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).
2024-025 - Inadequate Controls over Waiver and Support Coordination Service Providers State Entity: Louisiana Department of Health (LDH) Award Years: 2023, 2024 Award Numbers: 2305LA5MAP, 2405LA5MAP Compliance Requirement: Activities Allowed or Unallowed Repeat Finding: Yes (Prior Year Finding No. 2023-023) See Schedule of Findings and Questioned Costs for chart/table. Condition: For the second consecutive year, LDH paid Medicaid Home and Community Based Services (HCBS) claims for the New Opportunities Waiver (NOW) for waiver services that were not adequately documented. In addition, payments were made for the Residential Options Waiver (ROW) for waiver services that were not adequately documented. LDH also paid claims for support coordination services that were not documented in accordance with established policies. Our testing of NOW and ROW waiver services included 729 claims paid in state fiscal year 2024 totaling $130,881 paid to two providers for 14 beneficiaries. Our test identified errors for 501 claims totaling $16,634 in federal funds, with some claims having multiple errors. The following errors were noted. • For 383 claims for 13 beneficiaries, the waiver services provider did not provide adequate documentation to support billed services. • For 121 claims for 9 beneficiaries, the waiver services provider did not provide documentation substantiating the reasons for departures from the approved plan of care (POC). • For 50 claims for 3 beneficiaries, the waiver services provider billed the units of service for the claim at a rate that was inconsistent with the allocated billing rate per unit in the POC. • For 4 claims for 1 beneficiary, the waiver services provider inappropriately billed for services that overlapped with non-waiver institutional services. In addition to testing NOW and ROW waiver services, we also tested claims paid for support coordination services for the 14 waiver beneficiaries tested. In our test of 156 claims paid in fiscal year 2024 totaling $30,544 paid to six support coordination providers for the 14 beneficiaries, the support coordination service provider did not provide adequate documentation to support billed services for six claims for two beneficiaries. The federally funded portion of these claims totaled $768. Criteria: 42 CFR Part 441, Subpart G requires states to operate their HCBS programs with certain assurances, including health and welfare, financial accountability, and evaluation of need. To meet these assurances, states must demonstrate that they have systems to effectively monitor the adequacy of service plans, the qualifications of providers, and the health and welfare of beneficiaries. Waiver services are accessed through support coordinators who assist with development and monitoring of the beneficiary’s POC. Auditors used LDH’s provider manuals to identify required documentation, which includes billing codes, an approved POC, time sheets or electronic clock in/out and progress notes. Provider manuals are intended to give a provider the information needed to fulfill its vendor agreement with the State of Louisiana, and is the basis for federal and state reviews of the program. The beneficiary’s case record is required to include a copy of the approved POC, including any revisions. The POC documents the beneficiary’s assessed needs and types and quantity of services to address those needs and costs related to services. Direct service providers provide care to a beneficiary based on the approved POC. According to the LDH service coordination provider manual, service logs are the means for clearly documenting services billed and must be reviewed by supervisors. In addition, in accordance with 42 CFR 441.301(b)(1)(ii), waiver services are not furnished to individuals who are inpatients of a hospital, nursing facility or inpatient care facility for individuals with an intellectual disability. Cause: The errors noted in testing occurred because LDH failed to adequately monitor that NOW and ROW waiver and support coordination providers properly maintained adequate records, supporting documentation, and appropriately billed for services. Effect: Without adequate documentation a provider cannot substantiate and auditors cannot verify that the departures were beneficiary-driven and person-centered as required. Without adequate supporting documentation there is reduced assurance that billed services were properly billed, were actually performed, beneficiaries are receiving needed services, and limited resources are allocated appropriately. Questioned costs totaling $17,402 in federal funds were noted in relation to the waiver services provider and support coordination services provider not providing adequate documentation to support billed services. Recommendation: LDH should ensure all departmental policies and federal regulations for waiver and support coordination services are enforced, including documentation to support claims and evidence that departures from the approved POC meet the needs of the beneficiary. LDH should consider additional provider training regarding documentation requirements. Management’s Response and Corrective Action Plan: Management partially concurred with the finding stating they did not concur with three of the errors noted in the determination of inadequate controls. For the error that management concurred with, a corrective action plan was provided (B-19). Auditor’s Additional Comments: LDH noted in their response they did not concur with three of the errors noted in the determination of inadequate controls over waiver and support coordination providers and have concerns with LLA’s overreliance on documentation in determining control adequacy. According to CFR 200.303(a) the recipient must establish, document, and maintain effective internal control over federal awards that provides reasonable assurance that the recipient is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. As part of obtaining reasonable assurance that the system of internal control is operating effectively and implemented, documentation supporting these controls is necessary for the auditor to make these determinations. All control mechanisms that were in place, documented, and provided to the auditor were considered. In addition, LDH noted that there was no error in the departures from the approved POC nor were there errors associated with the claims that were reported as having been billed at the incorrect rate. As stated in the finding, documentation could not be provided to substantiate the reason for the departure from the approved POC for either the number of units or the allocated billing rate per unit. Finally, LDH noted that while claims were paid for waiver services that overlapped with non-waiver institutional services, there was no error as LDH’s established controls identified and addressed the overlap in billing. The exceptions noted for these claims were a result of LDH not providing sufficient supporting documentation to the auditor showing the recoupment of the payments for the overlapping shifts.
2024-025 - Inadequate Controls over Waiver and Support Coordination Service Providers State Entity: Louisiana Department of Health (LDH) Award Years: 2023, 2024 Award Numbers: 2305LA5MAP, 2405LA5MAP Compliance Requirement: Activities Allowed or Unallowed Repeat Finding: Yes (Prior Year Finding No. 2023-023) See Schedule of Findings and Questioned Costs for chart/table. Condition: For the second consecutive year, LDH paid Medicaid Home and Community Based Services (HCBS) claims for the New Opportunities Waiver (NOW) for waiver services that were not adequately documented. In addition, payments were made for the Residential Options Waiver (ROW) for waiver services that were not adequately documented. LDH also paid claims for support coordination services that were not documented in accordance with established policies. Our testing of NOW and ROW waiver services included 729 claims paid in state fiscal year 2024 totaling $130,881 paid to two providers for 14 beneficiaries. Our test identified errors for 501 claims totaling $16,634 in federal funds, with some claims having multiple errors. The following errors were noted. • For 383 claims for 13 beneficiaries, the waiver services provider did not provide adequate documentation to support billed services. • For 121 claims for 9 beneficiaries, the waiver services provider did not provide documentation substantiating the reasons for departures from the approved plan of care (POC). • For 50 claims for 3 beneficiaries, the waiver services provider billed the units of service for the claim at a rate that was inconsistent with the allocated billing rate per unit in the POC. • For 4 claims for 1 beneficiary, the waiver services provider inappropriately billed for services that overlapped with non-waiver institutional services. In addition to testing NOW and ROW waiver services, we also tested claims paid for support coordination services for the 14 waiver beneficiaries tested. In our test of 156 claims paid in fiscal year 2024 totaling $30,544 paid to six support coordination providers for the 14 beneficiaries, the support coordination service provider did not provide adequate documentation to support billed services for six claims for two beneficiaries. The federally funded portion of these claims totaled $768. Criteria: 42 CFR Part 441, Subpart G requires states to operate their HCBS programs with certain assurances, including health and welfare, financial accountability, and evaluation of need. To meet these assurances, states must demonstrate that they have systems to effectively monitor the adequacy of service plans, the qualifications of providers, and the health and welfare of beneficiaries. Waiver services are accessed through support coordinators who assist with development and monitoring of the beneficiary’s POC. Auditors used LDH’s provider manuals to identify required documentation, which includes billing codes, an approved POC, time sheets or electronic clock in/out and progress notes. Provider manuals are intended to give a provider the information needed to fulfill its vendor agreement with the State of Louisiana, and is the basis for federal and state reviews of the program. The beneficiary’s case record is required to include a copy of the approved POC, including any revisions. The POC documents the beneficiary’s assessed needs and types and quantity of services to address those needs and costs related to services. Direct service providers provide care to a beneficiary based on the approved POC. According to the LDH service coordination provider manual, service logs are the means for clearly documenting services billed and must be reviewed by supervisors. In addition, in accordance with 42 CFR 441.301(b)(1)(ii), waiver services are not furnished to individuals who are inpatients of a hospital, nursing facility or inpatient care facility for individuals with an intellectual disability. Cause: The errors noted in testing occurred because LDH failed to adequately monitor that NOW and ROW waiver and support coordination providers properly maintained adequate records, supporting documentation, and appropriately billed for services. Effect: Without adequate documentation a provider cannot substantiate and auditors cannot verify that the departures were beneficiary-driven and person-centered as required. Without adequate supporting documentation there is reduced assurance that billed services were properly billed, were actually performed, beneficiaries are receiving needed services, and limited resources are allocated appropriately. Questioned costs totaling $17,402 in federal funds were noted in relation to the waiver services provider and support coordination services provider not providing adequate documentation to support billed services. Recommendation: LDH should ensure all departmental policies and federal regulations for waiver and support coordination services are enforced, including documentation to support claims and evidence that departures from the approved POC meet the needs of the beneficiary. LDH should consider additional provider training regarding documentation requirements. Management’s Response and Corrective Action Plan: Management partially concurred with the finding stating they did not concur with three of the errors noted in the determination of inadequate controls. For the error that management concurred with, a corrective action plan was provided (B-19). Auditor’s Additional Comments: LDH noted in their response they did not concur with three of the errors noted in the determination of inadequate controls over waiver and support coordination providers and have concerns with LLA’s overreliance on documentation in determining control adequacy. According to CFR 200.303(a) the recipient must establish, document, and maintain effective internal control over federal awards that provides reasonable assurance that the recipient is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. As part of obtaining reasonable assurance that the system of internal control is operating effectively and implemented, documentation supporting these controls is necessary for the auditor to make these determinations. All control mechanisms that were in place, documented, and provided to the auditor were considered. In addition, LDH noted that there was no error in the departures from the approved POC nor were there errors associated with the claims that were reported as having been billed at the incorrect rate. As stated in the finding, documentation could not be provided to substantiate the reason for the departure from the approved POC for either the number of units or the allocated billing rate per unit. Finally, LDH noted that while claims were paid for waiver services that overlapped with non-waiver institutional services, there was no error as LDH’s established controls identified and addressed the overlap in billing. The exceptions noted for these claims were a result of LDH not providing sufficient supporting documentation to the auditor showing the recoupment of the payments for the overlapping shifts.
Criteria: 2 CFR § 200.303(a) requires a non-federal entity 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 award. Condition: The District posts all costs to its QuickBooks-based general ledger. QuickBooks provides separate financial information for the District’s individual federal awards and other activities. The District also posts all costs to a spreadsheet used to aggregate costs for billing purposes (the “Billing Worksheets”). These Billing Worksheets form the basis of the financial reports to the U.S. Forest Service. We noted a material discrepancy between the QuickBooks reports and the Billing Worksheets. The District does not have a procedure to reconcile the Billing Worksheets to QuickBooks. We inquired about the discrepancy, but the District was unable to fully explain the difference. The need for a reconciliation procedure between QuickBooks and the Billing Worksheets was most evident in payroll. Of a population of 37 payroll items, we test 9 individual postings of either wages or fringe benefits. We began testing the sample by recomputing the payroll items and comparing them to the Billing Worksheets with only one very small exception. We then traced these billing items to the SF 270’s with no exceptions. However, when we attempted to trace the proven payroll costs, which were billed to the Forest Service (based on the Billing Worksheets), to QuickBooks (used to draft the Schedule of Expenditures of Federal Awards) and could not match most numbers. Further, in our non-payroll disbursements testing, we located one small item that appeared to have been paid twice. We noted that a reconciliation procedure between QuickBooks and the Billing Worksheets would likely have located this double billing. Cause: Had the District used QuickBooks as a base for the billing to the USFS or, alternately, reconciled the Billing Worksheets used to prepare SF 270s to the bank-reconciled, QuickBooks general ledger, the errors identified above likely would not have occurred. Effect: Costs could be billed to the federal award, which are not allowable because they were not expended. Repeat Finding: No. Questioned Costs: No costs are questioned. Recommendation: We recommend that the District impose a procedure to require that the Billing Worksheets be reconciled to the QuickBooks general ledger on a monthly basis. Views of Responsible Officials: Management’s response is reported in “Management’s Response and Corrective Action Plan” included in a separate section at the end of this report.
Criteria: 2 CFR § 200.303(a) requires a non-federal entity 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 award. Supervisory review and approval of invoices for allowability, adherence to cost principles, accuracy and completeness is a very important internal control over allowable costs/activities. Condition: In testing, non-payroll disbursements, we noted that there was no signature showing approval for payment on invoices or other document in the voucher package. We did, however, note that the District matches cancelled checks to the invoices and files a copy of the cancelled check with the invoice within QuickBooks Online system. The District informed us that the District Manager can alone signs all checks up to $5,000 and that additional signatures are required for all invoices over $5000. We reviewed Cash Disbursements Policy 3140, which provides that: The District Manager may be the sole signatory on checks up to $5,000. Two signatures by “officials” are required for checks greater than $5,000 but less than $25,000. Further checks over $5,000 require presentation to the Board of Directors at a regular Board meeting unless there is an urgency in payment before the meeting. For all check amounts greater than $25,000, two Board Directors must be the signatories. We determined to test the above cited policy on check signatures to show approval of invoices. Of a population of 87 items of non-payroll disbursements, we randomly selected a sample of 22 items and further selected 11 more items based on dollar amount. We located five exceptions to the check signature requirements of Cash Disbursements Policy 3140. In each case, the amount was over $25,000, but the signature on the checks were of the District Manager and only one Board member. We inquired about other, additional controls which could help to ensure that only authorized invoices are paid. The District suggested that Board of Director’s review and approval of the QuickBooks financials at monthly Board Meetings might be considered. We felt that this provided some assurance, though not significant assurance because the financials do not detail disbursements. Cause: The District Manager changed about mid-year. As well, the District is very small with only three employees. Effect: Not requiring an approval prior to payment of invoices and omitting to enforce the signatory requirements described in Cash Disbursements Policy 3140 (two signatures of “officials” member for checks over $5,000 and up to $25,000; two Board members’ signature for checks over $25,000) can lead to more errors and possibly even fraud. Repeat Finding: No. Recommendation: We recommend that the District discuss, at the next Board meeting, the lack of appropriate signatures on checks noted in testing as required by Cash Disbursements Policy 3140 (two signatures of “officials” member for checks over $5,000 and up to $25,000; two Board members’ signature for checks over $25,000). Further, we recommend that the District enact a review process, checking for required signatures on all checks. The District might also consider a policy requiring that approval of invoices be documented with a signature affixed to the invoice or other document in the voucher package prior to payment. Questioned Costs: No costs are questioned. Views of Responsible Officials: Management’s response is reported in “Management’s Response and Corrective Action Plan” included in a separate section at the end of this report.
Finding Number: 2024-002 Disbursement Documentation - Significant Deficiency; Repeat Finding: No; Questioned Costs: None; Funding Agency: Department of Health and Human Services, US Department of Treasury AL Number: 93.243, 21.027 Award Year: 7/1/2023 – 6/30/2024, 7/1/2023 – 6/30/2024 Condition: A sample of expenses were selected to test internal control over compliance and compliance with allowable costs/cost principles. Out of the items selected for testing, we noted insufficient documentation to support approval on 10 out of the 18 expenses selected for testing. Criteria: The Organization is required to follow the Uniform Guidance requirement 2 CFR 200.303, which requires the Organization to establish, document and maintain effective internal controls over federal awards. The Organization verbally approved these expenses but lacked the documentation to support the approval. Cause: The Organization’s fiscal policies and procedures did not require written approval, leading to reliance on verbal approvals which were not documented. Effect: The failure to document approvals for expenses could lead to unallowable costs to be disbursed on grant awards. Effect: The failure to document approvals for expenses could lead to unallowable costs to be disbursed on grant awards. View of Responsible Officials: Management agrees with the finding and has committed to implementing a corrective action plan. Management has hired new fiscal staff and implemented a new expense management system that requires invoice approvals for all purchases.
Finding Number: 2024-002 Disbursement Documentation - Significant Deficiency; Repeat Finding: No; Questioned Costs: None; Funding Agency: Department of Health and Human Services, US Department of Treasury AL Number: 93.243, 21.027 Award Year: 7/1/2023 – 6/30/2024, 7/1/2023 – 6/30/2024 Condition: A sample of expenses were selected to test internal control over compliance and compliance with allowable costs/cost principles. Out of the items selected for testing, we noted insufficient documentation to support approval on 10 out of the 18 expenses selected for testing. Criteria: The Organization is required to follow the Uniform Guidance requirement 2 CFR 200.303, which requires the Organization to establish, document and maintain effective internal controls over federal awards. The Organization verbally approved these expenses but lacked the documentation to support the approval. Cause: The Organization’s fiscal policies and procedures did not require written approval, leading to reliance on verbal approvals which were not documented. Effect: The failure to document approvals for expenses could lead to unallowable costs to be disbursed on grant awards. Effect: The failure to document approvals for expenses could lead to unallowable costs to be disbursed on grant awards. View of Responsible Officials: Management agrees with the finding and has committed to implementing a corrective action plan. Management has hired new fiscal staff and implemented a new expense management system that requires invoice approvals for all purchases.
Department of Health and Human Services FFAL #93.087, 90CU0095, 9/30/2018 – 9/29/2024 Enhance Safety of Children Affected by Substance Abuse Activities Allowed or Unallowed and Allowable Costs and Cost Principles Significant Deficiency in Internal Control over Compliance Criteria: The Center is required to have procedures in place to ensure that federal awards are expended only for allowable costs in accordance with Subpart E – Cost Principles of the Uniform Guidance. Allowable costs are supported by appropriate documentation and correctly charged as to account, amount, and period. 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition: In our sample of expenditures selected for testing, we noted calculation errors when allocating payroll expenses to the federal grant. Cause: The calculation errors were due to the use of a wrong employee’s allocation percentage, a keying error for the amount of payroll taxes for an employee, and not properly updating the calculation of worker’s compensation based upon the new percentage effective January 1, 2024 for the state of Iowa. In addition, the secondary review of federal grant expenditure tracking spreadsheet did not identify the calculation errors. Effect: The Center’s controls did not detect or correct the errors identified, which results in a reasonable possibility that the Center could submit disallowed costs under the federal awards and would not be able to detect and correct noncompliance in a timely manner. Questioned Costs: The program was overcharged by $1,348. Context: A total non-statistical sample of 60 nonpayroll and payroll transactions out of more than 250 transactions were selected for testing, which accounted for $113,666 of $474,590 of federal payroll and nonpayroll direct program expenditures. Repeat Finding from Prior Year: Yes, prior year finding 2023-003 Recommendation: We recommend management review the procedures and control processes involving allocating payroll expenses and the federal grant expenditure tracking spreadsheet to ensure compliance with the federal grant. Views of Responsible Officials: Management is in agreement.
Department of Health and Human Services FFAL #93.696, 1H79SM087069, 9/30/2022 – 9/30/2026 Certified Community Behavior Health Clinic Expansion Grants Activities Allowed or Unallowed and Allowable Costs and Cost Principles Significant Deficiency in Internal Control over Compliance Criteria: The Center is required to have procedures in place to ensure that federal awards are expended only for allowable costs in accordance with Subpart E – Cost Principles of the Uniform Guidance. Allowable costs are supported by appropriate documentation and correctly charged as to account, amount, and period. 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. 2 CFR 200.430(i) establishes the standards for documentation of personnel expenses including charges to Federal awards for salaries and wages. Charges must be based on records that accurately reflect the work performed with the records meeting the following standards: a) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. b) Be incorporated into the office records of the non-Federal entity. c) Reasonably reflect the total activity for which the employee is compensated by the non-Federal entity, not exceeding 100% of compensated activities. d) Encompass both federally assisted and all other activities compensated by the non-Federal entity on an integrated basis, but may include the use of subsidiary records as defined in the non-Federal entity’s written policy. e) Comply with the established accounting policies and practices of the non-Federal entity. f) Support the distribution of the employee’s salary or wages among specific activities or cost objectives. g) Budget estimates alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes. Condition: In our sample of expenditures selected for testing, we noted the following items: a) ClickTime timecard, which tracks federal and nonfederal hours for employees, did not properly reflect the employees total federal and nonfederal hours being paid within the payroll register (1 instances). b) Calculation errors for expenses allocated to the grant (3 instances). c) Employee tracked 2.7 hours under the federal program and a nonfederal program line in ClickTime (1 instance) causing it to be double counted. Cause: An employee entered 8 hours of PTO into ClickTime for two days each; however, the employee was only paid for 4 hours of PTO for each day. The calculation errors were due to the use of a wrong employee’s allocation percentage and a keying error for payroll expenses for an employee. The secondary review of the employee ClickTime timecards did not identify the incorrectly tracked hours and double tracked time. Also, the secondary review of federal grant expenditure tracking spreadsheet did not identify the calculation errors. Effect: The Center’s controls did not detect or correct the errors identified, which results in a reasonable possibility that the Center could submit disallowed costs under the federal awards and would not be able to detect and correct noncompliance in a timely manner. Questioned Costs: The program was overcharged by $1,134. Context: A total non-statistical sample of 60 nonpayroll and payroll transactions out of more than 250 transactions were selected for testing, which accounted for $239,541 of $886,400 of federal payroll and nonpayroll direct program expenditures. Repeat Finding from Prior Year: No Recommendation: We recommend management review the procedures and control processes involving timecards, allocating payroll expenses and the federal grant expenditure tracking spreadsheet to ensure compliance with the federal grant. Views of Responsible Officials: Management is in agreement.
Department of Health and Human Services FFAL #93.087, 90CU0095, 9/30/2018 – 9/29/2024 Enhance Safety of Children Affected by Substance Abuse Matching Significant Deficiency in Internal Control over Compliance Criteria: 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and conditions of the federal award. In addition, 2 CFR 200.306 establishes that matching funds be verifiable from the non-federal entity’s records and are allowable under Subpart E – Cost Principles and 2 CFR 200.403(g) establishes that costs be adequately documented. Condition: In our sample of expenditures selected for testing, we noted 5.15 hours identified as Medicaid hours for one employee were not removed from the employee’s total hours when calculating the amount of match for the federal program. Cause: The employee’s Medicaid hours were not properly included within a revenues report due to the employee’s provider number not being included within the report parameters. Effect: The Center’s controls did not detect or correct the errors identified, which results in a reasonable possibility that the Center could claim as match disallowed costs under the federal award and would not be able to detect and correct noncompliance in a timely manner. Questioned Costs: Error resulted in $142; however, the Center has identified more than the match requirement under the federal program. Context: A total non-statistical sample of 12 out of 58 match transactions were selected for testing, which accounted for $49,219 out of $233,501 of federal match expenditures. Repeat Finding from Prior Year: Yes, prior year finding 2023-006 Recommendation: We recommend management review the procedures and control processes involving the match claim workbook to ensure compliance with the federal grant. Views of Responsible Officials: Management is in agreement.
Assistance Listing, Federal Agency, and Program Name - R&D Cluster - all awards Federal Award Identification Number and Year - R&D Cluster - see SEFA for details Pass-through Entity - R&D Cluster - see SEFA for details Finding Type - Significant deficiency Repeat Finding - No Criteria - Per 2 CFR 200.303(a), a nonfederal entity must establish, document, and maintain effective internal control over the federal award that provides reasonable assurance that the recipient or subrecipient is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should align with the 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 - One of the internal controls that the University has designed related to ensuring that personnel expenses charged to federal grants were accurate is an effort certification that is completed at least annually. This control was not operating effectively during the year ended June 30, 2024, as certain effort certifications were not completed timely. Questioned Costs - None Identification of How Questioned Costs Were Computed - No unallowable costs were identified related to the testing completed. Context - The breakdown in controls was identified by management. There were several grants within the R&D Cluster that did not have effort certifications, which are typically performed through a workflow, completed during the year. Cause and Effect - The University’s control was ineffective as it allowed effort certifications to remain outstanding with no detective control to ensure that the certifications were completed timely, resulting in numerous effort certifications that were completed well after a time that would be effective for identifying any adjustments to federal payroll expenditures that would need to be made. As a result, effort certifications were not completed timely. Recommendation - We recommend implementing a control to ensure that all effort certifications are completed within an effective timeframe. Views of Responsible Officials and Planned Corrective Actions - Penn State concurs with the audit finding. Penn State has maintained a compliant effort certification system for decades. Our leadership remains wholly committed to addressing the concerns that were brought to our attention last fall. The FY24 annual effort certification process was launched on July 25, 2024. All business areas were informed at that time that effort confirmation is a “critical financial responsibility” and that final approvals were to be secured by September 30, 2024. It was brought to leadership’s attention that several effort reports were not timely certified. This was investigated by our Research Accounting Office in accordance with Penn State’s policy. As a result of frequent follow up, by the end of October 2024, virtually all such effort reports were resolved. A small number of such effort reports were certified later in fall 2024, generally due to system errors and/or special challenges associated with personnel changes.
Assistance Listing, Federal Agency, and Program Name - R&D Cluster - all awards Federal Award Identification Number and Year - R&D Cluster - see SEFA for details Pass-through Entity - R&D Cluster - see SEFA for details Finding Type - Significant deficiency Repeat Finding - No Criteria - Per 2 CFR 200.303(a), a nonfederal entity must establish, document, and maintain effective internal control over the federal award that provides reasonable assurance that the recipient or subrecipient is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should align with the 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 - One of the internal controls that the University has designed related to ensuring that personnel expenses charged to federal grants were accurate is an effort certification that is completed at least annually. This control was not operating effectively during the year ended June 30, 2024, as certain effort certifications were not completed timely. Questioned Costs - None Identification of How Questioned Costs Were Computed - No unallowable costs were identified related to the testing completed. Context - The breakdown in controls was identified by management. There were several grants within the R&D Cluster that did not have effort certifications, which are typically performed through a workflow, completed during the year. Cause and Effect - The University’s control was ineffective as it allowed effort certifications to remain outstanding with no detective control to ensure that the certifications were completed timely, resulting in numerous effort certifications that were completed well after a time that would be effective for identifying any adjustments to federal payroll expenditures that would need to be made. As a result, effort certifications were not completed timely. Recommendation - We recommend implementing a control to ensure that all effort certifications are completed within an effective timeframe. Views of Responsible Officials and Planned Corrective Actions - Penn State concurs with the audit finding. Penn State has maintained a compliant effort certification system for decades. Our leadership remains wholly committed to addressing the concerns that were brought to our attention last fall. The FY24 annual effort certification process was launched on July 25, 2024. All business areas were informed at that time that effort confirmation is a “critical financial responsibility” and that final approvals were to be secured by September 30, 2024. It was brought to leadership’s attention that several effort reports were not timely certified. This was investigated by our Research Accounting Office in accordance with Penn State’s policy. As a result of frequent follow up, by the end of October 2024, virtually all such effort reports were resolved. A small number of such effort reports were certified later in fall 2024, generally due to system errors and/or special challenges associated with personnel changes.
Assistance Listing, Federal Agency, and Program Name - R&D Cluster - all awards Federal Award Identification Number and Year - R&D Cluster - see SEFA for details Pass-through Entity - R&D Cluster - see SEFA for details Finding Type - Significant deficiency Repeat Finding - No Criteria - Per 2 CFR 200.303(a), a nonfederal entity must establish, document, and maintain effective internal control over the federal award that provides reasonable assurance that the recipient or subrecipient is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should align with the 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 - One of the internal controls that the University has designed related to ensuring that personnel expenses charged to federal grants were accurate is an effort certification that is completed at least annually. This control was not operating effectively during the year ended June 30, 2024, as certain effort certifications were not completed timely. Questioned Costs - None Identification of How Questioned Costs Were Computed - No unallowable costs were identified related to the testing completed. Context - The breakdown in controls was identified by management. There were several grants within the R&D Cluster that did not have effort certifications, which are typically performed through a workflow, completed during the year. Cause and Effect - The University’s control was ineffective as it allowed effort certifications to remain outstanding with no detective control to ensure that the certifications were completed timely, resulting in numerous effort certifications that were completed well after a time that would be effective for identifying any adjustments to federal payroll expenditures that would need to be made. As a result, effort certifications were not completed timely. Recommendation - We recommend implementing a control to ensure that all effort certifications are completed within an effective timeframe. Views of Responsible Officials and Planned Corrective Actions - Penn State concurs with the audit finding. Penn State has maintained a compliant effort certification system for decades. Our leadership remains wholly committed to addressing the concerns that were brought to our attention last fall. The FY24 annual effort certification process was launched on July 25, 2024. All business areas were informed at that time that effort confirmation is a “critical financial responsibility” and that final approvals were to be secured by September 30, 2024. It was brought to leadership’s attention that several effort reports were not timely certified. This was investigated by our Research Accounting Office in accordance with Penn State’s policy. As a result of frequent follow up, by the end of October 2024, virtually all such effort reports were resolved. A small number of such effort reports were certified later in fall 2024, generally due to system errors and/or special challenges associated with personnel changes.
Assistance Listing, Federal Agency, and Program Name - R&D Cluster - all awards Federal Award Identification Number and Year - R&D Cluster - see SEFA for details Pass-through Entity - R&D Cluster - see SEFA for details Finding Type - Significant deficiency Repeat Finding - No Criteria - Per 2 CFR 200.303(a), a nonfederal entity must establish, document, and maintain effective internal control over the federal award that provides reasonable assurance that the recipient or subrecipient is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should align with the 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 - One of the internal controls that the University has designed related to ensuring that personnel expenses charged to federal grants were accurate is an effort certification that is completed at least annually. This control was not operating effectively during the year ended June 30, 2024, as certain effort certifications were not completed timely. Questioned Costs - None Identification of How Questioned Costs Were Computed - No unallowable costs were identified related to the testing completed. Context - The breakdown in controls was identified by management. There were several grants within the R&D Cluster that did not have effort certifications, which are typically performed through a workflow, completed during the year. Cause and Effect - The University’s control was ineffective as it allowed effort certifications to remain outstanding with no detective control to ensure that the certifications were completed timely, resulting in numerous effort certifications that were completed well after a time that would be effective for identifying any adjustments to federal payroll expenditures that would need to be made. As a result, effort certifications were not completed timely. Recommendation - We recommend implementing a control to ensure that all effort certifications are completed within an effective timeframe. Views of Responsible Officials and Planned Corrective Actions - Penn State concurs with the audit finding. Penn State has maintained a compliant effort certification system for decades. Our leadership remains wholly committed to addressing the concerns that were brought to our attention last fall. The FY24 annual effort certification process was launched on July 25, 2024. All business areas were informed at that time that effort confirmation is a “critical financial responsibility” and that final approvals were to be secured by September 30, 2024. It was brought to leadership’s attention that several effort reports were not timely certified. This was investigated by our Research Accounting Office in accordance with Penn State’s policy. As a result of frequent follow up, by the end of October 2024, virtually all such effort reports were resolved. A small number of such effort reports were certified later in fall 2024, generally due to system errors and/or special challenges associated with personnel changes.
Assistance Listing, Federal Agency, and Program Name - R&D Cluster - all awards Federal Award Identification Number and Year - R&D Cluster - see SEFA for details Pass-through Entity - R&D Cluster - see SEFA for details Finding Type - Significant deficiency Repeat Finding - No Criteria - Per 2 CFR 200.303(a), a nonfederal entity must establish, document, and maintain effective internal control over the federal award that provides reasonable assurance that the recipient or subrecipient is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should align with the 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 - One of the internal controls that the University has designed related to ensuring that personnel expenses charged to federal grants were accurate is an effort certification that is completed at least annually. This control was not operating effectively during the year ended June 30, 2024, as certain effort certifications were not completed timely. Questioned Costs - None Identification of How Questioned Costs Were Computed - No unallowable costs were identified related to the testing completed. Context - The breakdown in controls was identified by management. There were several grants within the R&D Cluster that did not have effort certifications, which are typically performed through a workflow, completed during the year. Cause and Effect - The University’s control was ineffective as it allowed effort certifications to remain outstanding with no detective control to ensure that the certifications were completed timely, resulting in numerous effort certifications that were completed well after a time that would be effective for identifying any adjustments to federal payroll expenditures that would need to be made. As a result, effort certifications were not completed timely. Recommendation - We recommend implementing a control to ensure that all effort certifications are completed within an effective timeframe. Views of Responsible Officials and Planned Corrective Actions - Penn State concurs with the audit finding. Penn State has maintained a compliant effort certification system for decades. Our leadership remains wholly committed to addressing the concerns that were brought to our attention last fall. The FY24 annual effort certification process was launched on July 25, 2024. All business areas were informed at that time that effort confirmation is a “critical financial responsibility” and that final approvals were to be secured by September 30, 2024. It was brought to leadership’s attention that several effort reports were not timely certified. This was investigated by our Research Accounting Office in accordance with Penn State’s policy. As a result of frequent follow up, by the end of October 2024, virtually all such effort reports were resolved. A small number of such effort reports were certified later in fall 2024, generally due to system errors and/or special challenges associated with personnel changes.
Assistance Listing, Federal Agency, and Program Name - R&D Cluster - all awards Federal Award Identification Number and Year - R&D Cluster - see SEFA for details Pass-through Entity - R&D Cluster - see SEFA for details Finding Type - Significant deficiency Repeat Finding - No Criteria - Per 2 CFR 200.303(a), a nonfederal entity must establish, document, and maintain effective internal control over the federal award that provides reasonable assurance that the recipient or subrecipient is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should align with the 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 - One of the internal controls that the University has designed related to ensuring that personnel expenses charged to federal grants were accurate is an effort certification that is completed at least annually. This control was not operating effectively during the year ended June 30, 2024, as certain effort certifications were not completed timely. Questioned Costs - None Identification of How Questioned Costs Were Computed - No unallowable costs were identified related to the testing completed. Context - The breakdown in controls was identified by management. There were several grants within the R&D Cluster that did not have effort certifications, which are typically performed through a workflow, completed during the year. Cause and Effect - The University’s control was ineffective as it allowed effort certifications to remain outstanding with no detective control to ensure that the certifications were completed timely, resulting in numerous effort certifications that were completed well after a time that would be effective for identifying any adjustments to federal payroll expenditures that would need to be made. As a result, effort certifications were not completed timely. Recommendation - We recommend implementing a control to ensure that all effort certifications are completed within an effective timeframe. Views of Responsible Officials and Planned Corrective Actions - Penn State concurs with the audit finding. Penn State has maintained a compliant effort certification system for decades. Our leadership remains wholly committed to addressing the concerns that were brought to our attention last fall. The FY24 annual effort certification process was launched on July 25, 2024. All business areas were informed at that time that effort confirmation is a “critical financial responsibility” and that final approvals were to be secured by September 30, 2024. It was brought to leadership’s attention that several effort reports were not timely certified. This was investigated by our Research Accounting Office in accordance with Penn State’s policy. As a result of frequent follow up, by the end of October 2024, virtually all such effort reports were resolved. A small number of such effort reports were certified later in fall 2024, generally due to system errors and/or special challenges associated with personnel changes.
Assistance Listing, Federal Agency, and Program Name - R&D Cluster - all awards Federal Award Identification Number and Year - R&D Cluster - see SEFA for details Pass-through Entity - R&D Cluster - see SEFA for details Finding Type - Significant deficiency Repeat Finding - No Criteria - Per 2 CFR 200.303(a), a nonfederal entity must establish, document, and maintain effective internal control over the federal award that provides reasonable assurance that the recipient or subrecipient is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should align with the 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 - One of the internal controls that the University has designed related to ensuring that personnel expenses charged to federal grants were accurate is an effort certification that is completed at least annually. This control was not operating effectively during the year ended June 30, 2024, as certain effort certifications were not completed timely. Questioned Costs - None Identification of How Questioned Costs Were Computed - No unallowable costs were identified related to the testing completed. Context - The breakdown in controls was identified by management. There were several grants within the R&D Cluster that did not have effort certifications, which are typically performed through a workflow, completed during the year. Cause and Effect - The University’s control was ineffective as it allowed effort certifications to remain outstanding with no detective control to ensure that the certifications were completed timely, resulting in numerous effort certifications that were completed well after a time that would be effective for identifying any adjustments to federal payroll expenditures that would need to be made. As a result, effort certifications were not completed timely. Recommendation - We recommend implementing a control to ensure that all effort certifications are completed within an effective timeframe. Views of Responsible Officials and Planned Corrective Actions - Penn State concurs with the audit finding. Penn State has maintained a compliant effort certification system for decades. Our leadership remains wholly committed to addressing the concerns that were brought to our attention last fall. The FY24 annual effort certification process was launched on July 25, 2024. All business areas were informed at that time that effort confirmation is a “critical financial responsibility” and that final approvals were to be secured by September 30, 2024. It was brought to leadership’s attention that several effort reports were not timely certified. This was investigated by our Research Accounting Office in accordance with Penn State’s policy. As a result of frequent follow up, by the end of October 2024, virtually all such effort reports were resolved. A small number of such effort reports were certified later in fall 2024, generally due to system errors and/or special challenges associated with personnel changes.
Assistance Listing, Federal Agency, and Program Name - R&D Cluster - all awards Federal Award Identification Number and Year - R&D Cluster - see SEFA for details Pass-through Entity - R&D Cluster - see SEFA for details Finding Type - Significant deficiency Repeat Finding - No Criteria - Per 2 CFR 200.303(a), a nonfederal entity must establish, document, and maintain effective internal control over the federal award that provides reasonable assurance that the recipient or subrecipient is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should align with the 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 - One of the internal controls that the University has designed related to ensuring that personnel expenses charged to federal grants were accurate is an effort certification that is completed at least annually. This control was not operating effectively during the year ended June 30, 2024, as certain effort certifications were not completed timely. Questioned Costs - None Identification of How Questioned Costs Were Computed - No unallowable costs were identified related to the testing completed. Context - The breakdown in controls was identified by management. There were several grants within the R&D Cluster that did not have effort certifications, which are typically performed through a workflow, completed during the year. Cause and Effect - The University’s control was ineffective as it allowed effort certifications to remain outstanding with no detective control to ensure that the certifications were completed timely, resulting in numerous effort certifications that were completed well after a time that would be effective for identifying any adjustments to federal payroll expenditures that would need to be made. As a result, effort certifications were not completed timely. Recommendation - We recommend implementing a control to ensure that all effort certifications are completed within an effective timeframe. Views of Responsible Officials and Planned Corrective Actions - Penn State concurs with the audit finding. Penn State has maintained a compliant effort certification system for decades. Our leadership remains wholly committed to addressing the concerns that were brought to our attention last fall. The FY24 annual effort certification process was launched on July 25, 2024. All business areas were informed at that time that effort confirmation is a “critical financial responsibility” and that final approvals were to be secured by September 30, 2024. It was brought to leadership’s attention that several effort reports were not timely certified. This was investigated by our Research Accounting Office in accordance with Penn State’s policy. As a result of frequent follow up, by the end of October 2024, virtually all such effort reports were resolved. A small number of such effort reports were certified later in fall 2024, generally due to system errors and/or special challenges associated with personnel changes.
Assistance Listing, Federal Agency, and Program Name - R&D Cluster - all awards Federal Award Identification Number and Year - R&D Cluster - see SEFA for details Pass-through Entity - R&D Cluster - see SEFA for details Finding Type - Significant deficiency Repeat Finding - No Criteria - Per 2 CFR 200.303(a), a nonfederal entity must establish, document, and maintain effective internal control over the federal award that provides reasonable assurance that the recipient or subrecipient is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should align with the 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 - One of the internal controls that the University has designed related to ensuring that personnel expenses charged to federal grants were accurate is an effort certification that is completed at least annually. This control was not operating effectively during the year ended June 30, 2024, as certain effort certifications were not completed timely. Questioned Costs - None Identification of How Questioned Costs Were Computed - No unallowable costs were identified related to the testing completed. Context - The breakdown in controls was identified by management. There were several grants within the R&D Cluster that did not have effort certifications, which are typically performed through a workflow, completed during the year. Cause and Effect - The University’s control was ineffective as it allowed effort certifications to remain outstanding with no detective control to ensure that the certifications were completed timely, resulting in numerous effort certifications that were completed well after a time that would be effective for identifying any adjustments to federal payroll expenditures that would need to be made. As a result, effort certifications were not completed timely. Recommendation - We recommend implementing a control to ensure that all effort certifications are completed within an effective timeframe. Views of Responsible Officials and Planned Corrective Actions - Penn State concurs with the audit finding. Penn State has maintained a compliant effort certification system for decades. Our leadership remains wholly committed to addressing the concerns that were brought to our attention last fall. The FY24 annual effort certification process was launched on July 25, 2024. All business areas were informed at that time that effort confirmation is a “critical financial responsibility” and that final approvals were to be secured by September 30, 2024. It was brought to leadership’s attention that several effort reports were not timely certified. This was investigated by our Research Accounting Office in accordance with Penn State’s policy. As a result of frequent follow up, by the end of October 2024, virtually all such effort reports were resolved. A small number of such effort reports were certified later in fall 2024, generally due to system errors and/or special challenges associated with personnel changes.
Assistance Listing, Federal Agency, and Program Name - R&D Cluster - all awards Federal Award Identification Number and Year - R&D Cluster - see SEFA for details Pass-through Entity - R&D Cluster - see SEFA for details Finding Type - Significant deficiency Repeat Finding - No Criteria - Per 2 CFR 200.303(a), a nonfederal entity must establish, document, and maintain effective internal control over the federal award that provides reasonable assurance that the recipient or subrecipient is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should align with the 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 - One of the internal controls that the University has designed related to ensuring that personnel expenses charged to federal grants were accurate is an effort certification that is completed at least annually. This control was not operating effectively during the year ended June 30, 2024, as certain effort certifications were not completed timely. Questioned Costs - None Identification of How Questioned Costs Were Computed - No unallowable costs were identified related to the testing completed. Context - The breakdown in controls was identified by management. There were several grants within the R&D Cluster that did not have effort certifications, which are typically performed through a workflow, completed during the year. Cause and Effect - The University’s control was ineffective as it allowed effort certifications to remain outstanding with no detective control to ensure that the certifications were completed timely, resulting in numerous effort certifications that were completed well after a time that would be effective for identifying any adjustments to federal payroll expenditures that would need to be made. As a result, effort certifications were not completed timely. Recommendation - We recommend implementing a control to ensure that all effort certifications are completed within an effective timeframe. Views of Responsible Officials and Planned Corrective Actions - Penn State concurs with the audit finding. Penn State has maintained a compliant effort certification system for decades. Our leadership remains wholly committed to addressing the concerns that were brought to our attention last fall. The FY24 annual effort certification process was launched on July 25, 2024. All business areas were informed at that time that effort confirmation is a “critical financial responsibility” and that final approvals were to be secured by September 30, 2024. It was brought to leadership’s attention that several effort reports were not timely certified. This was investigated by our Research Accounting Office in accordance with Penn State’s policy. As a result of frequent follow up, by the end of October 2024, virtually all such effort reports were resolved. A small number of such effort reports were certified later in fall 2024, generally due to system errors and/or special challenges associated with personnel changes.
Assistance Listing, Federal Agency, and Program Name - R&D Cluster - all awards Federal Award Identification Number and Year - R&D Cluster - see SEFA for details Pass-through Entity - R&D Cluster - see SEFA for details Finding Type - Significant deficiency Repeat Finding - No Criteria - Per 2 CFR 200.303(a), a nonfederal entity must establish, document, and maintain effective internal control over the federal award that provides reasonable assurance that the recipient or subrecipient is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should align with the 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 - One of the internal controls that the University has designed related to ensuring that personnel expenses charged to federal grants were accurate is an effort certification that is completed at least annually. This control was not operating effectively during the year ended June 30, 2024, as certain effort certifications were not completed timely. Questioned Costs - None Identification of How Questioned Costs Were Computed - No unallowable costs were identified related to the testing completed. Context - The breakdown in controls was identified by management. There were several grants within the R&D Cluster that did not have effort certifications, which are typically performed through a workflow, completed during the year. Cause and Effect - The University’s control was ineffective as it allowed effort certifications to remain outstanding with no detective control to ensure that the certifications were completed timely, resulting in numerous effort certifications that were completed well after a time that would be effective for identifying any adjustments to federal payroll expenditures that would need to be made. As a result, effort certifications were not completed timely. Recommendation - We recommend implementing a control to ensure that all effort certifications are completed within an effective timeframe. Views of Responsible Officials and Planned Corrective Actions - Penn State concurs with the audit finding. Penn State has maintained a compliant effort certification system for decades. Our leadership remains wholly committed to addressing the concerns that were brought to our attention last fall. The FY24 annual effort certification process was launched on July 25, 2024. All business areas were informed at that time that effort confirmation is a “critical financial responsibility” and that final approvals were to be secured by September 30, 2024. It was brought to leadership’s attention that several effort reports were not timely certified. This was investigated by our Research Accounting Office in accordance with Penn State’s policy. As a result of frequent follow up, by the end of October 2024, virtually all such effort reports were resolved. A small number of such effort reports were certified later in fall 2024, generally due to system errors and/or special challenges associated with personnel changes.
Assistance Listing, Federal Agency, and Program Name - R&D Cluster - all awards Federal Award Identification Number and Year - R&D Cluster - see SEFA for details Pass-through Entity - R&D Cluster - see SEFA for details Finding Type - Significant deficiency Repeat Finding - No Criteria - Per 2 CFR 200.303(a), a nonfederal entity must establish, document, and maintain effective internal control over the federal award that provides reasonable assurance that the recipient or subrecipient is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should align with the 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 - One of the internal controls that the University has designed related to ensuring that personnel expenses charged to federal grants were accurate is an effort certification that is completed at least annually. This control was not operating effectively during the year ended June 30, 2024, as certain effort certifications were not completed timely. Questioned Costs - None Identification of How Questioned Costs Were Computed - No unallowable costs were identified related to the testing completed. Context - The breakdown in controls was identified by management. There were several grants within the R&D Cluster that did not have effort certifications, which are typically performed through a workflow, completed during the year. Cause and Effect - The University’s control was ineffective as it allowed effort certifications to remain outstanding with no detective control to ensure that the certifications were completed timely, resulting in numerous effort certifications that were completed well after a time that would be effective for identifying any adjustments to federal payroll expenditures that would need to be made. As a result, effort certifications were not completed timely. Recommendation - We recommend implementing a control to ensure that all effort certifications are completed within an effective timeframe. Views of Responsible Officials and Planned Corrective Actions - Penn State concurs with the audit finding. Penn State has maintained a compliant effort certification system for decades. Our leadership remains wholly committed to addressing the concerns that were brought to our attention last fall. The FY24 annual effort certification process was launched on July 25, 2024. All business areas were informed at that time that effort confirmation is a “critical financial responsibility” and that final approvals were to be secured by September 30, 2024. It was brought to leadership’s attention that several effort reports were not timely certified. This was investigated by our Research Accounting Office in accordance with Penn State’s policy. As a result of frequent follow up, by the end of October 2024, virtually all such effort reports were resolved. A small number of such effort reports were certified later in fall 2024, generally due to system errors and/or special challenges associated with personnel changes.
Assistance Listing, Federal Agency, and Program Name - R&D Cluster - all awards Federal Award Identification Number and Year - R&D Cluster - see SEFA for details Pass-through Entity - R&D Cluster - see SEFA for details Finding Type - Significant deficiency Repeat Finding - No Criteria - Per 2 CFR 200.303(a), a nonfederal entity must establish, document, and maintain effective internal control over the federal award that provides reasonable assurance that the recipient or subrecipient is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should align with the 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 - One of the internal controls that the University has designed related to ensuring that personnel expenses charged to federal grants were accurate is an effort certification that is completed at least annually. This control was not operating effectively during the year ended June 30, 2024, as certain effort certifications were not completed timely. Questioned Costs - None Identification of How Questioned Costs Were Computed - No unallowable costs were identified related to the testing completed. Context - The breakdown in controls was identified by management. There were several grants within the R&D Cluster that did not have effort certifications, which are typically performed through a workflow, completed during the year. Cause and Effect - The University’s control was ineffective as it allowed effort certifications to remain outstanding with no detective control to ensure that the certifications were completed timely, resulting in numerous effort certifications that were completed well after a time that would be effective for identifying any adjustments to federal payroll expenditures that would need to be made. As a result, effort certifications were not completed timely. Recommendation - We recommend implementing a control to ensure that all effort certifications are completed within an effective timeframe. Views of Responsible Officials and Planned Corrective Actions - Penn State concurs with the audit finding. Penn State has maintained a compliant effort certification system for decades. Our leadership remains wholly committed to addressing the concerns that were brought to our attention last fall. The FY24 annual effort certification process was launched on July 25, 2024. All business areas were informed at that time that effort confirmation is a “critical financial responsibility” and that final approvals were to be secured by September 30, 2024. It was brought to leadership’s attention that several effort reports were not timely certified. This was investigated by our Research Accounting Office in accordance with Penn State’s policy. As a result of frequent follow up, by the end of October 2024, virtually all such effort reports were resolved. A small number of such effort reports were certified later in fall 2024, generally due to system errors and/or special challenges associated with personnel changes.
Assistance Listing, Federal Agency, and Program Name - R&D Cluster - all awards Federal Award Identification Number and Year - R&D Cluster - see SEFA for details Pass-through Entity - R&D Cluster - see SEFA for details Finding Type - Significant deficiency Repeat Finding - No Criteria - Per 2 CFR 200.303(a), a nonfederal entity must establish, document, and maintain effective internal control over the federal award that provides reasonable assurance that the recipient or subrecipient is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should align with the 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 - One of the internal controls that the University has designed related to ensuring that personnel expenses charged to federal grants were accurate is an effort certification that is completed at least annually. This control was not operating effectively during the year ended June 30, 2024, as certain effort certifications were not completed timely. Questioned Costs - None Identification of How Questioned Costs Were Computed - No unallowable costs were identified related to the testing completed. Context - The breakdown in controls was identified by management. There were several grants within the R&D Cluster that did not have effort certifications, which are typically performed through a workflow, completed during the year. Cause and Effect - The University’s control was ineffective as it allowed effort certifications to remain outstanding with no detective control to ensure that the certifications were completed timely, resulting in numerous effort certifications that were completed well after a time that would be effective for identifying any adjustments to federal payroll expenditures that would need to be made. As a result, effort certifications were not completed timely. Recommendation - We recommend implementing a control to ensure that all effort certifications are completed within an effective timeframe. Views of Responsible Officials and Planned Corrective Actions - Penn State concurs with the audit finding. Penn State has maintained a compliant effort certification system for decades. Our leadership remains wholly committed to addressing the concerns that were brought to our attention last fall. The FY24 annual effort certification process was launched on July 25, 2024. All business areas were informed at that time that effort confirmation is a “critical financial responsibility” and that final approvals were to be secured by September 30, 2024. It was brought to leadership’s attention that several effort reports were not timely certified. This was investigated by our Research Accounting Office in accordance with Penn State’s policy. As a result of frequent follow up, by the end of October 2024, virtually all such effort reports were resolved. A small number of such effort reports were certified later in fall 2024, generally due to system errors and/or special challenges associated with personnel changes.
Assistance Listing, Federal Agency, and Program Name - R&D Cluster - all awards Federal Award Identification Number and Year - R&D Cluster - see SEFA for details Pass-through Entity - R&D Cluster - see SEFA for details Finding Type - Significant deficiency Repeat Finding - No Criteria - Per 2 CFR 200.303(a), a nonfederal entity must establish, document, and maintain effective internal control over the federal award that provides reasonable assurance that the recipient or subrecipient is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should align with the 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 - One of the internal controls that the University has designed related to ensuring that personnel expenses charged to federal grants were accurate is an effort certification that is completed at least annually. This control was not operating effectively during the year ended June 30, 2024, as certain effort certifications were not completed timely. Questioned Costs - None Identification of How Questioned Costs Were Computed - No unallowable costs were identified related to the testing completed. Context - The breakdown in controls was identified by management. There were several grants within the R&D Cluster that did not have effort certifications, which are typically performed through a workflow, completed during the year. Cause and Effect - The University’s control was ineffective as it allowed effort certifications to remain outstanding with no detective control to ensure that the certifications were completed timely, resulting in numerous effort certifications that were completed well after a time that would be effective for identifying any adjustments to federal payroll expenditures that would need to be made. As a result, effort certifications were not completed timely. Recommendation - We recommend implementing a control to ensure that all effort certifications are completed within an effective timeframe. Views of Responsible Officials and Planned Corrective Actions - Penn State concurs with the audit finding. Penn State has maintained a compliant effort certification system for decades. Our leadership remains wholly committed to addressing the concerns that were brought to our attention last fall. The FY24 annual effort certification process was launched on July 25, 2024. All business areas were informed at that time that effort confirmation is a “critical financial responsibility” and that final approvals were to be secured by September 30, 2024. It was brought to leadership’s attention that several effort reports were not timely certified. This was investigated by our Research Accounting Office in accordance with Penn State’s policy. As a result of frequent follow up, by the end of October 2024, virtually all such effort reports were resolved. A small number of such effort reports were certified later in fall 2024, generally due to system errors and/or special challenges associated with personnel changes.
Assistance Listing, Federal Agency, and Program Name - R&D Cluster - all awards Federal Award Identification Number and Year - R&D Cluster - see SEFA for details Pass-through Entity - R&D Cluster - see SEFA for details Finding Type - Significant deficiency Repeat Finding - No Criteria - Per 2 CFR 200.303(a), a nonfederal entity must establish, document, and maintain effective internal control over the federal award that provides reasonable assurance that the recipient or subrecipient is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should align with the 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 - One of the internal controls that the University has designed related to ensuring that personnel expenses charged to federal grants were accurate is an effort certification that is completed at least annually. This control was not operating effectively during the year ended June 30, 2024, as certain effort certifications were not completed timely. Questioned Costs - None Identification of How Questioned Costs Were Computed - No unallowable costs were identified related to the testing completed. Context - The breakdown in controls was identified by management. There were several grants within the R&D Cluster that did not have effort certifications, which are typically performed through a workflow, completed during the year. Cause and Effect - The University’s control was ineffective as it allowed effort certifications to remain outstanding with no detective control to ensure that the certifications were completed timely, resulting in numerous effort certifications that were completed well after a time that would be effective for identifying any adjustments to federal payroll expenditures that would need to be made. As a result, effort certifications were not completed timely. Recommendation - We recommend implementing a control to ensure that all effort certifications are completed within an effective timeframe. Views of Responsible Officials and Planned Corrective Actions - Penn State concurs with the audit finding. Penn State has maintained a compliant effort certification system for decades. Our leadership remains wholly committed to addressing the concerns that were brought to our attention last fall. The FY24 annual effort certification process was launched on July 25, 2024. All business areas were informed at that time that effort confirmation is a “critical financial responsibility” and that final approvals were to be secured by September 30, 2024. It was brought to leadership’s attention that several effort reports were not timely certified. This was investigated by our Research Accounting Office in accordance with Penn State’s policy. As a result of frequent follow up, by the end of October 2024, virtually all such effort reports were resolved. A small number of such effort reports were certified later in fall 2024, generally due to system errors and/or special challenges associated with personnel changes.
Assistance Listing, Federal Agency, and Program Name - R&D Cluster - all awards Federal Award Identification Number and Year - R&D Cluster - see SEFA for details Pass-through Entity - R&D Cluster - see SEFA for details Finding Type - Significant deficiency Repeat Finding - No Criteria - Per 2 CFR 200.303(a), a nonfederal entity must establish, document, and maintain effective internal control over the federal award that provides reasonable assurance that the recipient or subrecipient is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should align with the 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 - One of the internal controls that the University has designed related to ensuring that personnel expenses charged to federal grants were accurate is an effort certification that is completed at least annually. This control was not operating effectively during the year ended June 30, 2024, as certain effort certifications were not completed timely. Questioned Costs - None Identification of How Questioned Costs Were Computed - No unallowable costs were identified related to the testing completed. Context - The breakdown in controls was identified by management. There were several grants within the R&D Cluster that did not have effort certifications, which are typically performed through a workflow, completed during the year. Cause and Effect - The University’s control was ineffective as it allowed effort certifications to remain outstanding with no detective control to ensure that the certifications were completed timely, resulting in numerous effort certifications that were completed well after a time that would be effective for identifying any adjustments to federal payroll expenditures that would need to be made. As a result, effort certifications were not completed timely. Recommendation - We recommend implementing a control to ensure that all effort certifications are completed within an effective timeframe. Views of Responsible Officials and Planned Corrective Actions - Penn State concurs with the audit finding. Penn State has maintained a compliant effort certification system for decades. Our leadership remains wholly committed to addressing the concerns that were brought to our attention last fall. The FY24 annual effort certification process was launched on July 25, 2024. All business areas were informed at that time that effort confirmation is a “critical financial responsibility” and that final approvals were to be secured by September 30, 2024. It was brought to leadership’s attention that several effort reports were not timely certified. This was investigated by our Research Accounting Office in accordance with Penn State’s policy. As a result of frequent follow up, by the end of October 2024, virtually all such effort reports were resolved. A small number of such effort reports were certified later in fall 2024, generally due to system errors and/or special challenges associated with personnel changes.
Assistance Listing, Federal Agency, and Program Name - R&D Cluster - all awards Federal Award Identification Number and Year - R&D Cluster - see SEFA for details Pass-through Entity - R&D Cluster - see SEFA for details Finding Type - Significant deficiency Repeat Finding - No Criteria - Per 2 CFR 200.303(a), a nonfederal entity must establish, document, and maintain effective internal control over the federal award that provides reasonable assurance that the recipient or subrecipient is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should align with the 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 - One of the internal controls that the University has designed related to ensuring that personnel expenses charged to federal grants were accurate is an effort certification that is completed at least annually. This control was not operating effectively during the year ended June 30, 2024, as certain effort certifications were not completed timely. Questioned Costs - None Identification of How Questioned Costs Were Computed - No unallowable costs were identified related to the testing completed. Context - The breakdown in controls was identified by management. There were several grants within the R&D Cluster that did not have effort certifications, which are typically performed through a workflow, completed during the year. Cause and Effect - The University’s control was ineffective as it allowed effort certifications to remain outstanding with no detective control to ensure that the certifications were completed timely, resulting in numerous effort certifications that were completed well after a time that would be effective for identifying any adjustments to federal payroll expenditures that would need to be made. As a result, effort certifications were not completed timely. Recommendation - We recommend implementing a control to ensure that all effort certifications are completed within an effective timeframe. Views of Responsible Officials and Planned Corrective Actions - Penn State concurs with the audit finding. Penn State has maintained a compliant effort certification system for decades. Our leadership remains wholly committed to addressing the concerns that were brought to our attention last fall. The FY24 annual effort certification process was launched on July 25, 2024. All business areas were informed at that time that effort confirmation is a “critical financial responsibility” and that final approvals were to be secured by September 30, 2024. It was brought to leadership’s attention that several effort reports were not timely certified. This was investigated by our Research Accounting Office in accordance with Penn State’s policy. As a result of frequent follow up, by the end of October 2024, virtually all such effort reports were resolved. A small number of such effort reports were certified later in fall 2024, generally due to system errors and/or special challenges associated with personnel changes.
Assistance Listing, Federal Agency, and Program Name - R&D Cluster - all awards Federal Award Identification Number and Year - R&D Cluster - see SEFA for details Pass-through Entity - R&D Cluster - see SEFA for details Finding Type - Significant deficiency Repeat Finding - No Criteria - Per 2 CFR 200.303(a), a nonfederal entity must establish, document, and maintain effective internal control over the federal award that provides reasonable assurance that the recipient or subrecipient is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should align with the 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 - One of the internal controls that the University has designed related to ensuring that personnel expenses charged to federal grants were accurate is an effort certification that is completed at least annually. This control was not operating effectively during the year ended June 30, 2024, as certain effort certifications were not completed timely. Questioned Costs - None Identification of How Questioned Costs Were Computed - No unallowable costs were identified related to the testing completed. Context - The breakdown in controls was identified by management. There were several grants within the R&D Cluster that did not have effort certifications, which are typically performed through a workflow, completed during the year. Cause and Effect - The University’s control was ineffective as it allowed effort certifications to remain outstanding with no detective control to ensure that the certifications were completed timely, resulting in numerous effort certifications that were completed well after a time that would be effective for identifying any adjustments to federal payroll expenditures that would need to be made. As a result, effort certifications were not completed timely. Recommendation - We recommend implementing a control to ensure that all effort certifications are completed within an effective timeframe. Views of Responsible Officials and Planned Corrective Actions - Penn State concurs with the audit finding. Penn State has maintained a compliant effort certification system for decades. Our leadership remains wholly committed to addressing the concerns that were brought to our attention last fall. The FY24 annual effort certification process was launched on July 25, 2024. All business areas were informed at that time that effort confirmation is a “critical financial responsibility” and that final approvals were to be secured by September 30, 2024. It was brought to leadership’s attention that several effort reports were not timely certified. This was investigated by our Research Accounting Office in accordance with Penn State’s policy. As a result of frequent follow up, by the end of October 2024, virtually all such effort reports were resolved. A small number of such effort reports were certified later in fall 2024, generally due to system errors and/or special challenges associated with personnel changes.
Assistance Listing, Federal Agency, and Program Name - R&D Cluster - all awards Federal Award Identification Number and Year - R&D Cluster - see SEFA for details Pass-through Entity - R&D Cluster - see SEFA for details Finding Type - Significant deficiency Repeat Finding - No Criteria - Per 2 CFR 200.303(a), a nonfederal entity must establish, document, and maintain effective internal control over the federal award that provides reasonable assurance that the recipient or subrecipient is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should align with the 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 - One of the internal controls that the University has designed related to ensuring that personnel expenses charged to federal grants were accurate is an effort certification that is completed at least annually. This control was not operating effectively during the year ended June 30, 2024, as certain effort certifications were not completed timely. Questioned Costs - None Identification of How Questioned Costs Were Computed - No unallowable costs were identified related to the testing completed. Context - The breakdown in controls was identified by management. There were several grants within the R&D Cluster that did not have effort certifications, which are typically performed through a workflow, completed during the year. Cause and Effect - The University’s control was ineffective as it allowed effort certifications to remain outstanding with no detective control to ensure that the certifications were completed timely, resulting in numerous effort certifications that were completed well after a time that would be effective for identifying any adjustments to federal payroll expenditures that would need to be made. As a result, effort certifications were not completed timely. Recommendation - We recommend implementing a control to ensure that all effort certifications are completed within an effective timeframe. Views of Responsible Officials and Planned Corrective Actions - Penn State concurs with the audit finding. Penn State has maintained a compliant effort certification system for decades. Our leadership remains wholly committed to addressing the concerns that were brought to our attention last fall. The FY24 annual effort certification process was launched on July 25, 2024. All business areas were informed at that time that effort confirmation is a “critical financial responsibility” and that final approvals were to be secured by September 30, 2024. It was brought to leadership’s attention that several effort reports were not timely certified. This was investigated by our Research Accounting Office in accordance with Penn State’s policy. As a result of frequent follow up, by the end of October 2024, virtually all such effort reports were resolved. A small number of such effort reports were certified later in fall 2024, generally due to system errors and/or special challenges associated with personnel changes.
Assistance Listing, Federal Agency, and Program Name - R&D Cluster - all awards Federal Award Identification Number and Year - R&D Cluster - see SEFA for details Pass-through Entity - R&D Cluster - see SEFA for details Finding Type - Significant deficiency Repeat Finding - No Criteria - Per 2 CFR 200.303(a), a nonfederal entity must establish, document, and maintain effective internal control over the federal award that provides reasonable assurance that the recipient or subrecipient is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should align with the 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 - One of the internal controls that the University has designed related to ensuring that personnel expenses charged to federal grants were accurate is an effort certification that is completed at least annually. This control was not operating effectively during the year ended June 30, 2024, as certain effort certifications were not completed timely. Questioned Costs - None Identification of How Questioned Costs Were Computed - No unallowable costs were identified related to the testing completed. Context - The breakdown in controls was identified by management. There were several grants within the R&D Cluster that did not have effort certifications, which are typically performed through a workflow, completed during the year. Cause and Effect - The University’s control was ineffective as it allowed effort certifications to remain outstanding with no detective control to ensure that the certifications were completed timely, resulting in numerous effort certifications that were completed well after a time that would be effective for identifying any adjustments to federal payroll expenditures that would need to be made. As a result, effort certifications were not completed timely. Recommendation - We recommend implementing a control to ensure that all effort certifications are completed within an effective timeframe. Views of Responsible Officials and Planned Corrective Actions - Penn State concurs with the audit finding. Penn State has maintained a compliant effort certification system for decades. Our leadership remains wholly committed to addressing the concerns that were brought to our attention last fall. The FY24 annual effort certification process was launched on July 25, 2024. All business areas were informed at that time that effort confirmation is a “critical financial responsibility” and that final approvals were to be secured by September 30, 2024. It was brought to leadership’s attention that several effort reports were not timely certified. This was investigated by our Research Accounting Office in accordance with Penn State’s policy. As a result of frequent follow up, by the end of October 2024, virtually all such effort reports were resolved. A small number of such effort reports were certified later in fall 2024, generally due to system errors and/or special challenges associated with personnel changes.
Assistance Listing, Federal Agency, and Program Name - R&D Cluster - all awards Federal Award Identification Number and Year - R&D Cluster - see SEFA for details Pass-through Entity - R&D Cluster - see SEFA for details Finding Type - Significant deficiency Repeat Finding - No Criteria - Per 2 CFR 200.303(a), a nonfederal entity must establish, document, and maintain effective internal control over the federal award that provides reasonable assurance that the recipient or subrecipient is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should align with the 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 - One of the internal controls that the University has designed related to ensuring that personnel expenses charged to federal grants were accurate is an effort certification that is completed at least annually. This control was not operating effectively during the year ended June 30, 2024, as certain effort certifications were not completed timely. Questioned Costs - None Identification of How Questioned Costs Were Computed - No unallowable costs were identified related to the testing completed. Context - The breakdown in controls was identified by management. There were several grants within the R&D Cluster that did not have effort certifications, which are typically performed through a workflow, completed during the year. Cause and Effect - The University’s control was ineffective as it allowed effort certifications to remain outstanding with no detective control to ensure that the certifications were completed timely, resulting in numerous effort certifications that were completed well after a time that would be effective for identifying any adjustments to federal payroll expenditures that would need to be made. As a result, effort certifications were not completed timely. Recommendation - We recommend implementing a control to ensure that all effort certifications are completed within an effective timeframe. Views of Responsible Officials and Planned Corrective Actions - Penn State concurs with the audit finding. Penn State has maintained a compliant effort certification system for decades. Our leadership remains wholly committed to addressing the concerns that were brought to our attention last fall. The FY24 annual effort certification process was launched on July 25, 2024. All business areas were informed at that time that effort confirmation is a “critical financial responsibility” and that final approvals were to be secured by September 30, 2024. It was brought to leadership’s attention that several effort reports were not timely certified. This was investigated by our Research Accounting Office in accordance with Penn State’s policy. As a result of frequent follow up, by the end of October 2024, virtually all such effort reports were resolved. A small number of such effort reports were certified later in fall 2024, generally due to system errors and/or special challenges associated with personnel changes.
Assistance Listing, Federal Agency, and Program Name - R&D Cluster - all awards Federal Award Identification Number and Year - R&D Cluster - see SEFA for details Pass-through Entity - R&D Cluster - see SEFA for details Finding Type - Significant deficiency Repeat Finding - No Criteria - Per 2 CFR 200.303(a), a nonfederal entity must establish, document, and maintain effective internal control over the federal award that provides reasonable assurance that the recipient or subrecipient is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should align with the 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 - One of the internal controls that the University has designed related to ensuring that personnel expenses charged to federal grants were accurate is an effort certification that is completed at least annually. This control was not operating effectively during the year ended June 30, 2024, as certain effort certifications were not completed timely. Questioned Costs - None Identification of How Questioned Costs Were Computed - No unallowable costs were identified related to the testing completed. Context - The breakdown in controls was identified by management. There were several grants within the R&D Cluster that did not have effort certifications, which are typically performed through a workflow, completed during the year. Cause and Effect - The University’s control was ineffective as it allowed effort certifications to remain outstanding with no detective control to ensure that the certifications were completed timely, resulting in numerous effort certifications that were completed well after a time that would be effective for identifying any adjustments to federal payroll expenditures that would need to be made. As a result, effort certifications were not completed timely. Recommendation - We recommend implementing a control to ensure that all effort certifications are completed within an effective timeframe. Views of Responsible Officials and Planned Corrective Actions - Penn State concurs with the audit finding. Penn State has maintained a compliant effort certification system for decades. Our leadership remains wholly committed to addressing the concerns that were brought to our attention last fall. The FY24 annual effort certification process was launched on July 25, 2024. All business areas were informed at that time that effort confirmation is a “critical financial responsibility” and that final approvals were to be secured by September 30, 2024. It was brought to leadership’s attention that several effort reports were not timely certified. This was investigated by our Research Accounting Office in accordance with Penn State’s policy. As a result of frequent follow up, by the end of October 2024, virtually all such effort reports were resolved. A small number of such effort reports were certified later in fall 2024, generally due to system errors and/or special challenges associated with personnel changes.
Assistance Listing, Federal Agency, and Program Name - R&D Cluster - all awards Federal Award Identification Number and Year - R&D Cluster - see SEFA for details Pass-through Entity - R&D Cluster - see SEFA for details Finding Type - Significant deficiency Repeat Finding - No Criteria - Per 2 CFR 200.303(a), a nonfederal entity must establish, document, and maintain effective internal control over the federal award that provides reasonable assurance that the recipient or subrecipient is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should align with the 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 - One of the internal controls that the University has designed related to ensuring that personnel expenses charged to federal grants were accurate is an effort certification that is completed at least annually. This control was not operating effectively during the year ended June 30, 2024, as certain effort certifications were not completed timely. Questioned Costs - None Identification of How Questioned Costs Were Computed - No unallowable costs were identified related to the testing completed. Context - The breakdown in controls was identified by management. There were several grants within the R&D Cluster that did not have effort certifications, which are typically performed through a workflow, completed during the year. Cause and Effect - The University’s control was ineffective as it allowed effort certifications to remain outstanding with no detective control to ensure that the certifications were completed timely, resulting in numerous effort certifications that were completed well after a time that would be effective for identifying any adjustments to federal payroll expenditures that would need to be made. As a result, effort certifications were not completed timely. Recommendation - We recommend implementing a control to ensure that all effort certifications are completed within an effective timeframe. Views of Responsible Officials and Planned Corrective Actions - Penn State concurs with the audit finding. Penn State has maintained a compliant effort certification system for decades. Our leadership remains wholly committed to addressing the concerns that were brought to our attention last fall. The FY24 annual effort certification process was launched on July 25, 2024. All business areas were informed at that time that effort confirmation is a “critical financial responsibility” and that final approvals were to be secured by September 30, 2024. It was brought to leadership’s attention that several effort reports were not timely certified. This was investigated by our Research Accounting Office in accordance with Penn State’s policy. As a result of frequent follow up, by the end of October 2024, virtually all such effort reports were resolved. A small number of such effort reports were certified later in fall 2024, generally due to system errors and/or special challenges associated with personnel changes.
Assistance Listing, Federal Agency, and Program Name - R&D Cluster - all awards Federal Award Identification Number and Year - R&D Cluster - see SEFA for details Pass-through Entity - R&D Cluster - see SEFA for details Finding Type - Significant deficiency Repeat Finding - No Criteria - Per 2 CFR 200.303(a), a nonfederal entity must establish, document, and maintain effective internal control over the federal award that provides reasonable assurance that the recipient or subrecipient is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should align with the 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 - One of the internal controls that the University has designed related to ensuring that personnel expenses charged to federal grants were accurate is an effort certification that is completed at least annually. This control was not operating effectively during the year ended June 30, 2024, as certain effort certifications were not completed timely. Questioned Costs - None Identification of How Questioned Costs Were Computed - No unallowable costs were identified related to the testing completed. Context - The breakdown in controls was identified by management. There were several grants within the R&D Cluster that did not have effort certifications, which are typically performed through a workflow, completed during the year. Cause and Effect - The University’s control was ineffective as it allowed effort certifications to remain outstanding with no detective control to ensure that the certifications were completed timely, resulting in numerous effort certifications that were completed well after a time that would be effective for identifying any adjustments to federal payroll expenditures that would need to be made. As a result, effort certifications were not completed timely. Recommendation - We recommend implementing a control to ensure that all effort certifications are completed within an effective timeframe. Views of Responsible Officials and Planned Corrective Actions - Penn State concurs with the audit finding. Penn State has maintained a compliant effort certification system for decades. Our leadership remains wholly committed to addressing the concerns that were brought to our attention last fall. The FY24 annual effort certification process was launched on July 25, 2024. All business areas were informed at that time that effort confirmation is a “critical financial responsibility” and that final approvals were to be secured by September 30, 2024. It was brought to leadership’s attention that several effort reports were not timely certified. This was investigated by our Research Accounting Office in accordance with Penn State’s policy. As a result of frequent follow up, by the end of October 2024, virtually all such effort reports were resolved. A small number of such effort reports were certified later in fall 2024, generally due to system errors and/or special challenges associated with personnel changes.
Assistance Listing, Federal Agency, and Program Name - R&D Cluster - all awards Federal Award Identification Number and Year - R&D Cluster - see SEFA for details Pass-through Entity - R&D Cluster - see SEFA for details Finding Type - Significant deficiency Repeat Finding - No Criteria - Per 2 CFR 200.303(a), a nonfederal entity must establish, document, and maintain effective internal control over the federal award that provides reasonable assurance that the recipient or subrecipient is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should align with the 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 - One of the internal controls that the University has designed related to ensuring that personnel expenses charged to federal grants were accurate is an effort certification that is completed at least annually. This control was not operating effectively during the year ended June 30, 2024, as certain effort certifications were not completed timely. Questioned Costs - None Identification of How Questioned Costs Were Computed - No unallowable costs were identified related to the testing completed. Context - The breakdown in controls was identified by management. There were several grants within the R&D Cluster that did not have effort certifications, which are typically performed through a workflow, completed during the year. Cause and Effect - The University’s control was ineffective as it allowed effort certifications to remain outstanding with no detective control to ensure that the certifications were completed timely, resulting in numerous effort certifications that were completed well after a time that would be effective for identifying any adjustments to federal payroll expenditures that would need to be made. As a result, effort certifications were not completed timely. Recommendation - We recommend implementing a control to ensure that all effort certifications are completed within an effective timeframe. Views of Responsible Officials and Planned Corrective Actions - Penn State concurs with the audit finding. Penn State has maintained a compliant effort certification system for decades. Our leadership remains wholly committed to addressing the concerns that were brought to our attention last fall. The FY24 annual effort certification process was launched on July 25, 2024. All business areas were informed at that time that effort confirmation is a “critical financial responsibility” and that final approvals were to be secured by September 30, 2024. It was brought to leadership’s attention that several effort reports were not timely certified. This was investigated by our Research Accounting Office in accordance with Penn State’s policy. As a result of frequent follow up, by the end of October 2024, virtually all such effort reports were resolved. A small number of such effort reports were certified later in fall 2024, generally due to system errors and/or special challenges associated with personnel changes.
Assistance Listing, Federal Agency, and Program Name - R&D Cluster - all awards Federal Award Identification Number and Year - R&D Cluster - see SEFA for details Pass-through Entity - R&D Cluster - see SEFA for details Finding Type - Significant deficiency Repeat Finding - No Criteria - Per 2 CFR 200.303(a), a nonfederal entity must establish, document, and maintain effective internal control over the federal award that provides reasonable assurance that the recipient or subrecipient is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should align with the 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 - One of the internal controls that the University has designed related to ensuring that personnel expenses charged to federal grants were accurate is an effort certification that is completed at least annually. This control was not operating effectively during the year ended June 30, 2024, as certain effort certifications were not completed timely. Questioned Costs - None Identification of How Questioned Costs Were Computed - No unallowable costs were identified related to the testing completed. Context - The breakdown in controls was identified by management. There were several grants within the R&D Cluster that did not have effort certifications, which are typically performed through a workflow, completed during the year. Cause and Effect - The University’s control was ineffective as it allowed effort certifications to remain outstanding with no detective control to ensure that the certifications were completed timely, resulting in numerous effort certifications that were completed well after a time that would be effective for identifying any adjustments to federal payroll expenditures that would need to be made. As a result, effort certifications were not completed timely. Recommendation - We recommend implementing a control to ensure that all effort certifications are completed within an effective timeframe. Views of Responsible Officials and Planned Corrective Actions - Penn State concurs with the audit finding. Penn State has maintained a compliant effort certification system for decades. Our leadership remains wholly committed to addressing the concerns that were brought to our attention last fall. The FY24 annual effort certification process was launched on July 25, 2024. All business areas were informed at that time that effort confirmation is a “critical financial responsibility” and that final approvals were to be secured by September 30, 2024. It was brought to leadership’s attention that several effort reports were not timely certified. This was investigated by our Research Accounting Office in accordance with Penn State’s policy. As a result of frequent follow up, by the end of October 2024, virtually all such effort reports were resolved. A small number of such effort reports were certified later in fall 2024, generally due to system errors and/or special challenges associated with personnel changes.
Assistance Listing, Federal Agency, and Program Name - R&D Cluster - all awards Federal Award Identification Number and Year - R&D Cluster - see SEFA for details Pass-through Entity - R&D Cluster - see SEFA for details Finding Type - Significant deficiency Repeat Finding - No Criteria - Per 2 CFR 200.303(a), a nonfederal entity must establish, document, and maintain effective internal control over the federal award that provides reasonable assurance that the recipient or subrecipient is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should align with the 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 - One of the internal controls that the University has designed related to ensuring that personnel expenses charged to federal grants were accurate is an effort certification that is completed at least annually. This control was not operating effectively during the year ended June 30, 2024, as certain effort certifications were not completed timely. Questioned Costs - None Identification of How Questioned Costs Were Computed - No unallowable costs were identified related to the testing completed. Context - The breakdown in controls was identified by management. There were several grants within the R&D Cluster that did not have effort certifications, which are typically performed through a workflow, completed during the year. Cause and Effect - The University’s control was ineffective as it allowed effort certifications to remain outstanding with no detective control to ensure that the certifications were completed timely, resulting in numerous effort certifications that were completed well after a time that would be effective for identifying any adjustments to federal payroll expenditures that would need to be made. As a result, effort certifications were not completed timely. Recommendation - We recommend implementing a control to ensure that all effort certifications are completed within an effective timeframe. Views of Responsible Officials and Planned Corrective Actions - Penn State concurs with the audit finding. Penn State has maintained a compliant effort certification system for decades. Our leadership remains wholly committed to addressing the concerns that were brought to our attention last fall. The FY24 annual effort certification process was launched on July 25, 2024. All business areas were informed at that time that effort confirmation is a “critical financial responsibility” and that final approvals were to be secured by September 30, 2024. It was brought to leadership’s attention that several effort reports were not timely certified. This was investigated by our Research Accounting Office in accordance with Penn State’s policy. As a result of frequent follow up, by the end of October 2024, virtually all such effort reports were resolved. A small number of such effort reports were certified later in fall 2024, generally due to system errors and/or special challenges associated with personnel changes.
Assistance Listing, Federal Agency, and Program Name - R&D Cluster - all awards Federal Award Identification Number and Year - R&D Cluster - see SEFA for details Pass-through Entity - R&D Cluster - see SEFA for details Finding Type - Significant deficiency Repeat Finding - No Criteria - Per 2 CFR 200.303(a), a nonfederal entity must establish, document, and maintain effective internal control over the federal award that provides reasonable assurance that the recipient or subrecipient is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should align with the 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 - One of the internal controls that the University has designed related to ensuring that personnel expenses charged to federal grants were accurate is an effort certification that is completed at least annually. This control was not operating effectively during the year ended June 30, 2024, as certain effort certifications were not completed timely. Questioned Costs - None Identification of How Questioned Costs Were Computed - No unallowable costs were identified related to the testing completed. Context - The breakdown in controls was identified by management. There were several grants within the R&D Cluster that did not have effort certifications, which are typically performed through a workflow, completed during the year. Cause and Effect - The University’s control was ineffective as it allowed effort certifications to remain outstanding with no detective control to ensure that the certifications were completed timely, resulting in numerous effort certifications that were completed well after a time that would be effective for identifying any adjustments to federal payroll expenditures that would need to be made. As a result, effort certifications were not completed timely. Recommendation - We recommend implementing a control to ensure that all effort certifications are completed within an effective timeframe. Views of Responsible Officials and Planned Corrective Actions - Penn State concurs with the audit finding. Penn State has maintained a compliant effort certification system for decades. Our leadership remains wholly committed to addressing the concerns that were brought to our attention last fall. The FY24 annual effort certification process was launched on July 25, 2024. All business areas were informed at that time that effort confirmation is a “critical financial responsibility” and that final approvals were to be secured by September 30, 2024. It was brought to leadership’s attention that several effort reports were not timely certified. This was investigated by our Research Accounting Office in accordance with Penn State’s policy. As a result of frequent follow up, by the end of October 2024, virtually all such effort reports were resolved. A small number of such effort reports were certified later in fall 2024, generally due to system errors and/or special challenges associated with personnel changes.
Assistance Listing, Federal Agency, and Program Name - R&D Cluster - all awards Federal Award Identification Number and Year - R&D Cluster - see SEFA for details Pass-through Entity - R&D Cluster - see SEFA for details Finding Type - Significant deficiency Repeat Finding - No Criteria - Per 2 CFR 200.303(a), a nonfederal entity must establish, document, and maintain effective internal control over the federal award that provides reasonable assurance that the recipient or subrecipient is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should align with the 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 - One of the internal controls that the University has designed related to ensuring that personnel expenses charged to federal grants were accurate is an effort certification that is completed at least annually. This control was not operating effectively during the year ended June 30, 2024, as certain effort certifications were not completed timely. Questioned Costs - None Identification of How Questioned Costs Were Computed - No unallowable costs were identified related to the testing completed. Context - The breakdown in controls was identified by management. There were several grants within the R&D Cluster that did not have effort certifications, which are typically performed through a workflow, completed during the year. Cause and Effect - The University’s control was ineffective as it allowed effort certifications to remain outstanding with no detective control to ensure that the certifications were completed timely, resulting in numerous effort certifications that were completed well after a time that would be effective for identifying any adjustments to federal payroll expenditures that would need to be made. As a result, effort certifications were not completed timely. Recommendation - We recommend implementing a control to ensure that all effort certifications are completed within an effective timeframe. Views of Responsible Officials and Planned Corrective Actions - Penn State concurs with the audit finding. Penn State has maintained a compliant effort certification system for decades. Our leadership remains wholly committed to addressing the concerns that were brought to our attention last fall. The FY24 annual effort certification process was launched on July 25, 2024. All business areas were informed at that time that effort confirmation is a “critical financial responsibility” and that final approvals were to be secured by September 30, 2024. It was brought to leadership’s attention that several effort reports were not timely certified. This was investigated by our Research Accounting Office in accordance with Penn State’s policy. As a result of frequent follow up, by the end of October 2024, virtually all such effort reports were resolved. A small number of such effort reports were certified later in fall 2024, generally due to system errors and/or special challenges associated with personnel changes.
Assistance Listing, Federal Agency, and Program Name - R&D Cluster - all awards Federal Award Identification Number and Year - R&D Cluster - see SEFA for details Pass-through Entity - R&D Cluster - see SEFA for details Finding Type - Significant deficiency Repeat Finding - No Criteria - Per 2 CFR 200.303(a), a nonfederal entity must establish, document, and maintain effective internal control over the federal award that provides reasonable assurance that the recipient or subrecipient is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should align with the 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 - One of the internal controls that the University has designed related to ensuring that personnel expenses charged to federal grants were accurate is an effort certification that is completed at least annually. This control was not operating effectively during the year ended June 30, 2024, as certain effort certifications were not completed timely. Questioned Costs - None Identification of How Questioned Costs Were Computed - No unallowable costs were identified related to the testing completed. Context - The breakdown in controls was identified by management. There were several grants within the R&D Cluster that did not have effort certifications, which are typically performed through a workflow, completed during the year. Cause and Effect - The University’s control was ineffective as it allowed effort certifications to remain outstanding with no detective control to ensure that the certifications were completed timely, resulting in numerous effort certifications that were completed well after a time that would be effective for identifying any adjustments to federal payroll expenditures that would need to be made. As a result, effort certifications were not completed timely. Recommendation - We recommend implementing a control to ensure that all effort certifications are completed within an effective timeframe. Views of Responsible Officials and Planned Corrective Actions - Penn State concurs with the audit finding. Penn State has maintained a compliant effort certification system for decades. Our leadership remains wholly committed to addressing the concerns that were brought to our attention last fall. The FY24 annual effort certification process was launched on July 25, 2024. All business areas were informed at that time that effort confirmation is a “critical financial responsibility” and that final approvals were to be secured by September 30, 2024. It was brought to leadership’s attention that several effort reports were not timely certified. This was investigated by our Research Accounting Office in accordance with Penn State’s policy. As a result of frequent follow up, by the end of October 2024, virtually all such effort reports were resolved. A small number of such effort reports were certified later in fall 2024, generally due to system errors and/or special challenges associated with personnel changes.
Assistance Listing, Federal Agency, and Program Name - R&D Cluster - all awards Federal Award Identification Number and Year - R&D Cluster - see SEFA for details Pass-through Entity - R&D Cluster - see SEFA for details Finding Type - Significant deficiency Repeat Finding - No Criteria - Per 2 CFR 200.303(a), a nonfederal entity must establish, document, and maintain effective internal control over the federal award that provides reasonable assurance that the recipient or subrecipient is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should align with the 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 - One of the internal controls that the University has designed related to ensuring that personnel expenses charged to federal grants were accurate is an effort certification that is completed at least annually. This control was not operating effectively during the year ended June 30, 2024, as certain effort certifications were not completed timely. Questioned Costs - None Identification of How Questioned Costs Were Computed - No unallowable costs were identified related to the testing completed. Context - The breakdown in controls was identified by management. There were several grants within the R&D Cluster that did not have effort certifications, which are typically performed through a workflow, completed during the year. Cause and Effect - The University’s control was ineffective as it allowed effort certifications to remain outstanding with no detective control to ensure that the certifications were completed timely, resulting in numerous effort certifications that were completed well after a time that would be effective for identifying any adjustments to federal payroll expenditures that would need to be made. As a result, effort certifications were not completed timely. Recommendation - We recommend implementing a control to ensure that all effort certifications are completed within an effective timeframe. Views of Responsible Officials and Planned Corrective Actions - Penn State concurs with the audit finding. Penn State has maintained a compliant effort certification system for decades. Our leadership remains wholly committed to addressing the concerns that were brought to our attention last fall. The FY24 annual effort certification process was launched on July 25, 2024. All business areas were informed at that time that effort confirmation is a “critical financial responsibility” and that final approvals were to be secured by September 30, 2024. It was brought to leadership’s attention that several effort reports were not timely certified. This was investigated by our Research Accounting Office in accordance with Penn State’s policy. As a result of frequent follow up, by the end of October 2024, virtually all such effort reports were resolved. A small number of such effort reports were certified later in fall 2024, generally due to system errors and/or special challenges associated with personnel changes.