Finding 2024‐003 Indirect Cost Information on the federal/state program: Federal Award agency; Research and Development Cluster COVID-19 Coronavirus State and Local Fiscal Recovery Funds (CSLFRF) ALN: Various 21.027 Criteria or specific requirement (including statutory, regulatory or other citation): Internal Controls Federal Awards 2 CFR Section 200.303 of the Uniform Guidance states the following regarding internal control: “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 or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).” Condition: The College did not retain documentation and evidence of review of the indirect cost amounts being charged to the R&D and CSLFRF programs. Management performed a monthly control that included reviewing a sample of indirect costs charged to grants on a sample basis. The College had a new ERP implementation that went into effect on January 1, 2024. Management did not perform the monthly control subsequent to the ERP implementation for the last 6 months of year. Questioned costs: None Section III – Federal Award Findings and Questioned Costs (continued) Context: During our testing over indirect cost, we selected 2 months during FY24 to test managements control. We observed that during FY24, BCM had a mid year ERP implementation in January 2024. After the ERP implementation, management no longer performed the monthly control for the remainder of FY24. As such for 6 months during FY24, the control was not in place. Effect or potential effect: The incorrect indirect cost rate could be applied to a grant. Cause: Management’s internal control over the review and approval of indirect cost expenditures for compliance was not consistently documented. Identification as a repeat finding, if applicable: This is not a repeat finding Recommendation: The College should reassess its internal controls over the review and approval of indirect cost expenditures post ERP implementation and ensure documentation is retained to evidence review and approval to support the allowability of the expenditure. Views of responsible officials and planned corrective actions: Management agrees with the finding and has developed a plan to ensure indirect costs are reviewed.
Finding 2024‐003 Indirect Cost Information on the federal/state program: Federal Award agency; Research and Development Cluster COVID-19 Coronavirus State and Local Fiscal Recovery Funds (CSLFRF) ALN: Various 21.027 Criteria or specific requirement (including statutory, regulatory or other citation): Internal Controls Federal Awards 2 CFR Section 200.303 of the Uniform Guidance states the following regarding internal control: “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 or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).” Condition: The College did not retain documentation and evidence of review of the indirect cost amounts being charged to the R&D and CSLFRF programs. Management performed a monthly control that included reviewing a sample of indirect costs charged to grants on a sample basis. The College had a new ERP implementation that went into effect on January 1, 2024. Management did not perform the monthly control subsequent to the ERP implementation for the last 6 months of year. Questioned costs: None Section III – Federal Award Findings and Questioned Costs (continued) Context: During our testing over indirect cost, we selected 2 months during FY24 to test managements control. We observed that during FY24, BCM had a mid year ERP implementation in January 2024. After the ERP implementation, management no longer performed the monthly control for the remainder of FY24. As such for 6 months during FY24, the control was not in place. Effect or potential effect: The incorrect indirect cost rate could be applied to a grant. Cause: Management’s internal control over the review and approval of indirect cost expenditures for compliance was not consistently documented. Identification as a repeat finding, if applicable: This is not a repeat finding Recommendation: The College should reassess its internal controls over the review and approval of indirect cost expenditures post ERP implementation and ensure documentation is retained to evidence review and approval to support the allowability of the expenditure. Views of responsible officials and planned corrective actions: Management agrees with the finding and has developed a plan to ensure indirect costs are reviewed.
Finding 2024‐003 Indirect Cost Information on the federal/state program: Federal Award agency; Research and Development Cluster COVID-19 Coronavirus State and Local Fiscal Recovery Funds (CSLFRF) ALN: Various 21.027 Criteria or specific requirement (including statutory, regulatory or other citation): Internal Controls Federal Awards 2 CFR Section 200.303 of the Uniform Guidance states the following regarding internal control: “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 or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).” Condition: The College did not retain documentation and evidence of review of the indirect cost amounts being charged to the R&D and CSLFRF programs. Management performed a monthly control that included reviewing a sample of indirect costs charged to grants on a sample basis. The College had a new ERP implementation that went into effect on January 1, 2024. Management did not perform the monthly control subsequent to the ERP implementation for the last 6 months of year. Questioned costs: None Section III – Federal Award Findings and Questioned Costs (continued) Context: During our testing over indirect cost, we selected 2 months during FY24 to test managements control. We observed that during FY24, BCM had a mid year ERP implementation in January 2024. After the ERP implementation, management no longer performed the monthly control for the remainder of FY24. As such for 6 months during FY24, the control was not in place. Effect or potential effect: The incorrect indirect cost rate could be applied to a grant. Cause: Management’s internal control over the review and approval of indirect cost expenditures for compliance was not consistently documented. Identification as a repeat finding, if applicable: This is not a repeat finding Recommendation: The College should reassess its internal controls over the review and approval of indirect cost expenditures post ERP implementation and ensure documentation is retained to evidence review and approval to support the allowability of the expenditure. Views of responsible officials and planned corrective actions: Management agrees with the finding and has developed a plan to ensure indirect costs are reviewed.
Finding 2024‐003 Indirect Cost Information on the federal/state program: Federal Award agency; Research and Development Cluster COVID-19 Coronavirus State and Local Fiscal Recovery Funds (CSLFRF) ALN: Various 21.027 Criteria or specific requirement (including statutory, regulatory or other citation): Internal Controls Federal Awards 2 CFR Section 200.303 of the Uniform Guidance states the following regarding internal control: “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 or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).” Condition: The College did not retain documentation and evidence of review of the indirect cost amounts being charged to the R&D and CSLFRF programs. Management performed a monthly control that included reviewing a sample of indirect costs charged to grants on a sample basis. The College had a new ERP implementation that went into effect on January 1, 2024. Management did not perform the monthly control subsequent to the ERP implementation for the last 6 months of year. Questioned costs: None Section III – Federal Award Findings and Questioned Costs (continued) Context: During our testing over indirect cost, we selected 2 months during FY24 to test managements control. We observed that during FY24, BCM had a mid year ERP implementation in January 2024. After the ERP implementation, management no longer performed the monthly control for the remainder of FY24. As such for 6 months during FY24, the control was not in place. Effect or potential effect: The incorrect indirect cost rate could be applied to a grant. Cause: Management’s internal control over the review and approval of indirect cost expenditures for compliance was not consistently documented. Identification as a repeat finding, if applicable: This is not a repeat finding Recommendation: The College should reassess its internal controls over the review and approval of indirect cost expenditures post ERP implementation and ensure documentation is retained to evidence review and approval to support the allowability of the expenditure. Views of responsible officials and planned corrective actions: Management agrees with the finding and has developed a plan to ensure indirect costs are reviewed.
Finding 2024‐003 Indirect Cost Information on the federal/state program: Federal Award agency; Research and Development Cluster COVID-19 Coronavirus State and Local Fiscal Recovery Funds (CSLFRF) ALN: Various 21.027 Criteria or specific requirement (including statutory, regulatory or other citation): Internal Controls Federal Awards 2 CFR Section 200.303 of the Uniform Guidance states the following regarding internal control: “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 or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).” Condition: The College did not retain documentation and evidence of review of the indirect cost amounts being charged to the R&D and CSLFRF programs. Management performed a monthly control that included reviewing a sample of indirect costs charged to grants on a sample basis. The College had a new ERP implementation that went into effect on January 1, 2024. Management did not perform the monthly control subsequent to the ERP implementation for the last 6 months of year. Questioned costs: None Section III – Federal Award Findings and Questioned Costs (continued) Context: During our testing over indirect cost, we selected 2 months during FY24 to test managements control. We observed that during FY24, BCM had a mid year ERP implementation in January 2024. After the ERP implementation, management no longer performed the monthly control for the remainder of FY24. As such for 6 months during FY24, the control was not in place. Effect or potential effect: The incorrect indirect cost rate could be applied to a grant. Cause: Management’s internal control over the review and approval of indirect cost expenditures for compliance was not consistently documented. Identification as a repeat finding, if applicable: This is not a repeat finding Recommendation: The College should reassess its internal controls over the review and approval of indirect cost expenditures post ERP implementation and ensure documentation is retained to evidence review and approval to support the allowability of the expenditure. Views of responsible officials and planned corrective actions: Management agrees with the finding and has developed a plan to ensure indirect costs are reviewed.
Finding 2024‐003 Indirect Cost Information on the federal/state program: Federal Award agency; Research and Development Cluster COVID-19 Coronavirus State and Local Fiscal Recovery Funds (CSLFRF) ALN: Various 21.027 Criteria or specific requirement (including statutory, regulatory or other citation): Internal Controls Federal Awards 2 CFR Section 200.303 of the Uniform Guidance states the following regarding internal control: “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 or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).” Condition: The College did not retain documentation and evidence of review of the indirect cost amounts being charged to the R&D and CSLFRF programs. Management performed a monthly control that included reviewing a sample of indirect costs charged to grants on a sample basis. The College had a new ERP implementation that went into effect on January 1, 2024. Management did not perform the monthly control subsequent to the ERP implementation for the last 6 months of year. Questioned costs: None Section III – Federal Award Findings and Questioned Costs (continued) Context: During our testing over indirect cost, we selected 2 months during FY24 to test managements control. We observed that during FY24, BCM had a mid year ERP implementation in January 2024. After the ERP implementation, management no longer performed the monthly control for the remainder of FY24. As such for 6 months during FY24, the control was not in place. Effect or potential effect: The incorrect indirect cost rate could be applied to a grant. Cause: Management’s internal control over the review and approval of indirect cost expenditures for compliance was not consistently documented. Identification as a repeat finding, if applicable: This is not a repeat finding Recommendation: The College should reassess its internal controls over the review and approval of indirect cost expenditures post ERP implementation and ensure documentation is retained to evidence review and approval to support the allowability of the expenditure. Views of responsible officials and planned corrective actions: Management agrees with the finding and has developed a plan to ensure indirect costs are reviewed.
Finding 2024‐003 Indirect Cost Information on the federal/state program: Federal Award agency; Research and Development Cluster COVID-19 Coronavirus State and Local Fiscal Recovery Funds (CSLFRF) ALN: Various 21.027 Criteria or specific requirement (including statutory, regulatory or other citation): Internal Controls Federal Awards 2 CFR Section 200.303 of the Uniform Guidance states the following regarding internal control: “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 or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).” Condition: The College did not retain documentation and evidence of review of the indirect cost amounts being charged to the R&D and CSLFRF programs. Management performed a monthly control that included reviewing a sample of indirect costs charged to grants on a sample basis. The College had a new ERP implementation that went into effect on January 1, 2024. Management did not perform the monthly control subsequent to the ERP implementation for the last 6 months of year. Questioned costs: None Section III – Federal Award Findings and Questioned Costs (continued) Context: During our testing over indirect cost, we selected 2 months during FY24 to test managements control. We observed that during FY24, BCM had a mid year ERP implementation in January 2024. After the ERP implementation, management no longer performed the monthly control for the remainder of FY24. As such for 6 months during FY24, the control was not in place. Effect or potential effect: The incorrect indirect cost rate could be applied to a grant. Cause: Management’s internal control over the review and approval of indirect cost expenditures for compliance was not consistently documented. Identification as a repeat finding, if applicable: This is not a repeat finding Recommendation: The College should reassess its internal controls over the review and approval of indirect cost expenditures post ERP implementation and ensure documentation is retained to evidence review and approval to support the allowability of the expenditure. Views of responsible officials and planned corrective actions: Management agrees with the finding and has developed a plan to ensure indirect costs are reviewed.
Finding 2024‐003 Indirect Cost Information on the federal/state program: Federal Award agency; Research and Development Cluster COVID-19 Coronavirus State and Local Fiscal Recovery Funds (CSLFRF) ALN: Various 21.027 Criteria or specific requirement (including statutory, regulatory or other citation): Internal Controls Federal Awards 2 CFR Section 200.303 of the Uniform Guidance states the following regarding internal control: “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 or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).” Condition: The College did not retain documentation and evidence of review of the indirect cost amounts being charged to the R&D and CSLFRF programs. Management performed a monthly control that included reviewing a sample of indirect costs charged to grants on a sample basis. The College had a new ERP implementation that went into effect on January 1, 2024. Management did not perform the monthly control subsequent to the ERP implementation for the last 6 months of year. Questioned costs: None Section III – Federal Award Findings and Questioned Costs (continued) Context: During our testing over indirect cost, we selected 2 months during FY24 to test managements control. We observed that during FY24, BCM had a mid year ERP implementation in January 2024. After the ERP implementation, management no longer performed the monthly control for the remainder of FY24. As such for 6 months during FY24, the control was not in place. Effect or potential effect: The incorrect indirect cost rate could be applied to a grant. Cause: Management’s internal control over the review and approval of indirect cost expenditures for compliance was not consistently documented. Identification as a repeat finding, if applicable: This is not a repeat finding Recommendation: The College should reassess its internal controls over the review and approval of indirect cost expenditures post ERP implementation and ensure documentation is retained to evidence review and approval to support the allowability of the expenditure. Views of responsible officials and planned corrective actions: Management agrees with the finding and has developed a plan to ensure indirect costs are reviewed.
Finding 2024‐003 Indirect Cost Information on the federal/state program: Federal Award agency; Research and Development Cluster COVID-19 Coronavirus State and Local Fiscal Recovery Funds (CSLFRF) ALN: Various 21.027 Criteria or specific requirement (including statutory, regulatory or other citation): Internal Controls Federal Awards 2 CFR Section 200.303 of the Uniform Guidance states the following regarding internal control: “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 or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).” Condition: The College did not retain documentation and evidence of review of the indirect cost amounts being charged to the R&D and CSLFRF programs. Management performed a monthly control that included reviewing a sample of indirect costs charged to grants on a sample basis. The College had a new ERP implementation that went into effect on January 1, 2024. Management did not perform the monthly control subsequent to the ERP implementation for the last 6 months of year. Questioned costs: None Section III – Federal Award Findings and Questioned Costs (continued) Context: During our testing over indirect cost, we selected 2 months during FY24 to test managements control. We observed that during FY24, BCM had a mid year ERP implementation in January 2024. After the ERP implementation, management no longer performed the monthly control for the remainder of FY24. As such for 6 months during FY24, the control was not in place. Effect or potential effect: The incorrect indirect cost rate could be applied to a grant. Cause: Management’s internal control over the review and approval of indirect cost expenditures for compliance was not consistently documented. Identification as a repeat finding, if applicable: This is not a repeat finding Recommendation: The College should reassess its internal controls over the review and approval of indirect cost expenditures post ERP implementation and ensure documentation is retained to evidence review and approval to support the allowability of the expenditure. Views of responsible officials and planned corrective actions: Management agrees with the finding and has developed a plan to ensure indirect costs are reviewed.
Finding 2024‐003 Indirect Cost Information on the federal/state program: Federal Award agency; Research and Development Cluster COVID-19 Coronavirus State and Local Fiscal Recovery Funds (CSLFRF) ALN: Various 21.027 Criteria or specific requirement (including statutory, regulatory or other citation): Internal Controls Federal Awards 2 CFR Section 200.303 of the Uniform Guidance states the following regarding internal control: “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 or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).” Condition: The College did not retain documentation and evidence of review of the indirect cost amounts being charged to the R&D and CSLFRF programs. Management performed a monthly control that included reviewing a sample of indirect costs charged to grants on a sample basis. The College had a new ERP implementation that went into effect on January 1, 2024. Management did not perform the monthly control subsequent to the ERP implementation for the last 6 months of year. Questioned costs: None Section III – Federal Award Findings and Questioned Costs (continued) Context: During our testing over indirect cost, we selected 2 months during FY24 to test managements control. We observed that during FY24, BCM had a mid year ERP implementation in January 2024. After the ERP implementation, management no longer performed the monthly control for the remainder of FY24. As such for 6 months during FY24, the control was not in place. Effect or potential effect: The incorrect indirect cost rate could be applied to a grant. Cause: Management’s internal control over the review and approval of indirect cost expenditures for compliance was not consistently documented. Identification as a repeat finding, if applicable: This is not a repeat finding Recommendation: The College should reassess its internal controls over the review and approval of indirect cost expenditures post ERP implementation and ensure documentation is retained to evidence review and approval to support the allowability of the expenditure. Views of responsible officials and planned corrective actions: Management agrees with the finding and has developed a plan to ensure indirect costs are reviewed.
Finding 2024‐003 Indirect Cost Information on the federal/state program: Federal Award agency; Research and Development Cluster COVID-19 Coronavirus State and Local Fiscal Recovery Funds (CSLFRF) ALN: Various 21.027 Criteria or specific requirement (including statutory, regulatory or other citation): Internal Controls Federal Awards 2 CFR Section 200.303 of the Uniform Guidance states the following regarding internal control: “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 or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).” Condition: The College did not retain documentation and evidence of review of the indirect cost amounts being charged to the R&D and CSLFRF programs. Management performed a monthly control that included reviewing a sample of indirect costs charged to grants on a sample basis. The College had a new ERP implementation that went into effect on January 1, 2024. Management did not perform the monthly control subsequent to the ERP implementation for the last 6 months of year. Questioned costs: None Section III – Federal Award Findings and Questioned Costs (continued) Context: During our testing over indirect cost, we selected 2 months during FY24 to test managements control. We observed that during FY24, BCM had a mid year ERP implementation in January 2024. After the ERP implementation, management no longer performed the monthly control for the remainder of FY24. As such for 6 months during FY24, the control was not in place. Effect or potential effect: The incorrect indirect cost rate could be applied to a grant. Cause: Management’s internal control over the review and approval of indirect cost expenditures for compliance was not consistently documented. Identification as a repeat finding, if applicable: This is not a repeat finding Recommendation: The College should reassess its internal controls over the review and approval of indirect cost expenditures post ERP implementation and ensure documentation is retained to evidence review and approval to support the allowability of the expenditure. Views of responsible officials and planned corrective actions: Management agrees with the finding and has developed a plan to ensure indirect costs are reviewed.
Finding 2024‐003 Indirect Cost Information on the federal/state program: Federal Award agency; Research and Development Cluster COVID-19 Coronavirus State and Local Fiscal Recovery Funds (CSLFRF) ALN: Various 21.027 Criteria or specific requirement (including statutory, regulatory or other citation): Internal Controls Federal Awards 2 CFR Section 200.303 of the Uniform Guidance states the following regarding internal control: “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 or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).” Condition: The College did not retain documentation and evidence of review of the indirect cost amounts being charged to the R&D and CSLFRF programs. Management performed a monthly control that included reviewing a sample of indirect costs charged to grants on a sample basis. The College had a new ERP implementation that went into effect on January 1, 2024. Management did not perform the monthly control subsequent to the ERP implementation for the last 6 months of year. Questioned costs: None Section III – Federal Award Findings and Questioned Costs (continued) Context: During our testing over indirect cost, we selected 2 months during FY24 to test managements control. We observed that during FY24, BCM had a mid year ERP implementation in January 2024. After the ERP implementation, management no longer performed the monthly control for the remainder of FY24. As such for 6 months during FY24, the control was not in place. Effect or potential effect: The incorrect indirect cost rate could be applied to a grant. Cause: Management’s internal control over the review and approval of indirect cost expenditures for compliance was not consistently documented. Identification as a repeat finding, if applicable: This is not a repeat finding Recommendation: The College should reassess its internal controls over the review and approval of indirect cost expenditures post ERP implementation and ensure documentation is retained to evidence review and approval to support the allowability of the expenditure. Views of responsible officials and planned corrective actions: Management agrees with the finding and has developed a plan to ensure indirect costs are reviewed.
Finding 2024‐003 Indirect Cost Information on the federal/state program: Federal Award agency; Research and Development Cluster COVID-19 Coronavirus State and Local Fiscal Recovery Funds (CSLFRF) ALN: Various 21.027 Criteria or specific requirement (including statutory, regulatory or other citation): Internal Controls Federal Awards 2 CFR Section 200.303 of the Uniform Guidance states the following regarding internal control: “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 or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).” Condition: The College did not retain documentation and evidence of review of the indirect cost amounts being charged to the R&D and CSLFRF programs. Management performed a monthly control that included reviewing a sample of indirect costs charged to grants on a sample basis. The College had a new ERP implementation that went into effect on January 1, 2024. Management did not perform the monthly control subsequent to the ERP implementation for the last 6 months of year. Questioned costs: None Section III – Federal Award Findings and Questioned Costs (continued) Context: During our testing over indirect cost, we selected 2 months during FY24 to test managements control. We observed that during FY24, BCM had a mid year ERP implementation in January 2024. After the ERP implementation, management no longer performed the monthly control for the remainder of FY24. As such for 6 months during FY24, the control was not in place. Effect or potential effect: The incorrect indirect cost rate could be applied to a grant. Cause: Management’s internal control over the review and approval of indirect cost expenditures for compliance was not consistently documented. Identification as a repeat finding, if applicable: This is not a repeat finding Recommendation: The College should reassess its internal controls over the review and approval of indirect cost expenditures post ERP implementation and ensure documentation is retained to evidence review and approval to support the allowability of the expenditure. Views of responsible officials and planned corrective actions: Management agrees with the finding and has developed a plan to ensure indirect costs are reviewed.
Finding 2024‐003 Indirect Cost Information on the federal/state program: Federal Award agency; Research and Development Cluster COVID-19 Coronavirus State and Local Fiscal Recovery Funds (CSLFRF) ALN: Various 21.027 Criteria or specific requirement (including statutory, regulatory or other citation): Internal Controls Federal Awards 2 CFR Section 200.303 of the Uniform Guidance states the following regarding internal control: “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 or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).” Condition: The College did not retain documentation and evidence of review of the indirect cost amounts being charged to the R&D and CSLFRF programs. Management performed a monthly control that included reviewing a sample of indirect costs charged to grants on a sample basis. The College had a new ERP implementation that went into effect on January 1, 2024. Management did not perform the monthly control subsequent to the ERP implementation for the last 6 months of year. Questioned costs: None Section III – Federal Award Findings and Questioned Costs (continued) Context: During our testing over indirect cost, we selected 2 months during FY24 to test managements control. We observed that during FY24, BCM had a mid year ERP implementation in January 2024. After the ERP implementation, management no longer performed the monthly control for the remainder of FY24. As such for 6 months during FY24, the control was not in place. Effect or potential effect: The incorrect indirect cost rate could be applied to a grant. Cause: Management’s internal control over the review and approval of indirect cost expenditures for compliance was not consistently documented. Identification as a repeat finding, if applicable: This is not a repeat finding Recommendation: The College should reassess its internal controls over the review and approval of indirect cost expenditures post ERP implementation and ensure documentation is retained to evidence review and approval to support the allowability of the expenditure. Views of responsible officials and planned corrective actions: Management agrees with the finding and has developed a plan to ensure indirect costs are reviewed.
Finding 2024‐004 Reporting Information on the federal/state program: Federal Programs: COVID-19 Coronavirus State and Local Fiscal Recovery Funds (CSLFRF) ALN: 21.027 State Awarding agency: Texas Higher Education Coordinating Board State Program: Texas Child Mental Health Care Consortium (TCMHCC) Criteria or specific requirement (including statutory, regulatory or other citation): Federal Program 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 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).” Pursuant to 47 C.F.R 302.9 and in accordance with the grant agreement, the award recipient was to submit monthly technical progress reports within 15 days of the end of the month. Per the CSLFRF and TCHMCC agreements with UT Austin: A monthly progress report is due to UT System by the 15th of the month for the previous month. Section III – Federal Award Findings and Questioned Costs (continued) Condition: The College did not submit monthly reports for the CSLFRF or TCMHCC grants by the 15th of the each month. Questioned costs: None Context: Federal and State: The College submitted monthly reports for the 4 health initiatives created under the TCMHCC grant. CPAN 6 out of 12 reports were not submitted by the 15th deadline. CPWE 7 out of 12 reports were not submitted by the 15th deadline. CAP 7 out of 12 reports were not submitted by the 15th deadline. Effect or potential effect: The College did not comply with the timing of the CSLFRF and TCMHC reporting requirements. Cause: The College did not have effective internal controls in place to ensure the monthly reports were submitted by the required dates, resulting in noncompliance. Identification as a repeat finding, if applicable: This is not a repeat finding Recommendation: The College should develop and implement effective internal controls to ensure the required reports are submitted by the required due dates. Views of responsible officials and planned corrective actions: Management agrees with the finding and has developed a plan to ensure all reports are filed timely.
Finding 2024‐004 Reporting Information on the federal/state program: Federal Programs: COVID-19 Coronavirus State and Local Fiscal Recovery Funds (CSLFRF) ALN: 21.027 State Awarding agency: Texas Higher Education Coordinating Board State Program: Texas Child Mental Health Care Consortium (TCMHCC) Criteria or specific requirement (including statutory, regulatory or other citation): Federal Program 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 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).” Pursuant to 47 C.F.R 302.9 and in accordance with the grant agreement, the award recipient was to submit monthly technical progress reports within 15 days of the end of the month. Per the CSLFRF and TCHMCC agreements with UT Austin: A monthly progress report is due to UT System by the 15th of the month for the previous month. Section III – Federal Award Findings and Questioned Costs (continued) Condition: The College did not submit monthly reports for the CSLFRF or TCMHCC grants by the 15th of the each month. Questioned costs: None Context: Federal and State: The College submitted monthly reports for the 4 health initiatives created under the TCMHCC grant. CPAN 6 out of 12 reports were not submitted by the 15th deadline. CPWE 7 out of 12 reports were not submitted by the 15th deadline. CAP 7 out of 12 reports were not submitted by the 15th deadline. Effect or potential effect: The College did not comply with the timing of the CSLFRF and TCMHC reporting requirements. Cause: The College did not have effective internal controls in place to ensure the monthly reports were submitted by the required dates, resulting in noncompliance. Identification as a repeat finding, if applicable: This is not a repeat finding Recommendation: The College should develop and implement effective internal controls to ensure the required reports are submitted by the required due dates. Views of responsible officials and planned corrective actions: Management agrees with the finding and has developed a plan to ensure all reports are filed timely.
Finding 2024‐005 Information on the federal/state program: Federal Programs: Student Financial Assistance Cluster ALN: 84.268 Criteria or specific requirement (including statutory, regulatory or other citation): Federal Program 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 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).” Cash Management Program Requirements for Direct Lonas- Monthly Reconciliations Schools participating in the Direct Loan program are required to perform monthly Direct Loan Reconciliations (34 CFR 685.300(b)(5)). Electronic Announcements DL-22-07 and General -22-86 explain that a school must reconcile the funds it received from G5 with actual disbursement records the school submitted to Common Origination and Disbursement (COD). Each month COD sends the school a School Account Statement, which is Department of Education (ED’s) official record of the school’s cash and disbursement records and identifies the difference between net draws from G5 and the actual disbursement information reported to COD by the school. The School is required to account for any differences by reconciling ED’s records (School Account Statement) with the school’s financial and business records. Condition: The College did not submit the required monthly reconciliation for the direct loan program timely. Section III – Federal Award Findings and Questioned Costs (continued) Questioned costs: None Context: As part of our testing, EY selected 4 months to test the monthly reconciliation between the funds received from G5 to the actual disbursement submitted to the COD. During our testing we determined that the College did not perform the monthly reconciliation timely for 3 of the 4 months selected for testing. Effect or potential effect: The College did not comply with the cash management reporting requirements, which could result in unreconciled differences between the funds the College received to what was actually disbursed to students. Cause: As part of our testing, EY selected 4 months to test the monthly reconciliation between the funds received from G5 to the actual disbursement submitted to the COD. During our testing we determined that the College did not perform the monthly reconciliation timely for 3 of the 4 months selected for testing. There was turnover by management and management was working with the IT department to ensure information was accurately obtained from the system to perform the reconciliation. After the data could be appropriately downloaded, management reconciled all transactions to date. Ultimately, management missed the monthly reconciliation deadline for 4 months during FY24. However the College did perform a year to date reconciliation in order to ensure all months during FY24 were reconciled from G5 to COD. Identification as a repeat finding, if applicable: This is not a repeat finding Recommendation: The College should perform and submit the required monthly reconciliation between the G5 and the COD timely. Views of responsible officials and planned corrective actions: Management agrees with the finding and has developed a plan to ensure that the reconciliation is performed on a monthly basis.
Finding 2024‐003 Indirect Cost Information on the federal/state program: Federal Award agency; Research and Development Cluster COVID-19 Coronavirus State and Local Fiscal Recovery Funds (CSLFRF) ALN: Various 21.027 Criteria or specific requirement (including statutory, regulatory or other citation): Internal Controls Federal Awards 2 CFR Section 200.303 of the Uniform Guidance states the following regarding internal control: “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 or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).” Condition: The College did not retain documentation and evidence of review of the indirect cost amounts being charged to the R&D and CSLFRF programs. Management performed a monthly control that included reviewing a sample of indirect costs charged to grants on a sample basis. The College had a new ERP implementation that went into effect on January 1, 2024. Management did not perform the monthly control subsequent to the ERP implementation for the last 6 months of year. Questioned costs: None Section III – Federal Award Findings and Questioned Costs (continued) Context: During our testing over indirect cost, we selected 2 months during FY24 to test managements control. We observed that during FY24, BCM had a mid year ERP implementation in January 2024. After the ERP implementation, management no longer performed the monthly control for the remainder of FY24. As such for 6 months during FY24, the control was not in place. Effect or potential effect: The incorrect indirect cost rate could be applied to a grant. Cause: Management’s internal control over the review and approval of indirect cost expenditures for compliance was not consistently documented. Identification as a repeat finding, if applicable: This is not a repeat finding Recommendation: The College should reassess its internal controls over the review and approval of indirect cost expenditures post ERP implementation and ensure documentation is retained to evidence review and approval to support the allowability of the expenditure. Views of responsible officials and planned corrective actions: Management agrees with the finding and has developed a plan to ensure indirect costs are reviewed.
2024-003 - Control Weakness and Noncompliance Related to Cost Allocation Process State Entity: Department of Children and Family Services (DCFS) Award Years: 2018, 2023, 2024 Award Numbers: 1804LACEST, 2301LASOSR, 2401LACSES, 2401LAFOST, 2401LASOSR, 2401LATANF, SNAP - Letter of Credit Compliance Requirement: Allowable Costs/Cost Principles Repeat Finding: Yes (Prior Year Finding No. 2023-003) See Schedule of Findings and Questioned Costs for chart/table. Condition: The Department of Children and Family Services (DCFS) did not have adequate controls in place to ensure the correct allocation of expenditures in accordance with the Cost Allocation Plan, which assigns costs to federal programs. In a non-statistical sample of 60 cost allocation forms out of a population of 921 forms, three (5%) forms used percentages from a prior month and amounts were applied to the incorrect cost allocation grant, which resulted in the incorrect allocation of costs to various cost pools affecting multiple federal programs. These errors resulted in overbilling Temporary Assistance for Needy Families program by $1,907, Child Support Services (CSS) program by $1,161, State Administrative Matching Grants for the Supplemental Nutrition Assistance Program (SNAP) by $389, Foster Care Title IV-E program by $1,216, and Social Services Block Grant program by $12. The amounts overbilled represent questioned costs. In addition, the CSS and SNAP programs were underbilled by $621 and $4,684, respectively. Criteria: 2 CFR 200.303(a) requires that non-federal entities receiving federal awards establish and maintain effective internal control designed to reasonably ensure compliance with federal statutes, regulations, and the terms and conditions of the federal awards. Per 2 CFR 200.400(d), the accounting practices of the non-federal entity must be consistent with cost principles and support the accumulation of costs as required and must provide for adequate documentation to support costs charged to the federal award. Cause: These errors occurred because there was not an effective review process in place to identify amounts being charged incorrectly through the cost allocation process. Effect: Failure to adequately review cost allocation supporting documentation increases the risk that unallowable costs could be charged to federal programs. This is the second consecutive year we have reported to DCFS management exceptions with internal controls related to the cost allocation process. Recommendation: Management should strengthen internal controls over the cost allocation review process. Management’s Response and Corrective Action Plan: Management concurred with the finding and provided a corrective action plan (B-2).
2024-003 - Control Weakness and Noncompliance Related to Cost Allocation Process State Entity: Department of Children and Family Services (DCFS) Award Years: 2018, 2023, 2024 Award Numbers: 1804LACEST, 2301LASOSR, 2401LACSES, 2401LAFOST, 2401LASOSR, 2401LATANF, SNAP - Letter of Credit Compliance Requirement: Allowable Costs/Cost Principles Repeat Finding: Yes (Prior Year Finding No. 2023-003) See Schedule of Findings and Questioned Costs for chart/table. Condition: The Department of Children and Family Services (DCFS) did not have adequate controls in place to ensure the correct allocation of expenditures in accordance with the Cost Allocation Plan, which assigns costs to federal programs. In a non-statistical sample of 60 cost allocation forms out of a population of 921 forms, three (5%) forms used percentages from a prior month and amounts were applied to the incorrect cost allocation grant, which resulted in the incorrect allocation of costs to various cost pools affecting multiple federal programs. These errors resulted in overbilling Temporary Assistance for Needy Families program by $1,907, Child Support Services (CSS) program by $1,161, State Administrative Matching Grants for the Supplemental Nutrition Assistance Program (SNAP) by $389, Foster Care Title IV-E program by $1,216, and Social Services Block Grant program by $12. The amounts overbilled represent questioned costs. In addition, the CSS and SNAP programs were underbilled by $621 and $4,684, respectively. Criteria: 2 CFR 200.303(a) requires that non-federal entities receiving federal awards establish and maintain effective internal control designed to reasonably ensure compliance with federal statutes, regulations, and the terms and conditions of the federal awards. Per 2 CFR 200.400(d), the accounting practices of the non-federal entity must be consistent with cost principles and support the accumulation of costs as required and must provide for adequate documentation to support costs charged to the federal award. Cause: These errors occurred because there was not an effective review process in place to identify amounts being charged incorrectly through the cost allocation process. Effect: Failure to adequately review cost allocation supporting documentation increases the risk that unallowable costs could be charged to federal programs. This is the second consecutive year we have reported to DCFS management exceptions with internal controls related to the cost allocation process. Recommendation: Management should strengthen internal controls over the cost allocation review process. Management’s Response and Corrective Action Plan: Management concurred with the finding and provided a corrective action plan (B-2).
2024-005 - Noncompliance with and Weakness in Controls over Federal Research and Development Expenses State Entity: Louisiana State University Health Sciences Center - Shreveport (LSUHSC-S) Award Years: Various Award Numbers: Various Compliance Requirements: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Cash Management Pass-Through Entities: Various Repeat Finding: Yes (Prior Year Finding No. 2023-006) See Schedule of Findings and Questioned Costs for chart/table. Condition: For the sixth consecutive year, LSUHSC-S did not ensure internal controls over documentation of personnel services were operating effectively, and did not ensure compliance with federal guidance regarding cost transfers applicable to the Research and Development (R&D) Cluster. In a non-statistical random sample of 27 out of 2,933 payroll adjusting entries affecting R&D, we noted the following exceptions for 15 adjusting entries, some of which had multiple exceptions: • Seven (26%) adjustments did not have adequate documentation to fully explain how the error occurred and/or the transfer was not accomplished within 90 days of when the error was discovered. • For five (19%) adjustments, LSUHSC-S did not provide sufficient information to determine if the cost transfers were completed timely. • For three (11%) adjustments, LSUHSC-S did not provide sufficient information to verify the new charge was certified by a responsible organizational official. • For three (11%) adjustments, LSUHSC-S did not provide sufficient documentation to determine whether adjustments were allowable per the award, which resulted in questioned costs totaling $2,686. • For twelve (44%) adjustments, LSUHSC-S did not provide sufficient documentation to evidence that expenses were incurred prior to reimbursement and that funds were returned to the federal agency for expenses that were removed from the federal award. We also performed an analysis of interim payroll adjusting journal entries to record cost transfers to and/or from R&D awards. We noted that 465 (20%) out of 2,309 adjusting journal entries were made more than 90 days after the end of the biannual period from the original transactions. The adjustments were made 103 to 430 days after the end of the biannual period. In addition, in a non-statistical random sample of 53 out of 11,272 expense transactions charged to R&D during the fiscal year ending June 30, 2024, we noted the following exceptions for 10 transactions, some of which had multiple exceptions: • Six (11%) time and effort certifications for salary and related benefit expenses tested were completed 92 to 248 days after the end of the biannual period, or LSUHSC-S did not provide sufficient documentation to determine that the certifications were completed timely. • For one (2%) transaction, LSUHSC-S did not provide documentation approving the employee’s salary on the applicable award. • For four (8%) transactions, LSUHSC-S did not provide documentation that indicated expenses were reconciled and approved prior to submitting reimbursement requests. Additionally, for three of these transactions, LSUHSC-S did not provide sufficient support to determine if the expenses were incurred prior to the reimbursement request or if LSUHSC-S minimized the time that elapsed between the transfer of funds from the federal government and LSUHSC-S’s disbursement for federal program purposes Finally, it was noted during our procedures related to requisition transactions that LSUHSC-S lacked proper segregation of duties in the online requisition process. We noted in an analysis of all requisition transactions that are subject to online approvals (14,941 transactions totaling $25,349,749) that 4,916 transactions totaling $7,222,206 (28%) did not have adequate segregation of duties. Of these, 306 transactions totaling $338,679 related to the R&D Cluster. Criteria: 2 CFR 200.430(i)(1)(i) requires that charges to federal awards for salaries and wages must be supported by a system of internal control which provides reasonable assurance the charges are accurate, allowable, and properly allocated. Per 2 CFR 200.430(i)(1)(viii), budget estimates alone do not qualify as support for charges to federal awards, but may be used for interim accounting purposes, provided that the system for establishing the estimates produces reasonable approximations of the activity performed, significant changes in work activity are identified and entered into the records in a timely manner, and the non-federal entity’s system of internal controls includes processes to review after-the-fact interim charges and make necessary adjustments. Per LSUHSC-S’s Time and Effort Certification Policy and Procedures, LSUHSC-S utilizes time and effort certifications to support salary charges to sponsored projects as an after-the-fact certification of effort of all individuals when all or a portion of their salaries are charged to a sponsored project. Based on LSUHSC-S’s policy, time and effort certifications should be completed within approximately 90 days of the end of the biannual period. Management interprets the end of the period to be when the time and effort reports are sent to the departments once the last month of the biannual period is closed in the accounting system. If there is a substantial (five percent or more) difference between the salary charges and the effort actually expended by the individual on projects during the biannual reporting period, a payroll reallocation must be created within 30 days. Per 2 CFR 200.303, the 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 Organizations of the Treadway Commission. Per the Standards for Internal Control in the Federal Government, examples of common categories of control activities include accurate and timely recording of transactions. In addition, the National Institutes of Health (NIH) is the grantor for the majority of the LSUHSC-S’s R&D grant awards. Per the NIH Grants Policy Statement §7.5, cost transfers that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. An explanation merely stating that the transfer was made “to correct error" or "to transfer to correct project" is not sufficient. Transfers of costs from one project to another or from one competitive segment to the next solely to cover cost overruns are not allowable. Cause: LSUHSC-S faculty are not completing time and effort certifications timely, which contributes to untimely adjustments for compensation. In addition, LSUHSC-S did not provide sufficient supporting documentation for the auditor to test federal regulations related to cash management for all sample items selected due to an insufficient method for sorting and storing the documentation related to each federal award. Finally, the lack of segregation of duties was caused by LSUHSC-S granting certain employees’ access that allowed for self-approvals. Effect: Untimely certifications and the untimely discovery and correction of errors increases the risk of inaccurate reporting and may result in an inability to complete approved projects within the approved budget and/or period of performance. As a result, LSUHSC-S may have to utilize university funds to complete approved projects. In addition, inadequate controls and noncompliance with federal awards increases the likelihood of disallowed costs, which LSUHSC-S may have to repay to the federal grantor. Recommendation: Management should ensure they have adequate controls over time and effort certifications, purchases, and reimbursement requests. In addition, management should ensure adequate segregation of duties covering approvals of all transaction types. Management’s Response and Corrective Action Plan: Management concurred with the finding and outlined a plan of corrective action (B-47).
2024-009 – Noncompliance with Reporting Requirements for the Federal Funding Accountability and Transparency Act State Entity: Executive Department – Division of Administration – Office of Community Development Award Years: 2016, 2021, 2023 Award Numbers: B-16-DL-22-0001, B-21-DF-22-0001, B-21-DZ-22-0001, B-23-DC-22-0001 Compliance Requirement: Reporting Repeat Finding: No See Schedule of Findings and Questioned Costs for chart/table. Condition: The Division of Administration, Office of Community Development – Local Government Assistance (OCD-LGA) and Office of Community Development-Disaster Recovery (OCD-DR) did not comply with Federal Funding Accountability and Transparency Act (FFATA) Reporting requirements for the Community Development Block Grant/State’s Program (CDBG). During fiscal year 2024, OCD-LGA approved 41 subawards totaling approximately $22 million to 40 different subrecipients, and OCD-DR approved 33 subawards totaling approximately $310.9 million to 32 different subrecipients. Our procedures identified the following: • In a sample of eight OCD-LGA subawards, none of the eight subaward obligations were reported in the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS) until 39 to 62 days after the required time frame. • Of the 10 OCD-DR subawards tested, four obligations reported in FSRS were not reported until 5 to 86 days after the required time frame. See Schedule of Findings and Questioned Costs for chart/table. Criteria: 2 CFR Part 170, Appendix A, requires the non-federal entity to report to FSRS each obligating action equal to or exceeding $30,000 for a subaward. In addition, the subaward information must be reported no later than the end of the month following the month in which the obligation was made. 2 CFR Part 200.303 requires that non-federal entities receiving federal awards establish and maintain internal control over the federal awards that provide reasonable assurance that the non-federal entity is managing the federal award in compliance with relevant requirements. Cause: OCD-LGA management stated that they were unable to submit the reports in FSRS timely. OCD-DR management stated that the infrequency of preparation of the FFATA reports caused the required FFATA reports to be submitted untimely to FSRS. Both OCD-LGA and OCD-DR did not maintain adequate internal controls to ensure compliance with FFATA reporting requirements. Effect: Not complying with the FFATA requirements increases the likelihood that the public will not have access to transparent and accurate information regarding OCD-LGA and OCD-DR’s administration of federal awards. Recommendation: OCD-LGA and OCD-DR management should ensure that established internal controls are operating to ensure compliance with FFATA reporting requirements, which includes the timely submission of information. Management’s Response and Corrective Action Plan: Management concurred with the finding and provided a corrective action plan (B-6).
2024-011 - Noncompliance and Inadequate Controls Related to Reporting Requirements for the Federal Funding Accountability and Transparency Act State Entity: Louisiana Workforce Commission (LWC) Award Year: 2024 Award Numbers: 23A55AT000024, 23A55AW000027, 23A55AY000034 Compliance Requirement: Reporting Repeat Finding: Yes (Prior Year Finding No. 2023-013) See Schedule of Findings and Questioned Costs for chart/table. Condition: For the second consecutive year, for Workforce Innovation and Opportunity Act (WIOA) Cluster programs, LWC did not have adequate internal controls in place to review and approve data submissions to the Federal Funding Accountability and Transparency Act (FFATA) Subaward Reporting System (FSRS) website required for federal subawards by FFATA. LWC had 15 subawards totaling $35.7 million executed in state fiscal year 2024. The data submissions for 11 of the 15 subawards occurred between one and two months after the due date specified by federal regulations. The 11 subawards submitted late each exceeded $30,000 and collectively totaled more than $25.2 million. In addition, LWC entered into the FSRS website an incorrect subaward amount for two subawards. The error resulted in an underreporting of the subawards totaling $79,207. Criteria: 2 CFR 200.303 requires non-federal entities receiving federal award to establish and maintain internal control designed to reasonably ensure compliance with federal statutes, regulations, and the terms and conditions of the federal award. 2 CFR 170, Appendix A(I)(a) requires the non-federal entity to report certain information about each obligating action that equals or exceeds $30,000 in federal funds for a subaward to a non-federal entity into the FSRS website no later than the end of the month following the month in which the obligation was made. The amount of the subaward is one of the key data elements identified by federal regulations for FFATA data submissions. Cause: LWC management represented that a staff member, other than the compiler of the data that was submitted, observed the data as it was being submitted to the FSRS website and reviewed and approved it as complete and accurate based on this observation. However, management was not able to provide evidence of the review and approval of the data submission. In addition, as noted above, the data submissions occurred after the due date specified in federal regulations and included erroneous amounts for two subawards. Effect: Failure to implement adequate internal controls over the data submissions to the FSRS website as required by the FFATA could result in required data submissions being incomplete, inaccurate, and/or untimely, as evidenced by the late and erroneous data submissions noted above, which resulted in noncompliance with federal regulations. Recommendation: LWC should strengthen controls, including maintaining evidence of reviews, to ensure compliance with federal regulations. Management’s Response and Corrective Action Plan: Management concurred with the finding and provided a corrective action plan (B-52).
2024-011 - Noncompliance and Inadequate Controls Related to Reporting Requirements for the Federal Funding Accountability and Transparency Act State Entity: Louisiana Workforce Commission (LWC) Award Year: 2024 Award Numbers: 23A55AT000024, 23A55AW000027, 23A55AY000034 Compliance Requirement: Reporting Repeat Finding: Yes (Prior Year Finding No. 2023-013) See Schedule of Findings and Questioned Costs for chart/table. Condition: For the second consecutive year, for Workforce Innovation and Opportunity Act (WIOA) Cluster programs, LWC did not have adequate internal controls in place to review and approve data submissions to the Federal Funding Accountability and Transparency Act (FFATA) Subaward Reporting System (FSRS) website required for federal subawards by FFATA. LWC had 15 subawards totaling $35.7 million executed in state fiscal year 2024. The data submissions for 11 of the 15 subawards occurred between one and two months after the due date specified by federal regulations. The 11 subawards submitted late each exceeded $30,000 and collectively totaled more than $25.2 million. In addition, LWC entered into the FSRS website an incorrect subaward amount for two subawards. The error resulted in an underreporting of the subawards totaling $79,207. Criteria: 2 CFR 200.303 requires non-federal entities receiving federal award to establish and maintain internal control designed to reasonably ensure compliance with federal statutes, regulations, and the terms and conditions of the federal award. 2 CFR 170, Appendix A(I)(a) requires the non-federal entity to report certain information about each obligating action that equals or exceeds $30,000 in federal funds for a subaward to a non-federal entity into the FSRS website no later than the end of the month following the month in which the obligation was made. The amount of the subaward is one of the key data elements identified by federal regulations for FFATA data submissions. Cause: LWC management represented that a staff member, other than the compiler of the data that was submitted, observed the data as it was being submitted to the FSRS website and reviewed and approved it as complete and accurate based on this observation. However, management was not able to provide evidence of the review and approval of the data submission. In addition, as noted above, the data submissions occurred after the due date specified in federal regulations and included erroneous amounts for two subawards. Effect: Failure to implement adequate internal controls over the data submissions to the FSRS website as required by the FFATA could result in required data submissions being incomplete, inaccurate, and/or untimely, as evidenced by the late and erroneous data submissions noted above, which resulted in noncompliance with federal regulations. Recommendation: LWC should strengthen controls, including maintaining evidence of reviews, to ensure compliance with federal regulations. Management’s Response and Corrective Action Plan: Management concurred with the finding and provided a corrective action plan (B-52).
2024-011 - Noncompliance and Inadequate Controls Related to Reporting Requirements for the Federal Funding Accountability and Transparency Act State Entity: Louisiana Workforce Commission (LWC) Award Year: 2024 Award Numbers: 23A55AT000024, 23A55AW000027, 23A55AY000034 Compliance Requirement: Reporting Repeat Finding: Yes (Prior Year Finding No. 2023-013) See Schedule of Findings and Questioned Costs for chart/table. Condition: For the second consecutive year, for Workforce Innovation and Opportunity Act (WIOA) Cluster programs, LWC did not have adequate internal controls in place to review and approve data submissions to the Federal Funding Accountability and Transparency Act (FFATA) Subaward Reporting System (FSRS) website required for federal subawards by FFATA. LWC had 15 subawards totaling $35.7 million executed in state fiscal year 2024. The data submissions for 11 of the 15 subawards occurred between one and two months after the due date specified by federal regulations. The 11 subawards submitted late each exceeded $30,000 and collectively totaled more than $25.2 million. In addition, LWC entered into the FSRS website an incorrect subaward amount for two subawards. The error resulted in an underreporting of the subawards totaling $79,207. Criteria: 2 CFR 200.303 requires non-federal entities receiving federal award to establish and maintain internal control designed to reasonably ensure compliance with federal statutes, regulations, and the terms and conditions of the federal award. 2 CFR 170, Appendix A(I)(a) requires the non-federal entity to report certain information about each obligating action that equals or exceeds $30,000 in federal funds for a subaward to a non-federal entity into the FSRS website no later than the end of the month following the month in which the obligation was made. The amount of the subaward is one of the key data elements identified by federal regulations for FFATA data submissions. Cause: LWC management represented that a staff member, other than the compiler of the data that was submitted, observed the data as it was being submitted to the FSRS website and reviewed and approved it as complete and accurate based on this observation. However, management was not able to provide evidence of the review and approval of the data submission. In addition, as noted above, the data submissions occurred after the due date specified in federal regulations and included erroneous amounts for two subawards. Effect: Failure to implement adequate internal controls over the data submissions to the FSRS website as required by the FFATA could result in required data submissions being incomplete, inaccurate, and/or untimely, as evidenced by the late and erroneous data submissions noted above, which resulted in noncompliance with federal regulations. Recommendation: LWC should strengthen controls, including maintaining evidence of reviews, to ensure compliance with federal regulations. Management’s Response and Corrective Action Plan: Management concurred with the finding and provided a corrective action plan (B-52).
2024-005 - Noncompliance with and Weakness in Controls over Federal Research and Development Expenses State Entity: Louisiana State University Health Sciences Center - Shreveport (LSUHSC-S) Award Years: Various Award Numbers: Various Compliance Requirements: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Cash Management Pass-Through Entities: Various Repeat Finding: Yes (Prior Year Finding No. 2023-006) See Schedule of Findings and Questioned Costs for chart/table. Condition: For the sixth consecutive year, LSUHSC-S did not ensure internal controls over documentation of personnel services were operating effectively, and did not ensure compliance with federal guidance regarding cost transfers applicable to the Research and Development (R&D) Cluster. In a non-statistical random sample of 27 out of 2,933 payroll adjusting entries affecting R&D, we noted the following exceptions for 15 adjusting entries, some of which had multiple exceptions: • Seven (26%) adjustments did not have adequate documentation to fully explain how the error occurred and/or the transfer was not accomplished within 90 days of when the error was discovered. • For five (19%) adjustments, LSUHSC-S did not provide sufficient information to determine if the cost transfers were completed timely. • For three (11%) adjustments, LSUHSC-S did not provide sufficient information to verify the new charge was certified by a responsible organizational official. • For three (11%) adjustments, LSUHSC-S did not provide sufficient documentation to determine whether adjustments were allowable per the award, which resulted in questioned costs totaling $2,686. • For twelve (44%) adjustments, LSUHSC-S did not provide sufficient documentation to evidence that expenses were incurred prior to reimbursement and that funds were returned to the federal agency for expenses that were removed from the federal award. We also performed an analysis of interim payroll adjusting journal entries to record cost transfers to and/or from R&D awards. We noted that 465 (20%) out of 2,309 adjusting journal entries were made more than 90 days after the end of the biannual period from the original transactions. The adjustments were made 103 to 430 days after the end of the biannual period. In addition, in a non-statistical random sample of 53 out of 11,272 expense transactions charged to R&D during the fiscal year ending June 30, 2024, we noted the following exceptions for 10 transactions, some of which had multiple exceptions: • Six (11%) time and effort certifications for salary and related benefit expenses tested were completed 92 to 248 days after the end of the biannual period, or LSUHSC-S did not provide sufficient documentation to determine that the certifications were completed timely. • For one (2%) transaction, LSUHSC-S did not provide documentation approving the employee’s salary on the applicable award. • For four (8%) transactions, LSUHSC-S did not provide documentation that indicated expenses were reconciled and approved prior to submitting reimbursement requests. Additionally, for three of these transactions, LSUHSC-S did not provide sufficient support to determine if the expenses were incurred prior to the reimbursement request or if LSUHSC-S minimized the time that elapsed between the transfer of funds from the federal government and LSUHSC-S’s disbursement for federal program purposes Finally, it was noted during our procedures related to requisition transactions that LSUHSC-S lacked proper segregation of duties in the online requisition process. We noted in an analysis of all requisition transactions that are subject to online approvals (14,941 transactions totaling $25,349,749) that 4,916 transactions totaling $7,222,206 (28%) did not have adequate segregation of duties. Of these, 306 transactions totaling $338,679 related to the R&D Cluster. Criteria: 2 CFR 200.430(i)(1)(i) requires that charges to federal awards for salaries and wages must be supported by a system of internal control which provides reasonable assurance the charges are accurate, allowable, and properly allocated. Per 2 CFR 200.430(i)(1)(viii), budget estimates alone do not qualify as support for charges to federal awards, but may be used for interim accounting purposes, provided that the system for establishing the estimates produces reasonable approximations of the activity performed, significant changes in work activity are identified and entered into the records in a timely manner, and the non-federal entity’s system of internal controls includes processes to review after-the-fact interim charges and make necessary adjustments. Per LSUHSC-S’s Time and Effort Certification Policy and Procedures, LSUHSC-S utilizes time and effort certifications to support salary charges to sponsored projects as an after-the-fact certification of effort of all individuals when all or a portion of their salaries are charged to a sponsored project. Based on LSUHSC-S’s policy, time and effort certifications should be completed within approximately 90 days of the end of the biannual period. Management interprets the end of the period to be when the time and effort reports are sent to the departments once the last month of the biannual period is closed in the accounting system. If there is a substantial (five percent or more) difference between the salary charges and the effort actually expended by the individual on projects during the biannual reporting period, a payroll reallocation must be created within 30 days. Per 2 CFR 200.303, the 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 Organizations of the Treadway Commission. Per the Standards for Internal Control in the Federal Government, examples of common categories of control activities include accurate and timely recording of transactions. In addition, the National Institutes of Health (NIH) is the grantor for the majority of the LSUHSC-S’s R&D grant awards. Per the NIH Grants Policy Statement §7.5, cost transfers that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. An explanation merely stating that the transfer was made “to correct error" or "to transfer to correct project" is not sufficient. Transfers of costs from one project to another or from one competitive segment to the next solely to cover cost overruns are not allowable. Cause: LSUHSC-S faculty are not completing time and effort certifications timely, which contributes to untimely adjustments for compensation. In addition, LSUHSC-S did not provide sufficient supporting documentation for the auditor to test federal regulations related to cash management for all sample items selected due to an insufficient method for sorting and storing the documentation related to each federal award. Finally, the lack of segregation of duties was caused by LSUHSC-S granting certain employees’ access that allowed for self-approvals. Effect: Untimely certifications and the untimely discovery and correction of errors increases the risk of inaccurate reporting and may result in an inability to complete approved projects within the approved budget and/or period of performance. As a result, LSUHSC-S may have to utilize university funds to complete approved projects. In addition, inadequate controls and noncompliance with federal awards increases the likelihood of disallowed costs, which LSUHSC-S may have to repay to the federal grantor. Recommendation: Management should ensure they have adequate controls over time and effort certifications, purchases, and reimbursement requests. In addition, management should ensure adequate segregation of duties covering approvals of all transaction types. Management’s Response and Corrective Action Plan: Management concurred with the finding and outlined a plan of corrective action (B-47).
2024-032 - Inadequate Controls over and Noncompliance with Federal Financial Reporting State Entity: Louisiana Department of Health - Office of Public Health (OPH) Award Year: 2024 Award Number: NU90TP922016 Compliance Requirement: Reporting Repeat Finding: No See Schedule of Findings and Questioned Costs for chart/table. Condition: The Louisiana Department of Health - Office of Public Health (OPH) did not have adequate controls in place to ensure that federal financial reports were accurate, current, and complete prior to being submitted to the federal agency for the Public Health Emergency Preparedness federal program for the June 30, 2024 reporting period. OPH's annual report for the reporting period June 30, 2024 improperly included expenditures totaling $146,598 from the period July 2024 through September 2024. Criteria: 2 CFR 200.302(b)(2) states accurate, current, and complete disclosure of the financial results of each federal award or program in accordance with the reporting requirements set forth in 2 CFR 200.328 and 200.329 is required. In addition, the U.S. Centers for Disease Control and Prevention guidance indicates that the report must include only those funds authorized and expended during the timeframe of the report. 2 CFR 200.303(a) requires that non-federal entities receiving federal awards establish and maintain effective internal control designed to reasonably ensure compliance with federal statutes, regulations, and the terms and conditions of the federal awards. Cause: OPH did not have adequate controls in place to ensure the federal financial report only included expenditures for the period being reported prior to submission to the federal agency. Effect: Failure to establish adequate controls over financial reporting could result in inaccurate information being reported to the federal agency. Recommendation: OPH should design and implement controls to ensure all information contained in the financial reports submitted to federal agencies is accurate, current, and complete for the reporting period covered under the report. Management’s Response and Corrective Action Plan: Management did not concur with the finding stating that the amount in question is immaterial and does not misstate the federal financial report. To address the control weakness, management provided a corrective action plan (B-36).
2024-003 - Control Weakness and Noncompliance Related to Cost Allocation Process State Entity: Department of Children and Family Services (DCFS) Award Years: 2018, 2023, 2024 Award Numbers: 1804LACEST, 2301LASOSR, 2401LACSES, 2401LAFOST, 2401LASOSR, 2401LATANF, SNAP - Letter of Credit Compliance Requirement: Allowable Costs/Cost Principles Repeat Finding: Yes (Prior Year Finding No. 2023-003) See Schedule of Findings and Questioned Costs for chart/table. Condition: The Department of Children and Family Services (DCFS) did not have adequate controls in place to ensure the correct allocation of expenditures in accordance with the Cost Allocation Plan, which assigns costs to federal programs. In a non-statistical sample of 60 cost allocation forms out of a population of 921 forms, three (5%) forms used percentages from a prior month and amounts were applied to the incorrect cost allocation grant, which resulted in the incorrect allocation of costs to various cost pools affecting multiple federal programs. These errors resulted in overbilling Temporary Assistance for Needy Families program by $1,907, Child Support Services (CSS) program by $1,161, State Administrative Matching Grants for the Supplemental Nutrition Assistance Program (SNAP) by $389, Foster Care Title IV-E program by $1,216, and Social Services Block Grant program by $12. The amounts overbilled represent questioned costs. In addition, the CSS and SNAP programs were underbilled by $621 and $4,684, respectively. Criteria: 2 CFR 200.303(a) requires that non-federal entities receiving federal awards establish and maintain effective internal control designed to reasonably ensure compliance with federal statutes, regulations, and the terms and conditions of the federal awards. Per 2 CFR 200.400(d), the accounting practices of the non-federal entity must be consistent with cost principles and support the accumulation of costs as required and must provide for adequate documentation to support costs charged to the federal award. Cause: These errors occurred because there was not an effective review process in place to identify amounts being charged incorrectly through the cost allocation process. Effect: Failure to adequately review cost allocation supporting documentation increases the risk that unallowable costs could be charged to federal programs. This is the second consecutive year we have reported to DCFS management exceptions with internal controls related to the cost allocation process. Recommendation: Management should strengthen internal controls over the cost allocation review process. Management’s Response and Corrective Action Plan: Management concurred with the finding and provided a corrective action plan (B-2).
2024-003 - Control Weakness and Noncompliance Related to Cost Allocation Process State Entity: Department of Children and Family Services (DCFS) Award Years: 2018, 2023, 2024 Award Numbers: 1804LACEST, 2301LASOSR, 2401LACSES, 2401LAFOST, 2401LASOSR, 2401LATANF, SNAP - Letter of Credit Compliance Requirement: Allowable Costs/Cost Principles Repeat Finding: Yes (Prior Year Finding No. 2023-003) See Schedule of Findings and Questioned Costs for chart/table. Condition: The Department of Children and Family Services (DCFS) did not have adequate controls in place to ensure the correct allocation of expenditures in accordance with the Cost Allocation Plan, which assigns costs to federal programs. In a non-statistical sample of 60 cost allocation forms out of a population of 921 forms, three (5%) forms used percentages from a prior month and amounts were applied to the incorrect cost allocation grant, which resulted in the incorrect allocation of costs to various cost pools affecting multiple federal programs. These errors resulted in overbilling Temporary Assistance for Needy Families program by $1,907, Child Support Services (CSS) program by $1,161, State Administrative Matching Grants for the Supplemental Nutrition Assistance Program (SNAP) by $389, Foster Care Title IV-E program by $1,216, and Social Services Block Grant program by $12. The amounts overbilled represent questioned costs. In addition, the CSS and SNAP programs were underbilled by $621 and $4,684, respectively. Criteria: 2 CFR 200.303(a) requires that non-federal entities receiving federal awards establish and maintain effective internal control designed to reasonably ensure compliance with federal statutes, regulations, and the terms and conditions of the federal awards. Per 2 CFR 200.400(d), the accounting practices of the non-federal entity must be consistent with cost principles and support the accumulation of costs as required and must provide for adequate documentation to support costs charged to the federal award. Cause: These errors occurred because there was not an effective review process in place to identify amounts being charged incorrectly through the cost allocation process. Effect: Failure to adequately review cost allocation supporting documentation increases the risk that unallowable costs could be charged to federal programs. This is the second consecutive year we have reported to DCFS management exceptions with internal controls related to the cost allocation process. Recommendation: Management should strengthen internal controls over the cost allocation review process. Management’s Response and Corrective Action Plan: Management concurred with the finding and provided a corrective action plan (B-2).
2024-003 - Control Weakness and Noncompliance Related to Cost Allocation Process State Entity: Department of Children and Family Services (DCFS) Award Years: 2018, 2023, 2024 Award Numbers: 1804LACEST, 2301LASOSR, 2401LACSES, 2401LAFOST, 2401LASOSR, 2401LATANF, SNAP - Letter of Credit Compliance Requirement: Allowable Costs/Cost Principles Repeat Finding: Yes (Prior Year Finding No. 2023-003) See Schedule of Findings and Questioned Costs for chart/table. Condition: The Department of Children and Family Services (DCFS) did not have adequate controls in place to ensure the correct allocation of expenditures in accordance with the Cost Allocation Plan, which assigns costs to federal programs. In a non-statistical sample of 60 cost allocation forms out of a population of 921 forms, three (5%) forms used percentages from a prior month and amounts were applied to the incorrect cost allocation grant, which resulted in the incorrect allocation of costs to various cost pools affecting multiple federal programs. These errors resulted in overbilling Temporary Assistance for Needy Families program by $1,907, Child Support Services (CSS) program by $1,161, State Administrative Matching Grants for the Supplemental Nutrition Assistance Program (SNAP) by $389, Foster Care Title IV-E program by $1,216, and Social Services Block Grant program by $12. The amounts overbilled represent questioned costs. In addition, the CSS and SNAP programs were underbilled by $621 and $4,684, respectively. Criteria: 2 CFR 200.303(a) requires that non-federal entities receiving federal awards establish and maintain effective internal control designed to reasonably ensure compliance with federal statutes, regulations, and the terms and conditions of the federal awards. Per 2 CFR 200.400(d), the accounting practices of the non-federal entity must be consistent with cost principles and support the accumulation of costs as required and must provide for adequate documentation to support costs charged to the federal award. Cause: These errors occurred because there was not an effective review process in place to identify amounts being charged incorrectly through the cost allocation process. Effect: Failure to adequately review cost allocation supporting documentation increases the risk that unallowable costs could be charged to federal programs. This is the second consecutive year we have reported to DCFS management exceptions with internal controls related to the cost allocation process. Recommendation: Management should strengthen internal controls over the cost allocation review process. Management’s Response and Corrective Action Plan: Management concurred with the finding and provided a corrective action plan (B-2).
2024-021 – Unauthorized Employee Fuel Transactions State Entity: Department of Children and Family Services (DCFS) Award Years: 2023, 2024 Award Numbers: 2301LAFOST, 2301LASOSR, 2401LAFOST Compliance Requirement: Allowable Costs/Cost Principles Repeat Finding: No See Schedule of Findings and Questioned Costs for chart/table. Condition: The DCFS Bureau of Audit and Compliance Services investigated and identified multiple instances of unauthorized fuel transactions made by a former DCFS employee of approximately $97,500 in fiscal year 2024. Of that total, $5,191 was charged to the Social Services Block Grant federal program and $32,555 was charged to the Foster Care federal program through the cost allocation process. Criteria: DCFS policy and procedures require each DCFS office to have a Fleet or Safety Coordinator responsible for overseeing the FuelTrac account. DCFS Policy 1-15 also requires each office to establish internal management procedures and guidelines for handling state vehicles. 2 CFR 200.303(a) requires that non-federal entities receiving federal awards establish and maintain effective internal control designed to reasonably ensure compliance with federal statutes, regulations, and the terms and conditions of the federal awards. Cause: The misappropriation occurred because DCFS did not have adequate controls in place to timely detect or prevent the employee from making and concealing unauthorized fuel transactions. Effect: As of March 31, 2024, the employee being investigated resigned. Inadequate controls over FuelTrac increases the risk that inappropriate transactions could occur and unallowable costs could be charged to federal programs. The total identified federal questioned cost in fiscal year 2024 due to this misappropriation is $37,746. Recommendation: DCFS should establish policies and procedures at an appropriate level to ensure fuel transactions are properly monitored and that duties are properly segregated. Management’s Response and Corrective Action Plan: Management concurred with the finding and provided a corrective action plan (B-4).
2024-003 - Control Weakness and Noncompliance Related to Cost Allocation Process State Entity: Department of Children and Family Services (DCFS) Award Years: 2018, 2023, 2024 Award Numbers: 1804LACEST, 2301LASOSR, 2401LACSES, 2401LAFOST, 2401LASOSR, 2401LATANF, SNAP - Letter of Credit Compliance Requirement: Allowable Costs/Cost Principles Repeat Finding: Yes (Prior Year Finding No. 2023-003) See Schedule of Findings and Questioned Costs for chart/table. Condition: The Department of Children and Family Services (DCFS) did not have adequate controls in place to ensure the correct allocation of expenditures in accordance with the Cost Allocation Plan, which assigns costs to federal programs. In a non-statistical sample of 60 cost allocation forms out of a population of 921 forms, three (5%) forms used percentages from a prior month and amounts were applied to the incorrect cost allocation grant, which resulted in the incorrect allocation of costs to various cost pools affecting multiple federal programs. These errors resulted in overbilling Temporary Assistance for Needy Families program by $1,907, Child Support Services (CSS) program by $1,161, State Administrative Matching Grants for the Supplemental Nutrition Assistance Program (SNAP) by $389, Foster Care Title IV-E program by $1,216, and Social Services Block Grant program by $12. The amounts overbilled represent questioned costs. In addition, the CSS and SNAP programs were underbilled by $621 and $4,684, respectively. Criteria: 2 CFR 200.303(a) requires that non-federal entities receiving federal awards establish and maintain effective internal control designed to reasonably ensure compliance with federal statutes, regulations, and the terms and conditions of the federal awards. Per 2 CFR 200.400(d), the accounting practices of the non-federal entity must be consistent with cost principles and support the accumulation of costs as required and must provide for adequate documentation to support costs charged to the federal award. Cause: These errors occurred because there was not an effective review process in place to identify amounts being charged incorrectly through the cost allocation process. Effect: Failure to adequately review cost allocation supporting documentation increases the risk that unallowable costs could be charged to federal programs. This is the second consecutive year we have reported to DCFS management exceptions with internal controls related to the cost allocation process. Recommendation: Management should strengthen internal controls over the cost allocation review process. Management’s Response and Corrective Action Plan: Management concurred with the finding and provided a corrective action plan (B-2).
2024-020 – Control Weakness over Social Services Block Grant Expenditures State Entity: Department of Children and Family Services (DCFS) Award Year: 2024 Award Number: 2401LASOSR Compliance Requirements: Activities Allowed or Unallowed; Allowable Costs/Cost Principles Repeat Finding: No See Schedule of Findings and Questioned Costs for chart/table. Condition: The Department of Children and Family Services (DCFS) did not have adequate controls in place to ensure that expenditures charged to the Social Services Block Grant (SSBG) federal program through their Tracking Information Payment System (TIPS) were supported and approved. In a statistical sample of 40 expenditures out of a population of 64,711 expenditure transactions totaling $17,347,798, we noted the following deviations: • For one (3%) transaction, DCFS was unable to provide the TIPS payment form, which shows evidence of review and approval for the payment detail. However, DCFS did provide the invoice, which included payment detail information to support allowability of the expenditure. • For one (3%) transaction, the TIPS payment form lacked evidence of review and approval as it was not signed by a supervisor. Criteria: 2 CFR 200.303 requires non-federal entities to 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. Cause: Management represented that the cause for these deviations is due to a shortage of staffing in positions that prepare and process these TIPS forms. Effect: Failure to maintain adequate controls increases the risk that errors and omissions may occur and remain undetected. Recommendation: Management should strengthen internal controls to ensure that SSBG expenditures maintained in TIPS are supported and approved. Management’s Response and Corrective Action Plan: Management concurred with the finding and provided a corrective action plan (B-3).
2024-021 – Unauthorized Employee Fuel Transactions State Entity: Department of Children and Family Services (DCFS) Award Years: 2023, 2024 Award Numbers: 2301LAFOST, 2301LASOSR, 2401LAFOST Compliance Requirement: Allowable Costs/Cost Principles Repeat Finding: No See Schedule of Findings and Questioned Costs for chart/table. Condition: The DCFS Bureau of Audit and Compliance Services investigated and identified multiple instances of unauthorized fuel transactions made by a former DCFS employee of approximately $97,500 in fiscal year 2024. Of that total, $5,191 was charged to the Social Services Block Grant federal program and $32,555 was charged to the Foster Care federal program through the cost allocation process. Criteria: DCFS policy and procedures require each DCFS office to have a Fleet or Safety Coordinator responsible for overseeing the FuelTrac account. DCFS Policy 1-15 also requires each office to establish internal management procedures and guidelines for handling state vehicles. 2 CFR 200.303(a) requires that non-federal entities receiving federal awards establish and maintain effective internal control designed to reasonably ensure compliance with federal statutes, regulations, and the terms and conditions of the federal awards. Cause: The misappropriation occurred because DCFS did not have adequate controls in place to timely detect or prevent the employee from making and concealing unauthorized fuel transactions. Effect: As of March 31, 2024, the employee being investigated resigned. Inadequate controls over FuelTrac increases the risk that inappropriate transactions could occur and unallowable costs could be charged to federal programs. The total identified federal questioned cost in fiscal year 2024 due to this misappropriation is $37,746. Recommendation: DCFS should establish policies and procedures at an appropriate level to ensure fuel transactions are properly monitored and that duties are properly segregated. Management’s Response and Corrective Action Plan: Management concurred with the finding and provided a corrective action plan (B-4).
2024-005 - Noncompliance with and Weakness in Controls over Federal Research and Development Expenses State Entity: Louisiana State University Health Sciences Center - Shreveport (LSUHSC-S) Award Years: Various Award Numbers: Various Compliance Requirements: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Cash Management Pass-Through Entities: Various Repeat Finding: Yes (Prior Year Finding No. 2023-006) See Schedule of Findings and Questioned Costs for chart/table. Condition: For the sixth consecutive year, LSUHSC-S did not ensure internal controls over documentation of personnel services were operating effectively, and did not ensure compliance with federal guidance regarding cost transfers applicable to the Research and Development (R&D) Cluster. In a non-statistical random sample of 27 out of 2,933 payroll adjusting entries affecting R&D, we noted the following exceptions for 15 adjusting entries, some of which had multiple exceptions: • Seven (26%) adjustments did not have adequate documentation to fully explain how the error occurred and/or the transfer was not accomplished within 90 days of when the error was discovered. • For five (19%) adjustments, LSUHSC-S did not provide sufficient information to determine if the cost transfers were completed timely. • For three (11%) adjustments, LSUHSC-S did not provide sufficient information to verify the new charge was certified by a responsible organizational official. • For three (11%) adjustments, LSUHSC-S did not provide sufficient documentation to determine whether adjustments were allowable per the award, which resulted in questioned costs totaling $2,686. • For twelve (44%) adjustments, LSUHSC-S did not provide sufficient documentation to evidence that expenses were incurred prior to reimbursement and that funds were returned to the federal agency for expenses that were removed from the federal award. We also performed an analysis of interim payroll adjusting journal entries to record cost transfers to and/or from R&D awards. We noted that 465 (20%) out of 2,309 adjusting journal entries were made more than 90 days after the end of the biannual period from the original transactions. The adjustments were made 103 to 430 days after the end of the biannual period. In addition, in a non-statistical random sample of 53 out of 11,272 expense transactions charged to R&D during the fiscal year ending June 30, 2024, we noted the following exceptions for 10 transactions, some of which had multiple exceptions: • Six (11%) time and effort certifications for salary and related benefit expenses tested were completed 92 to 248 days after the end of the biannual period, or LSUHSC-S did not provide sufficient documentation to determine that the certifications were completed timely. • For one (2%) transaction, LSUHSC-S did not provide documentation approving the employee’s salary on the applicable award. • For four (8%) transactions, LSUHSC-S did not provide documentation that indicated expenses were reconciled and approved prior to submitting reimbursement requests. Additionally, for three of these transactions, LSUHSC-S did not provide sufficient support to determine if the expenses were incurred prior to the reimbursement request or if LSUHSC-S minimized the time that elapsed between the transfer of funds from the federal government and LSUHSC-S’s disbursement for federal program purposes Finally, it was noted during our procedures related to requisition transactions that LSUHSC-S lacked proper segregation of duties in the online requisition process. We noted in an analysis of all requisition transactions that are subject to online approvals (14,941 transactions totaling $25,349,749) that 4,916 transactions totaling $7,222,206 (28%) did not have adequate segregation of duties. Of these, 306 transactions totaling $338,679 related to the R&D Cluster. Criteria: 2 CFR 200.430(i)(1)(i) requires that charges to federal awards for salaries and wages must be supported by a system of internal control which provides reasonable assurance the charges are accurate, allowable, and properly allocated. Per 2 CFR 200.430(i)(1)(viii), budget estimates alone do not qualify as support for charges to federal awards, but may be used for interim accounting purposes, provided that the system for establishing the estimates produces reasonable approximations of the activity performed, significant changes in work activity are identified and entered into the records in a timely manner, and the non-federal entity’s system of internal controls includes processes to review after-the-fact interim charges and make necessary adjustments. Per LSUHSC-S’s Time and Effort Certification Policy and Procedures, LSUHSC-S utilizes time and effort certifications to support salary charges to sponsored projects as an after-the-fact certification of effort of all individuals when all or a portion of their salaries are charged to a sponsored project. Based on LSUHSC-S’s policy, time and effort certifications should be completed within approximately 90 days of the end of the biannual period. Management interprets the end of the period to be when the time and effort reports are sent to the departments once the last month of the biannual period is closed in the accounting system. If there is a substantial (five percent or more) difference between the salary charges and the effort actually expended by the individual on projects during the biannual reporting period, a payroll reallocation must be created within 30 days. Per 2 CFR 200.303, the 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 Organizations of the Treadway Commission. Per the Standards for Internal Control in the Federal Government, examples of common categories of control activities include accurate and timely recording of transactions. In addition, the National Institutes of Health (NIH) is the grantor for the majority of the LSUHSC-S’s R&D grant awards. Per the NIH Grants Policy Statement §7.5, cost transfers that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. An explanation merely stating that the transfer was made “to correct error" or "to transfer to correct project" is not sufficient. Transfers of costs from one project to another or from one competitive segment to the next solely to cover cost overruns are not allowable. Cause: LSUHSC-S faculty are not completing time and effort certifications timely, which contributes to untimely adjustments for compensation. In addition, LSUHSC-S did not provide sufficient supporting documentation for the auditor to test federal regulations related to cash management for all sample items selected due to an insufficient method for sorting and storing the documentation related to each federal award. Finally, the lack of segregation of duties was caused by LSUHSC-S granting certain employees’ access that allowed for self-approvals. Effect: Untimely certifications and the untimely discovery and correction of errors increases the risk of inaccurate reporting and may result in an inability to complete approved projects within the approved budget and/or period of performance. As a result, LSUHSC-S may have to utilize university funds to complete approved projects. In addition, inadequate controls and noncompliance with federal awards increases the likelihood of disallowed costs, which LSUHSC-S may have to repay to the federal grantor. Recommendation: Management should ensure they have adequate controls over time and effort certifications, purchases, and reimbursement requests. In addition, management should ensure adequate segregation of duties covering approvals of all transaction types. Management’s Response and Corrective Action Plan: Management concurred with the finding and outlined a plan of corrective action (B-47).
2024-005 - Noncompliance with and Weakness in Controls over Federal Research and Development Expenses State Entity: Louisiana State University Health Sciences Center - Shreveport (LSUHSC-S) Award Years: Various Award Numbers: Various Compliance Requirements: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Cash Management Pass-Through Entities: Various Repeat Finding: Yes (Prior Year Finding No. 2023-006) See Schedule of Findings and Questioned Costs for chart/table. Condition: For the sixth consecutive year, LSUHSC-S did not ensure internal controls over documentation of personnel services were operating effectively, and did not ensure compliance with federal guidance regarding cost transfers applicable to the Research and Development (R&D) Cluster. In a non-statistical random sample of 27 out of 2,933 payroll adjusting entries affecting R&D, we noted the following exceptions for 15 adjusting entries, some of which had multiple exceptions: • Seven (26%) adjustments did not have adequate documentation to fully explain how the error occurred and/or the transfer was not accomplished within 90 days of when the error was discovered. • For five (19%) adjustments, LSUHSC-S did not provide sufficient information to determine if the cost transfers were completed timely. • For three (11%) adjustments, LSUHSC-S did not provide sufficient information to verify the new charge was certified by a responsible organizational official. • For three (11%) adjustments, LSUHSC-S did not provide sufficient documentation to determine whether adjustments were allowable per the award, which resulted in questioned costs totaling $2,686. • For twelve (44%) adjustments, LSUHSC-S did not provide sufficient documentation to evidence that expenses were incurred prior to reimbursement and that funds were returned to the federal agency for expenses that were removed from the federal award. We also performed an analysis of interim payroll adjusting journal entries to record cost transfers to and/or from R&D awards. We noted that 465 (20%) out of 2,309 adjusting journal entries were made more than 90 days after the end of the biannual period from the original transactions. The adjustments were made 103 to 430 days after the end of the biannual period. In addition, in a non-statistical random sample of 53 out of 11,272 expense transactions charged to R&D during the fiscal year ending June 30, 2024, we noted the following exceptions for 10 transactions, some of which had multiple exceptions: • Six (11%) time and effort certifications for salary and related benefit expenses tested were completed 92 to 248 days after the end of the biannual period, or LSUHSC-S did not provide sufficient documentation to determine that the certifications were completed timely. • For one (2%) transaction, LSUHSC-S did not provide documentation approving the employee’s salary on the applicable award. • For four (8%) transactions, LSUHSC-S did not provide documentation that indicated expenses were reconciled and approved prior to submitting reimbursement requests. Additionally, for three of these transactions, LSUHSC-S did not provide sufficient support to determine if the expenses were incurred prior to the reimbursement request or if LSUHSC-S minimized the time that elapsed between the transfer of funds from the federal government and LSUHSC-S’s disbursement for federal program purposes Finally, it was noted during our procedures related to requisition transactions that LSUHSC-S lacked proper segregation of duties in the online requisition process. We noted in an analysis of all requisition transactions that are subject to online approvals (14,941 transactions totaling $25,349,749) that 4,916 transactions totaling $7,222,206 (28%) did not have adequate segregation of duties. Of these, 306 transactions totaling $338,679 related to the R&D Cluster. Criteria: 2 CFR 200.430(i)(1)(i) requires that charges to federal awards for salaries and wages must be supported by a system of internal control which provides reasonable assurance the charges are accurate, allowable, and properly allocated. Per 2 CFR 200.430(i)(1)(viii), budget estimates alone do not qualify as support for charges to federal awards, but may be used for interim accounting purposes, provided that the system for establishing the estimates produces reasonable approximations of the activity performed, significant changes in work activity are identified and entered into the records in a timely manner, and the non-federal entity’s system of internal controls includes processes to review after-the-fact interim charges and make necessary adjustments. Per LSUHSC-S’s Time and Effort Certification Policy and Procedures, LSUHSC-S utilizes time and effort certifications to support salary charges to sponsored projects as an after-the-fact certification of effort of all individuals when all or a portion of their salaries are charged to a sponsored project. Based on LSUHSC-S’s policy, time and effort certifications should be completed within approximately 90 days of the end of the biannual period. Management interprets the end of the period to be when the time and effort reports are sent to the departments once the last month of the biannual period is closed in the accounting system. If there is a substantial (five percent or more) difference between the salary charges and the effort actually expended by the individual on projects during the biannual reporting period, a payroll reallocation must be created within 30 days. Per 2 CFR 200.303, the 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 Organizations of the Treadway Commission. Per the Standards for Internal Control in the Federal Government, examples of common categories of control activities include accurate and timely recording of transactions. In addition, the National Institutes of Health (NIH) is the grantor for the majority of the LSUHSC-S’s R&D grant awards. Per the NIH Grants Policy Statement §7.5, cost transfers that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. An explanation merely stating that the transfer was made “to correct error" or "to transfer to correct project" is not sufficient. Transfers of costs from one project to another or from one competitive segment to the next solely to cover cost overruns are not allowable. Cause: LSUHSC-S faculty are not completing time and effort certifications timely, which contributes to untimely adjustments for compensation. In addition, LSUHSC-S did not provide sufficient supporting documentation for the auditor to test federal regulations related to cash management for all sample items selected due to an insufficient method for sorting and storing the documentation related to each federal award. Finally, the lack of segregation of duties was caused by LSUHSC-S granting certain employees’ access that allowed for self-approvals. Effect: Untimely certifications and the untimely discovery and correction of errors increases the risk of inaccurate reporting and may result in an inability to complete approved projects within the approved budget and/or period of performance. As a result, LSUHSC-S may have to utilize university funds to complete approved projects. In addition, inadequate controls and noncompliance with federal awards increases the likelihood of disallowed costs, which LSUHSC-S may have to repay to the federal grantor. Recommendation: Management should ensure they have adequate controls over time and effort certifications, purchases, and reimbursement requests. In addition, management should ensure adequate segregation of duties covering approvals of all transaction types. Management’s Response and Corrective Action Plan: Management concurred with the finding and outlined a plan of corrective action (B-47).
2024-034 - Misappropriation of Research and Development Cluster Funds State Entity: Louisiana Tech University (La Tech) Award Year: 2024 Award Numbers: GR301449, GR301541 Compliance Requirement: Allowable Costs/Cost Principles Repeat Finding: No See Schedule of Findings and Questioned Costs for chart/table. Condition: In December 2024, Louisiana Tech University (La Tech) discovered that during the period from February 2024 through November 2024, nine electronic fund transfer (EFT) payments to an out-of-state university totaling $206,451 had been fraudulently diverted to unknown person(s). La Tech reported the fraud to appropriate law enforcement and to the federal grantor. Criteria: 2 CFR 200.303(a) requires non-federal entities to establish and maintain internal control over the federal award that provides reasonable compliance with federal statutes, regulations, and the terms and conditions of the federal award. 2 CFR 200.403(a) indicates costs must be necessary and reasonable for the performance of the federal award. Cause: The misappropriation of funds occurred after an unknown individual(s) submitted fraudulent emails impersonating La Tech’s point of contact with the out-of-state university, requesting a change in payment method from physical check to EFT. La Tech processed the request under the incorrect assumption that it was legitimate. The stolen funds originated as grant funding (Research and Development Cluster) from the National Institutes of Health (NIH). La Tech became the direct recipient of the NIH grant funding when La Tech hired a faculty member that had been awarded the NIH grants while employed at the out-of-state university. Research related to the grant funding continued at the out-of-state university and La Tech, as the prime recipient, provided reimbursement. Effect: As a result of investigation, La Tech identified $206,451 in payments that were fraudulently diverted to unknown person(s). In response to this cyber fraud, La Tech management has represented that they are evaluating opportunities to further enhance its internal controls and verification procedures to better safeguard against increasingly sophisticated cyber threats targeting payment remittance processes. Recommendation: La Tech should continuously evaluate its internal controls to guard against future fraud attempts. Management’s Response and Corrective Action Plan: Management concurred with the finding and provided a corrective action plan (B-49).
2024-005 - Noncompliance with and Weakness in Controls over Federal Research and Development Expenses State Entity: Louisiana State University Health Sciences Center - Shreveport (LSUHSC-S) Award Years: Various Award Numbers: Various Compliance Requirements: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Cash Management Pass-Through Entities: Various Repeat Finding: Yes (Prior Year Finding No. 2023-006) See Schedule of Findings and Questioned Costs for chart/table. Condition: For the sixth consecutive year, LSUHSC-S did not ensure internal controls over documentation of personnel services were operating effectively, and did not ensure compliance with federal guidance regarding cost transfers applicable to the Research and Development (R&D) Cluster. In a non-statistical random sample of 27 out of 2,933 payroll adjusting entries affecting R&D, we noted the following exceptions for 15 adjusting entries, some of which had multiple exceptions: • Seven (26%) adjustments did not have adequate documentation to fully explain how the error occurred and/or the transfer was not accomplished within 90 days of when the error was discovered. • For five (19%) adjustments, LSUHSC-S did not provide sufficient information to determine if the cost transfers were completed timely. • For three (11%) adjustments, LSUHSC-S did not provide sufficient information to verify the new charge was certified by a responsible organizational official. • For three (11%) adjustments, LSUHSC-S did not provide sufficient documentation to determine whether adjustments were allowable per the award, which resulted in questioned costs totaling $2,686. • For twelve (44%) adjustments, LSUHSC-S did not provide sufficient documentation to evidence that expenses were incurred prior to reimbursement and that funds were returned to the federal agency for expenses that were removed from the federal award. We also performed an analysis of interim payroll adjusting journal entries to record cost transfers to and/or from R&D awards. We noted that 465 (20%) out of 2,309 adjusting journal entries were made more than 90 days after the end of the biannual period from the original transactions. The adjustments were made 103 to 430 days after the end of the biannual period. In addition, in a non-statistical random sample of 53 out of 11,272 expense transactions charged to R&D during the fiscal year ending June 30, 2024, we noted the following exceptions for 10 transactions, some of which had multiple exceptions: • Six (11%) time and effort certifications for salary and related benefit expenses tested were completed 92 to 248 days after the end of the biannual period, or LSUHSC-S did not provide sufficient documentation to determine that the certifications were completed timely. • For one (2%) transaction, LSUHSC-S did not provide documentation approving the employee’s salary on the applicable award. • For four (8%) transactions, LSUHSC-S did not provide documentation that indicated expenses were reconciled and approved prior to submitting reimbursement requests. Additionally, for three of these transactions, LSUHSC-S did not provide sufficient support to determine if the expenses were incurred prior to the reimbursement request or if LSUHSC-S minimized the time that elapsed between the transfer of funds from the federal government and LSUHSC-S’s disbursement for federal program purposes Finally, it was noted during our procedures related to requisition transactions that LSUHSC-S lacked proper segregation of duties in the online requisition process. We noted in an analysis of all requisition transactions that are subject to online approvals (14,941 transactions totaling $25,349,749) that 4,916 transactions totaling $7,222,206 (28%) did not have adequate segregation of duties. Of these, 306 transactions totaling $338,679 related to the R&D Cluster. Criteria: 2 CFR 200.430(i)(1)(i) requires that charges to federal awards for salaries and wages must be supported by a system of internal control which provides reasonable assurance the charges are accurate, allowable, and properly allocated. Per 2 CFR 200.430(i)(1)(viii), budget estimates alone do not qualify as support for charges to federal awards, but may be used for interim accounting purposes, provided that the system for establishing the estimates produces reasonable approximations of the activity performed, significant changes in work activity are identified and entered into the records in a timely manner, and the non-federal entity’s system of internal controls includes processes to review after-the-fact interim charges and make necessary adjustments. Per LSUHSC-S’s Time and Effort Certification Policy and Procedures, LSUHSC-S utilizes time and effort certifications to support salary charges to sponsored projects as an after-the-fact certification of effort of all individuals when all or a portion of their salaries are charged to a sponsored project. Based on LSUHSC-S’s policy, time and effort certifications should be completed within approximately 90 days of the end of the biannual period. Management interprets the end of the period to be when the time and effort reports are sent to the departments once the last month of the biannual period is closed in the accounting system. If there is a substantial (five percent or more) difference between the salary charges and the effort actually expended by the individual on projects during the biannual reporting period, a payroll reallocation must be created within 30 days. Per 2 CFR 200.303, the 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 Organizations of the Treadway Commission. Per the Standards for Internal Control in the Federal Government, examples of common categories of control activities include accurate and timely recording of transactions. In addition, the National Institutes of Health (NIH) is the grantor for the majority of the LSUHSC-S’s R&D grant awards. Per the NIH Grants Policy Statement §7.5, cost transfers that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. An explanation merely stating that the transfer was made “to correct error" or "to transfer to correct project" is not sufficient. Transfers of costs from one project to another or from one competitive segment to the next solely to cover cost overruns are not allowable. Cause: LSUHSC-S faculty are not completing time and effort certifications timely, which contributes to untimely adjustments for compensation. In addition, LSUHSC-S did not provide sufficient supporting documentation for the auditor to test federal regulations related to cash management for all sample items selected due to an insufficient method for sorting and storing the documentation related to each federal award. Finally, the lack of segregation of duties was caused by LSUHSC-S granting certain employees’ access that allowed for self-approvals. Effect: Untimely certifications and the untimely discovery and correction of errors increases the risk of inaccurate reporting and may result in an inability to complete approved projects within the approved budget and/or period of performance. As a result, LSUHSC-S may have to utilize university funds to complete approved projects. In addition, inadequate controls and noncompliance with federal awards increases the likelihood of disallowed costs, which LSUHSC-S may have to repay to the federal grantor. Recommendation: Management should ensure they have adequate controls over time and effort certifications, purchases, and reimbursement requests. In addition, management should ensure adequate segregation of duties covering approvals of all transaction types. Management’s Response and Corrective Action Plan: Management concurred with the finding and outlined a plan of corrective action (B-47).
2024-005 - Noncompliance with and Weakness in Controls over Federal Research and Development Expenses State Entity: Louisiana State University Health Sciences Center - Shreveport (LSUHSC-S) Award Years: Various Award Numbers: Various Compliance Requirements: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Cash Management Pass-Through Entities: Various Repeat Finding: Yes (Prior Year Finding No. 2023-006) See Schedule of Findings and Questioned Costs for chart/table. Condition: For the sixth consecutive year, LSUHSC-S did not ensure internal controls over documentation of personnel services were operating effectively, and did not ensure compliance with federal guidance regarding cost transfers applicable to the Research and Development (R&D) Cluster. In a non-statistical random sample of 27 out of 2,933 payroll adjusting entries affecting R&D, we noted the following exceptions for 15 adjusting entries, some of which had multiple exceptions: • Seven (26%) adjustments did not have adequate documentation to fully explain how the error occurred and/or the transfer was not accomplished within 90 days of when the error was discovered. • For five (19%) adjustments, LSUHSC-S did not provide sufficient information to determine if the cost transfers were completed timely. • For three (11%) adjustments, LSUHSC-S did not provide sufficient information to verify the new charge was certified by a responsible organizational official. • For three (11%) adjustments, LSUHSC-S did not provide sufficient documentation to determine whether adjustments were allowable per the award, which resulted in questioned costs totaling $2,686. • For twelve (44%) adjustments, LSUHSC-S did not provide sufficient documentation to evidence that expenses were incurred prior to reimbursement and that funds were returned to the federal agency for expenses that were removed from the federal award. We also performed an analysis of interim payroll adjusting journal entries to record cost transfers to and/or from R&D awards. We noted that 465 (20%) out of 2,309 adjusting journal entries were made more than 90 days after the end of the biannual period from the original transactions. The adjustments were made 103 to 430 days after the end of the biannual period. In addition, in a non-statistical random sample of 53 out of 11,272 expense transactions charged to R&D during the fiscal year ending June 30, 2024, we noted the following exceptions for 10 transactions, some of which had multiple exceptions: • Six (11%) time and effort certifications for salary and related benefit expenses tested were completed 92 to 248 days after the end of the biannual period, or LSUHSC-S did not provide sufficient documentation to determine that the certifications were completed timely. • For one (2%) transaction, LSUHSC-S did not provide documentation approving the employee’s salary on the applicable award. • For four (8%) transactions, LSUHSC-S did not provide documentation that indicated expenses were reconciled and approved prior to submitting reimbursement requests. Additionally, for three of these transactions, LSUHSC-S did not provide sufficient support to determine if the expenses were incurred prior to the reimbursement request or if LSUHSC-S minimized the time that elapsed between the transfer of funds from the federal government and LSUHSC-S’s disbursement for federal program purposes Finally, it was noted during our procedures related to requisition transactions that LSUHSC-S lacked proper segregation of duties in the online requisition process. We noted in an analysis of all requisition transactions that are subject to online approvals (14,941 transactions totaling $25,349,749) that 4,916 transactions totaling $7,222,206 (28%) did not have adequate segregation of duties. Of these, 306 transactions totaling $338,679 related to the R&D Cluster. Criteria: 2 CFR 200.430(i)(1)(i) requires that charges to federal awards for salaries and wages must be supported by a system of internal control which provides reasonable assurance the charges are accurate, allowable, and properly allocated. Per 2 CFR 200.430(i)(1)(viii), budget estimates alone do not qualify as support for charges to federal awards, but may be used for interim accounting purposes, provided that the system for establishing the estimates produces reasonable approximations of the activity performed, significant changes in work activity are identified and entered into the records in a timely manner, and the non-federal entity’s system of internal controls includes processes to review after-the-fact interim charges and make necessary adjustments. Per LSUHSC-S’s Time and Effort Certification Policy and Procedures, LSUHSC-S utilizes time and effort certifications to support salary charges to sponsored projects as an after-the-fact certification of effort of all individuals when all or a portion of their salaries are charged to a sponsored project. Based on LSUHSC-S’s policy, time and effort certifications should be completed within approximately 90 days of the end of the biannual period. Management interprets the end of the period to be when the time and effort reports are sent to the departments once the last month of the biannual period is closed in the accounting system. If there is a substantial (five percent or more) difference between the salary charges and the effort actually expended by the individual on projects during the biannual reporting period, a payroll reallocation must be created within 30 days. Per 2 CFR 200.303, the 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 Organizations of the Treadway Commission. Per the Standards for Internal Control in the Federal Government, examples of common categories of control activities include accurate and timely recording of transactions. In addition, the National Institutes of Health (NIH) is the grantor for the majority of the LSUHSC-S’s R&D grant awards. Per the NIH Grants Policy Statement §7.5, cost transfers that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. An explanation merely stating that the transfer was made “to correct error" or "to transfer to correct project" is not sufficient. Transfers of costs from one project to another or from one competitive segment to the next solely to cover cost overruns are not allowable. Cause: LSUHSC-S faculty are not completing time and effort certifications timely, which contributes to untimely adjustments for compensation. In addition, LSUHSC-S did not provide sufficient supporting documentation for the auditor to test federal regulations related to cash management for all sample items selected due to an insufficient method for sorting and storing the documentation related to each federal award. Finally, the lack of segregation of duties was caused by LSUHSC-S granting certain employees’ access that allowed for self-approvals. Effect: Untimely certifications and the untimely discovery and correction of errors increases the risk of inaccurate reporting and may result in an inability to complete approved projects within the approved budget and/or period of performance. As a result, LSUHSC-S may have to utilize university funds to complete approved projects. In addition, inadequate controls and noncompliance with federal awards increases the likelihood of disallowed costs, which LSUHSC-S may have to repay to the federal grantor. Recommendation: Management should ensure they have adequate controls over time and effort certifications, purchases, and reimbursement requests. In addition, management should ensure adequate segregation of duties covering approvals of all transaction types. Management’s Response and Corrective Action Plan: Management concurred with the finding and outlined a plan of corrective action (B-47).
2024-005 - Noncompliance with and Weakness in Controls over Federal Research and Development Expenses State Entity: Louisiana State University Health Sciences Center - Shreveport (LSUHSC-S) Award Years: Various Award Numbers: Various Compliance Requirements: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Cash Management Pass-Through Entities: Various Repeat Finding: Yes (Prior Year Finding No. 2023-006) See Schedule of Findings and Questioned Costs for chart/table. Condition: For the sixth consecutive year, LSUHSC-S did not ensure internal controls over documentation of personnel services were operating effectively, and did not ensure compliance with federal guidance regarding cost transfers applicable to the Research and Development (R&D) Cluster. In a non-statistical random sample of 27 out of 2,933 payroll adjusting entries affecting R&D, we noted the following exceptions for 15 adjusting entries, some of which had multiple exceptions: • Seven (26%) adjustments did not have adequate documentation to fully explain how the error occurred and/or the transfer was not accomplished within 90 days of when the error was discovered. • For five (19%) adjustments, LSUHSC-S did not provide sufficient information to determine if the cost transfers were completed timely. • For three (11%) adjustments, LSUHSC-S did not provide sufficient information to verify the new charge was certified by a responsible organizational official. • For three (11%) adjustments, LSUHSC-S did not provide sufficient documentation to determine whether adjustments were allowable per the award, which resulted in questioned costs totaling $2,686. • For twelve (44%) adjustments, LSUHSC-S did not provide sufficient documentation to evidence that expenses were incurred prior to reimbursement and that funds were returned to the federal agency for expenses that were removed from the federal award. We also performed an analysis of interim payroll adjusting journal entries to record cost transfers to and/or from R&D awards. We noted that 465 (20%) out of 2,309 adjusting journal entries were made more than 90 days after the end of the biannual period from the original transactions. The adjustments were made 103 to 430 days after the end of the biannual period. In addition, in a non-statistical random sample of 53 out of 11,272 expense transactions charged to R&D during the fiscal year ending June 30, 2024, we noted the following exceptions for 10 transactions, some of which had multiple exceptions: • Six (11%) time and effort certifications for salary and related benefit expenses tested were completed 92 to 248 days after the end of the biannual period, or LSUHSC-S did not provide sufficient documentation to determine that the certifications were completed timely. • For one (2%) transaction, LSUHSC-S did not provide documentation approving the employee’s salary on the applicable award. • For four (8%) transactions, LSUHSC-S did not provide documentation that indicated expenses were reconciled and approved prior to submitting reimbursement requests. Additionally, for three of these transactions, LSUHSC-S did not provide sufficient support to determine if the expenses were incurred prior to the reimbursement request or if LSUHSC-S minimized the time that elapsed between the transfer of funds from the federal government and LSUHSC-S’s disbursement for federal program purposes Finally, it was noted during our procedures related to requisition transactions that LSUHSC-S lacked proper segregation of duties in the online requisition process. We noted in an analysis of all requisition transactions that are subject to online approvals (14,941 transactions totaling $25,349,749) that 4,916 transactions totaling $7,222,206 (28%) did not have adequate segregation of duties. Of these, 306 transactions totaling $338,679 related to the R&D Cluster. Criteria: 2 CFR 200.430(i)(1)(i) requires that charges to federal awards for salaries and wages must be supported by a system of internal control which provides reasonable assurance the charges are accurate, allowable, and properly allocated. Per 2 CFR 200.430(i)(1)(viii), budget estimates alone do not qualify as support for charges to federal awards, but may be used for interim accounting purposes, provided that the system for establishing the estimates produces reasonable approximations of the activity performed, significant changes in work activity are identified and entered into the records in a timely manner, and the non-federal entity’s system of internal controls includes processes to review after-the-fact interim charges and make necessary adjustments. Per LSUHSC-S’s Time and Effort Certification Policy and Procedures, LSUHSC-S utilizes time and effort certifications to support salary charges to sponsored projects as an after-the-fact certification of effort of all individuals when all or a portion of their salaries are charged to a sponsored project. Based on LSUHSC-S’s policy, time and effort certifications should be completed within approximately 90 days of the end of the biannual period. Management interprets the end of the period to be when the time and effort reports are sent to the departments once the last month of the biannual period is closed in the accounting system. If there is a substantial (five percent or more) difference between the salary charges and the effort actually expended by the individual on projects during the biannual reporting period, a payroll reallocation must be created within 30 days. Per 2 CFR 200.303, the 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 Organizations of the Treadway Commission. Per the Standards for Internal Control in the Federal Government, examples of common categories of control activities include accurate and timely recording of transactions. In addition, the National Institutes of Health (NIH) is the grantor for the majority of the LSUHSC-S’s R&D grant awards. Per the NIH Grants Policy Statement §7.5, cost transfers that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. An explanation merely stating that the transfer was made “to correct error" or "to transfer to correct project" is not sufficient. Transfers of costs from one project to another or from one competitive segment to the next solely to cover cost overruns are not allowable. Cause: LSUHSC-S faculty are not completing time and effort certifications timely, which contributes to untimely adjustments for compensation. In addition, LSUHSC-S did not provide sufficient supporting documentation for the auditor to test federal regulations related to cash management for all sample items selected due to an insufficient method for sorting and storing the documentation related to each federal award. Finally, the lack of segregation of duties was caused by LSUHSC-S granting certain employees’ access that allowed for self-approvals. Effect: Untimely certifications and the untimely discovery and correction of errors increases the risk of inaccurate reporting and may result in an inability to complete approved projects within the approved budget and/or period of performance. As a result, LSUHSC-S may have to utilize university funds to complete approved projects. In addition, inadequate controls and noncompliance with federal awards increases the likelihood of disallowed costs, which LSUHSC-S may have to repay to the federal grantor. Recommendation: Management should ensure they have adequate controls over time and effort certifications, purchases, and reimbursement requests. In addition, management should ensure adequate segregation of duties covering approvals of all transaction types. Management’s Response and Corrective Action Plan: Management concurred with the finding and outlined a plan of corrective action (B-47).
2024-005 - Noncompliance with and Weakness in Controls over Federal Research and Development Expenses State Entity: Louisiana State University Health Sciences Center - Shreveport (LSUHSC-S) Award Years: Various Award Numbers: Various Compliance Requirements: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Cash Management Pass-Through Entities: Various Repeat Finding: Yes (Prior Year Finding No. 2023-006) See Schedule of Findings and Questioned Costs for chart/table. Condition: For the sixth consecutive year, LSUHSC-S did not ensure internal controls over documentation of personnel services were operating effectively, and did not ensure compliance with federal guidance regarding cost transfers applicable to the Research and Development (R&D) Cluster. In a non-statistical random sample of 27 out of 2,933 payroll adjusting entries affecting R&D, we noted the following exceptions for 15 adjusting entries, some of which had multiple exceptions: • Seven (26%) adjustments did not have adequate documentation to fully explain how the error occurred and/or the transfer was not accomplished within 90 days of when the error was discovered. • For five (19%) adjustments, LSUHSC-S did not provide sufficient information to determine if the cost transfers were completed timely. • For three (11%) adjustments, LSUHSC-S did not provide sufficient information to verify the new charge was certified by a responsible organizational official. • For three (11%) adjustments, LSUHSC-S did not provide sufficient documentation to determine whether adjustments were allowable per the award, which resulted in questioned costs totaling $2,686. • For twelve (44%) adjustments, LSUHSC-S did not provide sufficient documentation to evidence that expenses were incurred prior to reimbursement and that funds were returned to the federal agency for expenses that were removed from the federal award. We also performed an analysis of interim payroll adjusting journal entries to record cost transfers to and/or from R&D awards. We noted that 465 (20%) out of 2,309 adjusting journal entries were made more than 90 days after the end of the biannual period from the original transactions. The adjustments were made 103 to 430 days after the end of the biannual period. In addition, in a non-statistical random sample of 53 out of 11,272 expense transactions charged to R&D during the fiscal year ending June 30, 2024, we noted the following exceptions for 10 transactions, some of which had multiple exceptions: • Six (11%) time and effort certifications for salary and related benefit expenses tested were completed 92 to 248 days after the end of the biannual period, or LSUHSC-S did not provide sufficient documentation to determine that the certifications were completed timely. • For one (2%) transaction, LSUHSC-S did not provide documentation approving the employee’s salary on the applicable award. • For four (8%) transactions, LSUHSC-S did not provide documentation that indicated expenses were reconciled and approved prior to submitting reimbursement requests. Additionally, for three of these transactions, LSUHSC-S did not provide sufficient support to determine if the expenses were incurred prior to the reimbursement request or if LSUHSC-S minimized the time that elapsed between the transfer of funds from the federal government and LSUHSC-S’s disbursement for federal program purposes Finally, it was noted during our procedures related to requisition transactions that LSUHSC-S lacked proper segregation of duties in the online requisition process. We noted in an analysis of all requisition transactions that are subject to online approvals (14,941 transactions totaling $25,349,749) that 4,916 transactions totaling $7,222,206 (28%) did not have adequate segregation of duties. Of these, 306 transactions totaling $338,679 related to the R&D Cluster. Criteria: 2 CFR 200.430(i)(1)(i) requires that charges to federal awards for salaries and wages must be supported by a system of internal control which provides reasonable assurance the charges are accurate, allowable, and properly allocated. Per 2 CFR 200.430(i)(1)(viii), budget estimates alone do not qualify as support for charges to federal awards, but may be used for interim accounting purposes, provided that the system for establishing the estimates produces reasonable approximations of the activity performed, significant changes in work activity are identified and entered into the records in a timely manner, and the non-federal entity’s system of internal controls includes processes to review after-the-fact interim charges and make necessary adjustments. Per LSUHSC-S’s Time and Effort Certification Policy and Procedures, LSUHSC-S utilizes time and effort certifications to support salary charges to sponsored projects as an after-the-fact certification of effort of all individuals when all or a portion of their salaries are charged to a sponsored project. Based on LSUHSC-S’s policy, time and effort certifications should be completed within approximately 90 days of the end of the biannual period. Management interprets the end of the period to be when the time and effort reports are sent to the departments once the last month of the biannual period is closed in the accounting system. If there is a substantial (five percent or more) difference between the salary charges and the effort actually expended by the individual on projects during the biannual reporting period, a payroll reallocation must be created within 30 days. Per 2 CFR 200.303, the 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 Organizations of the Treadway Commission. Per the Standards for Internal Control in the Federal Government, examples of common categories of control activities include accurate and timely recording of transactions. In addition, the National Institutes of Health (NIH) is the grantor for the majority of the LSUHSC-S’s R&D grant awards. Per the NIH Grants Policy Statement §7.5, cost transfers that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. An explanation merely stating that the transfer was made “to correct error" or "to transfer to correct project" is not sufficient. Transfers of costs from one project to another or from one competitive segment to the next solely to cover cost overruns are not allowable. Cause: LSUHSC-S faculty are not completing time and effort certifications timely, which contributes to untimely adjustments for compensation. In addition, LSUHSC-S did not provide sufficient supporting documentation for the auditor to test federal regulations related to cash management for all sample items selected due to an insufficient method for sorting and storing the documentation related to each federal award. Finally, the lack of segregation of duties was caused by LSUHSC-S granting certain employees’ access that allowed for self-approvals. Effect: Untimely certifications and the untimely discovery and correction of errors increases the risk of inaccurate reporting and may result in an inability to complete approved projects within the approved budget and/or period of performance. As a result, LSUHSC-S may have to utilize university funds to complete approved projects. In addition, inadequate controls and noncompliance with federal awards increases the likelihood of disallowed costs, which LSUHSC-S may have to repay to the federal grantor. Recommendation: Management should ensure they have adequate controls over time and effort certifications, purchases, and reimbursement requests. In addition, management should ensure adequate segregation of duties covering approvals of all transaction types. Management’s Response and Corrective Action Plan: Management concurred with the finding and outlined a plan of corrective action (B-47).
2024-005 - Noncompliance with and Weakness in Controls over Federal Research and Development Expenses State Entity: Louisiana State University Health Sciences Center - Shreveport (LSUHSC-S) Award Years: Various Award Numbers: Various Compliance Requirements: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Cash Management Pass-Through Entities: Various Repeat Finding: Yes (Prior Year Finding No. 2023-006) See Schedule of Findings and Questioned Costs for chart/table. Condition: For the sixth consecutive year, LSUHSC-S did not ensure internal controls over documentation of personnel services were operating effectively, and did not ensure compliance with federal guidance regarding cost transfers applicable to the Research and Development (R&D) Cluster. In a non-statistical random sample of 27 out of 2,933 payroll adjusting entries affecting R&D, we noted the following exceptions for 15 adjusting entries, some of which had multiple exceptions: • Seven (26%) adjustments did not have adequate documentation to fully explain how the error occurred and/or the transfer was not accomplished within 90 days of when the error was discovered. • For five (19%) adjustments, LSUHSC-S did not provide sufficient information to determine if the cost transfers were completed timely. • For three (11%) adjustments, LSUHSC-S did not provide sufficient information to verify the new charge was certified by a responsible organizational official. • For three (11%) adjustments, LSUHSC-S did not provide sufficient documentation to determine whether adjustments were allowable per the award, which resulted in questioned costs totaling $2,686. • For twelve (44%) adjustments, LSUHSC-S did not provide sufficient documentation to evidence that expenses were incurred prior to reimbursement and that funds were returned to the federal agency for expenses that were removed from the federal award. We also performed an analysis of interim payroll adjusting journal entries to record cost transfers to and/or from R&D awards. We noted that 465 (20%) out of 2,309 adjusting journal entries were made more than 90 days after the end of the biannual period from the original transactions. The adjustments were made 103 to 430 days after the end of the biannual period. In addition, in a non-statistical random sample of 53 out of 11,272 expense transactions charged to R&D during the fiscal year ending June 30, 2024, we noted the following exceptions for 10 transactions, some of which had multiple exceptions: • Six (11%) time and effort certifications for salary and related benefit expenses tested were completed 92 to 248 days after the end of the biannual period, or LSUHSC-S did not provide sufficient documentation to determine that the certifications were completed timely. • For one (2%) transaction, LSUHSC-S did not provide documentation approving the employee’s salary on the applicable award. • For four (8%) transactions, LSUHSC-S did not provide documentation that indicated expenses were reconciled and approved prior to submitting reimbursement requests. Additionally, for three of these transactions, LSUHSC-S did not provide sufficient support to determine if the expenses were incurred prior to the reimbursement request or if LSUHSC-S minimized the time that elapsed between the transfer of funds from the federal government and LSUHSC-S’s disbursement for federal program purposes Finally, it was noted during our procedures related to requisition transactions that LSUHSC-S lacked proper segregation of duties in the online requisition process. We noted in an analysis of all requisition transactions that are subject to online approvals (14,941 transactions totaling $25,349,749) that 4,916 transactions totaling $7,222,206 (28%) did not have adequate segregation of duties. Of these, 306 transactions totaling $338,679 related to the R&D Cluster. Criteria: 2 CFR 200.430(i)(1)(i) requires that charges to federal awards for salaries and wages must be supported by a system of internal control which provides reasonable assurance the charges are accurate, allowable, and properly allocated. Per 2 CFR 200.430(i)(1)(viii), budget estimates alone do not qualify as support for charges to federal awards, but may be used for interim accounting purposes, provided that the system for establishing the estimates produces reasonable approximations of the activity performed, significant changes in work activity are identified and entered into the records in a timely manner, and the non-federal entity’s system of internal controls includes processes to review after-the-fact interim charges and make necessary adjustments. Per LSUHSC-S’s Time and Effort Certification Policy and Procedures, LSUHSC-S utilizes time and effort certifications to support salary charges to sponsored projects as an after-the-fact certification of effort of all individuals when all or a portion of their salaries are charged to a sponsored project. Based on LSUHSC-S’s policy, time and effort certifications should be completed within approximately 90 days of the end of the biannual period. Management interprets the end of the period to be when the time and effort reports are sent to the departments once the last month of the biannual period is closed in the accounting system. If there is a substantial (five percent or more) difference between the salary charges and the effort actually expended by the individual on projects during the biannual reporting period, a payroll reallocation must be created within 30 days. Per 2 CFR 200.303, the 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 Organizations of the Treadway Commission. Per the Standards for Internal Control in the Federal Government, examples of common categories of control activities include accurate and timely recording of transactions. In addition, the National Institutes of Health (NIH) is the grantor for the majority of the LSUHSC-S’s R&D grant awards. Per the NIH Grants Policy Statement §7.5, cost transfers that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. An explanation merely stating that the transfer was made “to correct error" or "to transfer to correct project" is not sufficient. Transfers of costs from one project to another or from one competitive segment to the next solely to cover cost overruns are not allowable. Cause: LSUHSC-S faculty are not completing time and effort certifications timely, which contributes to untimely adjustments for compensation. In addition, LSUHSC-S did not provide sufficient supporting documentation for the auditor to test federal regulations related to cash management for all sample items selected due to an insufficient method for sorting and storing the documentation related to each federal award. Finally, the lack of segregation of duties was caused by LSUHSC-S granting certain employees’ access that allowed for self-approvals. Effect: Untimely certifications and the untimely discovery and correction of errors increases the risk of inaccurate reporting and may result in an inability to complete approved projects within the approved budget and/or period of performance. As a result, LSUHSC-S may have to utilize university funds to complete approved projects. In addition, inadequate controls and noncompliance with federal awards increases the likelihood of disallowed costs, which LSUHSC-S may have to repay to the federal grantor. Recommendation: Management should ensure they have adequate controls over time and effort certifications, purchases, and reimbursement requests. In addition, management should ensure adequate segregation of duties covering approvals of all transaction types. Management’s Response and Corrective Action Plan: Management concurred with the finding and outlined a plan of corrective action (B-47).
2024-005 - Noncompliance with and Weakness in Controls over Federal Research and Development Expenses State Entity: Louisiana State University Health Sciences Center - Shreveport (LSUHSC-S) Award Years: Various Award Numbers: Various Compliance Requirements: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Cash Management Pass-Through Entities: Various Repeat Finding: Yes (Prior Year Finding No. 2023-006) See Schedule of Findings and Questioned Costs for chart/table. Condition: For the sixth consecutive year, LSUHSC-S did not ensure internal controls over documentation of personnel services were operating effectively, and did not ensure compliance with federal guidance regarding cost transfers applicable to the Research and Development (R&D) Cluster. In a non-statistical random sample of 27 out of 2,933 payroll adjusting entries affecting R&D, we noted the following exceptions for 15 adjusting entries, some of which had multiple exceptions: • Seven (26%) adjustments did not have adequate documentation to fully explain how the error occurred and/or the transfer was not accomplished within 90 days of when the error was discovered. • For five (19%) adjustments, LSUHSC-S did not provide sufficient information to determine if the cost transfers were completed timely. • For three (11%) adjustments, LSUHSC-S did not provide sufficient information to verify the new charge was certified by a responsible organizational official. • For three (11%) adjustments, LSUHSC-S did not provide sufficient documentation to determine whether adjustments were allowable per the award, which resulted in questioned costs totaling $2,686. • For twelve (44%) adjustments, LSUHSC-S did not provide sufficient documentation to evidence that expenses were incurred prior to reimbursement and that funds were returned to the federal agency for expenses that were removed from the federal award. We also performed an analysis of interim payroll adjusting journal entries to record cost transfers to and/or from R&D awards. We noted that 465 (20%) out of 2,309 adjusting journal entries were made more than 90 days after the end of the biannual period from the original transactions. The adjustments were made 103 to 430 days after the end of the biannual period. In addition, in a non-statistical random sample of 53 out of 11,272 expense transactions charged to R&D during the fiscal year ending June 30, 2024, we noted the following exceptions for 10 transactions, some of which had multiple exceptions: • Six (11%) time and effort certifications for salary and related benefit expenses tested were completed 92 to 248 days after the end of the biannual period, or LSUHSC-S did not provide sufficient documentation to determine that the certifications were completed timely. • For one (2%) transaction, LSUHSC-S did not provide documentation approving the employee’s salary on the applicable award. • For four (8%) transactions, LSUHSC-S did not provide documentation that indicated expenses were reconciled and approved prior to submitting reimbursement requests. Additionally, for three of these transactions, LSUHSC-S did not provide sufficient support to determine if the expenses were incurred prior to the reimbursement request or if LSUHSC-S minimized the time that elapsed between the transfer of funds from the federal government and LSUHSC-S’s disbursement for federal program purposes Finally, it was noted during our procedures related to requisition transactions that LSUHSC-S lacked proper segregation of duties in the online requisition process. We noted in an analysis of all requisition transactions that are subject to online approvals (14,941 transactions totaling $25,349,749) that 4,916 transactions totaling $7,222,206 (28%) did not have adequate segregation of duties. Of these, 306 transactions totaling $338,679 related to the R&D Cluster. Criteria: 2 CFR 200.430(i)(1)(i) requires that charges to federal awards for salaries and wages must be supported by a system of internal control which provides reasonable assurance the charges are accurate, allowable, and properly allocated. Per 2 CFR 200.430(i)(1)(viii), budget estimates alone do not qualify as support for charges to federal awards, but may be used for interim accounting purposes, provided that the system for establishing the estimates produces reasonable approximations of the activity performed, significant changes in work activity are identified and entered into the records in a timely manner, and the non-federal entity’s system of internal controls includes processes to review after-the-fact interim charges and make necessary adjustments. Per LSUHSC-S’s Time and Effort Certification Policy and Procedures, LSUHSC-S utilizes time and effort certifications to support salary charges to sponsored projects as an after-the-fact certification of effort of all individuals when all or a portion of their salaries are charged to a sponsored project. Based on LSUHSC-S’s policy, time and effort certifications should be completed within approximately 90 days of the end of the biannual period. Management interprets the end of the period to be when the time and effort reports are sent to the departments once the last month of the biannual period is closed in the accounting system. If there is a substantial (five percent or more) difference between the salary charges and the effort actually expended by the individual on projects during the biannual reporting period, a payroll reallocation must be created within 30 days. Per 2 CFR 200.303, the 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 Organizations of the Treadway Commission. Per the Standards for Internal Control in the Federal Government, examples of common categories of control activities include accurate and timely recording of transactions. In addition, the National Institutes of Health (NIH) is the grantor for the majority of the LSUHSC-S’s R&D grant awards. Per the NIH Grants Policy Statement §7.5, cost transfers that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. An explanation merely stating that the transfer was made “to correct error" or "to transfer to correct project" is not sufficient. Transfers of costs from one project to another or from one competitive segment to the next solely to cover cost overruns are not allowable. Cause: LSUHSC-S faculty are not completing time and effort certifications timely, which contributes to untimely adjustments for compensation. In addition, LSUHSC-S did not provide sufficient supporting documentation for the auditor to test federal regulations related to cash management for all sample items selected due to an insufficient method for sorting and storing the documentation related to each federal award. Finally, the lack of segregation of duties was caused by LSUHSC-S granting certain employees’ access that allowed for self-approvals. Effect: Untimely certifications and the untimely discovery and correction of errors increases the risk of inaccurate reporting and may result in an inability to complete approved projects within the approved budget and/or period of performance. As a result, LSUHSC-S may have to utilize university funds to complete approved projects. In addition, inadequate controls and noncompliance with federal awards increases the likelihood of disallowed costs, which LSUHSC-S may have to repay to the federal grantor. Recommendation: Management should ensure they have adequate controls over time and effort certifications, purchases, and reimbursement requests. In addition, management should ensure adequate segregation of duties covering approvals of all transaction types. Management’s Response and Corrective Action Plan: Management concurred with the finding and outlined a plan of corrective action (B-47).
2024-005 - Noncompliance with and Weakness in Controls over Federal Research and Development Expenses State Entity: Louisiana State University Health Sciences Center - Shreveport (LSUHSC-S) Award Years: Various Award Numbers: Various Compliance Requirements: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Cash Management Pass-Through Entities: Various Repeat Finding: Yes (Prior Year Finding No. 2023-006) See Schedule of Findings and Questioned Costs for chart/table. Condition: For the sixth consecutive year, LSUHSC-S did not ensure internal controls over documentation of personnel services were operating effectively, and did not ensure compliance with federal guidance regarding cost transfers applicable to the Research and Development (R&D) Cluster. In a non-statistical random sample of 27 out of 2,933 payroll adjusting entries affecting R&D, we noted the following exceptions for 15 adjusting entries, some of which had multiple exceptions: • Seven (26%) adjustments did not have adequate documentation to fully explain how the error occurred and/or the transfer was not accomplished within 90 days of when the error was discovered. • For five (19%) adjustments, LSUHSC-S did not provide sufficient information to determine if the cost transfers were completed timely. • For three (11%) adjustments, LSUHSC-S did not provide sufficient information to verify the new charge was certified by a responsible organizational official. • For three (11%) adjustments, LSUHSC-S did not provide sufficient documentation to determine whether adjustments were allowable per the award, which resulted in questioned costs totaling $2,686. • For twelve (44%) adjustments, LSUHSC-S did not provide sufficient documentation to evidence that expenses were incurred prior to reimbursement and that funds were returned to the federal agency for expenses that were removed from the federal award. We also performed an analysis of interim payroll adjusting journal entries to record cost transfers to and/or from R&D awards. We noted that 465 (20%) out of 2,309 adjusting journal entries were made more than 90 days after the end of the biannual period from the original transactions. The adjustments were made 103 to 430 days after the end of the biannual period. In addition, in a non-statistical random sample of 53 out of 11,272 expense transactions charged to R&D during the fiscal year ending June 30, 2024, we noted the following exceptions for 10 transactions, some of which had multiple exceptions: • Six (11%) time and effort certifications for salary and related benefit expenses tested were completed 92 to 248 days after the end of the biannual period, or LSUHSC-S did not provide sufficient documentation to determine that the certifications were completed timely. • For one (2%) transaction, LSUHSC-S did not provide documentation approving the employee’s salary on the applicable award. • For four (8%) transactions, LSUHSC-S did not provide documentation that indicated expenses were reconciled and approved prior to submitting reimbursement requests. Additionally, for three of these transactions, LSUHSC-S did not provide sufficient support to determine if the expenses were incurred prior to the reimbursement request or if LSUHSC-S minimized the time that elapsed between the transfer of funds from the federal government and LSUHSC-S’s disbursement for federal program purposes Finally, it was noted during our procedures related to requisition transactions that LSUHSC-S lacked proper segregation of duties in the online requisition process. We noted in an analysis of all requisition transactions that are subject to online approvals (14,941 transactions totaling $25,349,749) that 4,916 transactions totaling $7,222,206 (28%) did not have adequate segregation of duties. Of these, 306 transactions totaling $338,679 related to the R&D Cluster. Criteria: 2 CFR 200.430(i)(1)(i) requires that charges to federal awards for salaries and wages must be supported by a system of internal control which provides reasonable assurance the charges are accurate, allowable, and properly allocated. Per 2 CFR 200.430(i)(1)(viii), budget estimates alone do not qualify as support for charges to federal awards, but may be used for interim accounting purposes, provided that the system for establishing the estimates produces reasonable approximations of the activity performed, significant changes in work activity are identified and entered into the records in a timely manner, and the non-federal entity’s system of internal controls includes processes to review after-the-fact interim charges and make necessary adjustments. Per LSUHSC-S’s Time and Effort Certification Policy and Procedures, LSUHSC-S utilizes time and effort certifications to support salary charges to sponsored projects as an after-the-fact certification of effort of all individuals when all or a portion of their salaries are charged to a sponsored project. Based on LSUHSC-S’s policy, time and effort certifications should be completed within approximately 90 days of the end of the biannual period. Management interprets the end of the period to be when the time and effort reports are sent to the departments once the last month of the biannual period is closed in the accounting system. If there is a substantial (five percent or more) difference between the salary charges and the effort actually expended by the individual on projects during the biannual reporting period, a payroll reallocation must be created within 30 days. Per 2 CFR 200.303, the 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 Organizations of the Treadway Commission. Per the Standards for Internal Control in the Federal Government, examples of common categories of control activities include accurate and timely recording of transactions. In addition, the National Institutes of Health (NIH) is the grantor for the majority of the LSUHSC-S’s R&D grant awards. Per the NIH Grants Policy Statement §7.5, cost transfers that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. An explanation merely stating that the transfer was made “to correct error" or "to transfer to correct project" is not sufficient. Transfers of costs from one project to another or from one competitive segment to the next solely to cover cost overruns are not allowable. Cause: LSUHSC-S faculty are not completing time and effort certifications timely, which contributes to untimely adjustments for compensation. In addition, LSUHSC-S did not provide sufficient supporting documentation for the auditor to test federal regulations related to cash management for all sample items selected due to an insufficient method for sorting and storing the documentation related to each federal award. Finally, the lack of segregation of duties was caused by LSUHSC-S granting certain employees’ access that allowed for self-approvals. Effect: Untimely certifications and the untimely discovery and correction of errors increases the risk of inaccurate reporting and may result in an inability to complete approved projects within the approved budget and/or period of performance. As a result, LSUHSC-S may have to utilize university funds to complete approved projects. In addition, inadequate controls and noncompliance with federal awards increases the likelihood of disallowed costs, which LSUHSC-S may have to repay to the federal grantor. Recommendation: Management should ensure they have adequate controls over time and effort certifications, purchases, and reimbursement requests. In addition, management should ensure adequate segregation of duties covering approvals of all transaction types. Management’s Response and Corrective Action Plan: Management concurred with the finding and outlined a plan of corrective action (B-47).
2024-005 - Noncompliance with and Weakness in Controls over Federal Research and Development Expenses State Entity: Louisiana State University Health Sciences Center - Shreveport (LSUHSC-S) Award Years: Various Award Numbers: Various Compliance Requirements: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Cash Management Pass-Through Entities: Various Repeat Finding: Yes (Prior Year Finding No. 2023-006) See Schedule of Findings and Questioned Costs for chart/table. Condition: For the sixth consecutive year, LSUHSC-S did not ensure internal controls over documentation of personnel services were operating effectively, and did not ensure compliance with federal guidance regarding cost transfers applicable to the Research and Development (R&D) Cluster. In a non-statistical random sample of 27 out of 2,933 payroll adjusting entries affecting R&D, we noted the following exceptions for 15 adjusting entries, some of which had multiple exceptions: • Seven (26%) adjustments did not have adequate documentation to fully explain how the error occurred and/or the transfer was not accomplished within 90 days of when the error was discovered. • For five (19%) adjustments, LSUHSC-S did not provide sufficient information to determine if the cost transfers were completed timely. • For three (11%) adjustments, LSUHSC-S did not provide sufficient information to verify the new charge was certified by a responsible organizational official. • For three (11%) adjustments, LSUHSC-S did not provide sufficient documentation to determine whether adjustments were allowable per the award, which resulted in questioned costs totaling $2,686. • For twelve (44%) adjustments, LSUHSC-S did not provide sufficient documentation to evidence that expenses were incurred prior to reimbursement and that funds were returned to the federal agency for expenses that were removed from the federal award. We also performed an analysis of interim payroll adjusting journal entries to record cost transfers to and/or from R&D awards. We noted that 465 (20%) out of 2,309 adjusting journal entries were made more than 90 days after the end of the biannual period from the original transactions. The adjustments were made 103 to 430 days after the end of the biannual period. In addition, in a non-statistical random sample of 53 out of 11,272 expense transactions charged to R&D during the fiscal year ending June 30, 2024, we noted the following exceptions for 10 transactions, some of which had multiple exceptions: • Six (11%) time and effort certifications for salary and related benefit expenses tested were completed 92 to 248 days after the end of the biannual period, or LSUHSC-S did not provide sufficient documentation to determine that the certifications were completed timely. • For one (2%) transaction, LSUHSC-S did not provide documentation approving the employee’s salary on the applicable award. • For four (8%) transactions, LSUHSC-S did not provide documentation that indicated expenses were reconciled and approved prior to submitting reimbursement requests. Additionally, for three of these transactions, LSUHSC-S did not provide sufficient support to determine if the expenses were incurred prior to the reimbursement request or if LSUHSC-S minimized the time that elapsed between the transfer of funds from the federal government and LSUHSC-S’s disbursement for federal program purposes Finally, it was noted during our procedures related to requisition transactions that LSUHSC-S lacked proper segregation of duties in the online requisition process. We noted in an analysis of all requisition transactions that are subject to online approvals (14,941 transactions totaling $25,349,749) that 4,916 transactions totaling $7,222,206 (28%) did not have adequate segregation of duties. Of these, 306 transactions totaling $338,679 related to the R&D Cluster. Criteria: 2 CFR 200.430(i)(1)(i) requires that charges to federal awards for salaries and wages must be supported by a system of internal control which provides reasonable assurance the charges are accurate, allowable, and properly allocated. Per 2 CFR 200.430(i)(1)(viii), budget estimates alone do not qualify as support for charges to federal awards, but may be used for interim accounting purposes, provided that the system for establishing the estimates produces reasonable approximations of the activity performed, significant changes in work activity are identified and entered into the records in a timely manner, and the non-federal entity’s system of internal controls includes processes to review after-the-fact interim charges and make necessary adjustments. Per LSUHSC-S’s Time and Effort Certification Policy and Procedures, LSUHSC-S utilizes time and effort certifications to support salary charges to sponsored projects as an after-the-fact certification of effort of all individuals when all or a portion of their salaries are charged to a sponsored project. Based on LSUHSC-S’s policy, time and effort certifications should be completed within approximately 90 days of the end of the biannual period. Management interprets the end of the period to be when the time and effort reports are sent to the departments once the last month of the biannual period is closed in the accounting system. If there is a substantial (five percent or more) difference between the salary charges and the effort actually expended by the individual on projects during the biannual reporting period, a payroll reallocation must be created within 30 days. Per 2 CFR 200.303, the 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 Organizations of the Treadway Commission. Per the Standards for Internal Control in the Federal Government, examples of common categories of control activities include accurate and timely recording of transactions. In addition, the National Institutes of Health (NIH) is the grantor for the majority of the LSUHSC-S’s R&D grant awards. Per the NIH Grants Policy Statement §7.5, cost transfers that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. An explanation merely stating that the transfer was made “to correct error" or "to transfer to correct project" is not sufficient. Transfers of costs from one project to another or from one competitive segment to the next solely to cover cost overruns are not allowable. Cause: LSUHSC-S faculty are not completing time and effort certifications timely, which contributes to untimely adjustments for compensation. In addition, LSUHSC-S did not provide sufficient supporting documentation for the auditor to test federal regulations related to cash management for all sample items selected due to an insufficient method for sorting and storing the documentation related to each federal award. Finally, the lack of segregation of duties was caused by LSUHSC-S granting certain employees’ access that allowed for self-approvals. Effect: Untimely certifications and the untimely discovery and correction of errors increases the risk of inaccurate reporting and may result in an inability to complete approved projects within the approved budget and/or period of performance. As a result, LSUHSC-S may have to utilize university funds to complete approved projects. In addition, inadequate controls and noncompliance with federal awards increases the likelihood of disallowed costs, which LSUHSC-S may have to repay to the federal grantor. Recommendation: Management should ensure they have adequate controls over time and effort certifications, purchases, and reimbursement requests. In addition, management should ensure adequate segregation of duties covering approvals of all transaction types. Management’s Response and Corrective Action Plan: Management concurred with the finding and outlined a plan of corrective action (B-47).
2024-005 - Noncompliance with and Weakness in Controls over Federal Research and Development Expenses State Entity: Louisiana State University Health Sciences Center - Shreveport (LSUHSC-S) Award Years: Various Award Numbers: Various Compliance Requirements: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Cash Management Pass-Through Entities: Various Repeat Finding: Yes (Prior Year Finding No. 2023-006) See Schedule of Findings and Questioned Costs for chart/table. Condition: For the sixth consecutive year, LSUHSC-S did not ensure internal controls over documentation of personnel services were operating effectively, and did not ensure compliance with federal guidance regarding cost transfers applicable to the Research and Development (R&D) Cluster. In a non-statistical random sample of 27 out of 2,933 payroll adjusting entries affecting R&D, we noted the following exceptions for 15 adjusting entries, some of which had multiple exceptions: • Seven (26%) adjustments did not have adequate documentation to fully explain how the error occurred and/or the transfer was not accomplished within 90 days of when the error was discovered. • For five (19%) adjustments, LSUHSC-S did not provide sufficient information to determine if the cost transfers were completed timely. • For three (11%) adjustments, LSUHSC-S did not provide sufficient information to verify the new charge was certified by a responsible organizational official. • For three (11%) adjustments, LSUHSC-S did not provide sufficient documentation to determine whether adjustments were allowable per the award, which resulted in questioned costs totaling $2,686. • For twelve (44%) adjustments, LSUHSC-S did not provide sufficient documentation to evidence that expenses were incurred prior to reimbursement and that funds were returned to the federal agency for expenses that were removed from the federal award. We also performed an analysis of interim payroll adjusting journal entries to record cost transfers to and/or from R&D awards. We noted that 465 (20%) out of 2,309 adjusting journal entries were made more than 90 days after the end of the biannual period from the original transactions. The adjustments were made 103 to 430 days after the end of the biannual period. In addition, in a non-statistical random sample of 53 out of 11,272 expense transactions charged to R&D during the fiscal year ending June 30, 2024, we noted the following exceptions for 10 transactions, some of which had multiple exceptions: • Six (11%) time and effort certifications for salary and related benefit expenses tested were completed 92 to 248 days after the end of the biannual period, or LSUHSC-S did not provide sufficient documentation to determine that the certifications were completed timely. • For one (2%) transaction, LSUHSC-S did not provide documentation approving the employee’s salary on the applicable award. • For four (8%) transactions, LSUHSC-S did not provide documentation that indicated expenses were reconciled and approved prior to submitting reimbursement requests. Additionally, for three of these transactions, LSUHSC-S did not provide sufficient support to determine if the expenses were incurred prior to the reimbursement request or if LSUHSC-S minimized the time that elapsed between the transfer of funds from the federal government and LSUHSC-S’s disbursement for federal program purposes Finally, it was noted during our procedures related to requisition transactions that LSUHSC-S lacked proper segregation of duties in the online requisition process. We noted in an analysis of all requisition transactions that are subject to online approvals (14,941 transactions totaling $25,349,749) that 4,916 transactions totaling $7,222,206 (28%) did not have adequate segregation of duties. Of these, 306 transactions totaling $338,679 related to the R&D Cluster. Criteria: 2 CFR 200.430(i)(1)(i) requires that charges to federal awards for salaries and wages must be supported by a system of internal control which provides reasonable assurance the charges are accurate, allowable, and properly allocated. Per 2 CFR 200.430(i)(1)(viii), budget estimates alone do not qualify as support for charges to federal awards, but may be used for interim accounting purposes, provided that the system for establishing the estimates produces reasonable approximations of the activity performed, significant changes in work activity are identified and entered into the records in a timely manner, and the non-federal entity’s system of internal controls includes processes to review after-the-fact interim charges and make necessary adjustments. Per LSUHSC-S’s Time and Effort Certification Policy and Procedures, LSUHSC-S utilizes time and effort certifications to support salary charges to sponsored projects as an after-the-fact certification of effort of all individuals when all or a portion of their salaries are charged to a sponsored project. Based on LSUHSC-S’s policy, time and effort certifications should be completed within approximately 90 days of the end of the biannual period. Management interprets the end of the period to be when the time and effort reports are sent to the departments once the last month of the biannual period is closed in the accounting system. If there is a substantial (five percent or more) difference between the salary charges and the effort actually expended by the individual on projects during the biannual reporting period, a payroll reallocation must be created within 30 days. Per 2 CFR 200.303, the 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 Organizations of the Treadway Commission. Per the Standards for Internal Control in the Federal Government, examples of common categories of control activities include accurate and timely recording of transactions. In addition, the National Institutes of Health (NIH) is the grantor for the majority of the LSUHSC-S’s R&D grant awards. Per the NIH Grants Policy Statement §7.5, cost transfers that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. An explanation merely stating that the transfer was made “to correct error" or "to transfer to correct project" is not sufficient. Transfers of costs from one project to another or from one competitive segment to the next solely to cover cost overruns are not allowable. Cause: LSUHSC-S faculty are not completing time and effort certifications timely, which contributes to untimely adjustments for compensation. In addition, LSUHSC-S did not provide sufficient supporting documentation for the auditor to test federal regulations related to cash management for all sample items selected due to an insufficient method for sorting and storing the documentation related to each federal award. Finally, the lack of segregation of duties was caused by LSUHSC-S granting certain employees’ access that allowed for self-approvals. Effect: Untimely certifications and the untimely discovery and correction of errors increases the risk of inaccurate reporting and may result in an inability to complete approved projects within the approved budget and/or period of performance. As a result, LSUHSC-S may have to utilize university funds to complete approved projects. In addition, inadequate controls and noncompliance with federal awards increases the likelihood of disallowed costs, which LSUHSC-S may have to repay to the federal grantor. Recommendation: Management should ensure they have adequate controls over time and effort certifications, purchases, and reimbursement requests. In addition, management should ensure adequate segregation of duties covering approvals of all transaction types. Management’s Response and Corrective Action Plan: Management concurred with the finding and outlined a plan of corrective action (B-47).
2024-005 - Noncompliance with and Weakness in Controls over Federal Research and Development Expenses State Entity: Louisiana State University Health Sciences Center - Shreveport (LSUHSC-S) Award Years: Various Award Numbers: Various Compliance Requirements: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Cash Management Pass-Through Entities: Various Repeat Finding: Yes (Prior Year Finding No. 2023-006) See Schedule of Findings and Questioned Costs for chart/table. Condition: For the sixth consecutive year, LSUHSC-S did not ensure internal controls over documentation of personnel services were operating effectively, and did not ensure compliance with federal guidance regarding cost transfers applicable to the Research and Development (R&D) Cluster. In a non-statistical random sample of 27 out of 2,933 payroll adjusting entries affecting R&D, we noted the following exceptions for 15 adjusting entries, some of which had multiple exceptions: • Seven (26%) adjustments did not have adequate documentation to fully explain how the error occurred and/or the transfer was not accomplished within 90 days of when the error was discovered. • For five (19%) adjustments, LSUHSC-S did not provide sufficient information to determine if the cost transfers were completed timely. • For three (11%) adjustments, LSUHSC-S did not provide sufficient information to verify the new charge was certified by a responsible organizational official. • For three (11%) adjustments, LSUHSC-S did not provide sufficient documentation to determine whether adjustments were allowable per the award, which resulted in questioned costs totaling $2,686. • For twelve (44%) adjustments, LSUHSC-S did not provide sufficient documentation to evidence that expenses were incurred prior to reimbursement and that funds were returned to the federal agency for expenses that were removed from the federal award. We also performed an analysis of interim payroll adjusting journal entries to record cost transfers to and/or from R&D awards. We noted that 465 (20%) out of 2,309 adjusting journal entries were made more than 90 days after the end of the biannual period from the original transactions. The adjustments were made 103 to 430 days after the end of the biannual period. In addition, in a non-statistical random sample of 53 out of 11,272 expense transactions charged to R&D during the fiscal year ending June 30, 2024, we noted the following exceptions for 10 transactions, some of which had multiple exceptions: • Six (11%) time and effort certifications for salary and related benefit expenses tested were completed 92 to 248 days after the end of the biannual period, or LSUHSC-S did not provide sufficient documentation to determine that the certifications were completed timely. • For one (2%) transaction, LSUHSC-S did not provide documentation approving the employee’s salary on the applicable award. • For four (8%) transactions, LSUHSC-S did not provide documentation that indicated expenses were reconciled and approved prior to submitting reimbursement requests. Additionally, for three of these transactions, LSUHSC-S did not provide sufficient support to determine if the expenses were incurred prior to the reimbursement request or if LSUHSC-S minimized the time that elapsed between the transfer of funds from the federal government and LSUHSC-S’s disbursement for federal program purposes Finally, it was noted during our procedures related to requisition transactions that LSUHSC-S lacked proper segregation of duties in the online requisition process. We noted in an analysis of all requisition transactions that are subject to online approvals (14,941 transactions totaling $25,349,749) that 4,916 transactions totaling $7,222,206 (28%) did not have adequate segregation of duties. Of these, 306 transactions totaling $338,679 related to the R&D Cluster. Criteria: 2 CFR 200.430(i)(1)(i) requires that charges to federal awards for salaries and wages must be supported by a system of internal control which provides reasonable assurance the charges are accurate, allowable, and properly allocated. Per 2 CFR 200.430(i)(1)(viii), budget estimates alone do not qualify as support for charges to federal awards, but may be used for interim accounting purposes, provided that the system for establishing the estimates produces reasonable approximations of the activity performed, significant changes in work activity are identified and entered into the records in a timely manner, and the non-federal entity’s system of internal controls includes processes to review after-the-fact interim charges and make necessary adjustments. Per LSUHSC-S’s Time and Effort Certification Policy and Procedures, LSUHSC-S utilizes time and effort certifications to support salary charges to sponsored projects as an after-the-fact certification of effort of all individuals when all or a portion of their salaries are charged to a sponsored project. Based on LSUHSC-S’s policy, time and effort certifications should be completed within approximately 90 days of the end of the biannual period. Management interprets the end of the period to be when the time and effort reports are sent to the departments once the last month of the biannual period is closed in the accounting system. If there is a substantial (five percent or more) difference between the salary charges and the effort actually expended by the individual on projects during the biannual reporting period, a payroll reallocation must be created within 30 days. Per 2 CFR 200.303, the 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 Organizations of the Treadway Commission. Per the Standards for Internal Control in the Federal Government, examples of common categories of control activities include accurate and timely recording of transactions. In addition, the National Institutes of Health (NIH) is the grantor for the majority of the LSUHSC-S’s R&D grant awards. Per the NIH Grants Policy Statement §7.5, cost transfers that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. An explanation merely stating that the transfer was made “to correct error" or "to transfer to correct project" is not sufficient. Transfers of costs from one project to another or from one competitive segment to the next solely to cover cost overruns are not allowable. Cause: LSUHSC-S faculty are not completing time and effort certifications timely, which contributes to untimely adjustments for compensation. In addition, LSUHSC-S did not provide sufficient supporting documentation for the auditor to test federal regulations related to cash management for all sample items selected due to an insufficient method for sorting and storing the documentation related to each federal award. Finally, the lack of segregation of duties was caused by LSUHSC-S granting certain employees’ access that allowed for self-approvals. Effect: Untimely certifications and the untimely discovery and correction of errors increases the risk of inaccurate reporting and may result in an inability to complete approved projects within the approved budget and/or period of performance. As a result, LSUHSC-S may have to utilize university funds to complete approved projects. In addition, inadequate controls and noncompliance with federal awards increases the likelihood of disallowed costs, which LSUHSC-S may have to repay to the federal grantor. Recommendation: Management should ensure they have adequate controls over time and effort certifications, purchases, and reimbursement requests. In addition, management should ensure adequate segregation of duties covering approvals of all transaction types. Management’s Response and Corrective Action Plan: Management concurred with the finding and outlined a plan of corrective action (B-47).
2024-005 - Noncompliance with and Weakness in Controls over Federal Research and Development Expenses State Entity: Louisiana State University Health Sciences Center - Shreveport (LSUHSC-S) Award Years: Various Award Numbers: Various Compliance Requirements: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Cash Management Pass-Through Entities: Various Repeat Finding: Yes (Prior Year Finding No. 2023-006) See Schedule of Findings and Questioned Costs for chart/table. Condition: For the sixth consecutive year, LSUHSC-S did not ensure internal controls over documentation of personnel services were operating effectively, and did not ensure compliance with federal guidance regarding cost transfers applicable to the Research and Development (R&D) Cluster. In a non-statistical random sample of 27 out of 2,933 payroll adjusting entries affecting R&D, we noted the following exceptions for 15 adjusting entries, some of which had multiple exceptions: • Seven (26%) adjustments did not have adequate documentation to fully explain how the error occurred and/or the transfer was not accomplished within 90 days of when the error was discovered. • For five (19%) adjustments, LSUHSC-S did not provide sufficient information to determine if the cost transfers were completed timely. • For three (11%) adjustments, LSUHSC-S did not provide sufficient information to verify the new charge was certified by a responsible organizational official. • For three (11%) adjustments, LSUHSC-S did not provide sufficient documentation to determine whether adjustments were allowable per the award, which resulted in questioned costs totaling $2,686. • For twelve (44%) adjustments, LSUHSC-S did not provide sufficient documentation to evidence that expenses were incurred prior to reimbursement and that funds were returned to the federal agency for expenses that were removed from the federal award. We also performed an analysis of interim payroll adjusting journal entries to record cost transfers to and/or from R&D awards. We noted that 465 (20%) out of 2,309 adjusting journal entries were made more than 90 days after the end of the biannual period from the original transactions. The adjustments were made 103 to 430 days after the end of the biannual period. In addition, in a non-statistical random sample of 53 out of 11,272 expense transactions charged to R&D during the fiscal year ending June 30, 2024, we noted the following exceptions for 10 transactions, some of which had multiple exceptions: • Six (11%) time and effort certifications for salary and related benefit expenses tested were completed 92 to 248 days after the end of the biannual period, or LSUHSC-S did not provide sufficient documentation to determine that the certifications were completed timely. • For one (2%) transaction, LSUHSC-S did not provide documentation approving the employee’s salary on the applicable award. • For four (8%) transactions, LSUHSC-S did not provide documentation that indicated expenses were reconciled and approved prior to submitting reimbursement requests. Additionally, for three of these transactions, LSUHSC-S did not provide sufficient support to determine if the expenses were incurred prior to the reimbursement request or if LSUHSC-S minimized the time that elapsed between the transfer of funds from the federal government and LSUHSC-S’s disbursement for federal program purposes Finally, it was noted during our procedures related to requisition transactions that LSUHSC-S lacked proper segregation of duties in the online requisition process. We noted in an analysis of all requisition transactions that are subject to online approvals (14,941 transactions totaling $25,349,749) that 4,916 transactions totaling $7,222,206 (28%) did not have adequate segregation of duties. Of these, 306 transactions totaling $338,679 related to the R&D Cluster. Criteria: 2 CFR 200.430(i)(1)(i) requires that charges to federal awards for salaries and wages must be supported by a system of internal control which provides reasonable assurance the charges are accurate, allowable, and properly allocated. Per 2 CFR 200.430(i)(1)(viii), budget estimates alone do not qualify as support for charges to federal awards, but may be used for interim accounting purposes, provided that the system for establishing the estimates produces reasonable approximations of the activity performed, significant changes in work activity are identified and entered into the records in a timely manner, and the non-federal entity’s system of internal controls includes processes to review after-the-fact interim charges and make necessary adjustments. Per LSUHSC-S’s Time and Effort Certification Policy and Procedures, LSUHSC-S utilizes time and effort certifications to support salary charges to sponsored projects as an after-the-fact certification of effort of all individuals when all or a portion of their salaries are charged to a sponsored project. Based on LSUHSC-S’s policy, time and effort certifications should be completed within approximately 90 days of the end of the biannual period. Management interprets the end of the period to be when the time and effort reports are sent to the departments once the last month of the biannual period is closed in the accounting system. If there is a substantial (five percent or more) difference between the salary charges and the effort actually expended by the individual on projects during the biannual reporting period, a payroll reallocation must be created within 30 days. Per 2 CFR 200.303, the 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 Organizations of the Treadway Commission. Per the Standards for Internal Control in the Federal Government, examples of common categories of control activities include accurate and timely recording of transactions. In addition, the National Institutes of Health (NIH) is the grantor for the majority of the LSUHSC-S’s R&D grant awards. Per the NIH Grants Policy Statement §7.5, cost transfers that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. An explanation merely stating that the transfer was made “to correct error" or "to transfer to correct project" is not sufficient. Transfers of costs from one project to another or from one competitive segment to the next solely to cover cost overruns are not allowable. Cause: LSUHSC-S faculty are not completing time and effort certifications timely, which contributes to untimely adjustments for compensation. In addition, LSUHSC-S did not provide sufficient supporting documentation for the auditor to test federal regulations related to cash management for all sample items selected due to an insufficient method for sorting and storing the documentation related to each federal award. Finally, the lack of segregation of duties was caused by LSUHSC-S granting certain employees’ access that allowed for self-approvals. Effect: Untimely certifications and the untimely discovery and correction of errors increases the risk of inaccurate reporting and may result in an inability to complete approved projects within the approved budget and/or period of performance. As a result, LSUHSC-S may have to utilize university funds to complete approved projects. In addition, inadequate controls and noncompliance with federal awards increases the likelihood of disallowed costs, which LSUHSC-S may have to repay to the federal grantor. Recommendation: Management should ensure they have adequate controls over time and effort certifications, purchases, and reimbursement requests. In addition, management should ensure adequate segregation of duties covering approvals of all transaction types. Management’s Response and Corrective Action Plan: Management concurred with the finding and outlined a plan of corrective action (B-47).
2024-005 - Noncompliance with and Weakness in Controls over Federal Research and Development Expenses State Entity: Louisiana State University Health Sciences Center - Shreveport (LSUHSC-S) Award Years: Various Award Numbers: Various Compliance Requirements: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Cash Management Pass-Through Entities: Various Repeat Finding: Yes (Prior Year Finding No. 2023-006) See Schedule of Findings and Questioned Costs for chart/table. Condition: For the sixth consecutive year, LSUHSC-S did not ensure internal controls over documentation of personnel services were operating effectively, and did not ensure compliance with federal guidance regarding cost transfers applicable to the Research and Development (R&D) Cluster. In a non-statistical random sample of 27 out of 2,933 payroll adjusting entries affecting R&D, we noted the following exceptions for 15 adjusting entries, some of which had multiple exceptions: • Seven (26%) adjustments did not have adequate documentation to fully explain how the error occurred and/or the transfer was not accomplished within 90 days of when the error was discovered. • For five (19%) adjustments, LSUHSC-S did not provide sufficient information to determine if the cost transfers were completed timely. • For three (11%) adjustments, LSUHSC-S did not provide sufficient information to verify the new charge was certified by a responsible organizational official. • For three (11%) adjustments, LSUHSC-S did not provide sufficient documentation to determine whether adjustments were allowable per the award, which resulted in questioned costs totaling $2,686. • For twelve (44%) adjustments, LSUHSC-S did not provide sufficient documentation to evidence that expenses were incurred prior to reimbursement and that funds were returned to the federal agency for expenses that were removed from the federal award. We also performed an analysis of interim payroll adjusting journal entries to record cost transfers to and/or from R&D awards. We noted that 465 (20%) out of 2,309 adjusting journal entries were made more than 90 days after the end of the biannual period from the original transactions. The adjustments were made 103 to 430 days after the end of the biannual period. In addition, in a non-statistical random sample of 53 out of 11,272 expense transactions charged to R&D during the fiscal year ending June 30, 2024, we noted the following exceptions for 10 transactions, some of which had multiple exceptions: • Six (11%) time and effort certifications for salary and related benefit expenses tested were completed 92 to 248 days after the end of the biannual period, or LSUHSC-S did not provide sufficient documentation to determine that the certifications were completed timely. • For one (2%) transaction, LSUHSC-S did not provide documentation approving the employee’s salary on the applicable award. • For four (8%) transactions, LSUHSC-S did not provide documentation that indicated expenses were reconciled and approved prior to submitting reimbursement requests. Additionally, for three of these transactions, LSUHSC-S did not provide sufficient support to determine if the expenses were incurred prior to the reimbursement request or if LSUHSC-S minimized the time that elapsed between the transfer of funds from the federal government and LSUHSC-S’s disbursement for federal program purposes Finally, it was noted during our procedures related to requisition transactions that LSUHSC-S lacked proper segregation of duties in the online requisition process. We noted in an analysis of all requisition transactions that are subject to online approvals (14,941 transactions totaling $25,349,749) that 4,916 transactions totaling $7,222,206 (28%) did not have adequate segregation of duties. Of these, 306 transactions totaling $338,679 related to the R&D Cluster. Criteria: 2 CFR 200.430(i)(1)(i) requires that charges to federal awards for salaries and wages must be supported by a system of internal control which provides reasonable assurance the charges are accurate, allowable, and properly allocated. Per 2 CFR 200.430(i)(1)(viii), budget estimates alone do not qualify as support for charges to federal awards, but may be used for interim accounting purposes, provided that the system for establishing the estimates produces reasonable approximations of the activity performed, significant changes in work activity are identified and entered into the records in a timely manner, and the non-federal entity’s system of internal controls includes processes to review after-the-fact interim charges and make necessary adjustments. Per LSUHSC-S’s Time and Effort Certification Policy and Procedures, LSUHSC-S utilizes time and effort certifications to support salary charges to sponsored projects as an after-the-fact certification of effort of all individuals when all or a portion of their salaries are charged to a sponsored project. Based on LSUHSC-S’s policy, time and effort certifications should be completed within approximately 90 days of the end of the biannual period. Management interprets the end of the period to be when the time and effort reports are sent to the departments once the last month of the biannual period is closed in the accounting system. If there is a substantial (five percent or more) difference between the salary charges and the effort actually expended by the individual on projects during the biannual reporting period, a payroll reallocation must be created within 30 days. Per 2 CFR 200.303, the 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 Organizations of the Treadway Commission. Per the Standards for Internal Control in the Federal Government, examples of common categories of control activities include accurate and timely recording of transactions. In addition, the National Institutes of Health (NIH) is the grantor for the majority of the LSUHSC-S’s R&D grant awards. Per the NIH Grants Policy Statement §7.5, cost transfers that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. An explanation merely stating that the transfer was made “to correct error" or "to transfer to correct project" is not sufficient. Transfers of costs from one project to another or from one competitive segment to the next solely to cover cost overruns are not allowable. Cause: LSUHSC-S faculty are not completing time and effort certifications timely, which contributes to untimely adjustments for compensation. In addition, LSUHSC-S did not provide sufficient supporting documentation for the auditor to test federal regulations related to cash management for all sample items selected due to an insufficient method for sorting and storing the documentation related to each federal award. Finally, the lack of segregation of duties was caused by LSUHSC-S granting certain employees’ access that allowed for self-approvals. Effect: Untimely certifications and the untimely discovery and correction of errors increases the risk of inaccurate reporting and may result in an inability to complete approved projects within the approved budget and/or period of performance. As a result, LSUHSC-S may have to utilize university funds to complete approved projects. In addition, inadequate controls and noncompliance with federal awards increases the likelihood of disallowed costs, which LSUHSC-S may have to repay to the federal grantor. Recommendation: Management should ensure they have adequate controls over time and effort certifications, purchases, and reimbursement requests. In addition, management should ensure adequate segregation of duties covering approvals of all transaction types. Management’s Response and Corrective Action Plan: Management concurred with the finding and outlined a plan of corrective action (B-47).
2024-034 - Misappropriation of Research and Development Cluster Funds State Entity: Louisiana Tech University (La Tech) Award Year: 2024 Award Numbers: GR301449, GR301541 Compliance Requirement: Allowable Costs/Cost Principles Repeat Finding: No See Schedule of Findings and Questioned Costs for chart/table. Condition: In December 2024, Louisiana Tech University (La Tech) discovered that during the period from February 2024 through November 2024, nine electronic fund transfer (EFT) payments to an out-of-state university totaling $206,451 had been fraudulently diverted to unknown person(s). La Tech reported the fraud to appropriate law enforcement and to the federal grantor. Criteria: 2 CFR 200.303(a) requires non-federal entities to establish and maintain internal control over the federal award that provides reasonable compliance with federal statutes, regulations, and the terms and conditions of the federal award. 2 CFR 200.403(a) indicates costs must be necessary and reasonable for the performance of the federal award. Cause: The misappropriation of funds occurred after an unknown individual(s) submitted fraudulent emails impersonating La Tech’s point of contact with the out-of-state university, requesting a change in payment method from physical check to EFT. La Tech processed the request under the incorrect assumption that it was legitimate. The stolen funds originated as grant funding (Research and Development Cluster) from the National Institutes of Health (NIH). La Tech became the direct recipient of the NIH grant funding when La Tech hired a faculty member that had been awarded the NIH grants while employed at the out-of-state university. Research related to the grant funding continued at the out-of-state university and La Tech, as the prime recipient, provided reimbursement. Effect: As a result of investigation, La Tech identified $206,451 in payments that were fraudulently diverted to unknown person(s). In response to this cyber fraud, La Tech management has represented that they are evaluating opportunities to further enhance its internal controls and verification procedures to better safeguard against increasingly sophisticated cyber threats targeting payment remittance processes. Recommendation: La Tech should continuously evaluate its internal controls to guard against future fraud attempts. Management’s Response and Corrective Action Plan: Management concurred with the finding and provided a corrective action plan (B-49).