FINDING 2024-003 Information on the federal program: Subject: Child Nutrition Cluster - Internal Controls Federal Agency: Department of Agriculture Federal Program: School Breakfast Program, National School Lunch Program Assistance Listing Number: 10.553, 10.555 Federal Award Numbers and Years (or Other Identifying Numbers): FY2024 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Activities Allowed or Unallowed, Allowable Costs/Cost Principles Audit Finding: Significant Deficiency Criteria: 2 CFR section 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.430 states in part: (1) Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (ii) Be incorporated into the official records of the non-Federal entity; (iii) Reasonably reflect the total activity for which the employee is compensated by the non-Federal entity, (iv) 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; (v) Comply with the established accounting policies and practices of the non-Federal entity (See paragraph (h)(1)(ii) above for treatment of incidental work for IHEs.); and vii) Support the distribution of the employee's salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. Condition: An effective internal control system was not in place at the School Corporation in order to ensure compliance with requirements related to the grant agreement and the activities allowed or unallowed and allowable costs/cost principle compliance requirements. Cause: The School Corporation's management had not developed a system of internal controls to ensure compliance with the compliance requirements listed above. Effect: The failure to establish an effective internal control system placed the School Corporation at risk of noncompliance with the grant agreement and the compliance requirements. A lack of segregation of duties within an internal control system could have also allowed noncompliance with the compliance requirements and allowed the misuse and mismanagement of federal funds and assets by not having proper oversight, reviews, and approvals over the activities of the programs. Questioned Costs: $5,338 (Known questioned costs) Context: For 5 selections, in a sample of 5 payroll transactions, the School Corporation did not have time and effort logs to support the portion of the employee’s time charged to the grant. The employees’ time was split with a non-federal fund; however, the School Corporation did not have support for the allocation of the time charged to the School Lunch fund. Identification as a repeat finding: No. Recommendation: We recommend management ensure semi-annual certifications are completed for all employees charged to the grant awards at 100% and time and effort logs are maintained for all employees not charged at 100% to support work performed and charged to the grant awards. We recommend management establish a documented review by management of semi-annual certifications and time and effort logs to ensure time charged to grant awards is allowable and allocable based on work performed in accordance with grant requirements. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.
FINDING 2024-003 Information on the federal program: Subject: Child Nutrition Cluster - Internal Controls Federal Agency: Department of Agriculture Federal Program: School Breakfast Program, National School Lunch Program Assistance Listing Number: 10.553, 10.555 Federal Award Numbers and Years (or Other Identifying Numbers): FY2024 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Activities Allowed or Unallowed, Allowable Costs/Cost Principles Audit Finding: Significant Deficiency Criteria: 2 CFR section 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.430 states in part: (1) Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (ii) Be incorporated into the official records of the non-Federal entity; (iii) Reasonably reflect the total activity for which the employee is compensated by the non-Federal entity, (iv) 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; (v) Comply with the established accounting policies and practices of the non-Federal entity (See paragraph (h)(1)(ii) above for treatment of incidental work for IHEs.); and vii) Support the distribution of the employee's salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. Condition: An effective internal control system was not in place at the School Corporation in order to ensure compliance with requirements related to the grant agreement and the activities allowed or unallowed and allowable costs/cost principle compliance requirements. Cause: The School Corporation's management had not developed a system of internal controls to ensure compliance with the compliance requirements listed above. Effect: The failure to establish an effective internal control system placed the School Corporation at risk of noncompliance with the grant agreement and the compliance requirements. A lack of segregation of duties within an internal control system could have also allowed noncompliance with the compliance requirements and allowed the misuse and mismanagement of federal funds and assets by not having proper oversight, reviews, and approvals over the activities of the programs. Questioned Costs: $5,338 (Known questioned costs) Context: For 5 selections, in a sample of 5 payroll transactions, the School Corporation did not have time and effort logs to support the portion of the employee’s time charged to the grant. The employees’ time was split with a non-federal fund; however, the School Corporation did not have support for the allocation of the time charged to the School Lunch fund. Identification as a repeat finding: No. Recommendation: We recommend management ensure semi-annual certifications are completed for all employees charged to the grant awards at 100% and time and effort logs are maintained for all employees not charged at 100% to support work performed and charged to the grant awards. We recommend management establish a documented review by management of semi-annual certifications and time and effort logs to ensure time charged to grant awards is allowable and allocable based on work performed in accordance with grant requirements. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.
2 CFR § 3474.1 gives regulatory effect to the Department of Education for 2 CFR § 200.430 which states, in part, that costs of compensation are allowable to the extent that they satisfy the specific requirements of this part, and that the total compensation for individual employees is reasonable for the services rendered and conforms to the established written policy of the non-federal entity consistently applied to both Federal and non-Federal activities. In addition, charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; be incorporated into the official records of the non-Federal entity; reasonably reflect the total activity for which the employee is compensated by the non-Federal entity; and support the distribution of the employee’s salary or wages among specific activities or cost objectives if the employee works on more than one Federal award, a Federal award and non-Federal award, an indirect cost activity and a direct cost activity, two or more indirect activities which are allocated using different allocation bases, or an unallowable activity and a direct or indirect cost activity. Service Center Policy 6116 for Time and Effort Reporting indicates the reports should support the distribution of the employee’s salary or wages among specific activities or cost objectives if the employee works on more than one federal award, a Federal award and non-Federal award, an indirect and direct cost activity, two or more indirect activities which are allocated using different allocation bases, or an unallowable activity and a direct or indirect cost activity. The payroll office is responsible for the distribution, collection, and retention of all employee time and effort reports. The Service Center did not follow policy 6116 relating to time and effort resulting in the following errors: • The wages and related benefits for four out of 40 employee payroll checks tested totaling $2,569 were charged to the Special Education Grant Fund without any time and effort documentation. Semi-Annual Certifications, Personnel Activity Reports (PARs), or a Substitute System were not maintained to support the amount of time worked on the grant. Therefore, we consider the wages and related benefits for these employees in the amount of $2,569 to be questioned costs. Failure to maintain the appropriate time and effort documentation could lead to future questioned costs, reduced future federal funding, and the requirement to repay the Ohio Department of Education and Workforce. The Service Center should ensure all employees charging wages and benefits to federal grants maintain the appropriate documentation supporting the time spent on the grant, in accordance with the Service Center’s policy. Appropriate supporting documentation could include semi-annual certifications for employees working solely on a single cost objective or personal activity reports or timesheets with sufficient detail when an employee works on multiple activities.
2 CFR § 3474.1 gives regulatory effect to the Department of Education for 2 CFR § 200.430 which states, in part, that costs of compensation are allowable to the extent that they satisfy the specific requirements of this part, and that the total compensation for individual employees is reasonable for the services rendered and conforms to the established written policy of the non-federal entity consistently applied to both Federal and non-Federal activities. In addition, charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; be incorporated into the official records of the non-Federal entity; reasonably reflect the total activity for which the employee is compensated by the non-Federal entity; and support the distribution of the employee’s salary or wages among specific activities or cost objectives if the employee works on more than one Federal award, a Federal award and non-Federal award, an indirect cost activity and a direct cost activity, two or more indirect activities which are allocated using different allocation bases, or an unallowable activity and a direct or indirect cost activity. Service Center Policy 6116 for Time and Effort Reporting indicates the reports should support the distribution of the employee’s salary or wages among specific activities or cost objectives if the employee works on more than one federal award, a Federal award and non-Federal award, an indirect and direct cost activity, two or more indirect activities which are allocated using different allocation bases, or an unallowable activity and a direct or indirect cost activity. The payroll office is responsible for the distribution, collection, and retention of all employee time and effort reports. The Service Center did not follow policy 6116 relating to time and effort resulting in the following errors: • The wages and related benefits for four out of 40 employee payroll checks tested totaling $2,569 were charged to the Special Education Grant Fund without any time and effort documentation. Semi-Annual Certifications, Personnel Activity Reports (PARs), or a Substitute System were not maintained to support the amount of time worked on the grant. Therefore, we consider the wages and related benefits for these employees in the amount of $2,569 to be questioned costs. Failure to maintain the appropriate time and effort documentation could lead to future questioned costs, reduced future federal funding, and the requirement to repay the Ohio Department of Education and Workforce. The Service Center should ensure all employees charging wages and benefits to federal grants maintain the appropriate documentation supporting the time spent on the grant, in accordance with the Service Center’s policy. Appropriate supporting documentation could include semi-annual certifications for employees working solely on a single cost objective or personal activity reports or timesheets with sufficient detail when an employee works on multiple activities.
Federal Agency: U.S. Department of Health and Human Services Federal Program Name: Immunization Cooperative Agreements Assistance Listing Number: 93.268 Pass-through Agency: Pennsylvania Department of Health Pass-through Number: 4100090652 Award Period: July 1, 2021 - June 30, 2025 Compliance Requirement Affected: Allowable Costs Type of Finding: • Significant Deficiency in Internal Control over Compliance • Other Matters Criteria: 3 CFR Part 200 Subpart E General Provisions for Selected Items of Cost Section 200.430 Compensation – requires charges to federal awards for salaries and wages must be based on records that accurately reflect the work performed. Budget estimates determined before the services are performed alone do not qualify as support for charges to the federal awards. The Chapter’s system of internal controls should include processes to perform periodic after-the-fact reviews of interim charges made to a federal award based on budget estimates. All necessary adjustments must be made so that the final amount charged to the federal award is accurate, allowable, and properly allocated. Condition: During our testing, we noted the Chapter charges fringe benefits to the program based on an estimated allocation on the percentage of salaries as determined in the contract budget. However, we noted the Chapter does not have internal controls in place to provide a review of the actual fringe benefits incurred. Questioned Costs: No questioned costs above the $25,000 threshold have been identified. Context: During our testing, we noted the Chapter charges fringe benefits to the programs based on an estimated allocation on the percentage of salaries as determined in the contract budget. Cause: The Chapter does not have internal controls in place to provide a review of the actual fringe benefits incurred. Effect: Allocated costs that are not appropriately budgeted and invoiced could result in inaccurate reporting and misrepresentation of the program's expenses. Inaccurate reporting of expenses can result in noncompliance with federal regulations, which may lead to the requirement to return funds to the federal agency. Repeat Finding: N/A: Not a repeat finding. Recommendation: We recommend Pennsylvania Chapter, American Academy of Pediatrics establish a process for periodic after-the-fact reviews of interim charges made to federal awards based on budget estimates. Based on the review, management should make any necessary adjustments to the interim charges based on the results of the periodic reviews. This would ensure that the final amount charged to the federal award is accurate, allowable, and properly allocated. Viewed of Responsible Officials and Planned Corrective Actions: Please refer to Pennsylvania Chapter, American Academy of Pediatrics Corrective Action Plan.
Finding 2024-002 – Allowable Costs / Principles & Activities Allowed or Unallowed Federal Agency: U.S. Department of Health and Human Services Federal Program: Block Grants for Substance Use Prevention, Treatment, and Recovery Services AL Number: 93.959 Award Number: 24-05-128 & 6B08TI085827-01M002 Award Year: 2024 Type of Finding: Significant Deficiency in Internal Control over Compliance and Noncompliance Criteria: Per 2 CFR 200.430(g)(1)(i) & (ii), “Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: Be supported by a system of internal control that provides reasonable assurance that the charges are accurate, allowable, and properly allocated and be incorporated into the official records of the recipient or subrecipient.” Condition: During our testing of allowable costs and activities, it was determined that the Company’s internal controls over salaries and wages were not sufficient. Although the Organization maintained copies of employees’ original hiring documents, pay raises that were subsequent to the original hiring, and the related approvals, were not documented or maintained. Additionally, we noted that there is not a formal process to review employee timesheets or the payroll submission process as a whole. Context: There were 40 instances of employees’ salaries and wages tested. The sample consisted of six employees tested for seven pay periods, with one employee tested for five pay periods. For each instance tested, the deficiency in internal controls around payroll costs, as described in the Condition section, applied. Cause: The Organization did not maintain documentation of employee pay raises or the necessary approvals for those pay raises. The Organization’s internal control process around payroll costs does not include review of employee timesheets to ensure that reported time is reasonable and accurate. Effect: Lack of internal controls surrounding payroll costs could potentially lead to improper allocation of payroll costs to the Federal grant. Repeat finding: Not applicable. Recommendation: We recommend the Organization improve it’s internal control processes surrounding payroll costs. Specifically, documenting the approval of pay raises and maintaining that documentation as well as documenting the review and approval of employee timesheets and processing payroll for each pay run. Management’s Response: See Corrective Action Plan.
Finding 2024-002 – Allowable Costs / Principles & Activities Allowed or Unallowed Federal Agency: U.S. Department of Health and Human Services Federal Program: Block Grants for Substance Use Prevention, Treatment, and Recovery Services AL Number: 93.959 Award Number: 24-05-128 & 6B08TI085827-01M002 Award Year: 2024 Type of Finding: Significant Deficiency in Internal Control over Compliance and Noncompliance Criteria: Per 2 CFR 200.430(g)(1)(i) & (ii), “Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: Be supported by a system of internal control that provides reasonable assurance that the charges are accurate, allowable, and properly allocated and be incorporated into the official records of the recipient or subrecipient.” Condition: During our testing of allowable costs and activities, it was determined that the Company’s internal controls over salaries and wages were not sufficient. Although the Organization maintained copies of employees’ original hiring documents, pay raises that were subsequent to the original hiring, and the related approvals, were not documented or maintained. Additionally, we noted that there is not a formal process to review employee timesheets or the payroll submission process as a whole. Context: There were 40 instances of employees’ salaries and wages tested. The sample consisted of six employees tested for seven pay periods, with one employee tested for five pay periods. For each instance tested, the deficiency in internal controls around payroll costs, as described in the Condition section, applied. Cause: The Organization did not maintain documentation of employee pay raises or the necessary approvals for those pay raises. The Organization’s internal control process around payroll costs does not include review of employee timesheets to ensure that reported time is reasonable and accurate. Effect: Lack of internal controls surrounding payroll costs could potentially lead to improper allocation of payroll costs to the Federal grant. Repeat finding: Not applicable. Recommendation: We recommend the Organization improve it’s internal control processes surrounding payroll costs. Specifically, documenting the approval of pay raises and maintaining that documentation as well as documenting the review and approval of employee timesheets and processing payroll for each pay run. Management’s Response: See Corrective Action Plan.
Finding 2024-001: Time Tracking and Reporting (Significant Deficiency) Information on the Federal Program: 93.958 - Block Grants for Community Mental Health Services Criteria or Specific Requirement: According to 2 CFR Section 200.430(i) charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: 1. Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; 2. Be incorporated into the official records of the non-Federal entity; 3. Reasonably reflect the total activity for which the employee is compensated by the non-Federal entity, not exceeding 100% of compensated activities; 4. Encompass 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; 5. Comply with the established accounting policies and practices of the non-Federal entity; 6. Support the distribution of the employee’s salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non- Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. 7. Budget estimates (i.e., estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards.” Condition: During our testwork, we determined that the Association did not adequately document employee time spent on the Federal programs versus other programs. Cause: The Association does not require that all employees complete timesheets documenting time spent on the Federal award versus other awards. Effect or Potential Effect: The Association could inadvertently charge time to the Federal award that was not truly spent working on the Federal award. This could result in the Federal government over-paying for salaries associated with the award. Questioned Costs: Undetermined. The allocations of time were ultimately determined based on Management's evaluation of employee level of effort during the year. While the allocation was approved by management, there was degree of subjectivity applied in management's evaluation. Context: We noted that employees selected for testing did not have completed, detailed timesheets to indicate time spent on the Federal awards and other programs. Identification as a Repeat Finding, if Applicable: N/A Recommendation: We recommend that the Association implement formal time tracking policies to require all employees to complete a detailed timesheet in order to track actual time spent on various programs. All timesheets should have evidence of both employee and supervisory approval.
Finding 2024-001: Time Tracking and Reporting (Significant Deficiency) Information on the Federal Program: 93.958 - Block Grants for Community Mental Health Services Criteria or Specific Requirement: According to 2 CFR Section 200.430(i) charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: 1. Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; 2. Be incorporated into the official records of the non-Federal entity; 3. Reasonably reflect the total activity for which the employee is compensated by the non-Federal entity, not exceeding 100% of compensated activities; 4. Encompass 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; 5. Comply with the established accounting policies and practices of the non-Federal entity; 6. Support the distribution of the employee’s salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non- Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. 7. Budget estimates (i.e., estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards.” Condition: During our testwork, we determined that the Association did not adequately document employee time spent on the Federal programs versus other programs. Cause: The Association does not require that all employees complete timesheets documenting time spent on the Federal award versus other awards. Effect or Potential Effect: The Association could inadvertently charge time to the Federal award that was not truly spent working on the Federal award. This could result in the Federal government over-paying for salaries associated with the award. Questioned Costs: Undetermined. The allocations of time were ultimately determined based on Management's evaluation of employee level of effort during the year. While the allocation was approved by management, there was degree of subjectivity applied in management's evaluation. Context: We noted that employees selected for testing did not have completed, detailed timesheets to indicate time spent on the Federal awards and other programs. Identification as a Repeat Finding, if Applicable: N/A Recommendation: We recommend that the Association implement formal time tracking policies to require all employees to complete a detailed timesheet in order to track actual time spent on various programs. All timesheets should have evidence of both employee and supervisory approval.
Allowable Activities and Costs Federal Agency: U.S. Department of Health and Human Services Federal Program Name: Health Centers Cluster Assistance Listing Number: 93.224 and 93.527 Federal Award Identification Number: H80CS00824-22 and H80CS00824-23 Award Periods: May 1, 2023 – April 30, 2024, May 1, 2024 – April 30, 2025 Type of Finding: Immaterial noncompliance and significant deficiency in internal control over compliance Criteria: A grantee's system of internal control should include processes to review after-the-fact interim charges made to a federal award based on budget estimates. 45 CFR 75.430(i)(1). In addition, CFR 200.430 indicates costs of compensation are allowable to the extent that they satisfy the specific requirement of determining and supporting the salary and wages based on records that accurately reflect the work performed. Salaries and wages charged to a grant should be tagged/identified by employee to ensure expenses are not counted or charged twice. Condition: During the testing of payroll expenses charged to the grant, it was noted that a formula error resulted in the incorrect calculation of payroll expense for a particular employee. The Organization’s review did not identify that the wages being charged to the grant were inconsistent with the amount actually paid to the identified employee. Questioned Costs: $757. Context: The above condition impacted three (3) of sixty (60) transactions selected for testing, all of which related to the same employee. Cause: The Organization’s process for tracking and aggregating wages charged to the grant was dependent upon a VLOOKUP formula based on the employee’s last name. As a result of there being two employees with the same last name, the formula returned the first such employee from the payroll records. This resulted in the incorrect calculation of payroll expense for the employee selected for testing. Effect: The amount of wages charges to the grant could be different from the actual amount of wages paid to the employee. Repeat Finding: Yes. Recommendation: We recommend the Organization implement a comprehensive and thorough process to review all wages charged to federal and state grant prior to initiating a drawdown request or submitting a reimbursement request to the grantor. As part of this, the Organization should implement a process to review changes to salary and wage information as changes are made or identified.
Allowable Activities and Costs Federal Agency: U.S. Department of Health and Human Services Federal Program Name: Health Centers Cluster Assistance Listing Number: 93.224 and 93.527 Federal Award Identification Number: H80CS00824-22 and H80CS00824-23 Award Periods: May 1, 2023 – April 30, 2024, May 1, 2024 – April 30, 2025 Type of Finding: Immaterial noncompliance and significant deficiency in internal control over compliance Criteria: A grantee's system of internal control should include processes to review after-the-fact interim charges made to a federal award based on budget estimates. 45 CFR 75.430(i)(1). In addition, CFR 200.430 indicates costs of compensation are allowable to the extent that they satisfy the specific requirement of determining and supporting the salary and wages based on records that accurately reflect the work performed. Salaries and wages charged to a grant should be tagged/identified by employee to ensure expenses are not counted or charged twice. Condition: During the testing of payroll expenses charged to the grant, it was noted that a formula error resulted in the incorrect calculation of payroll expense for a particular employee. The Organization’s review did not identify that the wages being charged to the grant were inconsistent with the amount actually paid to the identified employee. Questioned Costs: $757. Context: The above condition impacted three (3) of sixty (60) transactions selected for testing, all of which related to the same employee. Cause: The Organization’s process for tracking and aggregating wages charged to the grant was dependent upon a VLOOKUP formula based on the employee’s last name. As a result of there being two employees with the same last name, the formula returned the first such employee from the payroll records. This resulted in the incorrect calculation of payroll expense for the employee selected for testing. Effect: The amount of wages charges to the grant could be different from the actual amount of wages paid to the employee. Repeat Finding: Yes. Recommendation: We recommend the Organization implement a comprehensive and thorough process to review all wages charged to federal and state grant prior to initiating a drawdown request or submitting a reimbursement request to the grantor. As part of this, the Organization should implement a process to review changes to salary and wage information as changes are made or identified.
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).
2024-006 - Control Weakness and Noncompliance with Personnel Expenses Charged to Federal Awards State Entity: University of Louisiana at Lafayette (UL Lafayette) Award Years: 2020, 2021, 2022 Award Numbers: 1R01MH125395, 2046460, R37AI094595 Compliance Requirements: Allowable Costs/Cost Principles; Special Tests and Provisions Pass-Through Entity: Northwestern University Repeat Finding: Yes (Prior Year Finding No. 2023-007) See Schedule of Findings and Questioned Costs for chart/table. Condition: For the fourth consecutive year, the University of Louisiana at Lafayette (UL Lafayette) did not have adequate controls in place to ensure personnel expenses charged to federal Research and Development (R&D) awards accurately reflected work performed. From a population of 14,024 payroll and non-payroll expenses charged to R&D grants for the fiscal year ending June 30, 2024, a non-statistical sample of 25 transactions were tested for compliance with allowable costs and cost principles requirements. For three (12%) of the payroll transactions, UL Lafayette was unable to provide documentation to show that personnel-related expenses totaling $18,707 were supported by time and effort certifications to ensure the accuracy of budget estimates charged to federal awards as required by federal regulations. Additionally, UL Lafayette did not perform time and effort certifications for the period January 1, 2024, through June 30, 2024. Because there is no after-the-fact review to ensure the accuracy of personnel costs and efforts charged to the awards, UL Lafayette could not ensure compliance with the requirements of special tests and provisions related to key personnel effort. Criteria: 2 CFR 200.430(i) specifies the documentation standards for personnel expenses. In order to be allowable, charges to federal awards for personnel expenses must be based on records that accurately reflect the work performed and must be supported by a system of internal control, which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Budget estimates alone do not qualify as support for charges to federal awards, but can be used for interim accounting purposes provided that internal controls include an after-the fact review to confirm the accuracy of final amounts charged to federal awards. Prior approval requirements related to key personnel effort are contained in 2 CFR 200.308(c) and within grant terms and conditions. A reduction of 25% or greater in time devoted to the project from key personnel requires prior approval, as does disengagement of key personnel from the project for three or more months. Cause: UL Lafayette noted in their prior-year corrective action that certifications for employees charging time to federal awards would be required annually. Annual certifications are not sufficient to timely detect changes in key personnel effort and ensure prior approvals are obtained when applicable. Furthermore, UL Lafayette noted that the next effort reporting cycle would cover July 1, 2023, through December 31, 2023. The time certification period only covered half of the audit period. As a result, time and effort certifications were not completed by employees on the latter half of the audit period to support that the charges to federal awards for salaries and wages were based on records that accurately reflect the work performed during this period. Effect: Inadequate controls related to federal documentation standards for personnel expenses could result in noncompliance with federal allowable costs and cost principles, as well as noncompliance with special tests and provisions related to key personnel effort. Recommendation: Management should strengthen internal controls to ensure that personnel expenses charged to the federal awards are supported by a system of internal control, which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Additionally, Management should revise the Time & Effort Certification policy and/or implement alternative controls designed to ensure compliance with Special Tests and Provisions requirements. Management should monitor changes in effort for key personnel and ensure that prior written approval is obtained from the federal grantor for changes that exceed the thresholds set in federal regulations. Management’s Response and Corrective Action Plan: Management partially concurred with the finding and provided a corrective action plan (B-60).
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).
2024-006 - Control Weakness and Noncompliance with Personnel Expenses Charged to Federal Awards State Entity: University of Louisiana at Lafayette (UL Lafayette) Award Years: 2020, 2021, 2022 Award Numbers: 1R01MH125395, 2046460, R37AI094595 Compliance Requirements: Allowable Costs/Cost Principles; Special Tests and Provisions Pass-Through Entity: Northwestern University Repeat Finding: Yes (Prior Year Finding No. 2023-007) See Schedule of Findings and Questioned Costs for chart/table. Condition: For the fourth consecutive year, the University of Louisiana at Lafayette (UL Lafayette) did not have adequate controls in place to ensure personnel expenses charged to federal Research and Development (R&D) awards accurately reflected work performed. From a population of 14,024 payroll and non-payroll expenses charged to R&D grants for the fiscal year ending June 30, 2024, a non-statistical sample of 25 transactions were tested for compliance with allowable costs and cost principles requirements. For three (12%) of the payroll transactions, UL Lafayette was unable to provide documentation to show that personnel-related expenses totaling $18,707 were supported by time and effort certifications to ensure the accuracy of budget estimates charged to federal awards as required by federal regulations. Additionally, UL Lafayette did not perform time and effort certifications for the period January 1, 2024, through June 30, 2024. Because there is no after-the-fact review to ensure the accuracy of personnel costs and efforts charged to the awards, UL Lafayette could not ensure compliance with the requirements of special tests and provisions related to key personnel effort. Criteria: 2 CFR 200.430(i) specifies the documentation standards for personnel expenses. In order to be allowable, charges to federal awards for personnel expenses must be based on records that accurately reflect the work performed and must be supported by a system of internal control, which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Budget estimates alone do not qualify as support for charges to federal awards, but can be used for interim accounting purposes provided that internal controls include an after-the fact review to confirm the accuracy of final amounts charged to federal awards. Prior approval requirements related to key personnel effort are contained in 2 CFR 200.308(c) and within grant terms and conditions. A reduction of 25% or greater in time devoted to the project from key personnel requires prior approval, as does disengagement of key personnel from the project for three or more months. Cause: UL Lafayette noted in their prior-year corrective action that certifications for employees charging time to federal awards would be required annually. Annual certifications are not sufficient to timely detect changes in key personnel effort and ensure prior approvals are obtained when applicable. Furthermore, UL Lafayette noted that the next effort reporting cycle would cover July 1, 2023, through December 31, 2023. The time certification period only covered half of the audit period. As a result, time and effort certifications were not completed by employees on the latter half of the audit period to support that the charges to federal awards for salaries and wages were based on records that accurately reflect the work performed during this period. Effect: Inadequate controls related to federal documentation standards for personnel expenses could result in noncompliance with federal allowable costs and cost principles, as well as noncompliance with special tests and provisions related to key personnel effort. Recommendation: Management should strengthen internal controls to ensure that personnel expenses charged to the federal awards are supported by a system of internal control, which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Additionally, Management should revise the Time & Effort Certification policy and/or implement alternative controls designed to ensure compliance with Special Tests and Provisions requirements. Management should monitor changes in effort for key personnel and ensure that prior written approval is obtained from the federal grantor for changes that exceed the thresholds set in federal regulations. Management’s Response and Corrective Action Plan: Management partially concurred with the finding and provided a corrective action plan (B-60).
2024-005 - Noncompliance with and Weakness in Controls over Federal Research and Development Expenses State Entity: Louisiana State University Health Sciences Center - Shreveport (LSUHSC-S) Award Years: Various Award Numbers: Various Compliance Requirements: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Cash Management Pass-Through Entities: Various Repeat Finding: Yes (Prior Year Finding No. 2023-006) See Schedule of Findings and Questioned Costs for chart/table. Condition: For the sixth consecutive year, LSUHSC-S did not ensure internal controls over documentation of personnel services were operating effectively, and did not ensure compliance with federal guidance regarding cost transfers applicable to the Research and Development (R&D) Cluster. In a non-statistical random sample of 27 out of 2,933 payroll adjusting entries affecting R&D, we noted the following exceptions for 15 adjusting entries, some of which had multiple exceptions: • Seven (26%) adjustments did not have adequate documentation to fully explain how the error occurred and/or the transfer was not accomplished within 90 days of when the error was discovered. • For five (19%) adjustments, LSUHSC-S did not provide sufficient information to determine if the cost transfers were completed timely. • For three (11%) adjustments, LSUHSC-S did not provide sufficient information to verify the new charge was certified by a responsible organizational official. • For three (11%) adjustments, LSUHSC-S did not provide sufficient documentation to determine whether adjustments were allowable per the award, which resulted in questioned costs totaling $2,686. • For twelve (44%) adjustments, LSUHSC-S did not provide sufficient documentation to evidence that expenses were incurred prior to reimbursement and that funds were returned to the federal agency for expenses that were removed from the federal award. We also performed an analysis of interim payroll adjusting journal entries to record cost transfers to and/or from R&D awards. We noted that 465 (20%) out of 2,309 adjusting journal entries were made more than 90 days after the end of the biannual period from the original transactions. The adjustments were made 103 to 430 days after the end of the biannual period. In addition, in a non-statistical random sample of 53 out of 11,272 expense transactions charged to R&D during the fiscal year ending June 30, 2024, we noted the following exceptions for 10 transactions, some of which had multiple exceptions: • Six (11%) time and effort certifications for salary and related benefit expenses tested were completed 92 to 248 days after the end of the biannual period, or LSUHSC-S did not provide sufficient documentation to determine that the certifications were completed timely. • For one (2%) transaction, LSUHSC-S did not provide documentation approving the employee’s salary on the applicable award. • For four (8%) transactions, LSUHSC-S did not provide documentation that indicated expenses were reconciled and approved prior to submitting reimbursement requests. Additionally, for three of these transactions, LSUHSC-S did not provide sufficient support to determine if the expenses were incurred prior to the reimbursement request or if LSUHSC-S minimized the time that elapsed between the transfer of funds from the federal government and LSUHSC-S’s disbursement for federal program purposes Finally, it was noted during our procedures related to requisition transactions that LSUHSC-S lacked proper segregation of duties in the online requisition process. We noted in an analysis of all requisition transactions that are subject to online approvals (14,941 transactions totaling $25,349,749) that 4,916 transactions totaling $7,222,206 (28%) did not have adequate segregation of duties. Of these, 306 transactions totaling $338,679 related to the R&D Cluster. Criteria: 2 CFR 200.430(i)(1)(i) requires that charges to federal awards for salaries and wages must be supported by a system of internal control which provides reasonable assurance the charges are accurate, allowable, and properly allocated. Per 2 CFR 200.430(i)(1)(viii), budget estimates alone do not qualify as support for charges to federal awards, but may be used for interim accounting purposes, provided that the system for establishing the estimates produces reasonable approximations of the activity performed, significant changes in work activity are identified and entered into the records in a timely manner, and the non-federal entity’s system of internal controls includes processes to review after-the-fact interim charges and make necessary adjustments. Per LSUHSC-S’s Time and Effort Certification Policy and Procedures, LSUHSC-S utilizes time and effort certifications to support salary charges to sponsored projects as an after-the-fact certification of effort of all individuals when all or a portion of their salaries are charged to a sponsored project. Based on LSUHSC-S’s policy, time and effort certifications should be completed within approximately 90 days of the end of the biannual period. Management interprets the end of the period to be when the time and effort reports are sent to the departments once the last month of the biannual period is closed in the accounting system. If there is a substantial (five percent or more) difference between the salary charges and the effort actually expended by the individual on projects during the biannual reporting period, a payroll reallocation must be created within 30 days. Per 2 CFR 200.303, the non-federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Per the Standards for Internal Control in the Federal Government, examples of common categories of control activities include accurate and timely recording of transactions. In addition, the National Institutes of Health (NIH) is the grantor for the majority of the LSUHSC-S’s R&D grant awards. Per the NIH Grants Policy Statement §7.5, cost transfers that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. An explanation merely stating that the transfer was made “to correct error" or "to transfer to correct project" is not sufficient. Transfers of costs from one project to another or from one competitive segment to the next solely to cover cost overruns are not allowable. Cause: LSUHSC-S faculty are not completing time and effort certifications timely, which contributes to untimely adjustments for compensation. In addition, LSUHSC-S did not provide sufficient supporting documentation for the auditor to test federal regulations related to cash management for all sample items selected due to an insufficient method for sorting and storing the documentation related to each federal award. Finally, the lack of segregation of duties was caused by LSUHSC-S granting certain employees’ access that allowed for self-approvals. Effect: Untimely certifications and the untimely discovery and correction of errors increases the risk of inaccurate reporting and may result in an inability to complete approved projects within the approved budget and/or period of performance. As a result, LSUHSC-S may have to utilize university funds to complete approved projects. In addition, inadequate controls and noncompliance with federal awards increases the likelihood of disallowed costs, which LSUHSC-S may have to repay to the federal grantor. Recommendation: Management should ensure they have adequate controls over time and effort certifications, purchases, and reimbursement requests. In addition, management should ensure adequate segregation of duties covering approvals of all transaction types. Management’s Response and Corrective Action Plan: Management concurred with the finding and outlined a plan of corrective action (B-47).
2024-005 - Noncompliance with and Weakness in Controls over Federal Research and Development Expenses State Entity: Louisiana State University Health Sciences Center - Shreveport (LSUHSC-S) Award Years: Various Award Numbers: Various Compliance Requirements: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Cash Management Pass-Through Entities: Various Repeat Finding: Yes (Prior Year Finding No. 2023-006) See Schedule of Findings and Questioned Costs for chart/table. Condition: For the sixth consecutive year, LSUHSC-S did not ensure internal controls over documentation of personnel services were operating effectively, and did not ensure compliance with federal guidance regarding cost transfers applicable to the Research and Development (R&D) Cluster. In a non-statistical random sample of 27 out of 2,933 payroll adjusting entries affecting R&D, we noted the following exceptions for 15 adjusting entries, some of which had multiple exceptions: • Seven (26%) adjustments did not have adequate documentation to fully explain how the error occurred and/or the transfer was not accomplished within 90 days of when the error was discovered. • For five (19%) adjustments, LSUHSC-S did not provide sufficient information to determine if the cost transfers were completed timely. • For three (11%) adjustments, LSUHSC-S did not provide sufficient information to verify the new charge was certified by a responsible organizational official. • For three (11%) adjustments, LSUHSC-S did not provide sufficient documentation to determine whether adjustments were allowable per the award, which resulted in questioned costs totaling $2,686. • For twelve (44%) adjustments, LSUHSC-S did not provide sufficient documentation to evidence that expenses were incurred prior to reimbursement and that funds were returned to the federal agency for expenses that were removed from the federal award. We also performed an analysis of interim payroll adjusting journal entries to record cost transfers to and/or from R&D awards. We noted that 465 (20%) out of 2,309 adjusting journal entries were made more than 90 days after the end of the biannual period from the original transactions. The adjustments were made 103 to 430 days after the end of the biannual period. In addition, in a non-statistical random sample of 53 out of 11,272 expense transactions charged to R&D during the fiscal year ending June 30, 2024, we noted the following exceptions for 10 transactions, some of which had multiple exceptions: • Six (11%) time and effort certifications for salary and related benefit expenses tested were completed 92 to 248 days after the end of the biannual period, or LSUHSC-S did not provide sufficient documentation to determine that the certifications were completed timely. • For one (2%) transaction, LSUHSC-S did not provide documentation approving the employee’s salary on the applicable award. • For four (8%) transactions, LSUHSC-S did not provide documentation that indicated expenses were reconciled and approved prior to submitting reimbursement requests. Additionally, for three of these transactions, LSUHSC-S did not provide sufficient support to determine if the expenses were incurred prior to the reimbursement request or if LSUHSC-S minimized the time that elapsed between the transfer of funds from the federal government and LSUHSC-S’s disbursement for federal program purposes Finally, it was noted during our procedures related to requisition transactions that LSUHSC-S lacked proper segregation of duties in the online requisition process. We noted in an analysis of all requisition transactions that are subject to online approvals (14,941 transactions totaling $25,349,749) that 4,916 transactions totaling $7,222,206 (28%) did not have adequate segregation of duties. Of these, 306 transactions totaling $338,679 related to the R&D Cluster. Criteria: 2 CFR 200.430(i)(1)(i) requires that charges to federal awards for salaries and wages must be supported by a system of internal control which provides reasonable assurance the charges are accurate, allowable, and properly allocated. Per 2 CFR 200.430(i)(1)(viii), budget estimates alone do not qualify as support for charges to federal awards, but may be used for interim accounting purposes, provided that the system for establishing the estimates produces reasonable approximations of the activity performed, significant changes in work activity are identified and entered into the records in a timely manner, and the non-federal entity’s system of internal controls includes processes to review after-the-fact interim charges and make necessary adjustments. Per LSUHSC-S’s Time and Effort Certification Policy and Procedures, LSUHSC-S utilizes time and effort certifications to support salary charges to sponsored projects as an after-the-fact certification of effort of all individuals when all or a portion of their salaries are charged to a sponsored project. Based on LSUHSC-S’s policy, time and effort certifications should be completed within approximately 90 days of the end of the biannual period. Management interprets the end of the period to be when the time and effort reports are sent to the departments once the last month of the biannual period is closed in the accounting system. If there is a substantial (five percent or more) difference between the salary charges and the effort actually expended by the individual on projects during the biannual reporting period, a payroll reallocation must be created within 30 days. Per 2 CFR 200.303, the non-federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Per the Standards for Internal Control in the Federal Government, examples of common categories of control activities include accurate and timely recording of transactions. In addition, the National Institutes of Health (NIH) is the grantor for the majority of the LSUHSC-S’s R&D grant awards. Per the NIH Grants Policy Statement §7.5, cost transfers that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. An explanation merely stating that the transfer was made “to correct error" or "to transfer to correct project" is not sufficient. Transfers of costs from one project to another or from one competitive segment to the next solely to cover cost overruns are not allowable. Cause: LSUHSC-S faculty are not completing time and effort certifications timely, which contributes to untimely adjustments for compensation. In addition, LSUHSC-S did not provide sufficient supporting documentation for the auditor to test federal regulations related to cash management for all sample items selected due to an insufficient method for sorting and storing the documentation related to each federal award. Finally, the lack of segregation of duties was caused by LSUHSC-S granting certain employees’ access that allowed for self-approvals. Effect: Untimely certifications and the untimely discovery and correction of errors increases the risk of inaccurate reporting and may result in an inability to complete approved projects within the approved budget and/or period of performance. As a result, LSUHSC-S may have to utilize university funds to complete approved projects. In addition, inadequate controls and noncompliance with federal awards increases the likelihood of disallowed costs, which LSUHSC-S may have to repay to the federal grantor. Recommendation: Management should ensure they have adequate controls over time and effort certifications, purchases, and reimbursement requests. In addition, management should ensure adequate segregation of duties covering approvals of all transaction types. Management’s Response and Corrective Action Plan: Management concurred with the finding and outlined a plan of corrective action (B-47).
2024-005 - Noncompliance with and Weakness in Controls over Federal Research and Development Expenses State Entity: Louisiana State University Health Sciences Center - Shreveport (LSUHSC-S) Award Years: Various Award Numbers: Various Compliance Requirements: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Cash Management Pass-Through Entities: Various Repeat Finding: Yes (Prior Year Finding No. 2023-006) See Schedule of Findings and Questioned Costs for chart/table. Condition: For the sixth consecutive year, LSUHSC-S did not ensure internal controls over documentation of personnel services were operating effectively, and did not ensure compliance with federal guidance regarding cost transfers applicable to the Research and Development (R&D) Cluster. In a non-statistical random sample of 27 out of 2,933 payroll adjusting entries affecting R&D, we noted the following exceptions for 15 adjusting entries, some of which had multiple exceptions: • Seven (26%) adjustments did not have adequate documentation to fully explain how the error occurred and/or the transfer was not accomplished within 90 days of when the error was discovered. • For five (19%) adjustments, LSUHSC-S did not provide sufficient information to determine if the cost transfers were completed timely. • For three (11%) adjustments, LSUHSC-S did not provide sufficient information to verify the new charge was certified by a responsible organizational official. • For three (11%) adjustments, LSUHSC-S did not provide sufficient documentation to determine whether adjustments were allowable per the award, which resulted in questioned costs totaling $2,686. • For twelve (44%) adjustments, LSUHSC-S did not provide sufficient documentation to evidence that expenses were incurred prior to reimbursement and that funds were returned to the federal agency for expenses that were removed from the federal award. We also performed an analysis of interim payroll adjusting journal entries to record cost transfers to and/or from R&D awards. We noted that 465 (20%) out of 2,309 adjusting journal entries were made more than 90 days after the end of the biannual period from the original transactions. The adjustments were made 103 to 430 days after the end of the biannual period. In addition, in a non-statistical random sample of 53 out of 11,272 expense transactions charged to R&D during the fiscal year ending June 30, 2024, we noted the following exceptions for 10 transactions, some of which had multiple exceptions: • Six (11%) time and effort certifications for salary and related benefit expenses tested were completed 92 to 248 days after the end of the biannual period, or LSUHSC-S did not provide sufficient documentation to determine that the certifications were completed timely. • For one (2%) transaction, LSUHSC-S did not provide documentation approving the employee’s salary on the applicable award. • For four (8%) transactions, LSUHSC-S did not provide documentation that indicated expenses were reconciled and approved prior to submitting reimbursement requests. Additionally, for three of these transactions, LSUHSC-S did not provide sufficient support to determine if the expenses were incurred prior to the reimbursement request or if LSUHSC-S minimized the time that elapsed between the transfer of funds from the federal government and LSUHSC-S’s disbursement for federal program purposes Finally, it was noted during our procedures related to requisition transactions that LSUHSC-S lacked proper segregation of duties in the online requisition process. We noted in an analysis of all requisition transactions that are subject to online approvals (14,941 transactions totaling $25,349,749) that 4,916 transactions totaling $7,222,206 (28%) did not have adequate segregation of duties. Of these, 306 transactions totaling $338,679 related to the R&D Cluster. Criteria: 2 CFR 200.430(i)(1)(i) requires that charges to federal awards for salaries and wages must be supported by a system of internal control which provides reasonable assurance the charges are accurate, allowable, and properly allocated. Per 2 CFR 200.430(i)(1)(viii), budget estimates alone do not qualify as support for charges to federal awards, but may be used for interim accounting purposes, provided that the system for establishing the estimates produces reasonable approximations of the activity performed, significant changes in work activity are identified and entered into the records in a timely manner, and the non-federal entity’s system of internal controls includes processes to review after-the-fact interim charges and make necessary adjustments. Per LSUHSC-S’s Time and Effort Certification Policy and Procedures, LSUHSC-S utilizes time and effort certifications to support salary charges to sponsored projects as an after-the-fact certification of effort of all individuals when all or a portion of their salaries are charged to a sponsored project. Based on LSUHSC-S’s policy, time and effort certifications should be completed within approximately 90 days of the end of the biannual period. Management interprets the end of the period to be when the time and effort reports are sent to the departments once the last month of the biannual period is closed in the accounting system. If there is a substantial (five percent or more) difference between the salary charges and the effort actually expended by the individual on projects during the biannual reporting period, a payroll reallocation must be created within 30 days. Per 2 CFR 200.303, the non-federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Per the Standards for Internal Control in the Federal Government, examples of common categories of control activities include accurate and timely recording of transactions. In addition, the National Institutes of Health (NIH) is the grantor for the majority of the LSUHSC-S’s R&D grant awards. Per the NIH Grants Policy Statement §7.5, cost transfers that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. An explanation merely stating that the transfer was made “to correct error" or "to transfer to correct project" is not sufficient. Transfers of costs from one project to another or from one competitive segment to the next solely to cover cost overruns are not allowable. Cause: LSUHSC-S faculty are not completing time and effort certifications timely, which contributes to untimely adjustments for compensation. In addition, LSUHSC-S did not provide sufficient supporting documentation for the auditor to test federal regulations related to cash management for all sample items selected due to an insufficient method for sorting and storing the documentation related to each federal award. Finally, the lack of segregation of duties was caused by LSUHSC-S granting certain employees’ access that allowed for self-approvals. Effect: Untimely certifications and the untimely discovery and correction of errors increases the risk of inaccurate reporting and may result in an inability to complete approved projects within the approved budget and/or period of performance. As a result, LSUHSC-S may have to utilize university funds to complete approved projects. In addition, inadequate controls and noncompliance with federal awards increases the likelihood of disallowed costs, which LSUHSC-S may have to repay to the federal grantor. Recommendation: Management should ensure they have adequate controls over time and effort certifications, purchases, and reimbursement requests. In addition, management should ensure adequate segregation of duties covering approvals of all transaction types. Management’s Response and Corrective Action Plan: Management concurred with the finding and outlined a plan of corrective action (B-47).
2024-005 - Noncompliance with and Weakness in Controls over Federal Research and Development Expenses State Entity: Louisiana State University Health Sciences Center - Shreveport (LSUHSC-S) Award Years: Various Award Numbers: Various Compliance Requirements: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Cash Management Pass-Through Entities: Various Repeat Finding: Yes (Prior Year Finding No. 2023-006) See Schedule of Findings and Questioned Costs for chart/table. Condition: For the sixth consecutive year, LSUHSC-S did not ensure internal controls over documentation of personnel services were operating effectively, and did not ensure compliance with federal guidance regarding cost transfers applicable to the Research and Development (R&D) Cluster. In a non-statistical random sample of 27 out of 2,933 payroll adjusting entries affecting R&D, we noted the following exceptions for 15 adjusting entries, some of which had multiple exceptions: • Seven (26%) adjustments did not have adequate documentation to fully explain how the error occurred and/or the transfer was not accomplished within 90 days of when the error was discovered. • For five (19%) adjustments, LSUHSC-S did not provide sufficient information to determine if the cost transfers were completed timely. • For three (11%) adjustments, LSUHSC-S did not provide sufficient information to verify the new charge was certified by a responsible organizational official. • For three (11%) adjustments, LSUHSC-S did not provide sufficient documentation to determine whether adjustments were allowable per the award, which resulted in questioned costs totaling $2,686. • For twelve (44%) adjustments, LSUHSC-S did not provide sufficient documentation to evidence that expenses were incurred prior to reimbursement and that funds were returned to the federal agency for expenses that were removed from the federal award. We also performed an analysis of interim payroll adjusting journal entries to record cost transfers to and/or from R&D awards. We noted that 465 (20%) out of 2,309 adjusting journal entries were made more than 90 days after the end of the biannual period from the original transactions. The adjustments were made 103 to 430 days after the end of the biannual period. In addition, in a non-statistical random sample of 53 out of 11,272 expense transactions charged to R&D during the fiscal year ending June 30, 2024, we noted the following exceptions for 10 transactions, some of which had multiple exceptions: • Six (11%) time and effort certifications for salary and related benefit expenses tested were completed 92 to 248 days after the end of the biannual period, or LSUHSC-S did not provide sufficient documentation to determine that the certifications were completed timely. • For one (2%) transaction, LSUHSC-S did not provide documentation approving the employee’s salary on the applicable award. • For four (8%) transactions, LSUHSC-S did not provide documentation that indicated expenses were reconciled and approved prior to submitting reimbursement requests. Additionally, for three of these transactions, LSUHSC-S did not provide sufficient support to determine if the expenses were incurred prior to the reimbursement request or if LSUHSC-S minimized the time that elapsed between the transfer of funds from the federal government and LSUHSC-S’s disbursement for federal program purposes Finally, it was noted during our procedures related to requisition transactions that LSUHSC-S lacked proper segregation of duties in the online requisition process. We noted in an analysis of all requisition transactions that are subject to online approvals (14,941 transactions totaling $25,349,749) that 4,916 transactions totaling $7,222,206 (28%) did not have adequate segregation of duties. Of these, 306 transactions totaling $338,679 related to the R&D Cluster. Criteria: 2 CFR 200.430(i)(1)(i) requires that charges to federal awards for salaries and wages must be supported by a system of internal control which provides reasonable assurance the charges are accurate, allowable, and properly allocated. Per 2 CFR 200.430(i)(1)(viii), budget estimates alone do not qualify as support for charges to federal awards, but may be used for interim accounting purposes, provided that the system for establishing the estimates produces reasonable approximations of the activity performed, significant changes in work activity are identified and entered into the records in a timely manner, and the non-federal entity’s system of internal controls includes processes to review after-the-fact interim charges and make necessary adjustments. Per LSUHSC-S’s Time and Effort Certification Policy and Procedures, LSUHSC-S utilizes time and effort certifications to support salary charges to sponsored projects as an after-the-fact certification of effort of all individuals when all or a portion of their salaries are charged to a sponsored project. Based on LSUHSC-S’s policy, time and effort certifications should be completed within approximately 90 days of the end of the biannual period. Management interprets the end of the period to be when the time and effort reports are sent to the departments once the last month of the biannual period is closed in the accounting system. If there is a substantial (five percent or more) difference between the salary charges and the effort actually expended by the individual on projects during the biannual reporting period, a payroll reallocation must be created within 30 days. Per 2 CFR 200.303, the non-federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Per the Standards for Internal Control in the Federal Government, examples of common categories of control activities include accurate and timely recording of transactions. In addition, the National Institutes of Health (NIH) is the grantor for the majority of the LSUHSC-S’s R&D grant awards. Per the NIH Grants Policy Statement §7.5, cost transfers that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. An explanation merely stating that the transfer was made “to correct error" or "to transfer to correct project" is not sufficient. Transfers of costs from one project to another or from one competitive segment to the next solely to cover cost overruns are not allowable. Cause: LSUHSC-S faculty are not completing time and effort certifications timely, which contributes to untimely adjustments for compensation. In addition, LSUHSC-S did not provide sufficient supporting documentation for the auditor to test federal regulations related to cash management for all sample items selected due to an insufficient method for sorting and storing the documentation related to each federal award. Finally, the lack of segregation of duties was caused by LSUHSC-S granting certain employees’ access that allowed for self-approvals. Effect: Untimely certifications and the untimely discovery and correction of errors increases the risk of inaccurate reporting and may result in an inability to complete approved projects within the approved budget and/or period of performance. As a result, LSUHSC-S may have to utilize university funds to complete approved projects. In addition, inadequate controls and noncompliance with federal awards increases the likelihood of disallowed costs, which LSUHSC-S may have to repay to the federal grantor. Recommendation: Management should ensure they have adequate controls over time and effort certifications, purchases, and reimbursement requests. In addition, management should ensure adequate segregation of duties covering approvals of all transaction types. Management’s Response and Corrective Action Plan: Management concurred with the finding and outlined a plan of corrective action (B-47).
2024-005 - Noncompliance with and Weakness in Controls over Federal Research and Development Expenses State Entity: Louisiana State University Health Sciences Center - Shreveport (LSUHSC-S) Award Years: Various Award Numbers: Various Compliance Requirements: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Cash Management Pass-Through Entities: Various Repeat Finding: Yes (Prior Year Finding No. 2023-006) See Schedule of Findings and Questioned Costs for chart/table. Condition: For the sixth consecutive year, LSUHSC-S did not ensure internal controls over documentation of personnel services were operating effectively, and did not ensure compliance with federal guidance regarding cost transfers applicable to the Research and Development (R&D) Cluster. In a non-statistical random sample of 27 out of 2,933 payroll adjusting entries affecting R&D, we noted the following exceptions for 15 adjusting entries, some of which had multiple exceptions: • Seven (26%) adjustments did not have adequate documentation to fully explain how the error occurred and/or the transfer was not accomplished within 90 days of when the error was discovered. • For five (19%) adjustments, LSUHSC-S did not provide sufficient information to determine if the cost transfers were completed timely. • For three (11%) adjustments, LSUHSC-S did not provide sufficient information to verify the new charge was certified by a responsible organizational official. • For three (11%) adjustments, LSUHSC-S did not provide sufficient documentation to determine whether adjustments were allowable per the award, which resulted in questioned costs totaling $2,686. • For twelve (44%) adjustments, LSUHSC-S did not provide sufficient documentation to evidence that expenses were incurred prior to reimbursement and that funds were returned to the federal agency for expenses that were removed from the federal award. We also performed an analysis of interim payroll adjusting journal entries to record cost transfers to and/or from R&D awards. We noted that 465 (20%) out of 2,309 adjusting journal entries were made more than 90 days after the end of the biannual period from the original transactions. The adjustments were made 103 to 430 days after the end of the biannual period. In addition, in a non-statistical random sample of 53 out of 11,272 expense transactions charged to R&D during the fiscal year ending June 30, 2024, we noted the following exceptions for 10 transactions, some of which had multiple exceptions: • Six (11%) time and effort certifications for salary and related benefit expenses tested were completed 92 to 248 days after the end of the biannual period, or LSUHSC-S did not provide sufficient documentation to determine that the certifications were completed timely. • For one (2%) transaction, LSUHSC-S did not provide documentation approving the employee’s salary on the applicable award. • For four (8%) transactions, LSUHSC-S did not provide documentation that indicated expenses were reconciled and approved prior to submitting reimbursement requests. Additionally, for three of these transactions, LSUHSC-S did not provide sufficient support to determine if the expenses were incurred prior to the reimbursement request or if LSUHSC-S minimized the time that elapsed between the transfer of funds from the federal government and LSUHSC-S’s disbursement for federal program purposes Finally, it was noted during our procedures related to requisition transactions that LSUHSC-S lacked proper segregation of duties in the online requisition process. We noted in an analysis of all requisition transactions that are subject to online approvals (14,941 transactions totaling $25,349,749) that 4,916 transactions totaling $7,222,206 (28%) did not have adequate segregation of duties. Of these, 306 transactions totaling $338,679 related to the R&D Cluster. Criteria: 2 CFR 200.430(i)(1)(i) requires that charges to federal awards for salaries and wages must be supported by a system of internal control which provides reasonable assurance the charges are accurate, allowable, and properly allocated. Per 2 CFR 200.430(i)(1)(viii), budget estimates alone do not qualify as support for charges to federal awards, but may be used for interim accounting purposes, provided that the system for establishing the estimates produces reasonable approximations of the activity performed, significant changes in work activity are identified and entered into the records in a timely manner, and the non-federal entity’s system of internal controls includes processes to review after-the-fact interim charges and make necessary adjustments. Per LSUHSC-S’s Time and Effort Certification Policy and Procedures, LSUHSC-S utilizes time and effort certifications to support salary charges to sponsored projects as an after-the-fact certification of effort of all individuals when all or a portion of their salaries are charged to a sponsored project. Based on LSUHSC-S’s policy, time and effort certifications should be completed within approximately 90 days of the end of the biannual period. Management interprets the end of the period to be when the time and effort reports are sent to the departments once the last month of the biannual period is closed in the accounting system. If there is a substantial (five percent or more) difference between the salary charges and the effort actually expended by the individual on projects during the biannual reporting period, a payroll reallocation must be created within 30 days. Per 2 CFR 200.303, the non-federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Per the Standards for Internal Control in the Federal Government, examples of common categories of control activities include accurate and timely recording of transactions. In addition, the National Institutes of Health (NIH) is the grantor for the majority of the LSUHSC-S’s R&D grant awards. Per the NIH Grants Policy Statement §7.5, cost transfers that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. An explanation merely stating that the transfer was made “to correct error" or "to transfer to correct project" is not sufficient. Transfers of costs from one project to another or from one competitive segment to the next solely to cover cost overruns are not allowable. Cause: LSUHSC-S faculty are not completing time and effort certifications timely, which contributes to untimely adjustments for compensation. In addition, LSUHSC-S did not provide sufficient supporting documentation for the auditor to test federal regulations related to cash management for all sample items selected due to an insufficient method for sorting and storing the documentation related to each federal award. Finally, the lack of segregation of duties was caused by LSUHSC-S granting certain employees’ access that allowed for self-approvals. Effect: Untimely certifications and the untimely discovery and correction of errors increases the risk of inaccurate reporting and may result in an inability to complete approved projects within the approved budget and/or period of performance. As a result, LSUHSC-S may have to utilize university funds to complete approved projects. In addition, inadequate controls and noncompliance with federal awards increases the likelihood of disallowed costs, which LSUHSC-S may have to repay to the federal grantor. Recommendation: Management should ensure they have adequate controls over time and effort certifications, purchases, and reimbursement requests. In addition, management should ensure adequate segregation of duties covering approvals of all transaction types. Management’s Response and Corrective Action Plan: Management concurred with the finding and outlined a plan of corrective action (B-47).
2024-005 - Noncompliance with and Weakness in Controls over Federal Research and Development Expenses State Entity: Louisiana State University Health Sciences Center - Shreveport (LSUHSC-S) Award Years: Various Award Numbers: Various Compliance Requirements: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Cash Management Pass-Through Entities: Various Repeat Finding: Yes (Prior Year Finding No. 2023-006) See Schedule of Findings and Questioned Costs for chart/table. Condition: For the sixth consecutive year, LSUHSC-S did not ensure internal controls over documentation of personnel services were operating effectively, and did not ensure compliance with federal guidance regarding cost transfers applicable to the Research and Development (R&D) Cluster. In a non-statistical random sample of 27 out of 2,933 payroll adjusting entries affecting R&D, we noted the following exceptions for 15 adjusting entries, some of which had multiple exceptions: • Seven (26%) adjustments did not have adequate documentation to fully explain how the error occurred and/or the transfer was not accomplished within 90 days of when the error was discovered. • For five (19%) adjustments, LSUHSC-S did not provide sufficient information to determine if the cost transfers were completed timely. • For three (11%) adjustments, LSUHSC-S did not provide sufficient information to verify the new charge was certified by a responsible organizational official. • For three (11%) adjustments, LSUHSC-S did not provide sufficient documentation to determine whether adjustments were allowable per the award, which resulted in questioned costs totaling $2,686. • For twelve (44%) adjustments, LSUHSC-S did not provide sufficient documentation to evidence that expenses were incurred prior to reimbursement and that funds were returned to the federal agency for expenses that were removed from the federal award. We also performed an analysis of interim payroll adjusting journal entries to record cost transfers to and/or from R&D awards. We noted that 465 (20%) out of 2,309 adjusting journal entries were made more than 90 days after the end of the biannual period from the original transactions. The adjustments were made 103 to 430 days after the end of the biannual period. In addition, in a non-statistical random sample of 53 out of 11,272 expense transactions charged to R&D during the fiscal year ending June 30, 2024, we noted the following exceptions for 10 transactions, some of which had multiple exceptions: • Six (11%) time and effort certifications for salary and related benefit expenses tested were completed 92 to 248 days after the end of the biannual period, or LSUHSC-S did not provide sufficient documentation to determine that the certifications were completed timely. • For one (2%) transaction, LSUHSC-S did not provide documentation approving the employee’s salary on the applicable award. • For four (8%) transactions, LSUHSC-S did not provide documentation that indicated expenses were reconciled and approved prior to submitting reimbursement requests. Additionally, for three of these transactions, LSUHSC-S did not provide sufficient support to determine if the expenses were incurred prior to the reimbursement request or if LSUHSC-S minimized the time that elapsed between the transfer of funds from the federal government and LSUHSC-S’s disbursement for federal program purposes Finally, it was noted during our procedures related to requisition transactions that LSUHSC-S lacked proper segregation of duties in the online requisition process. We noted in an analysis of all requisition transactions that are subject to online approvals (14,941 transactions totaling $25,349,749) that 4,916 transactions totaling $7,222,206 (28%) did not have adequate segregation of duties. Of these, 306 transactions totaling $338,679 related to the R&D Cluster. Criteria: 2 CFR 200.430(i)(1)(i) requires that charges to federal awards for salaries and wages must be supported by a system of internal control which provides reasonable assurance the charges are accurate, allowable, and properly allocated. Per 2 CFR 200.430(i)(1)(viii), budget estimates alone do not qualify as support for charges to federal awards, but may be used for interim accounting purposes, provided that the system for establishing the estimates produces reasonable approximations of the activity performed, significant changes in work activity are identified and entered into the records in a timely manner, and the non-federal entity’s system of internal controls includes processes to review after-the-fact interim charges and make necessary adjustments. Per LSUHSC-S’s Time and Effort Certification Policy and Procedures, LSUHSC-S utilizes time and effort certifications to support salary charges to sponsored projects as an after-the-fact certification of effort of all individuals when all or a portion of their salaries are charged to a sponsored project. Based on LSUHSC-S’s policy, time and effort certifications should be completed within approximately 90 days of the end of the biannual period. Management interprets the end of the period to be when the time and effort reports are sent to the departments once the last month of the biannual period is closed in the accounting system. If there is a substantial (five percent or more) difference between the salary charges and the effort actually expended by the individual on projects during the biannual reporting period, a payroll reallocation must be created within 30 days. Per 2 CFR 200.303, the non-federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Per the Standards for Internal Control in the Federal Government, examples of common categories of control activities include accurate and timely recording of transactions. In addition, the National Institutes of Health (NIH) is the grantor for the majority of the LSUHSC-S’s R&D grant awards. Per the NIH Grants Policy Statement §7.5, cost transfers that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. An explanation merely stating that the transfer was made “to correct error" or "to transfer to correct project" is not sufficient. Transfers of costs from one project to another or from one competitive segment to the next solely to cover cost overruns are not allowable. Cause: LSUHSC-S faculty are not completing time and effort certifications timely, which contributes to untimely adjustments for compensation. In addition, LSUHSC-S did not provide sufficient supporting documentation for the auditor to test federal regulations related to cash management for all sample items selected due to an insufficient method for sorting and storing the documentation related to each federal award. Finally, the lack of segregation of duties was caused by LSUHSC-S granting certain employees’ access that allowed for self-approvals. Effect: Untimely certifications and the untimely discovery and correction of errors increases the risk of inaccurate reporting and may result in an inability to complete approved projects within the approved budget and/or period of performance. As a result, LSUHSC-S may have to utilize university funds to complete approved projects. In addition, inadequate controls and noncompliance with federal awards increases the likelihood of disallowed costs, which LSUHSC-S may have to repay to the federal grantor. Recommendation: Management should ensure they have adequate controls over time and effort certifications, purchases, and reimbursement requests. In addition, management should ensure adequate segregation of duties covering approvals of all transaction types. Management’s Response and Corrective Action Plan: Management concurred with the finding and outlined a plan of corrective action (B-47).
2024-005 - Noncompliance with and Weakness in Controls over Federal Research and Development Expenses State Entity: Louisiana State University Health Sciences Center - Shreveport (LSUHSC-S) Award Years: Various Award Numbers: Various Compliance Requirements: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Cash Management Pass-Through Entities: Various Repeat Finding: Yes (Prior Year Finding No. 2023-006) See Schedule of Findings and Questioned Costs for chart/table. Condition: For the sixth consecutive year, LSUHSC-S did not ensure internal controls over documentation of personnel services were operating effectively, and did not ensure compliance with federal guidance regarding cost transfers applicable to the Research and Development (R&D) Cluster. In a non-statistical random sample of 27 out of 2,933 payroll adjusting entries affecting R&D, we noted the following exceptions for 15 adjusting entries, some of which had multiple exceptions: • Seven (26%) adjustments did not have adequate documentation to fully explain how the error occurred and/or the transfer was not accomplished within 90 days of when the error was discovered. • For five (19%) adjustments, LSUHSC-S did not provide sufficient information to determine if the cost transfers were completed timely. • For three (11%) adjustments, LSUHSC-S did not provide sufficient information to verify the new charge was certified by a responsible organizational official. • For three (11%) adjustments, LSUHSC-S did not provide sufficient documentation to determine whether adjustments were allowable per the award, which resulted in questioned costs totaling $2,686. • For twelve (44%) adjustments, LSUHSC-S did not provide sufficient documentation to evidence that expenses were incurred prior to reimbursement and that funds were returned to the federal agency for expenses that were removed from the federal award. We also performed an analysis of interim payroll adjusting journal entries to record cost transfers to and/or from R&D awards. We noted that 465 (20%) out of 2,309 adjusting journal entries were made more than 90 days after the end of the biannual period from the original transactions. The adjustments were made 103 to 430 days after the end of the biannual period. In addition, in a non-statistical random sample of 53 out of 11,272 expense transactions charged to R&D during the fiscal year ending June 30, 2024, we noted the following exceptions for 10 transactions, some of which had multiple exceptions: • Six (11%) time and effort certifications for salary and related benefit expenses tested were completed 92 to 248 days after the end of the biannual period, or LSUHSC-S did not provide sufficient documentation to determine that the certifications were completed timely. • For one (2%) transaction, LSUHSC-S did not provide documentation approving the employee’s salary on the applicable award. • For four (8%) transactions, LSUHSC-S did not provide documentation that indicated expenses were reconciled and approved prior to submitting reimbursement requests. Additionally, for three of these transactions, LSUHSC-S did not provide sufficient support to determine if the expenses were incurred prior to the reimbursement request or if LSUHSC-S minimized the time that elapsed between the transfer of funds from the federal government and LSUHSC-S’s disbursement for federal program purposes Finally, it was noted during our procedures related to requisition transactions that LSUHSC-S lacked proper segregation of duties in the online requisition process. We noted in an analysis of all requisition transactions that are subject to online approvals (14,941 transactions totaling $25,349,749) that 4,916 transactions totaling $7,222,206 (28%) did not have adequate segregation of duties. Of these, 306 transactions totaling $338,679 related to the R&D Cluster. Criteria: 2 CFR 200.430(i)(1)(i) requires that charges to federal awards for salaries and wages must be supported by a system of internal control which provides reasonable assurance the charges are accurate, allowable, and properly allocated. Per 2 CFR 200.430(i)(1)(viii), budget estimates alone do not qualify as support for charges to federal awards, but may be used for interim accounting purposes, provided that the system for establishing the estimates produces reasonable approximations of the activity performed, significant changes in work activity are identified and entered into the records in a timely manner, and the non-federal entity’s system of internal controls includes processes to review after-the-fact interim charges and make necessary adjustments. Per LSUHSC-S’s Time and Effort Certification Policy and Procedures, LSUHSC-S utilizes time and effort certifications to support salary charges to sponsored projects as an after-the-fact certification of effort of all individuals when all or a portion of their salaries are charged to a sponsored project. Based on LSUHSC-S’s policy, time and effort certifications should be completed within approximately 90 days of the end of the biannual period. Management interprets the end of the period to be when the time and effort reports are sent to the departments once the last month of the biannual period is closed in the accounting system. If there is a substantial (five percent or more) difference between the salary charges and the effort actually expended by the individual on projects during the biannual reporting period, a payroll reallocation must be created within 30 days. Per 2 CFR 200.303, the non-federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Per the Standards for Internal Control in the Federal Government, examples of common categories of control activities include accurate and timely recording of transactions. In addition, the National Institutes of Health (NIH) is the grantor for the majority of the LSUHSC-S’s R&D grant awards. Per the NIH Grants Policy Statement §7.5, cost transfers that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. An explanation merely stating that the transfer was made “to correct error" or "to transfer to correct project" is not sufficient. Transfers of costs from one project to another or from one competitive segment to the next solely to cover cost overruns are not allowable. Cause: LSUHSC-S faculty are not completing time and effort certifications timely, which contributes to untimely adjustments for compensation. In addition, LSUHSC-S did not provide sufficient supporting documentation for the auditor to test federal regulations related to cash management for all sample items selected due to an insufficient method for sorting and storing the documentation related to each federal award. Finally, the lack of segregation of duties was caused by LSUHSC-S granting certain employees’ access that allowed for self-approvals. Effect: Untimely certifications and the untimely discovery and correction of errors increases the risk of inaccurate reporting and may result in an inability to complete approved projects within the approved budget and/or period of performance. As a result, LSUHSC-S may have to utilize university funds to complete approved projects. In addition, inadequate controls and noncompliance with federal awards increases the likelihood of disallowed costs, which LSUHSC-S may have to repay to the federal grantor. Recommendation: Management should ensure they have adequate controls over time and effort certifications, purchases, and reimbursement requests. In addition, management should ensure adequate segregation of duties covering approvals of all transaction types. Management’s Response and Corrective Action Plan: Management concurred with the finding and outlined a plan of corrective action (B-47).
2024-005 - Noncompliance with and Weakness in Controls over Federal Research and Development Expenses State Entity: Louisiana State University Health Sciences Center - Shreveport (LSUHSC-S) Award Years: Various Award Numbers: Various Compliance Requirements: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Cash Management Pass-Through Entities: Various Repeat Finding: Yes (Prior Year Finding No. 2023-006) See Schedule of Findings and Questioned Costs for chart/table. Condition: For the sixth consecutive year, LSUHSC-S did not ensure internal controls over documentation of personnel services were operating effectively, and did not ensure compliance with federal guidance regarding cost transfers applicable to the Research and Development (R&D) Cluster. In a non-statistical random sample of 27 out of 2,933 payroll adjusting entries affecting R&D, we noted the following exceptions for 15 adjusting entries, some of which had multiple exceptions: • Seven (26%) adjustments did not have adequate documentation to fully explain how the error occurred and/or the transfer was not accomplished within 90 days of when the error was discovered. • For five (19%) adjustments, LSUHSC-S did not provide sufficient information to determine if the cost transfers were completed timely. • For three (11%) adjustments, LSUHSC-S did not provide sufficient information to verify the new charge was certified by a responsible organizational official. • For three (11%) adjustments, LSUHSC-S did not provide sufficient documentation to determine whether adjustments were allowable per the award, which resulted in questioned costs totaling $2,686. • For twelve (44%) adjustments, LSUHSC-S did not provide sufficient documentation to evidence that expenses were incurred prior to reimbursement and that funds were returned to the federal agency for expenses that were removed from the federal award. We also performed an analysis of interim payroll adjusting journal entries to record cost transfers to and/or from R&D awards. We noted that 465 (20%) out of 2,309 adjusting journal entries were made more than 90 days after the end of the biannual period from the original transactions. The adjustments were made 103 to 430 days after the end of the biannual period. In addition, in a non-statistical random sample of 53 out of 11,272 expense transactions charged to R&D during the fiscal year ending June 30, 2024, we noted the following exceptions for 10 transactions, some of which had multiple exceptions: • Six (11%) time and effort certifications for salary and related benefit expenses tested were completed 92 to 248 days after the end of the biannual period, or LSUHSC-S did not provide sufficient documentation to determine that the certifications were completed timely. • For one (2%) transaction, LSUHSC-S did not provide documentation approving the employee’s salary on the applicable award. • For four (8%) transactions, LSUHSC-S did not provide documentation that indicated expenses were reconciled and approved prior to submitting reimbursement requests. Additionally, for three of these transactions, LSUHSC-S did not provide sufficient support to determine if the expenses were incurred prior to the reimbursement request or if LSUHSC-S minimized the time that elapsed between the transfer of funds from the federal government and LSUHSC-S’s disbursement for federal program purposes Finally, it was noted during our procedures related to requisition transactions that LSUHSC-S lacked proper segregation of duties in the online requisition process. We noted in an analysis of all requisition transactions that are subject to online approvals (14,941 transactions totaling $25,349,749) that 4,916 transactions totaling $7,222,206 (28%) did not have adequate segregation of duties. Of these, 306 transactions totaling $338,679 related to the R&D Cluster. Criteria: 2 CFR 200.430(i)(1)(i) requires that charges to federal awards for salaries and wages must be supported by a system of internal control which provides reasonable assurance the charges are accurate, allowable, and properly allocated. Per 2 CFR 200.430(i)(1)(viii), budget estimates alone do not qualify as support for charges to federal awards, but may be used for interim accounting purposes, provided that the system for establishing the estimates produces reasonable approximations of the activity performed, significant changes in work activity are identified and entered into the records in a timely manner, and the non-federal entity’s system of internal controls includes processes to review after-the-fact interim charges and make necessary adjustments. Per LSUHSC-S’s Time and Effort Certification Policy and Procedures, LSUHSC-S utilizes time and effort certifications to support salary charges to sponsored projects as an after-the-fact certification of effort of all individuals when all or a portion of their salaries are charged to a sponsored project. Based on LSUHSC-S’s policy, time and effort certifications should be completed within approximately 90 days of the end of the biannual period. Management interprets the end of the period to be when the time and effort reports are sent to the departments once the last month of the biannual period is closed in the accounting system. If there is a substantial (five percent or more) difference between the salary charges and the effort actually expended by the individual on projects during the biannual reporting period, a payroll reallocation must be created within 30 days. Per 2 CFR 200.303, the non-federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Per the Standards for Internal Control in the Federal Government, examples of common categories of control activities include accurate and timely recording of transactions. In addition, the National Institutes of Health (NIH) is the grantor for the majority of the LSUHSC-S’s R&D grant awards. Per the NIH Grants Policy Statement §7.5, cost transfers that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. An explanation merely stating that the transfer was made “to correct error" or "to transfer to correct project" is not sufficient. Transfers of costs from one project to another or from one competitive segment to the next solely to cover cost overruns are not allowable. Cause: LSUHSC-S faculty are not completing time and effort certifications timely, which contributes to untimely adjustments for compensation. In addition, LSUHSC-S did not provide sufficient supporting documentation for the auditor to test federal regulations related to cash management for all sample items selected due to an insufficient method for sorting and storing the documentation related to each federal award. Finally, the lack of segregation of duties was caused by LSUHSC-S granting certain employees’ access that allowed for self-approvals. Effect: Untimely certifications and the untimely discovery and correction of errors increases the risk of inaccurate reporting and may result in an inability to complete approved projects within the approved budget and/or period of performance. As a result, LSUHSC-S may have to utilize university funds to complete approved projects. In addition, inadequate controls and noncompliance with federal awards increases the likelihood of disallowed costs, which LSUHSC-S may have to repay to the federal grantor. Recommendation: Management should ensure they have adequate controls over time and effort certifications, purchases, and reimbursement requests. In addition, management should ensure adequate segregation of duties covering approvals of all transaction types. Management’s Response and Corrective Action Plan: Management concurred with the finding and outlined a plan of corrective action (B-47).
2024-005 - Noncompliance with and Weakness in Controls over Federal Research and Development Expenses State Entity: Louisiana State University Health Sciences Center - Shreveport (LSUHSC-S) Award Years: Various Award Numbers: Various Compliance Requirements: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Cash Management Pass-Through Entities: Various Repeat Finding: Yes (Prior Year Finding No. 2023-006) See Schedule of Findings and Questioned Costs for chart/table. Condition: For the sixth consecutive year, LSUHSC-S did not ensure internal controls over documentation of personnel services were operating effectively, and did not ensure compliance with federal guidance regarding cost transfers applicable to the Research and Development (R&D) Cluster. In a non-statistical random sample of 27 out of 2,933 payroll adjusting entries affecting R&D, we noted the following exceptions for 15 adjusting entries, some of which had multiple exceptions: • Seven (26%) adjustments did not have adequate documentation to fully explain how the error occurred and/or the transfer was not accomplished within 90 days of when the error was discovered. • For five (19%) adjustments, LSUHSC-S did not provide sufficient information to determine if the cost transfers were completed timely. • For three (11%) adjustments, LSUHSC-S did not provide sufficient information to verify the new charge was certified by a responsible organizational official. • For three (11%) adjustments, LSUHSC-S did not provide sufficient documentation to determine whether adjustments were allowable per the award, which resulted in questioned costs totaling $2,686. • For twelve (44%) adjustments, LSUHSC-S did not provide sufficient documentation to evidence that expenses were incurred prior to reimbursement and that funds were returned to the federal agency for expenses that were removed from the federal award. We also performed an analysis of interim payroll adjusting journal entries to record cost transfers to and/or from R&D awards. We noted that 465 (20%) out of 2,309 adjusting journal entries were made more than 90 days after the end of the biannual period from the original transactions. The adjustments were made 103 to 430 days after the end of the biannual period. In addition, in a non-statistical random sample of 53 out of 11,272 expense transactions charged to R&D during the fiscal year ending June 30, 2024, we noted the following exceptions for 10 transactions, some of which had multiple exceptions: • Six (11%) time and effort certifications for salary and related benefit expenses tested were completed 92 to 248 days after the end of the biannual period, or LSUHSC-S did not provide sufficient documentation to determine that the certifications were completed timely. • For one (2%) transaction, LSUHSC-S did not provide documentation approving the employee’s salary on the applicable award. • For four (8%) transactions, LSUHSC-S did not provide documentation that indicated expenses were reconciled and approved prior to submitting reimbursement requests. Additionally, for three of these transactions, LSUHSC-S did not provide sufficient support to determine if the expenses were incurred prior to the reimbursement request or if LSUHSC-S minimized the time that elapsed between the transfer of funds from the federal government and LSUHSC-S’s disbursement for federal program purposes Finally, it was noted during our procedures related to requisition transactions that LSUHSC-S lacked proper segregation of duties in the online requisition process. We noted in an analysis of all requisition transactions that are subject to online approvals (14,941 transactions totaling $25,349,749) that 4,916 transactions totaling $7,222,206 (28%) did not have adequate segregation of duties. Of these, 306 transactions totaling $338,679 related to the R&D Cluster. Criteria: 2 CFR 200.430(i)(1)(i) requires that charges to federal awards for salaries and wages must be supported by a system of internal control which provides reasonable assurance the charges are accurate, allowable, and properly allocated. Per 2 CFR 200.430(i)(1)(viii), budget estimates alone do not qualify as support for charges to federal awards, but may be used for interim accounting purposes, provided that the system for establishing the estimates produces reasonable approximations of the activity performed, significant changes in work activity are identified and entered into the records in a timely manner, and the non-federal entity’s system of internal controls includes processes to review after-the-fact interim charges and make necessary adjustments. Per LSUHSC-S’s Time and Effort Certification Policy and Procedures, LSUHSC-S utilizes time and effort certifications to support salary charges to sponsored projects as an after-the-fact certification of effort of all individuals when all or a portion of their salaries are charged to a sponsored project. Based on LSUHSC-S’s policy, time and effort certifications should be completed within approximately 90 days of the end of the biannual period. Management interprets the end of the period to be when the time and effort reports are sent to the departments once the last month of the biannual period is closed in the accounting system. If there is a substantial (five percent or more) difference between the salary charges and the effort actually expended by the individual on projects during the biannual reporting period, a payroll reallocation must be created within 30 days. Per 2 CFR 200.303, the non-federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Per the Standards for Internal Control in the Federal Government, examples of common categories of control activities include accurate and timely recording of transactions. In addition, the National Institutes of Health (NIH) is the grantor for the majority of the LSUHSC-S’s R&D grant awards. Per the NIH Grants Policy Statement §7.5, cost transfers that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. An explanation merely stating that the transfer was made “to correct error" or "to transfer to correct project" is not sufficient. Transfers of costs from one project to another or from one competitive segment to the next solely to cover cost overruns are not allowable. Cause: LSUHSC-S faculty are not completing time and effort certifications timely, which contributes to untimely adjustments for compensation. In addition, LSUHSC-S did not provide sufficient supporting documentation for the auditor to test federal regulations related to cash management for all sample items selected due to an insufficient method for sorting and storing the documentation related to each federal award. Finally, the lack of segregation of duties was caused by LSUHSC-S granting certain employees’ access that allowed for self-approvals. Effect: Untimely certifications and the untimely discovery and correction of errors increases the risk of inaccurate reporting and may result in an inability to complete approved projects within the approved budget and/or period of performance. As a result, LSUHSC-S may have to utilize university funds to complete approved projects. In addition, inadequate controls and noncompliance with federal awards increases the likelihood of disallowed costs, which LSUHSC-S may have to repay to the federal grantor. Recommendation: Management should ensure they have adequate controls over time and effort certifications, purchases, and reimbursement requests. In addition, management should ensure adequate segregation of duties covering approvals of all transaction types. Management’s Response and Corrective Action Plan: Management concurred with the finding and outlined a plan of corrective action (B-47).
2024-005 - Noncompliance with and Weakness in Controls over Federal Research and Development Expenses State Entity: Louisiana State University Health Sciences Center - Shreveport (LSUHSC-S) Award Years: Various Award Numbers: Various Compliance Requirements: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Cash Management Pass-Through Entities: Various Repeat Finding: Yes (Prior Year Finding No. 2023-006) See Schedule of Findings and Questioned Costs for chart/table. Condition: For the sixth consecutive year, LSUHSC-S did not ensure internal controls over documentation of personnel services were operating effectively, and did not ensure compliance with federal guidance regarding cost transfers applicable to the Research and Development (R&D) Cluster. In a non-statistical random sample of 27 out of 2,933 payroll adjusting entries affecting R&D, we noted the following exceptions for 15 adjusting entries, some of which had multiple exceptions: • Seven (26%) adjustments did not have adequate documentation to fully explain how the error occurred and/or the transfer was not accomplished within 90 days of when the error was discovered. • For five (19%) adjustments, LSUHSC-S did not provide sufficient information to determine if the cost transfers were completed timely. • For three (11%) adjustments, LSUHSC-S did not provide sufficient information to verify the new charge was certified by a responsible organizational official. • For three (11%) adjustments, LSUHSC-S did not provide sufficient documentation to determine whether adjustments were allowable per the award, which resulted in questioned costs totaling $2,686. • For twelve (44%) adjustments, LSUHSC-S did not provide sufficient documentation to evidence that expenses were incurred prior to reimbursement and that funds were returned to the federal agency for expenses that were removed from the federal award. We also performed an analysis of interim payroll adjusting journal entries to record cost transfers to and/or from R&D awards. We noted that 465 (20%) out of 2,309 adjusting journal entries were made more than 90 days after the end of the biannual period from the original transactions. The adjustments were made 103 to 430 days after the end of the biannual period. In addition, in a non-statistical random sample of 53 out of 11,272 expense transactions charged to R&D during the fiscal year ending June 30, 2024, we noted the following exceptions for 10 transactions, some of which had multiple exceptions: • Six (11%) time and effort certifications for salary and related benefit expenses tested were completed 92 to 248 days after the end of the biannual period, or LSUHSC-S did not provide sufficient documentation to determine that the certifications were completed timely. • For one (2%) transaction, LSUHSC-S did not provide documentation approving the employee’s salary on the applicable award. • For four (8%) transactions, LSUHSC-S did not provide documentation that indicated expenses were reconciled and approved prior to submitting reimbursement requests. Additionally, for three of these transactions, LSUHSC-S did not provide sufficient support to determine if the expenses were incurred prior to the reimbursement request or if LSUHSC-S minimized the time that elapsed between the transfer of funds from the federal government and LSUHSC-S’s disbursement for federal program purposes Finally, it was noted during our procedures related to requisition transactions that LSUHSC-S lacked proper segregation of duties in the online requisition process. We noted in an analysis of all requisition transactions that are subject to online approvals (14,941 transactions totaling $25,349,749) that 4,916 transactions totaling $7,222,206 (28%) did not have adequate segregation of duties. Of these, 306 transactions totaling $338,679 related to the R&D Cluster. Criteria: 2 CFR 200.430(i)(1)(i) requires that charges to federal awards for salaries and wages must be supported by a system of internal control which provides reasonable assurance the charges are accurate, allowable, and properly allocated. Per 2 CFR 200.430(i)(1)(viii), budget estimates alone do not qualify as support for charges to federal awards, but may be used for interim accounting purposes, provided that the system for establishing the estimates produces reasonable approximations of the activity performed, significant changes in work activity are identified and entered into the records in a timely manner, and the non-federal entity’s system of internal controls includes processes to review after-the-fact interim charges and make necessary adjustments. Per LSUHSC-S’s Time and Effort Certification Policy and Procedures, LSUHSC-S utilizes time and effort certifications to support salary charges to sponsored projects as an after-the-fact certification of effort of all individuals when all or a portion of their salaries are charged to a sponsored project. Based on LSUHSC-S’s policy, time and effort certifications should be completed within approximately 90 days of the end of the biannual period. Management interprets the end of the period to be when the time and effort reports are sent to the departments once the last month of the biannual period is closed in the accounting system. If there is a substantial (five percent or more) difference between the salary charges and the effort actually expended by the individual on projects during the biannual reporting period, a payroll reallocation must be created within 30 days. Per 2 CFR 200.303, the non-federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Per the Standards for Internal Control in the Federal Government, examples of common categories of control activities include accurate and timely recording of transactions. In addition, the National Institutes of Health (NIH) is the grantor for the majority of the LSUHSC-S’s R&D grant awards. Per the NIH Grants Policy Statement §7.5, cost transfers that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. An explanation merely stating that the transfer was made “to correct error" or "to transfer to correct project" is not sufficient. Transfers of costs from one project to another or from one competitive segment to the next solely to cover cost overruns are not allowable. Cause: LSUHSC-S faculty are not completing time and effort certifications timely, which contributes to untimely adjustments for compensation. In addition, LSUHSC-S did not provide sufficient supporting documentation for the auditor to test federal regulations related to cash management for all sample items selected due to an insufficient method for sorting and storing the documentation related to each federal award. Finally, the lack of segregation of duties was caused by LSUHSC-S granting certain employees’ access that allowed for self-approvals. Effect: Untimely certifications and the untimely discovery and correction of errors increases the risk of inaccurate reporting and may result in an inability to complete approved projects within the approved budget and/or period of performance. As a result, LSUHSC-S may have to utilize university funds to complete approved projects. In addition, inadequate controls and noncompliance with federal awards increases the likelihood of disallowed costs, which LSUHSC-S may have to repay to the federal grantor. Recommendation: Management should ensure they have adequate controls over time and effort certifications, purchases, and reimbursement requests. In addition, management should ensure adequate segregation of duties covering approvals of all transaction types. Management’s Response and Corrective Action Plan: Management concurred with the finding and outlined a plan of corrective action (B-47).
2024-005 - Noncompliance with and Weakness in Controls over Federal Research and Development Expenses State Entity: Louisiana State University Health Sciences Center - Shreveport (LSUHSC-S) Award Years: Various Award Numbers: Various Compliance Requirements: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Cash Management Pass-Through Entities: Various Repeat Finding: Yes (Prior Year Finding No. 2023-006) See Schedule of Findings and Questioned Costs for chart/table. Condition: For the sixth consecutive year, LSUHSC-S did not ensure internal controls over documentation of personnel services were operating effectively, and did not ensure compliance with federal guidance regarding cost transfers applicable to the Research and Development (R&D) Cluster. In a non-statistical random sample of 27 out of 2,933 payroll adjusting entries affecting R&D, we noted the following exceptions for 15 adjusting entries, some of which had multiple exceptions: • Seven (26%) adjustments did not have adequate documentation to fully explain how the error occurred and/or the transfer was not accomplished within 90 days of when the error was discovered. • For five (19%) adjustments, LSUHSC-S did not provide sufficient information to determine if the cost transfers were completed timely. • For three (11%) adjustments, LSUHSC-S did not provide sufficient information to verify the new charge was certified by a responsible organizational official. • For three (11%) adjustments, LSUHSC-S did not provide sufficient documentation to determine whether adjustments were allowable per the award, which resulted in questioned costs totaling $2,686. • For twelve (44%) adjustments, LSUHSC-S did not provide sufficient documentation to evidence that expenses were incurred prior to reimbursement and that funds were returned to the federal agency for expenses that were removed from the federal award. We also performed an analysis of interim payroll adjusting journal entries to record cost transfers to and/or from R&D awards. We noted that 465 (20%) out of 2,309 adjusting journal entries were made more than 90 days after the end of the biannual period from the original transactions. The adjustments were made 103 to 430 days after the end of the biannual period. In addition, in a non-statistical random sample of 53 out of 11,272 expense transactions charged to R&D during the fiscal year ending June 30, 2024, we noted the following exceptions for 10 transactions, some of which had multiple exceptions: • Six (11%) time and effort certifications for salary and related benefit expenses tested were completed 92 to 248 days after the end of the biannual period, or LSUHSC-S did not provide sufficient documentation to determine that the certifications were completed timely. • For one (2%) transaction, LSUHSC-S did not provide documentation approving the employee’s salary on the applicable award. • For four (8%) transactions, LSUHSC-S did not provide documentation that indicated expenses were reconciled and approved prior to submitting reimbursement requests. Additionally, for three of these transactions, LSUHSC-S did not provide sufficient support to determine if the expenses were incurred prior to the reimbursement request or if LSUHSC-S minimized the time that elapsed between the transfer of funds from the federal government and LSUHSC-S’s disbursement for federal program purposes Finally, it was noted during our procedures related to requisition transactions that LSUHSC-S lacked proper segregation of duties in the online requisition process. We noted in an analysis of all requisition transactions that are subject to online approvals (14,941 transactions totaling $25,349,749) that 4,916 transactions totaling $7,222,206 (28%) did not have adequate segregation of duties. Of these, 306 transactions totaling $338,679 related to the R&D Cluster. Criteria: 2 CFR 200.430(i)(1)(i) requires that charges to federal awards for salaries and wages must be supported by a system of internal control which provides reasonable assurance the charges are accurate, allowable, and properly allocated. Per 2 CFR 200.430(i)(1)(viii), budget estimates alone do not qualify as support for charges to federal awards, but may be used for interim accounting purposes, provided that the system for establishing the estimates produces reasonable approximations of the activity performed, significant changes in work activity are identified and entered into the records in a timely manner, and the non-federal entity’s system of internal controls includes processes to review after-the-fact interim charges and make necessary adjustments. Per LSUHSC-S’s Time and Effort Certification Policy and Procedures, LSUHSC-S utilizes time and effort certifications to support salary charges to sponsored projects as an after-the-fact certification of effort of all individuals when all or a portion of their salaries are charged to a sponsored project. Based on LSUHSC-S’s policy, time and effort certifications should be completed within approximately 90 days of the end of the biannual period. Management interprets the end of the period to be when the time and effort reports are sent to the departments once the last month of the biannual period is closed in the accounting system. If there is a substantial (five percent or more) difference between the salary charges and the effort actually expended by the individual on projects during the biannual reporting period, a payroll reallocation must be created within 30 days. Per 2 CFR 200.303, the non-federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Per the Standards for Internal Control in the Federal Government, examples of common categories of control activities include accurate and timely recording of transactions. In addition, the National Institutes of Health (NIH) is the grantor for the majority of the LSUHSC-S’s R&D grant awards. Per the NIH Grants Policy Statement §7.5, cost transfers that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. An explanation merely stating that the transfer was made “to correct error" or "to transfer to correct project" is not sufficient. Transfers of costs from one project to another or from one competitive segment to the next solely to cover cost overruns are not allowable. Cause: LSUHSC-S faculty are not completing time and effort certifications timely, which contributes to untimely adjustments for compensation. In addition, LSUHSC-S did not provide sufficient supporting documentation for the auditor to test federal regulations related to cash management for all sample items selected due to an insufficient method for sorting and storing the documentation related to each federal award. Finally, the lack of segregation of duties was caused by LSUHSC-S granting certain employees’ access that allowed for self-approvals. Effect: Untimely certifications and the untimely discovery and correction of errors increases the risk of inaccurate reporting and may result in an inability to complete approved projects within the approved budget and/or period of performance. As a result, LSUHSC-S may have to utilize university funds to complete approved projects. In addition, inadequate controls and noncompliance with federal awards increases the likelihood of disallowed costs, which LSUHSC-S may have to repay to the federal grantor. Recommendation: Management should ensure they have adequate controls over time and effort certifications, purchases, and reimbursement requests. In addition, management should ensure adequate segregation of duties covering approvals of all transaction types. Management’s Response and Corrective Action Plan: Management concurred with the finding and outlined a plan of corrective action (B-47).
2024-005 - Noncompliance with and Weakness in Controls over Federal Research and Development Expenses State Entity: Louisiana State University Health Sciences Center - Shreveport (LSUHSC-S) Award Years: Various Award Numbers: Various Compliance Requirements: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Cash Management Pass-Through Entities: Various Repeat Finding: Yes (Prior Year Finding No. 2023-006) See Schedule of Findings and Questioned Costs for chart/table. Condition: For the sixth consecutive year, LSUHSC-S did not ensure internal controls over documentation of personnel services were operating effectively, and did not ensure compliance with federal guidance regarding cost transfers applicable to the Research and Development (R&D) Cluster. In a non-statistical random sample of 27 out of 2,933 payroll adjusting entries affecting R&D, we noted the following exceptions for 15 adjusting entries, some of which had multiple exceptions: • Seven (26%) adjustments did not have adequate documentation to fully explain how the error occurred and/or the transfer was not accomplished within 90 days of when the error was discovered. • For five (19%) adjustments, LSUHSC-S did not provide sufficient information to determine if the cost transfers were completed timely. • For three (11%) adjustments, LSUHSC-S did not provide sufficient information to verify the new charge was certified by a responsible organizational official. • For three (11%) adjustments, LSUHSC-S did not provide sufficient documentation to determine whether adjustments were allowable per the award, which resulted in questioned costs totaling $2,686. • For twelve (44%) adjustments, LSUHSC-S did not provide sufficient documentation to evidence that expenses were incurred prior to reimbursement and that funds were returned to the federal agency for expenses that were removed from the federal award. We also performed an analysis of interim payroll adjusting journal entries to record cost transfers to and/or from R&D awards. We noted that 465 (20%) out of 2,309 adjusting journal entries were made more than 90 days after the end of the biannual period from the original transactions. The adjustments were made 103 to 430 days after the end of the biannual period. In addition, in a non-statistical random sample of 53 out of 11,272 expense transactions charged to R&D during the fiscal year ending June 30, 2024, we noted the following exceptions for 10 transactions, some of which had multiple exceptions: • Six (11%) time and effort certifications for salary and related benefit expenses tested were completed 92 to 248 days after the end of the biannual period, or LSUHSC-S did not provide sufficient documentation to determine that the certifications were completed timely. • For one (2%) transaction, LSUHSC-S did not provide documentation approving the employee’s salary on the applicable award. • For four (8%) transactions, LSUHSC-S did not provide documentation that indicated expenses were reconciled and approved prior to submitting reimbursement requests. Additionally, for three of these transactions, LSUHSC-S did not provide sufficient support to determine if the expenses were incurred prior to the reimbursement request or if LSUHSC-S minimized the time that elapsed between the transfer of funds from the federal government and LSUHSC-S’s disbursement for federal program purposes Finally, it was noted during our procedures related to requisition transactions that LSUHSC-S lacked proper segregation of duties in the online requisition process. We noted in an analysis of all requisition transactions that are subject to online approvals (14,941 transactions totaling $25,349,749) that 4,916 transactions totaling $7,222,206 (28%) did not have adequate segregation of duties. Of these, 306 transactions totaling $338,679 related to the R&D Cluster. Criteria: 2 CFR 200.430(i)(1)(i) requires that charges to federal awards for salaries and wages must be supported by a system of internal control which provides reasonable assurance the charges are accurate, allowable, and properly allocated. Per 2 CFR 200.430(i)(1)(viii), budget estimates alone do not qualify as support for charges to federal awards, but may be used for interim accounting purposes, provided that the system for establishing the estimates produces reasonable approximations of the activity performed, significant changes in work activity are identified and entered into the records in a timely manner, and the non-federal entity’s system of internal controls includes processes to review after-the-fact interim charges and make necessary adjustments. Per LSUHSC-S’s Time and Effort Certification Policy and Procedures, LSUHSC-S utilizes time and effort certifications to support salary charges to sponsored projects as an after-the-fact certification of effort of all individuals when all or a portion of their salaries are charged to a sponsored project. Based on LSUHSC-S’s policy, time and effort certifications should be completed within approximately 90 days of the end of the biannual period. Management interprets the end of the period to be when the time and effort reports are sent to the departments once the last month of the biannual period is closed in the accounting system. If there is a substantial (five percent or more) difference between the salary charges and the effort actually expended by the individual on projects during the biannual reporting period, a payroll reallocation must be created within 30 days. Per 2 CFR 200.303, the non-federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Per the Standards for Internal Control in the Federal Government, examples of common categories of control activities include accurate and timely recording of transactions. In addition, the National Institutes of Health (NIH) is the grantor for the majority of the LSUHSC-S’s R&D grant awards. Per the NIH Grants Policy Statement §7.5, cost transfers that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. An explanation merely stating that the transfer was made “to correct error" or "to transfer to correct project" is not sufficient. Transfers of costs from one project to another or from one competitive segment to the next solely to cover cost overruns are not allowable. Cause: LSUHSC-S faculty are not completing time and effort certifications timely, which contributes to untimely adjustments for compensation. In addition, LSUHSC-S did not provide sufficient supporting documentation for the auditor to test federal regulations related to cash management for all sample items selected due to an insufficient method for sorting and storing the documentation related to each federal award. Finally, the lack of segregation of duties was caused by LSUHSC-S granting certain employees’ access that allowed for self-approvals. Effect: Untimely certifications and the untimely discovery and correction of errors increases the risk of inaccurate reporting and may result in an inability to complete approved projects within the approved budget and/or period of performance. As a result, LSUHSC-S may have to utilize university funds to complete approved projects. In addition, inadequate controls and noncompliance with federal awards increases the likelihood of disallowed costs, which LSUHSC-S may have to repay to the federal grantor. Recommendation: Management should ensure they have adequate controls over time and effort certifications, purchases, and reimbursement requests. In addition, management should ensure adequate segregation of duties covering approvals of all transaction types. Management’s Response and Corrective Action Plan: Management concurred with the finding and outlined a plan of corrective action (B-47).
2024-005 - 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).
2024-006 - Control Weakness and Noncompliance with Personnel Expenses Charged to Federal Awards State Entity: University of Louisiana at Lafayette (UL Lafayette) Award Years: 2020, 2021, 2022 Award Numbers: 1R01MH125395, 2046460, R37AI094595 Compliance Requirements: Allowable Costs/Cost Principles; Special Tests and Provisions Pass-Through Entity: Northwestern University Repeat Finding: Yes (Prior Year Finding No. 2023-007) See Schedule of Findings and Questioned Costs for chart/table. Condition: For the fourth consecutive year, the University of Louisiana at Lafayette (UL Lafayette) did not have adequate controls in place to ensure personnel expenses charged to federal Research and Development (R&D) awards accurately reflected work performed. From a population of 14,024 payroll and non-payroll expenses charged to R&D grants for the fiscal year ending June 30, 2024, a non-statistical sample of 25 transactions were tested for compliance with allowable costs and cost principles requirements. For three (12%) of the payroll transactions, UL Lafayette was unable to provide documentation to show that personnel-related expenses totaling $18,707 were supported by time and effort certifications to ensure the accuracy of budget estimates charged to federal awards as required by federal regulations. Additionally, UL Lafayette did not perform time and effort certifications for the period January 1, 2024, through June 30, 2024. Because there is no after-the-fact review to ensure the accuracy of personnel costs and efforts charged to the awards, UL Lafayette could not ensure compliance with the requirements of special tests and provisions related to key personnel effort. Criteria: 2 CFR 200.430(i) specifies the documentation standards for personnel expenses. In order to be allowable, charges to federal awards for personnel expenses must be based on records that accurately reflect the work performed and must be supported by a system of internal control, which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Budget estimates alone do not qualify as support for charges to federal awards, but can be used for interim accounting purposes provided that internal controls include an after-the fact review to confirm the accuracy of final amounts charged to federal awards. Prior approval requirements related to key personnel effort are contained in 2 CFR 200.308(c) and within grant terms and conditions. A reduction of 25% or greater in time devoted to the project from key personnel requires prior approval, as does disengagement of key personnel from the project for three or more months. Cause: UL Lafayette noted in their prior-year corrective action that certifications for employees charging time to federal awards would be required annually. Annual certifications are not sufficient to timely detect changes in key personnel effort and ensure prior approvals are obtained when applicable. Furthermore, UL Lafayette noted that the next effort reporting cycle would cover July 1, 2023, through December 31, 2023. The time certification period only covered half of the audit period. As a result, time and effort certifications were not completed by employees on the latter half of the audit period to support that the charges to federal awards for salaries and wages were based on records that accurately reflect the work performed during this period. Effect: Inadequate controls related to federal documentation standards for personnel expenses could result in noncompliance with federal allowable costs and cost principles, as well as noncompliance with special tests and provisions related to key personnel effort. Recommendation: Management should strengthen internal controls to ensure that personnel expenses charged to the federal awards are supported by a system of internal control, which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Additionally, Management should revise the Time & Effort Certification policy and/or implement alternative controls designed to ensure compliance with Special Tests and Provisions requirements. Management should monitor changes in effort for key personnel and ensure that prior written approval is obtained from the federal grantor for changes that exceed the thresholds set in federal regulations. Management’s Response and Corrective Action Plan: Management partially concurred with the finding and provided a corrective action plan (B-60).
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).
2024-001. Allowable Costs/Cost Principles: Compensation – Personal Services United States Department of Education, Passed Through New York State, Department of Education: Twenty-First Century Community Learning Centers ALN: 84.287 Criteria: Salaries and wages charged to federal awards must be supported by documentation prescribed by the Uniform Guidance at Subpart E, 2 CFR §200.430. Condition: Subpart E, 2 CFR §200.430 of the Uniform Guidance requires that charges to “Federal awards for salaries and wages must be based on records that accurately reflect the work performed.” The documentation should support the distribution of the employee's compensation among specific activities if the employee works on more than one federal award, or a federal award and non-federal award. The preparation of personnel activity reports (PARs) or periodic certifications or the equivalent is the most effective way to comply with this requirement. During the current year, the District prepared periodic certification equivalents, but it did not comply with Subpart E, 2 CFR §200.430. Cause: The individual that was responsible for coordinating the program did not complete time and effort records, as described in Subpart E, 2 CFR §200.430, to support salaries charged to federal awards. Effect: Noncompliance could result in the incorrect amount for services rendered being charged to the federal award. Questioned Costs: None reported. Context: Time records for the balance of employees audited in our sample of 25, who were charged to federal awards by the District, were supportive of amounts included in budgets approved by the State and included in the Final Expenditure Report. Identification of a Repeat Finding: This is not a repeat finding. Recommendation: The District should monitor its procedures to ascertain that documentation to support salaries and wages charged to federal awards is in a format that complies with the requirements of the Uniform Guidance at Subpart E, 2 CFR §200.430. Views of Responsible Officials of Auditee: The District agrees with the finding. Peter Daly, Interim School Business Administrator, will oversee the monitoring of procedures to ensure appropriate documentation will be prepared to comply with Subpart E, 2 CFR §200.430.
2024-001. Allowable Costs/Cost Principles: Compensation – Personal Services United States Department of Education, Passed Through New York State, Department of Education: Twenty-First Century Community Learning Centers ALN: 84.287 Criteria: Salaries and wages charged to federal awards must be supported by documentation prescribed by the Uniform Guidance at Subpart E, 2 CFR §200.430. Condition: Subpart E, 2 CFR §200.430 of the Uniform Guidance requires that charges to “Federal awards for salaries and wages must be based on records that accurately reflect the work performed.” The documentation should support the distribution of the employee's compensation among specific activities if the employee works on more than one federal award, or a federal award and non-federal award. The preparation of personnel activity reports (PARs) or periodic certifications or the equivalent is the most effective way to comply with this requirement. During the current year, the District prepared periodic certification equivalents, but it did not comply with Subpart E, 2 CFR §200.430. Cause: The individual that was responsible for coordinating the program did not complete time and effort records, as described in Subpart E, 2 CFR §200.430, to support salaries charged to federal awards. Effect: Noncompliance could result in the incorrect amount for services rendered being charged to the federal award. Questioned Costs: None reported. Context: Time records for the balance of employees audited in our sample of 25, who were charged to federal awards by the District, were supportive of amounts included in budgets approved by the State and included in the Final Expenditure Report. Identification of a Repeat Finding: This is not a repeat finding. Recommendation: The District should monitor its procedures to ascertain that documentation to support salaries and wages charged to federal awards is in a format that complies with the requirements of the Uniform Guidance at Subpart E, 2 CFR §200.430. Views of Responsible Officials of Auditee: The District agrees with the finding. Peter Daly, Interim School Business Administrator, will oversee the monitoring of procedures to ensure appropriate documentation will be prepared to comply with Subpart E, 2 CFR §200.430.
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.
Significant Deficiency / Other Non-compliance Federal Agency U.S. Department of Education Pass-through: Mississippi Department of Education Assistance Listing Numbers: 84.425 U Program Title: COVID-19-Elementary & Secondary School Emergency Relief Fund (ESSER) ARP III Compliance Requirement: Activities Allowed or Unallowed; Allowable Costs/Cost Principles. Repeat Finding from prior year: No Prior Year Finding Number: N/A Criteria: 2 CFR Section 200.430(g) specifies that charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must be supported by a system of internal control that provides reasonable assurance that the charges are accurate, allowable, and properly allocated and support the distribution of the employee's salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. In addition, the district’s Federal Programs Procedural Handbook states “ Salaries and wages paid for North Tippah employees who work on a single federal cost object must be supported by periodic certifications that the employees worked solely on that activity for the period covered by the certification. These certifications must be prepared at least semi-annually, then signed and dated by the employee and supervisory administrator that has firsthand knowledge of the employee’s work. North Tippah Employees who work on multiple cost objectives must support the distribution of their salaries or wages by completing personnel activity reports These personnel activity reports must reflect an after the fact distribution of the actual activity; must account for the total activity for which the employee is compensated; must be prepared at least monthly, coinciding with one or more pay periods; and the PAR shall have a legible handwritten signature signed and dated by employee and supervisory administrator that has firsthand knowledge of the employee’s work. Condition: The district failed to follow the their policies and procedures regarding time and effort documentation, as a result time and effort documentation for seven employees were not available for audit. Context/Perspective This finding is a result of our statistically valid random sample of forty cash disbursements for single audit purposes and the conditions cited appear to be an isolated issue. Cause: The cause is likely a failure to monitor and follow the District’s documented internal controls procedures. Effect: Failure to prepare and review time and effort reporting forms in a timely and accurate manner may lead to improper charges to the federal award which can result in disallowed costs being applied to the program. Recommendation: We recommend that the District implement additional internal controls to ensure that it obtains and maintains the required semi-annual certifications required by employees who work on a single cost objective and are paid through federal grants or monthly personnel activity reports (PAR) for employees who work on more that one cost objective. Questioned Cost: None Views of responsible officials of the auditee: See Auditee’s Corrective Action Plan
Federal Program Title: Staffing for Adequate Fire & Emergency Response Federal Catalog Number: 97.083 Federal Agency: U.S. Department of Homeland Security Category of Finding: Activities Allowed/Unallowed Criteria: According to 2 CFR 200.430, employees working on federally funded projects are required to submit timesheets that accurately reflect the time spent on the project. These timesheets must be approved by a responsible supervisor to ensure that the reported hours are accurate, reasonable, and properly allocated. Additionally, organizations must establish and maintain effective internal controls to ensure compliance with timekeeping and payroll procedures. Condition: During the audit, it was found that the City's time roster report approval process was not consistently followed. We selected four pay periods for testing. In two of these periods, the time roster reports were not properly reviewed and approved by a battalion chief supervisor before submission for payroll processing. These time roster reports were automatically approved by the system to meet payroll processing deadlines, bypassing the required supervisory review. Cause: The failure to adhere to the time roster report approval process was due to a lack of oversight and insufficient enforcement of internal control procedures. Effect or Potential Effect: The lack of proper time roster approval creates a risk of inaccuracies in the allocation of payroll costs to federal grants, which could result in non-compliance with federal regulations. Additionally, failure to follow the required process could lead to improper charging of labor costs, potentially jeopardizing the City’s eligibility for future funding and risking the disallowance of grant-related costs. Questioned Cost: None. Repeat of a Prior-Year Finding: No. Recommendation: We recommend the City to strengthen its internal controls related to time roster report approval. Specifically, a formal time roster report approval process should be implemented that includes clear guidelines for timely approval by supervisors. The City should also establish a tracking system to ensure that time roster report is approved before submission for payroll processing. Regular training for staff and supervisors on the importance of accurate timekeeping and approval procedures should be conducted to reinforce compliance with federal grant requirements. Management Response and Corrective Action Plan City's Response: The City uses Telestaff to maintain Fire employees’ work schedules and as the system of record for payroll timekeeping. The audit identified several rosters that were not finalized (approved) by the Duty Chief before the conclusion of their shift and were auto-finalized by the system. Going forward, the City will ensure that the finalization process by the Duty Chief, which essentially serves to confirm that the time and attendance as reflected in Telestaff is what was actually worked, is adhered to. Oxnard Fire Department Policy 1005 requires that the Duty Chief review and approve the roster at the conclusion of their shift to verify the accuracy of the roster for payroll processing. In instances where overtime related to late relief is in unapproved status (depicted with an asterisk in the system), the Duty Chief will ensure the late relief is approved before finalizing the daily roster. After the roster is finalized (approved) by the Duty Chief, the timekeeper reviews the roster for the appropriate general ledger account(s), paycode(s), and project coding to ensure proper accounting of payroll costs. If the Duty Chief has not finalized the roster by 0800, the timekeeper will inform the Department Assistant Chiefs to initiate completion of the task. Corrective Action Plan: The Department will conduct a formal review of its processes and policies to identify potential weaknesses in the payroll timekeeping and approval process, and will update its policies and procedures to align with the roles and responsibilities of those involved in rostering and timekeeping. The department has already taken corrective action to ensure that duty chiefs are finalizing the rosters before the end of their shift and making it the responsibility of the timekeeper to initiate action when finalization by the Duty Chiefs has not occurred so the timekeepers review process can be completed. Planned Implementation Date: June 30, 2025 Responsible Person(s): Karsten Guthrie and Rose Rodarte
Criteria: Federal regulations 2 CFR Part 200, Sect 200.430(g) requires that wages chargerd to federal programs, including amounts claimed or used for matching, must be based on records that accuratley reflect work performed. Budget estimates alone do not qualify as support for charges to federal awards, but may be used for interim accounting purposes (with restrictions). Condition: The Alliance did maintain acurate time sheeets for time worked, however time was alloacted to the federal grant based on the year-to-date percentag eof time spent on the federal program and was not adjusted to actual time spent based on the pay period and times worked in the corresponding pay period. Additionally, fringe benefits were not allocated to the federal program based on time worked in the federal program. Cause: Management was unaware of the requirement to adjust to actual time spent on the federal program. Effect: Wages, payroll taxes and fring benefits charged to the federal program are in excess of actutal amounts based on time spent working in the federal program. Questions costs: $33,921. Recommendation: We recommend that mamangement allocate time to federal programs based on time spent per pay period. If estimates will be used during the fiscal year, an adjustment should be made at year-end to adjust to actual time worked in the federal program. Additionally, fringe benefits should be allocated to the fedral program in a manner consistent with the pattern of benefits attributable to employees whose salaries are chargebable to the federal award. View of Responsible Officials: Management agrees with the finding and recommendation. See attached Corrective Action Plan.
2024 – 002 Allowable Costs Federal Agency: U.S. Department Education Federal Program Name: Education Stabilization Fund Assistance Listing Number: 84.425U, 84.425D, 84.425W Pass-Through Agency: Indiana Department of Education Pass-Through Numbers: S425U210013, S425D210013, S425W210013 Award Period: July 1, 2023 – June 30, 2024 Type of Finding: Material Weakness in Internal Control over Compliance Material Noncompliance Criteria or specific requirement: The Compliance Supplement requires that compensation for personal services be charged to the federal grant based upon approved actual time worked on the program and not based on an allocation or budget (2 CFR 200.430(i)). Condition: While performing audit procedures, it was noted that payroll expenses were charged to the grant program based upon an allocation from the budget and not on approved and/or certified time worked in the program. Questioned costs: $234,052 Context: During the process of obtaining an understanding of internal controls and processing of payroll expenditures, we noted payroll was not reviewed to ensure the expense charged to the grants was accurate based upon approved actual time spent in the program. Cause: Salary figures for salaried employees were charged to the federal grant based on unapproved work actually performed for the program. Effect: The organization has not fully followed compliance attributes with the allowable costs principles set forth by the Compliance Supplement related to allocation of salaries being charged based on approved time worked for a program. Personnel need to reinforce policies to ensure control procedures are in place to ensure salaries charged to a grant are appropriately based on actual approved time worked in a program. Repeat Finding: No. Recommendation: We recommend the School ensure policies and procedures for payroll expenditures for grant programs be charged to the federal grant based on approved hours worked in the program. Views of responsible officials: There is no disagreement with the audit finding.
2024 – 002 Allowable Costs Federal Agency: U.S. Department Education Federal Program Name: Education Stabilization Fund Assistance Listing Number: 84.425U, 84.425D, 84.425W Pass-Through Agency: Indiana Department of Education Pass-Through Numbers: S425U210013, S425D210013, S425W210013 Award Period: July 1, 2023 – June 30, 2024 Type of Finding: Material Weakness in Internal Control over Compliance Material Noncompliance Criteria or specific requirement: The Compliance Supplement requires that compensation for personal services be charged to the federal grant based upon approved actual time worked on the program and not based on an allocation or budget (2 CFR 200.430(i)). Condition: While performing audit procedures, it was noted that payroll expenses were charged to the grant program based upon an allocation from the budget and not on approved and/or certified time worked in the program. Questioned costs: $234,052 Context: During the process of obtaining an understanding of internal controls and processing of payroll expenditures, we noted payroll was not reviewed to ensure the expense charged to the grants was accurate based upon approved actual time spent in the program. Cause: Salary figures for salaried employees were charged to the federal grant based on unapproved work actually performed for the program. Effect: The organization has not fully followed compliance attributes with the allowable costs principles set forth by the Compliance Supplement related to allocation of salaries being charged based on approved time worked for a program. Personnel need to reinforce policies to ensure control procedures are in place to ensure salaries charged to a grant are appropriately based on actual approved time worked in a program. Repeat Finding: No. Recommendation: We recommend the School ensure policies and procedures for payroll expenditures for grant programs be charged to the federal grant based on approved hours worked in the program. Views of responsible officials: There is no disagreement with the audit finding.
2024 – 002 Allowable Costs Federal Agency: U.S. Department Education Federal Program Name: Education Stabilization Fund Assistance Listing Number: 84.425U, 84.425D, 84.425W Pass-Through Agency: Indiana Department of Education Pass-Through Numbers: S425U210013, S425D210013, S425W210013 Award Period: July 1, 2023 – June 30, 2024 Type of Finding: Material Weakness in Internal Control over Compliance Material Noncompliance Criteria or specific requirement: The Compliance Supplement requires that compensation for personal services be charged to the federal grant based upon approved actual time worked on the program and not based on an allocation or budget (2 CFR 200.430(i)). Condition: While performing audit procedures, it was noted that payroll expenses were charged to the grant program based upon an allocation from the budget and not on approved and/or certified time worked in the program. Questioned costs: $234,052 Context: During the process of obtaining an understanding of internal controls and processing of payroll expenditures, we noted payroll was not reviewed to ensure the expense charged to the grants was accurate based upon approved actual time spent in the program. Cause: Salary figures for salaried employees were charged to the federal grant based on unapproved work actually performed for the program. Effect: The organization has not fully followed compliance attributes with the allowable costs principles set forth by the Compliance Supplement related to allocation of salaries being charged based on approved time worked for a program. Personnel need to reinforce policies to ensure control procedures are in place to ensure salaries charged to a grant are appropriately based on actual approved time worked in a program. Repeat Finding: No. Recommendation: We recommend the School ensure policies and procedures for payroll expenditures for grant programs be charged to the federal grant based on approved hours worked in the program. Views of responsible officials: There is no disagreement with the audit finding.
2024-004 Community Development Block Grants, ALN 14.218 Federal Award Identification Number and Year: B-23-MC-25-0019, 2024 Award Period: July 1, 2023 through June 30, 2024 Compliance Requirement: Allowable Costs/Cost Principles Criteria or Specific Requirement: (CFR) Title 2 Part 200.430 indicates charges to federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Such records must also reasonably reflect the total activity for which the employee is compensated by the non-Federal entity. Condition and Context: For one of forty payroll disbursements in our sample, evidence of management's review of time and effort was not provided. Questioned Costs: None. Cause: Procedures were not implemented effectively to ensure all attestations of time and effort were reviewed and approved by supervising officials. Effect: While time and effort dedicated to cost objectives was documented for the instance in questions, the risk of noncompliance with federal program requirements is present due to the lack of approval from the payroll documentation. Repeat Finding: No. Recommendation: We recommend procedures be strengthened to ensure management's review and approval of time and effort attestation is present on supporting documentation maintained for payroll costs. Views of Responsible Officials: Management agrees with the finding.
FINDING 2024-004 Subject: COVID-19 - Education Stabilization Fund - Allowable Costs/Cost Principles Federal Agency: Department of Education Federal Program: COVID-19 - Education Stabilization Fund Assistance Listings Numbers: 84.425D, 84.425U Federal Award Numbers and Years (or Other Identifying Numbers): S425D200013, S425U210013 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Allowable Costs/Cost Principles Audit Findings: Material Weakness, Other Matters Condition and Context An effective internal control system, which would include segregation of duties, was not in place at the School Corporation in order to ensure compliance with requirements related to the grant agreement and the following compliance requirement: Allowable Costs/Cost Principles. Federal funds may only be used to pay staff for work that has occurred supporting the objective of the federal program. As such, proper time and effort documentation is to be maintained by the School Corporation. The purpose of time and effort recording is to provide documentation of the time spent working on specific federal programs to ensure charges are accurate for each program. Reimbursements were prepared by one employee and reviewed by another employee prior to submission; however, this internal control was not effective in preventing noncompliance with allowable costs/cost principles. INDIANA STATE BOARD OF ACCOUNTS 22 MT. VERNON COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Out of 14 employees tested, 1 employee was paid 50 percent of their salary from the COVID-19 - Education Stabilization Funds (ESF) grant and 50 percent of their salary from another funding source. The School Corporation was not able to provide documentation that supported the hours paid from the ESF grant. The ineffective internal controls were systemic throughout the audit period. The noncompliance was isolated to payrolls for September and October of 2022. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (g) Be adequately documented. . . ." 2 CFR 200.430(i) states in part: "Standards for Documentation of Personnel Expenses (1) Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (ii) Be incorporated into the official records of the non-Federal entity; (iii) Reasonably reflect the total activity for which the employee is compensated by the non-Federal entity, not exceeding 100% of compensated activities . . . (iv) Encompass federally-assisted and all other activities compensated by the recipient or subrecipient on an integrated basis but may include the use of subsidiary records as defined in the recipient's or subrecipient's written policy; . . . (vii) Support the distribution of the employee's salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. . . ." INDIANA STATE BOARD OF ACCOUNTS 23 MT. VERNON COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) While across the board stipends are not permitted, LEAs may pay staff for COVID-related work that has been documented. Most, if not all, staff likely had extra responsibilities as well as time and effort to respond to the pandemic. ESSER funds can be used to pay staff for that work and LEAs are responsible for documenting that this work occurred. (Indiana Department of Education, ESSER III Frequently Asked Questions (FAQs) updated August 16, 2021) Cause A proper system of internal controls over the payroll disbursements for employees who worked with both federal and nonfederal programs was not properly designed or implemented by management. The School Corporation did not maintain a record of the actual time spent working on extra responsibilities for COVID-related work to ensure allowability. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, the proper allocation could not be determined for reimbursements for one employee's payroll for September and October of 2022. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management design and implement a system of internal controls to ensure that disbursement documentation will be obtained, retained, and made available for audit and that the disbursements comply with the Allowable Costs/Cost Principles compliance requirement.