Audit 404614

Finding 2025-001 – Activities Allowed or Unallowed, Allowable Costs/Cost Principles Identification of the federal program: Federal Grantor: United States Department of Health and Human Services Assistance Listing No.: 93.817 Hospital Preparedness Program (HPP) Ebola Preparedness and Response Activities Criteria or specific requirement (including statutory, regulatory, or other citation): 2 CFR 200.303 requires that the non-Federal entity must “(a) establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States and the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).” Condition: Internal controls over payroll charged to the federal program were not sufficiently precise to ensure that payroll expenses were recorded using the correct authorized pay rates. Cause: Fairview did not have controls operating effectively, to review payroll calculations at a level of precision sufficient to detect discrepancies between applied pay rates and authorized rates prior to charging costs to the federal award. Effect or potential effect: Expenses may be charged to the federal award that are not in compliance with the federal grant agreements. Questioned costs: None. Context: Of the 23 payroll transactions sampled (totaling $67,035), two payroll transactions (totaling $404) were calculated using incorrect pay rates, resulting in inaccurate payroll charges to the federal program. For Assistance Listing No. 93.817, total payroll costs for Fairview were $537,540, representing 25.4% of total federal expenditures of $2,115,184 for the year ended December 31, 2025. Identification as a repeat finding, if applicable: The finding is not a repeat finding from the prior year. Recommendation: Management should enhance controls over payroll review processes to ensure payroll charges to federal programs are based on authorized pay rates and are reviewed at a sufficient level of precision to identify and correct errors prior to being charged to the award. Views of responsible officials: Management agrees with the finding and has developed a plan to correct the finding. To prevent recurrence, Fairview will enhance controls over payroll review processes to ensure accuracy prior to submission. These enhancements include reinforcing review expectations with project directors and including detailed review procedures for validating pay rate and wage calculations prior to reimbursement submissions.