Surveillance Programs; Research and Development Assistance Listing Number: 93.940; 93.838 Assistance Listing Title: HIV Prevention Activities Health Department Based; Lung Diseases Research Award Year: 07/1/2024 – 06/30/2025 Award Number: CP4043 and CP5043 (2220536); OT2HL161847-01 Pass-through: Not applicable Criteria 2 CFR part 200.430 addresses compensation charges. The regulations note that compensation charges should be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated and comply with the established accounting policies and practices of the nonFederal entity. Children’s Hospital of Philadelphia has implemented an employee time reporting system in which effort is reviewed to ensure the effort charged to the grant is accurate and is based on the actual effort devoted to the various functional and programmatic activities to which the salary and wage costs are charged. Additionally, in order to ensure the effort charged to grants is appropriate, the Hospital has a policy in place that defines the period by which the effort certification process should be complete. Per Hospital policy, the effort reports are required to be completed and certified within 90 days of the reporting period end date, which occurs every quarter. Condition Out of 39 effort reports selected for compensation testing, 3 effort reports were not certified within 90 days of the effort reporting period in accordance with Children’s Hospital of Philadelphia policy. Although the effort reports were not certified timely, there were no questioned costs related to the costs charged. Cause The delay in certification was primarily due to personnel not consistently adhering to the established effort reporting framework. There was a lack of awareness regarding deadlines. Questioned Costs There were no questioned costs related to this finding as payroll charges were allowable. Effect Effort reports may contain inaccuracies that remain uncorrected for a period of time if effort related to grants is not certified in a timely manner.. Repeat finding in the Prior Year No Recommendation We recommend the Hospital continue to enhance the execution of the effort reporting policy to ensure all effort reports are certified in a timely manner. As part of these enhancements, we recommend additional training for the individuals in the effort reporting process, including notifications of effort reporting deadlines.