2025-003 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) Specialized Training for Caregivers and Child Care Providers (707) Operation of a Child Care Resource Center - Baltimore, Harford, and Cecil Counties; Professional Development/ Quality (788) Operation of a Child Care Resource Center - Baltimore, Harford, and Cecil Counties; Infants and Toddlers (789) Pass-Through Agencies: Maryland State Department of Education (707) Maryland Family Network (688, 689, 788, 789) Pass-Through Numbers: 2201MDCCDD (688, 689, 707) 2401MDCCDD (788, 789) Award Periods: July 1, 2023 – September 30, 2024 (688, 689) August 15, 2022 – June 30, 2025 (707) July 1, 2024 – June 30, 2025 (788, 789) 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, $44,115 general disbursements were booked via unsupported journal entry (allocated). Of the payroll and fringe benefit disbursement population, $21,319 were booked via unsupported journal entry (allocated). Additionally, one out of one 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: $66,995 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 2024-003 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 Operation of a Child Care Resource Center – Baltimore, Harford and Cecil Counties; Professional Development/Quality (688) Specialized Training for Caregivers and Child Care Providers (707) Operation of a Child Care Resource Center - Baltimore, Harford and Cecil Counties; Professional Development/ Quality (788) Operation of a Child Care Resource Center - Baltimore, Harford and Cecil Counties; Infants and Toddlers (789) Assistance Listing Number: 93.575 Pass-Through Agencies: Maryland State Department of Education (707) Maryland Family Network (688, 788, 789) Pass-Through Numbers: 2201MDCCDD (688, 707) 2401MDCCDD (788, 789) Award Periods: July 1, 2023 – September 30, 2024 (688) August 15, 2022 – June 30, 2025 (707) July 1, 2024 – June 30, 2025 (788, 789) 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. Additionally, charges must be incurred during the approved period of performance, per 2 CFR 200.309. Condition: The Organization did not maintain evidence to support approval of payroll allocation journal entries. Additionally, one transaction did not occur within the period of performance. Context: Auditors tested five payroll journal entry allocations out of a total sample of 75 period of performance transactions, and all lacked evidence of appropriate approval to support that the disbursements were recorded within the proper period of performance. Additionally, one out of 75 transactions did not occur within the period of performance. Questioned Costs: None Cause: Internal controls over the approval of payroll journal entries and general disbursements 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 2024-004 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.