Type of Finding: Significant Deficiency in Internal Control over Compliance – Activities Allowed or Unallowed, Allowable Costs / Cost Principles
Federal Agency: U.S. Department of Health and Human Services
Federal Program Name: Aging Cluster
Assistance Listing Number; 93.044 / 93.045 / 93.053
Feder...
Type of Finding: Significant Deficiency in Internal Control over Compliance – Activities Allowed or Unallowed, Allowable Costs / Cost Principles
Federal Agency: U.S. Department of Health and Human Services
Federal Program Name: Aging Cluster
Assistance Listing Number; 93.044 / 93.045 / 93.053
Federal Award Identification Number and Year: DA23-1109-2023, DA23-1176-2023
Pass-Through Agency: City of Seattle
Pass-Through Number(s): DA23-1109, DA23-1176
Award Period: January 1, 2023 through December 31, 2023
Criteria or specific requirement: 2 CFR 200.303(a) states that a non-Federal entity must “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 or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring the Organization of the Treadway Commission (COSO).”
Condition: During testing of payroll, it was noted that three employee’s wages had been misallocated between contracts. These misallocations occurred due to clerical errors and inadequate monitoring and review of the allocation process.
Questioned Costs: None
Context: A sample of 60 payroll samples were made from a population of over 260 individual employee paychecks. Of the 60 sampled, three samples had wages misallocated. The first was misallocated between the Community Dining and Meals on Wheels contracts. The second had misallocations between two funding sources under the Meals on Wheels contract. The third had misallocations between the Meals on Wheels contract and another funder.
Cause: In one instance, a manual intervening calculation needed to be made to a normally automated process due to an illness at the executive level during time study updates. As a result of a clerical error, the allocations between the contracts were accidentally switched and the misallocation was not caught during review. In the remaining two instances, a formula error resulted in a misallocation of wages between funding sources.
Effect: The misallocation of expenses could impact on the accuracy of financial reporting for the major program and could result in noncompliance with federal regulations.
Repeat Finding: No.
Recommendation: CLA recommends that Sound Generations emphasize the importance of its procedures for monitoring and reviewing the allocation of wages between contracts and provide training to the individuals responsible for the allocation of expenses.
Views of responsible officials and planned corrective actions: Sound Generations Agrees with the finding. Sound Generations has reviewed and revised its procedures to include reviews at intermediary steps as well as streamlined its automation to allow for less opportunity for manual inputs and clerical errors.
Responsible Official: Carlos Rojas, Chief Financial Officer; Christina Hannan, Controller
Anticipated Completion Date: June 30, 2024