Allowable Costs – Payroll, Fringe, and General Disbursements Federal Agency: U.S. Department of Health and Human Services Federal Program Title: Child Care and Development Block Grant Operation of a Child Care Resource Center – Baltimore, Harford and Cecil Counties; Professional Development/Quality (688) Operation of a Child Care Resource Center – Baltimore, Harford and Cecil Counties; Infants and Toddlers (689) Operation of a Child Care Resource Center – Baltimore, Harford and Cecil Counties (691) Specialized Training for Caregivers and Child Care Providers (707) Maryland Rebuilds Initiative Grant (708) Infant and early Childhood Mental Health Support Services Grant (709) Assistance Listing Number: 93.575 Award Periods: July 1, 2023 – September 30, 2024 (688, 689, 709) July 1, 2023 – June 30, 2024 (691) August 15, 2022 – June 30, 2025 (707) December 1, 2022 – June 30, 2024 (708) Type of Finding: Material Weakness in Internal Control over Compliance and Material Non-Compliance Criteria: Recipients of federal funds are required to establish and maintain effective internal controls over federal funds received, per 2 CFR section 200.303. Allowable costs must be approved by the awarding agency (2 CFR section 200.407) and necessary and reasonable for the performance of the federal award and allocable under the principles of 2 CFR, Subpart E. Additionally, costs must be adequately documented. Condition: Direct costs incurred were allocated through journal entries to the grant without support of an allocation methodology. Management was unable to provide an understanding of how to trace the allocated amounts to a consistent methodology or to original source documentation. Additionally, credit card costs did not have proper evidence of approval maintained. Lastly, evidence of review for time and effort was not consistently maintained and could not be provided to support selections made. Context: Of the general disbursement population, $51,948 of general disbursements were booked via unsupported journal entry (allocated). Of the payroll and fringe benefit disbursement population, $125,034 were booked via unsupported journal entry (allocated). Additionally, three out of three credit card transactions selected did not have evidence of approval. Lastly, forty out of forty payroll transactions tested did not have proper evidence of the review for time and effort. Questioned Costs: $177,054 Cause: Internal controls surrounding allocations were not properly designed and implemented and an audit trail for allocation journal entries/source documentation was not maintained. Effect: The lack of evidence for audit trail and lack of effective internal controls over allocations provides an opportunity for noncompliance and errors. Repeat Finding: Yes; prior year finding 2023-003 Recommendation: We recommend that the Organization design, implement and monitor internal controls over allocations as well as maintain source documentation to support amounts charged to the grant. Views of Responsible Officials of the Auditee: There is no disagreement with the audit finding.
Period of Performance Federal Agency: U.S. Department of Health and Human Services Federal Program Title: Child Care and Development Block Grant, Operation of a Child Care Resource Center – Baltimore, Harford and Cecil Counties (691) Assistance Listing Number: 93.575 Award Period: July 1, 2023 – June 30, 2024 (691) Type of Finding: Significant Deficiency in Internal Control over Compliance Criteria: Recipients of federal funds are required to establish and maintain effective internal controls over federal funds received, per 2 CFR section 200.303. Condition: The Organization did not maintain documentation to evidence approval of credit card general disbursements charged to the program. Context: Auditors tested two credit card general disbursement transactions out of a total sample of 50 period of performance transactions, and both lacked evidence of appropriate approval to support that the disbursements were recorded within the proper period of performance. Questioned Costs: None Cause: Internal controls over the approval of credit card transactions were not adequately designed and implemented to ensure supporting documentation was maintained. Effect: The absence of effective internal controls over period of performance increases the risk of noncompliance with federal award requirements and the potential for errors. Repeat Finding: Yes; prior year finding 2023-004 Recommendation: We recommend that the Organization design, implement, and monitor effective internal controls over credit card disbursements and maintain appropriate documentation evidencing review and approval to ensure compliance with period of performance requirements. Views of Responsible Officials of the Auditee: There is no disagreement with the audit finding.