Audit 414276

Finding 2025-001, Level of Effort, Internal Control and Noncompliance Identification of the federal program Assistance listing number and title: 93.493 Congressional Directives Agency: U.S. Department of Health and Human Services Federal award identification number (FAIN): H79FG000996 Federal Award Year: 2024, 2025 Criteria or specific requirement (including statutory, regulatory or other citation) 2 CFR 200.303(a) requires that a 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 would 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).” The Notice of Award (NOA) lists a specific key personnel (also called a Project Director) at a 25% level of effort. In addition, the detailed budget and narrative justification for the award had listed two in-kind personnel (including the Project Director) as key positions each having a 25% level of effort. Furthermore, the NOA states that organizations receiving federal funds may not exceed 100% level of effort for any program staff member across all federally funded sources. Any changes to key personnel including level of effort involving separation from the project for more than three months or a 25% reduction in time dedicated to the project requires prior approval and must be submitted as a post-award amendment in Electronic Research Administration Commons system. Condition The documentation provided showed that the two in-kind key personnel did not meet the 25% level of effort during the year and no communications were made to the Federal agency relating to the unmet level of effort. Cause The System failed to implement controls over the monitoring of required level of effort. Effect or potential effect The key personnel level of effort required by the grant was not maintained and any changes in the said level of effort was not communicated to the Federal agency. Questioned costs None, as the key personnel’s salaries and benefits were not charged to the Federal grant in 2025. Context EY reviewed the NOA and related detailed budget and identified two (2) in-kind key personnel (including the Project Director) with a 25% level of effort. Supporting documentation such as timesheet tracking showed that the Project Director had only met 15.2% level of effort, while the other key personnel had only met 18.10% level of effort during the year. As a result, the required level of effort was not met. Per inquiry with management, there were no communications made to the Federal agency during the year relating to the change in key personnel level of effort. Identification as a repeat finding, if applicable This is a repeat finding – Finding 2023-002. Recommendation Management should improve internal controls to ensure that any level of effort listed in the grant award documents are met and any required communications to the Federal agency relating to changes in level of effort are made timely. In addition, management should also obtain written communications from the Federal awarding agency for any clarifications they have on the provisions of the grant award documents. Views of responsible officials Management did not fully document the level of effort for key personnel identified as Project Directors who were providing in-kind support to the grant program. Although this grant has ended, management recognizes the importance of maintaining adequate documentation and monitoring procedures for future grants. Management will update its grant policies and procedures to include specific requirements for tracking and documenting in-kind personnel time, as well as an approval and review process to ensure compliance with grant requirements.