Finding 2022-002: Allowable Costs/Cost Principles (Material Weakness and Noncompliance) Federal Agency: Department of Housing and Urban Development Assistance Listing Number and Title: 14.231 - Emergency Solutions Grant Program Criteria: Per 2 CFR ?200.430, Compensation - personal services, (i) Standards for Documentation of Personnel Expenses, charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. Among other requirements, these records must: ? Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; ? Reasonably reflect the total activity for which the employee is compensated by the non-Federal entity, not exceeding 100% of compensated activities; ? Encompass both federally assisted and all other activities compensated by the non-Federal entity on an integrated basis; 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. Budget estimates (i.e., estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that the award recipient?s system of internal controls includes processes to review after-the-fact interim charges made to a Federal awards based on budget estimates, and that all necessary adjustments be made such that the final amount charged to the Federal award is accurate, allowable, and properly allocated. Condition: For this program, there was no evidence that actual employee time was tracked, reviewed and approved, or that the actual time spent was used as a basis for allocating personnel charges to the grant. Questioned Costs: $166,148 (total employee salaries and wages charged to the program) Context: For our direct labor allowable costs sample, Army management indicated that all 10 expenditure selections totaling $12,871 were allocated to the program based on budgeted percentages. There was no evidence that a subsequent review of budget estimates was performed for all the selections. Cause: Current policies and procedures do not require documented timekeeping by employees working on the grant program, which is appropriately reviewed, approved and used as a basis for charges to the grant. Effect: Personnel costs charged to federal awards without appropriate documentation may be subject to disallowance. Repeat Finding: No. Recommendation: Policies and procedures should be implemented to ensure that employee timekeeping, as well as the salary and wage allocations to the grant, are appropriately documented and accurately reflect the work performed. Views of Responsible Officials: Management notes the details of this finding and the resulting material weakness. Management will enact processes outlined in our Corrective Action Plan to correct this deficiency in the future.
Finding 2022-002: Allowable Costs/Cost Principles (Material Weakness and Noncompliance) Federal Agency: Department of Housing and Urban Development Assistance Listing Number and Title: 14.231 - Emergency Solutions Grant Program Criteria: Per 2 CFR ?200.430, Compensation - personal services, (i) Standards for Documentation of Personnel Expenses, charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. Among other requirements, these records must: ? Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; ? Reasonably reflect the total activity for which the employee is compensated by the non-Federal entity, not exceeding 100% of compensated activities; ? Encompass both federally assisted and all other activities compensated by the non-Federal entity on an integrated basis; 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. Budget estimates (i.e., estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that the award recipient?s system of internal controls includes processes to review after-the-fact interim charges made to a Federal awards based on budget estimates, and that all necessary adjustments be made such that the final amount charged to the Federal award is accurate, allowable, and properly allocated. Condition: For this program, there was no evidence that actual employee time was tracked, reviewed and approved, or that the actual time spent was used as a basis for allocating personnel charges to the grant. Questioned Costs: $166,148 (total employee salaries and wages charged to the program) Context: For our direct labor allowable costs sample, Army management indicated that all 10 expenditure selections totaling $12,871 were allocated to the program based on budgeted percentages. There was no evidence that a subsequent review of budget estimates was performed for all the selections. Cause: Current policies and procedures do not require documented timekeeping by employees working on the grant program, which is appropriately reviewed, approved and used as a basis for charges to the grant. Effect: Personnel costs charged to federal awards without appropriate documentation may be subject to disallowance. Repeat Finding: No. Recommendation: Policies and procedures should be implemented to ensure that employee timekeeping, as well as the salary and wage allocations to the grant, are appropriately documented and accurately reflect the work performed. Views of Responsible Officials: Management notes the details of this finding and the resulting material weakness. Management will enact processes outlined in our Corrective Action Plan to correct this deficiency in the future.
Finding 2022-002: Allowable Costs/Cost Principles (Material Weakness and Noncompliance) Federal Agency: Department of Housing and Urban Development Assistance Listing Number and Title: 14.231 - Emergency Solutions Grant Program Criteria: Per 2 CFR ?200.430, Compensation - personal services, (i) Standards for Documentation of Personnel Expenses, charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. Among other requirements, these records must: ? Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; ? Reasonably reflect the total activity for which the employee is compensated by the non-Federal entity, not exceeding 100% of compensated activities; ? Encompass both federally assisted and all other activities compensated by the non-Federal entity on an integrated basis; 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. Budget estimates (i.e., estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that the award recipient?s system of internal controls includes processes to review after-the-fact interim charges made to a Federal awards based on budget estimates, and that all necessary adjustments be made such that the final amount charged to the Federal award is accurate, allowable, and properly allocated. Condition: For this program, there was no evidence that actual employee time was tracked, reviewed and approved, or that the actual time spent was used as a basis for allocating personnel charges to the grant. Questioned Costs: $166,148 (total employee salaries and wages charged to the program) Context: For our direct labor allowable costs sample, Army management indicated that all 10 expenditure selections totaling $12,871 were allocated to the program based on budgeted percentages. There was no evidence that a subsequent review of budget estimates was performed for all the selections. Cause: Current policies and procedures do not require documented timekeeping by employees working on the grant program, which is appropriately reviewed, approved and used as a basis for charges to the grant. Effect: Personnel costs charged to federal awards without appropriate documentation may be subject to disallowance. Repeat Finding: No. Recommendation: Policies and procedures should be implemented to ensure that employee timekeeping, as well as the salary and wage allocations to the grant, are appropriately documented and accurately reflect the work performed. Views of Responsible Officials: Management notes the details of this finding and the resulting material weakness. Management will enact processes outlined in our Corrective Action Plan to correct this deficiency in the future.
Finding 2022-002: Allowable Costs/Cost Principles (Material Weakness and Noncompliance) Federal Agency: Department of Housing and Urban Development Assistance Listing Number and Title: 14.231 - Emergency Solutions Grant Program Criteria: Per 2 CFR ?200.430, Compensation - personal services, (i) Standards for Documentation of Personnel Expenses, charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. Among other requirements, these records must: ? Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; ? Reasonably reflect the total activity for which the employee is compensated by the non-Federal entity, not exceeding 100% of compensated activities; ? Encompass both federally assisted and all other activities compensated by the non-Federal entity on an integrated basis; 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. Budget estimates (i.e., estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that the award recipient?s system of internal controls includes processes to review after-the-fact interim charges made to a Federal awards based on budget estimates, and that all necessary adjustments be made such that the final amount charged to the Federal award is accurate, allowable, and properly allocated. Condition: For this program, there was no evidence that actual employee time was tracked, reviewed and approved, or that the actual time spent was used as a basis for allocating personnel charges to the grant. Questioned Costs: $166,148 (total employee salaries and wages charged to the program) Context: For our direct labor allowable costs sample, Army management indicated that all 10 expenditure selections totaling $12,871 were allocated to the program based on budgeted percentages. There was no evidence that a subsequent review of budget estimates was performed for all the selections. Cause: Current policies and procedures do not require documented timekeeping by employees working on the grant program, which is appropriately reviewed, approved and used as a basis for charges to the grant. Effect: Personnel costs charged to federal awards without appropriate documentation may be subject to disallowance. Repeat Finding: No. Recommendation: Policies and procedures should be implemented to ensure that employee timekeeping, as well as the salary and wage allocations to the grant, are appropriately documented and accurately reflect the work performed. Views of Responsible Officials: Management notes the details of this finding and the resulting material weakness. Management will enact processes outlined in our Corrective Action Plan to correct this deficiency in the future.
Finding 2022-002: Allowable Costs/Cost Principles (Material Weakness and Noncompliance) Federal Agency: Department of Housing and Urban Development Assistance Listing Number and Title: 14.231 - Emergency Solutions Grant Program Criteria: Per 2 CFR ?200.430, Compensation - personal services, (i) Standards for Documentation of Personnel Expenses, charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. Among other requirements, these records must: ? Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; ? Reasonably reflect the total activity for which the employee is compensated by the non-Federal entity, not exceeding 100% of compensated activities; ? Encompass both federally assisted and all other activities compensated by the non-Federal entity on an integrated basis; 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. Budget estimates (i.e., estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that the award recipient?s system of internal controls includes processes to review after-the-fact interim charges made to a Federal awards based on budget estimates, and that all necessary adjustments be made such that the final amount charged to the Federal award is accurate, allowable, and properly allocated. Condition: For this program, there was no evidence that actual employee time was tracked, reviewed and approved, or that the actual time spent was used as a basis for allocating personnel charges to the grant. Questioned Costs: $166,148 (total employee salaries and wages charged to the program) Context: For our direct labor allowable costs sample, Army management indicated that all 10 expenditure selections totaling $12,871 were allocated to the program based on budgeted percentages. There was no evidence that a subsequent review of budget estimates was performed for all the selections. Cause: Current policies and procedures do not require documented timekeeping by employees working on the grant program, which is appropriately reviewed, approved and used as a basis for charges to the grant. Effect: Personnel costs charged to federal awards without appropriate documentation may be subject to disallowance. Repeat Finding: No. Recommendation: Policies and procedures should be implemented to ensure that employee timekeeping, as well as the salary and wage allocations to the grant, are appropriately documented and accurately reflect the work performed. Views of Responsible Officials: Management notes the details of this finding and the resulting material weakness. Management will enact processes outlined in our Corrective Action Plan to correct this deficiency in the future.
Finding 2022-002: Allowable Costs/Cost Principles (Material Weakness and Noncompliance) Federal Agency: Department of Housing and Urban Development Assistance Listing Number and Title: 14.231 - Emergency Solutions Grant Program Criteria: Per 2 CFR ?200.430, Compensation - personal services, (i) Standards for Documentation of Personnel Expenses, charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. Among other requirements, these records must: ? Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; ? Reasonably reflect the total activity for which the employee is compensated by the non-Federal entity, not exceeding 100% of compensated activities; ? Encompass both federally assisted and all other activities compensated by the non-Federal entity on an integrated basis; 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. Budget estimates (i.e., estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that the award recipient?s system of internal controls includes processes to review after-the-fact interim charges made to a Federal awards based on budget estimates, and that all necessary adjustments be made such that the final amount charged to the Federal award is accurate, allowable, and properly allocated. Condition: For this program, there was no evidence that actual employee time was tracked, reviewed and approved, or that the actual time spent was used as a basis for allocating personnel charges to the grant. Questioned Costs: $166,148 (total employee salaries and wages charged to the program) Context: For our direct labor allowable costs sample, Army management indicated that all 10 expenditure selections totaling $12,871 were allocated to the program based on budgeted percentages. There was no evidence that a subsequent review of budget estimates was performed for all the selections. Cause: Current policies and procedures do not require documented timekeeping by employees working on the grant program, which is appropriately reviewed, approved and used as a basis for charges to the grant. Effect: Personnel costs charged to federal awards without appropriate documentation may be subject to disallowance. Repeat Finding: No. Recommendation: Policies and procedures should be implemented to ensure that employee timekeeping, as well as the salary and wage allocations to the grant, are appropriately documented and accurately reflect the work performed. Views of Responsible Officials: Management notes the details of this finding and the resulting material weakness. Management will enact processes outlined in our Corrective Action Plan to correct this deficiency in the future.
Finding 2022-002: Allowable Costs/Cost Principles (Material Weakness and Noncompliance) Federal Agency: Department of Housing and Urban Development Assistance Listing Number and Title: 14.231 - Emergency Solutions Grant Program Criteria: Per 2 CFR ?200.430, Compensation - personal services, (i) Standards for Documentation of Personnel Expenses, charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. Among other requirements, these records must: ? Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; ? Reasonably reflect the total activity for which the employee is compensated by the non-Federal entity, not exceeding 100% of compensated activities; ? Encompass both federally assisted and all other activities compensated by the non-Federal entity on an integrated basis; 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. Budget estimates (i.e., estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that the award recipient?s system of internal controls includes processes to review after-the-fact interim charges made to a Federal awards based on budget estimates, and that all necessary adjustments be made such that the final amount charged to the Federal award is accurate, allowable, and properly allocated. Condition: For this program, there was no evidence that actual employee time was tracked, reviewed and approved, or that the actual time spent was used as a basis for allocating personnel charges to the grant. Questioned Costs: $166,148 (total employee salaries and wages charged to the program) Context: For our direct labor allowable costs sample, Army management indicated that all 10 expenditure selections totaling $12,871 were allocated to the program based on budgeted percentages. There was no evidence that a subsequent review of budget estimates was performed for all the selections. Cause: Current policies and procedures do not require documented timekeeping by employees working on the grant program, which is appropriately reviewed, approved and used as a basis for charges to the grant. Effect: Personnel costs charged to federal awards without appropriate documentation may be subject to disallowance. Repeat Finding: No. Recommendation: Policies and procedures should be implemented to ensure that employee timekeeping, as well as the salary and wage allocations to the grant, are appropriately documented and accurately reflect the work performed. Views of Responsible Officials: Management notes the details of this finding and the resulting material weakness. Management will enact processes outlined in our Corrective Action Plan to correct this deficiency in the future.
Federal Agency: U.S. Department of Health and Human Services Program: Family Violence Prevention and Services/Discretionary Assistance Listing Number: 93.592 Major Program Compliance Requirement: Allowable Costs/Activities Allowed Criteria: In accordance with 200.430(i) in Subpart E of Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), changes 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. Condition: Accurate and reliable records are necessary to meet ongoing financial reporting and operations needs and requirements. During our testing of the Organization?s compliance with Assistance Listing 93.592 Family Violence Prevention and Services/Discretionary, the Organization was unable to provide documentation that compensation rates were approved by management or the Board of Directors for all employees (5) selected for testing. Cause: The Organization did not consistently document in personnel records or elsewhere employee compensation or changes to employee compensation rates that were approved by management or the Board of Directors. Effect: The absence of approved employee compensation inhibits the Organization from complying with federal program requirements and the potential of disallowed costs and/or repayment to the federal agency. Recommendation: The Organization should retain all supporting documentation for reported expenditures. View of Responsible Officials: As part of the ongoing review of procedures, all wage changes must now be approved in writing by the CEO or her designee for all subordinate staff, and by the Board of Directors for the CEO. All wage changes will be submitted to the payroll processor before any adjustments can be made in the system. Additionally, each payroll is reviewed by a second person to ensure compliance. All supporting documentation of compensation changes will also be placed in the employee's personnel file. Policies and procedures and/or the Financial Procedures Handbook will also be updated to reflect the changes.
Federal Agency: U.S. Department of Health and Human Services Program: Family Violence Prevention and Services/Discretionary Assistance Listing Number: 93.592 Major Program Compliance Requirement: Allowable Costs/Activities Allowed Criteria: In accordance with 200.430(i) in Subpart E of Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), changes 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. Condition: Accurate and reliable records are necessary to meet ongoing financial reporting and operations needs and requirements. During our testing of the Organization?s compliance with Assistance Listing 93.592 Family Violence Prevention and Services/Discretionary, the Organization was unable to provide documentation that compensation rates were approved by management or the Board of Directors for all employees (5) selected for testing. Cause: The Organization did not consistently document in personnel records or elsewhere employee compensation or changes to employee compensation rates that were approved by management or the Board of Directors. Effect: The absence of approved employee compensation inhibits the Organization from complying with federal program requirements and the potential of disallowed costs and/or repayment to the federal agency. Recommendation: The Organization should retain all supporting documentation for reported expenditures. View of Responsible Officials: As part of the ongoing review of procedures, all wage changes must now be approved in writing by the CEO or her designee for all subordinate staff, and by the Board of Directors for the CEO. All wage changes will be submitted to the payroll processor before any adjustments can be made in the system. Additionally, each payroll is reviewed by a second person to ensure compliance. All supporting documentation of compensation changes will also be placed in the employee's personnel file. Policies and procedures and/or the Financial Procedures Handbook will also be updated to reflect the changes.
Finding Number: 2022-009 Prior Year Finding Number: 2021-011 Compliance Requirement: Activities Allowed or Unallowed and Allowable Costs/Cost Principles Program: U.S. Department of Health and Human Services Immunization Cooperative Agreements ALN: 93.268 Award #: 1 NH23IP922596-02-02 to NH23IP922596-02-11 Award Year: 08/01/2019 ? 06/30/2024 Government Department/Agency: Department of Health (DC Health) Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. Per 2 CFR Section 200.430 Compensation ? Personal Services: ?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: (1) Is reasonable for the services rendered and conforms to the establish written policy of the non-Federal entity consistently applied to both Federal and non-Federal activities; (2) Follows an appointment made in accordance with a non-Federal entity?s laws and/or rules or written policies and meets the requirements of Federal statute, where applicable; and (3) Is determined and supported as provided in paragraph (i) of this section, Standards for Documentation of Personnel Expenses, when applicable.? 2 CFR Section 200.430(i): ?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 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; (vi) [Reserved] (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. (viii) Budget estimates (i.e., estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards.? Condition ? We noted that the District Department of Health (DC Health) continued to allocate payroll expenditures to the Immunization Cooperative Agreements (ICA) program during fiscal year 2022 based on budgeted percentages. These percentages were entered into the PeopleSoft Human Resources/Payroll System (PeopleSoft) at the beginning of the fiscal year and were based on management?s estimate of the respective employee?s level of effort for each program. PeopleSoft calculated the payroll costs every payroll cycle for each employee and program based on the predetermined percentage, and reported it through the Labor Distribution Report (485 Report). However, management did not perform a periodic comparison of actual costs to the budgeted costs and make any necessary adjustment as required by 2 CFR Section 200.430. Specifically, 11 out of 60 sampled payroll items tested for the ICA grant were recorded based on estimated hours and not actual hours. Questioned Costs ? Not determinable. Context ? This is a condition identified per review of DC Health?s compliance with specified requirements using a statistically valid sample. Payroll costs including fringe benefits, for the ICA program in fiscal year 2022 were $2,646,210. Effect ? DC Health was unable to demonstrate that the payroll expenditures charged to the ICA grant accurately reflected the time incurred on the program and were properly supported in accordance with 2 CFR Part 200.430 time and effort reporting requirements. Cause ? DC Health did not have policies and procedures in place to review and reconcile the estimated amounts of payroll expenditures charged to the ICA program to the actual expenditures incurred. Per corrective action plans and status updates submitted by DC Health to BDO in fiscal year 2022, significant milestones have been achieved however due to several change management tasks, the corrective action plan is still progressing into fiscal year 2023 and is expected to fully implement by September 30, 2023. Recommendation ? We recommend that DC Health fully implement its current corrective action plan to deploy policies and procedures to periodically compare employees? estimated hours per the 485 Report to the actual hours incurred, and make any necessary adjustments as required by 2 CFR 200.430. Related Noncompliance ? Material noncompliance. Views of Responsible Officials and Planned Corrective Actions ? The District Department of Health (DC Health) concurs with the finding, causes and recommendations cited in the fiscal year 2022 single audit for the Immunization Cooperative Agreements (ICA) program. The current corrective action plan (CAP), originating from the prior year's finding had been actively implemented in fiscal year 2022 and reached significant milestones. DC Health asserts that while a process was implemented to obtain a regular schedule of payroll and budget- to-actual data for personnel, and supervisors were provided a tool and process for delivering ?time and effort certifications?, there were still some errors and omissions. DC Health concurs with the auditor on the need to continue implementation of the current CAP, but DC Health will modify processes and tools to ensure that there is the required periodic comparison of actual costs to the budgeted costs of personnel per the requirements of 2 CFR 200.430. Contributing factors were delays in distributing and receiving the required certifications, provision of technical assistance and training, and managing manual errors. Additionally, there were missing certifications due to a large turnover of staff, including many supervisors assigned to complete time and effort certification forms. In fiscal year 2022, reporting templates and reporting repositories were being revised and further developed and continued in fiscal year 2023. The District?s corrective action is described in the Management?s Corrective Action Plan included as Appendix B of the attached Management?s Section.
Finding Number: 2022-009 Prior Year Finding Number: 2021-011 Compliance Requirement: Activities Allowed or Unallowed and Allowable Costs/Cost Principles Program: U.S. Department of Health and Human Services Immunization Cooperative Agreements ALN: 93.268 Award #: 1 NH23IP922596-02-02 to NH23IP922596-02-11 Award Year: 08/01/2019 ? 06/30/2024 Government Department/Agency: Department of Health (DC Health) Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. Per 2 CFR Section 200.430 Compensation ? Personal Services: ?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: (1) Is reasonable for the services rendered and conforms to the establish written policy of the non-Federal entity consistently applied to both Federal and non-Federal activities; (2) Follows an appointment made in accordance with a non-Federal entity?s laws and/or rules or written policies and meets the requirements of Federal statute, where applicable; and (3) Is determined and supported as provided in paragraph (i) of this section, Standards for Documentation of Personnel Expenses, when applicable.? 2 CFR Section 200.430(i): ?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 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; (vi) [Reserved] (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. (viii) Budget estimates (i.e., estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards.? Condition ? We noted that the District Department of Health (DC Health) continued to allocate payroll expenditures to the Immunization Cooperative Agreements (ICA) program during fiscal year 2022 based on budgeted percentages. These percentages were entered into the PeopleSoft Human Resources/Payroll System (PeopleSoft) at the beginning of the fiscal year and were based on management?s estimate of the respective employee?s level of effort for each program. PeopleSoft calculated the payroll costs every payroll cycle for each employee and program based on the predetermined percentage, and reported it through the Labor Distribution Report (485 Report). However, management did not perform a periodic comparison of actual costs to the budgeted costs and make any necessary adjustment as required by 2 CFR Section 200.430. Specifically, 11 out of 60 sampled payroll items tested for the ICA grant were recorded based on estimated hours and not actual hours. Questioned Costs ? Not determinable. Context ? This is a condition identified per review of DC Health?s compliance with specified requirements using a statistically valid sample. Payroll costs including fringe benefits, for the ICA program in fiscal year 2022 were $2,646,210. Effect ? DC Health was unable to demonstrate that the payroll expenditures charged to the ICA grant accurately reflected the time incurred on the program and were properly supported in accordance with 2 CFR Part 200.430 time and effort reporting requirements. Cause ? DC Health did not have policies and procedures in place to review and reconcile the estimated amounts of payroll expenditures charged to the ICA program to the actual expenditures incurred. Per corrective action plans and status updates submitted by DC Health to BDO in fiscal year 2022, significant milestones have been achieved however due to several change management tasks, the corrective action plan is still progressing into fiscal year 2023 and is expected to fully implement by September 30, 2023. Recommendation ? We recommend that DC Health fully implement its current corrective action plan to deploy policies and procedures to periodically compare employees? estimated hours per the 485 Report to the actual hours incurred, and make any necessary adjustments as required by 2 CFR 200.430. Related Noncompliance ? Material noncompliance. Views of Responsible Officials and Planned Corrective Actions ? The District Department of Health (DC Health) concurs with the finding, causes and recommendations cited in the fiscal year 2022 single audit for the Immunization Cooperative Agreements (ICA) program. The current corrective action plan (CAP), originating from the prior year's finding had been actively implemented in fiscal year 2022 and reached significant milestones. DC Health asserts that while a process was implemented to obtain a regular schedule of payroll and budget- to-actual data for personnel, and supervisors were provided a tool and process for delivering ?time and effort certifications?, there were still some errors and omissions. DC Health concurs with the auditor on the need to continue implementation of the current CAP, but DC Health will modify processes and tools to ensure that there is the required periodic comparison of actual costs to the budgeted costs of personnel per the requirements of 2 CFR 200.430. Contributing factors were delays in distributing and receiving the required certifications, provision of technical assistance and training, and managing manual errors. Additionally, there were missing certifications due to a large turnover of staff, including many supervisors assigned to complete time and effort certification forms. In fiscal year 2022, reporting templates and reporting repositories were being revised and further developed and continued in fiscal year 2023. The District?s corrective action is described in the Management?s Corrective Action Plan included as Appendix B of the attached Management?s Section.
Finding Number: 2022-010 Prior Year Finding Number: N/A Compliance Requirement: Activities Allowed or Unallowed and Allowable Costs/Cost Principles Program: U.S. Department of Health and Human Services Temporary Assistance for Needy Families (TANF) ALN: 93.558 Award #: Various Award Year: 10/01/2021 ? 09/30/2022 Government Department/Agency: Department of Human Services (DHS)/Economic Security Administration (ESA) Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. Per 2 CFR Section 200.430 Compensation ? Personal Services: ?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: (1) Is reasonable for the services rendered and conforms to the establish written policy of the non-Federal entity consistently applied to both Federal and non-Federal activities; (2) Follows an appointment made in accordance with a non-Federal entity?s laws and/or rules or written policies and meets the requirements of Federal statute, where applicable; and (3) Is determined and supported as provided in paragraph (i) of this section, Standards for Documentation of Personnel Expenses, when applicable.? 2 CFR Section 200.430(i): ?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 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; (vi) [Reserved] (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. (viii) Budget estimates (i.e., estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards.? Per District Personnel Issuance No. 2019-07 (Approval Required - page 10) ? ?Overtime work must be officially ordered and approved in advance. Agency heads and their designees are authorized to order and approve overtime work provided the agency has sufficient funding available. Overtime should be approved using DCSF No. 11B-12, Request for Authorization of Overtime Work. However, when responding to an immediate operational need, pre-approval may be memorialized in any written form, such as e-mail, and followed-up with the official overtime approval. Completed overtime forms and any supporting documentation should be submitted to the employee?s timekeeper for processing.? Condition ? We noted that for three (3) out of a sample of 25 employees tested, although the employee's timesheet was approved by the supervisor, DHS/ESA was unable to provide documentation that the overtime hours worked by the employee during the selected payperiods were preapproved. Questioned Costs ? Not determinable. Context ? This is a condition identified per review of DHS/ESA?s compliance with specified requirements using a statistically valid sample. Payroll costs including fringe benefits, for the TANF program in fiscal year 2022 were $15,092,248. Effect ? DHS/ESA was unable to demonstrate that overtime charged to the federal program was approved in advanced in accordance with the internal policies and procedures of the agency. Cause ? DHS/ESA did not follow its own internal controls and policies and procedures to ensure that authorization forms evidencing the preapproval of overtime are obtained and maintained. Recommendation ? We recommend that DHS/ESA follow its own policies, procedures and controls to ensure that pre-authorization of overtime are obtained and maintained. Related Noncompliance ? Noncompliance. Views of Responsible Officials and Planned Corrective Actions ? DHS concurs with the finding. The District?s corrective action is described in the Management?s Corrective Action Plan included as Appendix B of the attached Management?s Section.
Finding Number: 2022-019 Prior Year Finding Number: N/A Compliance Requirement: Activities Allowed or Unallowed and Allowable Costs/Cost Principles Program: U.S. Department of Health and Human Services Medicaid Cluster ALN 93.775, 93.777, 93.778 Award #: Various Award Year: 10/01/2021 ? 09/30/2022 Government Department/Agency: Department of Human Services (DHS) Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. Per 2 CFR Section 200.430 Compensation ? Personal Services: ?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: (1) Is reasonable for the services rendered and conforms to the establish written policy of the non-Federal entity consistently applied to both Federal and non-Federal activities; (2) Follows an appointment made in accordance with a non-Federal entity?s laws and/or rules or written policies and meets the requirements of Federal statute, where applicable; and (3) Is determined and supported as provided in paragraph (i) of this section, Standards for Documentation of Personnel Expenses, when applicable.? 2 CFR Section 200.430(i): ?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 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; (vi) [Reserved] (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. (viii) 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 review of 15 payroll transactions totaling $84,519, we noted that for 1 of the 15 payroll transactions, the hourly and annual employee pay amount was not supported by the Personnel Action Form or the People Soft payroll system. Department personnel could not explain the difference in pay between the amount noted on the Personnel Action form and the PeopleSoft Human Resources/Payroll System. In addition, management did not perform a reconciliation between the payroll amount in the PeopleSoft payroll system and the actual amount being paid to the employee. Questioned Costs ? Not determinable. Context ? This is a condition identified per review of DHS? compliance with specified requirements using a statistically valid sample. Payroll costs including fringe benefits, for the Medicaid Program in fiscal year 2022 were $48,126,394. Effect ? DHS was unable to provide support for the payroll expenditure charged to the Medicaid Program for fiscal year 2022. Cause ? DHS did not have policies and procedures in place to review and reconcile payroll expenditures posted in the People Soft system with the pay amount identified in the Personnel Action Form. In addition, the payroll expenses charged to the Medicaid program were not accurately stated for fiscal year 2022. Recommendation - We recommend that DHS implement policies and procedures to support payroll expenses charged to the Medicaid program. In addition, we recommend that DHS perform reconciliations of the employee?s pay noted on their Personnel Action Form to the payroll amount posted in the PeopleSoft payroll system. Related Noncompliance ? Noncompliance. Views of Responsible Officials and Planned Corrective Actions ? DHS agrees with the finding that for one payroll transaction, the hourly and annual employee pay amount was not supported by the Personnel Action Form of the PeopleSoft payroll system. DHS agrees with the finding that DHS did not perform a reconciliation between the payroll amount in PeopleSoft payroll system and the actual amount being paid to the employee. The District?s corrective action is described in the Management?s Corrective Action Plan included as Appendix B of the attached Management?s Section.
Finding Number: 2022-019 Prior Year Finding Number: N/A Compliance Requirement: Activities Allowed or Unallowed and Allowable Costs/Cost Principles Program: U.S. Department of Health and Human Services Medicaid Cluster ALN 93.775, 93.777, 93.778 Award #: Various Award Year: 10/01/2021 ? 09/30/2022 Government Department/Agency: Department of Human Services (DHS) Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. Per 2 CFR Section 200.430 Compensation ? Personal Services: ?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: (1) Is reasonable for the services rendered and conforms to the establish written policy of the non-Federal entity consistently applied to both Federal and non-Federal activities; (2) Follows an appointment made in accordance with a non-Federal entity?s laws and/or rules or written policies and meets the requirements of Federal statute, where applicable; and (3) Is determined and supported as provided in paragraph (i) of this section, Standards for Documentation of Personnel Expenses, when applicable.? 2 CFR Section 200.430(i): ?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 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; (vi) [Reserved] (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. (viii) 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 review of 15 payroll transactions totaling $84,519, we noted that for 1 of the 15 payroll transactions, the hourly and annual employee pay amount was not supported by the Personnel Action Form or the People Soft payroll system. Department personnel could not explain the difference in pay between the amount noted on the Personnel Action form and the PeopleSoft Human Resources/Payroll System. In addition, management did not perform a reconciliation between the payroll amount in the PeopleSoft payroll system and the actual amount being paid to the employee. Questioned Costs ? Not determinable. Context ? This is a condition identified per review of DHS? compliance with specified requirements using a statistically valid sample. Payroll costs including fringe benefits, for the Medicaid Program in fiscal year 2022 were $48,126,394. Effect ? DHS was unable to provide support for the payroll expenditure charged to the Medicaid Program for fiscal year 2022. Cause ? DHS did not have policies and procedures in place to review and reconcile payroll expenditures posted in the People Soft system with the pay amount identified in the Personnel Action Form. In addition, the payroll expenses charged to the Medicaid program were not accurately stated for fiscal year 2022. Recommendation - We recommend that DHS implement policies and procedures to support payroll expenses charged to the Medicaid program. In addition, we recommend that DHS perform reconciliations of the employee?s pay noted on their Personnel Action Form to the payroll amount posted in the PeopleSoft payroll system. Related Noncompliance ? Noncompliance. Views of Responsible Officials and Planned Corrective Actions ? DHS agrees with the finding that for one payroll transaction, the hourly and annual employee pay amount was not supported by the Personnel Action Form of the PeopleSoft payroll system. DHS agrees with the finding that DHS did not perform a reconciliation between the payroll amount in PeopleSoft payroll system and the actual amount being paid to the employee. The District?s corrective action is described in the Management?s Corrective Action Plan included as Appendix B of the attached Management?s Section.
Finding Number: 2022-019 Prior Year Finding Number: N/A Compliance Requirement: Activities Allowed or Unallowed and Allowable Costs/Cost Principles Program: U.S. Department of Health and Human Services Medicaid Cluster ALN 93.775, 93.777, 93.778 Award #: Various Award Year: 10/01/2021 ? 09/30/2022 Government Department/Agency: Department of Human Services (DHS) Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. Per 2 CFR Section 200.430 Compensation ? Personal Services: ?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: (1) Is reasonable for the services rendered and conforms to the establish written policy of the non-Federal entity consistently applied to both Federal and non-Federal activities; (2) Follows an appointment made in accordance with a non-Federal entity?s laws and/or rules or written policies and meets the requirements of Federal statute, where applicable; and (3) Is determined and supported as provided in paragraph (i) of this section, Standards for Documentation of Personnel Expenses, when applicable.? 2 CFR Section 200.430(i): ?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 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; (vi) [Reserved] (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. (viii) 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 review of 15 payroll transactions totaling $84,519, we noted that for 1 of the 15 payroll transactions, the hourly and annual employee pay amount was not supported by the Personnel Action Form or the People Soft payroll system. Department personnel could not explain the difference in pay between the amount noted on the Personnel Action form and the PeopleSoft Human Resources/Payroll System. In addition, management did not perform a reconciliation between the payroll amount in the PeopleSoft payroll system and the actual amount being paid to the employee. Questioned Costs ? Not determinable. Context ? This is a condition identified per review of DHS? compliance with specified requirements using a statistically valid sample. Payroll costs including fringe benefits, for the Medicaid Program in fiscal year 2022 were $48,126,394. Effect ? DHS was unable to provide support for the payroll expenditure charged to the Medicaid Program for fiscal year 2022. Cause ? DHS did not have policies and procedures in place to review and reconcile payroll expenditures posted in the People Soft system with the pay amount identified in the Personnel Action Form. In addition, the payroll expenses charged to the Medicaid program were not accurately stated for fiscal year 2022. Recommendation - We recommend that DHS implement policies and procedures to support payroll expenses charged to the Medicaid program. In addition, we recommend that DHS perform reconciliations of the employee?s pay noted on their Personnel Action Form to the payroll amount posted in the PeopleSoft payroll system. Related Noncompliance ? Noncompliance. Views of Responsible Officials and Planned Corrective Actions ? DHS agrees with the finding that for one payroll transaction, the hourly and annual employee pay amount was not supported by the Personnel Action Form of the PeopleSoft payroll system. DHS agrees with the finding that DHS did not perform a reconciliation between the payroll amount in PeopleSoft payroll system and the actual amount being paid to the employee. The District?s corrective action is described in the Management?s Corrective Action Plan included as Appendix B of the attached Management?s Section.
Finding Number: 2022-019 Prior Year Finding Number: N/A Compliance Requirement: Activities Allowed or Unallowed and Allowable Costs/Cost Principles Program: U.S. Department of Health and Human Services Medicaid Cluster ALN 93.775, 93.777, 93.778 Award #: Various Award Year: 10/01/2021 ? 09/30/2022 Government Department/Agency: Department of Human Services (DHS) Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. Per 2 CFR Section 200.430 Compensation ? Personal Services: ?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: (1) Is reasonable for the services rendered and conforms to the establish written policy of the non-Federal entity consistently applied to both Federal and non-Federal activities; (2) Follows an appointment made in accordance with a non-Federal entity?s laws and/or rules or written policies and meets the requirements of Federal statute, where applicable; and (3) Is determined and supported as provided in paragraph (i) of this section, Standards for Documentation of Personnel Expenses, when applicable.? 2 CFR Section 200.430(i): ?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 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; (vi) [Reserved] (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. (viii) 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 review of 15 payroll transactions totaling $84,519, we noted that for 1 of the 15 payroll transactions, the hourly and annual employee pay amount was not supported by the Personnel Action Form or the People Soft payroll system. Department personnel could not explain the difference in pay between the amount noted on the Personnel Action form and the PeopleSoft Human Resources/Payroll System. In addition, management did not perform a reconciliation between the payroll amount in the PeopleSoft payroll system and the actual amount being paid to the employee. Questioned Costs ? Not determinable. Context ? This is a condition identified per review of DHS? compliance with specified requirements using a statistically valid sample. Payroll costs including fringe benefits, for the Medicaid Program in fiscal year 2022 were $48,126,394. Effect ? DHS was unable to provide support for the payroll expenditure charged to the Medicaid Program for fiscal year 2022. Cause ? DHS did not have policies and procedures in place to review and reconcile payroll expenditures posted in the People Soft system with the pay amount identified in the Personnel Action Form. In addition, the payroll expenses charged to the Medicaid program were not accurately stated for fiscal year 2022. Recommendation - We recommend that DHS implement policies and procedures to support payroll expenses charged to the Medicaid program. In addition, we recommend that DHS perform reconciliations of the employee?s pay noted on their Personnel Action Form to the payroll amount posted in the PeopleSoft payroll system. Related Noncompliance ? Noncompliance. Views of Responsible Officials and Planned Corrective Actions ? DHS agrees with the finding that for one payroll transaction, the hourly and annual employee pay amount was not supported by the Personnel Action Form of the PeopleSoft payroll system. DHS agrees with the finding that DHS did not perform a reconciliation between the payroll amount in PeopleSoft payroll system and the actual amount being paid to the employee. The District?s corrective action is described in the Management?s Corrective Action Plan included as Appendix B of the attached Management?s Section.
Finding Number: 2022-019 Prior Year Finding Number: N/A Compliance Requirement: Activities Allowed or Unallowed and Allowable Costs/Cost Principles Program: U.S. Department of Health and Human Services Medicaid Cluster ALN 93.775, 93.777, 93.778 Award #: Various Award Year: 10/01/2021 ? 09/30/2022 Government Department/Agency: Department of Human Services (DHS) Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. Per 2 CFR Section 200.430 Compensation ? Personal Services: ?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: (1) Is reasonable for the services rendered and conforms to the establish written policy of the non-Federal entity consistently applied to both Federal and non-Federal activities; (2) Follows an appointment made in accordance with a non-Federal entity?s laws and/or rules or written policies and meets the requirements of Federal statute, where applicable; and (3) Is determined and supported as provided in paragraph (i) of this section, Standards for Documentation of Personnel Expenses, when applicable.? 2 CFR Section 200.430(i): ?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 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; (vi) [Reserved] (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. (viii) 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 review of 15 payroll transactions totaling $84,519, we noted that for 1 of the 15 payroll transactions, the hourly and annual employee pay amount was not supported by the Personnel Action Form or the People Soft payroll system. Department personnel could not explain the difference in pay between the amount noted on the Personnel Action form and the PeopleSoft Human Resources/Payroll System. In addition, management did not perform a reconciliation between the payroll amount in the PeopleSoft payroll system and the actual amount being paid to the employee. Questioned Costs ? Not determinable. Context ? This is a condition identified per review of DHS? compliance with specified requirements using a statistically valid sample. Payroll costs including fringe benefits, for the Medicaid Program in fiscal year 2022 were $48,126,394. Effect ? DHS was unable to provide support for the payroll expenditure charged to the Medicaid Program for fiscal year 2022. Cause ? DHS did not have policies and procedures in place to review and reconcile payroll expenditures posted in the People Soft system with the pay amount identified in the Personnel Action Form. In addition, the payroll expenses charged to the Medicaid program were not accurately stated for fiscal year 2022. Recommendation - We recommend that DHS implement policies and procedures to support payroll expenses charged to the Medicaid program. In addition, we recommend that DHS perform reconciliations of the employee?s pay noted on their Personnel Action Form to the payroll amount posted in the PeopleSoft payroll system. Related Noncompliance ? Noncompliance. Views of Responsible Officials and Planned Corrective Actions ? DHS agrees with the finding that for one payroll transaction, the hourly and annual employee pay amount was not supported by the Personnel Action Form of the PeopleSoft payroll system. DHS agrees with the finding that DHS did not perform a reconciliation between the payroll amount in PeopleSoft payroll system and the actual amount being paid to the employee. The District?s corrective action is described in the Management?s Corrective Action Plan included as Appendix B of the attached Management?s Section.
Finding Number: 2022-022 Prior Year Finding Number: 2021-021 Compliance Requirement: Activities Allowed or Unallowed and Allowable Costs/Cost Principles Program: U.S. Department of Health and Human Services HIV Emergency Relief Project Grants ALN: 93.914 Award #: 2 H89HA00012-32-00, 2 H89HA00012-31-00 Award Year: 03/01/2022 ? 02/28/2025, 03/01/2021 ? 02/28/2022 Government Department/Agency: Department of Health (DC Health) Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. Per 2 CFR Section 200.430 Compensation ? Personal Services: ?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: (1) Is reasonable for the services rendered and conforms to the establish written policy of the non-Federal entity consistently applied to both Federal and non-Federal activities; (2) Follows an appointment made in accordance with a non-Federal entity?s laws and/or rules or written policies and meets the requirements of Federal statute, where applicable; and (3) Is determined and supported as provided in paragraph (i) of this section, Standards for Documentation of Personnel Expenses, when applicable.? 2 CFR Section 200.430(i): ?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 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; (vi) [Reserved] (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. (viii) Budget estimates (i.e., estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards.? Condition ? We noted that the District Department of Health (DC Health) continued to allocate payroll expenditures to the HIV Emergency Relief Project Grants (HIVER) program during fiscal year 2022 based on budgeted percentages. These percentages were entered into the PeopleSoft Human Resources/Payroll System (PeopleSoft) at the beginning of the fiscal year and were based on management?s estimate of the respective employee?s level of effort for each program. PeopleSoft calculated the payroll costs every payroll cycle for each employee and program based on the predetermined percentage, and reported it through the Labor Distribution Report (485 Report). However, management did not perform a periodic comparison of actual costs to the budgeted costs and make any necessary adjustment as required by 2 CFR Section 200.430. Specifically, 41 out of 60 sampled payroll items tested for the HIVER grant were recorded based on estimated hours and not actual hours. Questioned Costs ? Not determinable. Context ? This is a condition identified per review of DC Health?s compliance with specified requirements using a statistically valid sample. Payroll costs including fringe benefits, for the HIVER program in fiscal year 2022 were $3,470,982. Effect ? DC Health was unable to demonstrate that the payroll expenditures charged to the HIVER grant accurately reflected the time incurred on the program and were properly supported in accordance with 2 CFR Part 200.430 time and effort reporting requirements. Cause ? DC Health did not have policies and procedures in place to review and reconcile the estimated amounts of payroll expenditures charged to the HIVER program to the actual expenditures incurred. Per corrective action plans and status updates submitted by DC Health to BDO in fiscal year 2022, significant milestones have been achieved however due to several change management tasks, the corrective action plan is still progressing into fiscal year 2023 and is expected to fully implement by September 30, 2023. Recommendation ? We recommend that DC Health fully implement its current corrective action plan to deploy policies and procedures to periodically compare employees? estimated hours per the 485 Report to the actual hours incurred, and make any necessary adjustments as required by 2 CFR 200.430. Related Noncompliance ? Material noncompliance. Views of Responsible Officials and Planned Corrective Actions ? The District Department of Health (DC Health) concurs with the finding, causes and recommendations cited in the fiscal year 2022 single audit for the HIV Emergency Relief Project Grants (HIVER) program. The current corrective action plan (CAP), originating from the prior year's finding had been actively implemented in fiscal year 2022 and reached significant milestones. DC Health asserts that while a process was implemented to obtain a regular schedule of payroll and budget- to-actual data for personnel, and supervisors were provided a tool and process for delivering ?time and effort certifications?, there were still some errors and omissions. DC Health concurs with the auditor on the need to continue implementation of the current CAP, but DC Health will modify processes and tools to ensure that there is the required periodic comparison of actual costs to the budgeted costs of personnel per the requirements of 2 CFR 200.430. Contributing factors were delays in distributing and receiving the required certifications, provision of technical assistance and training, and managing manual errors. Additionally, there were missing certifications due to a large turnover of staff, including many supervisors assigned to complete time and effort certification forms. In fiscal year 2022, reporting templates and reporting repositories were being revised and further developed and continued in fiscal year 2023. The District?s corrective action is described in the Management?s Corrective Action Plan included as Appendix B of the attached Management?s Section.
Item 2022-001 Activities Allowed/Allowable Costs & Costs Principles (Significant Deficiency - Payroll) Education Stabilization Fund (ESF) ALN# 84.425U U.S. Department of Education Passed through the State Department of Education, Pass Through Grantor Number COVID-19 199 Criteria ? Grantees should have controls in place to ensure that grant monies are for allowable costs and allowable activities. 2 CFR 200.303 requires the non-Federal entity to ?(a) establish and maintain effective internal controls over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal statutes, regulations, and the terms and conditions of the Federal award.? 2 CFR 200.430 (i) requires that Federal awards for salaries and wages be properly supported. Condition ? There were three noted instances out of 120 tested, where an employee?s time and effort certification was not prepared/approved for payroll charged to the program. Cause ? The errors noted above were caused by human error. The CSFO and payroll clerk review the payroll register for payroll charged to the program to determine time and effort certifications needed. The CSFO?s and payroll clerk?s review did not include the employee in question, as the employee was hired after the CSFO?s and payroll clerk?s review. Effect ? Failure to comply could result in disallowed costs. Questioned Costs ? None noted Recommendation ? We recommend a more detailed and frequent review of the payroll register used to prepare the time and effort certifications should be performed and documented. Management?s Response ? Management agrees with the finding.
Finding Number: Prior Year Finding Number:N/A Compliance Requirement:Allowable Costs/Cost Principles Program:CSLRF Pass through Entity: Office of Out of School Times Grant and Youth Outcomes and NAARC - Safe Passage Safe Blocks CFDA #:21.027 Award #:SY2021-22-SPSB-008-CSC: Award Year:10/01/2021-09/30/2022 Criteria: The Uniform Guidance in 2 CFR Section 200.303, Internal Controls, requires that non-federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statutes, regulations, and the terms and conditions of the federal award. In addition, 2 CFR 200.430 ? Factors Affecting Allowability of Costs - Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (a)Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles.(b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items.(c) Be consistent with policies and procedures that apply uniformly to both federally financed and other activities of the non-Federal entity. (d) Be accorded consistent treatment. A cost may not be assigned to a federal award as a direct cost if any other incurred for the same purpose in like circumstances has been allocated to the Federal award as an indirect cost.(e) Be determined in accordance with generally accepted accounting principles (GAAP), except, for state and local governments and Indian tribes only, as otherwise provided for in this part. (f) Not included as a cost or used to meet cost sharing or matching requirements of any other federally financed program in either the current or a prior period. (g)Be adequately documented. (h)Cost must be incurred during the approved budget period. The Federal awarding agency is authorized, at its discretion, to waive prior written approvals to carry forward unobligated balances to subsequent budget periods pursuant to ?200.308(e)(3). Condition: We sampled 40 payroll expense transactions and noted the following: ? 17 payroll transactions did not satisfy the prohibited felony background requirements as specified in the Safe Passage Safe Block grant agreement for personnel hired under this award. ? 14 payroll transactions from the Safe Passage Safe Block award did not show evidence of clearance by the D.C. Child and Family Services Child Protection Registry (CPR) and four (4) transactions did not show evidence of Metropolitan Police Department Criminal Background Check as a condition for employment. ? CSC received four (4) separate awards funded under this CFDA number. Two of the four awards were funded under the Safe Passage Safe Blocks program and CSC failed to provide the detail expenses of $212,866 to support federal revenues received from one of the grantors. Questioned Costs:$242,698 Context: This is a condition identified per review of CSC?s compliance with the specified requirements using a statistically valid sample. The known amount of the payroll transactions totaled $29,832 and the total of the pass-through award without detail expenses amounted to $212,866. Effect:CSC is not in compliance with the stated provisions of the grant awards. Failure to properly review and support expenses can result in noncompliance with laws and regulations along with loss of funding. Cause:CSC did not appear to have adequate policies and procedures in place to ensure compliance with the required stipulations regarding background and other checks and ensuring that expenses exist prior to funds being reimbursed. Recommendation:We recommend that CSC ensure that personnel hired under the grant meet all the background and other checks within the stipulated time frame outlined in the grant agreement. We recommend that CSC strengthen its processes with respect to setting up and charging expenditures between various grant awards. We also recommend that CSC improve internal controls to ensure adherence to Federal regulations related to the fiscal and administrative requirements for expending and accounting for expenses incurred and reported.
Finding Number: Prior Year Finding Number:N/A Compliance Requirement:Allowable Costs/Cost Principles Program:CSLRF Pass through Entity: Office of Out of School Times Grant and Youth Outcomes and NAARC - Safe Passage Safe Blocks CFDA #:21.027 Award #:SY2021-22-SPSB-008-CSC: Award Year:10/01/2021-09/30/2022 Criteria: The Uniform Guidance in 2 CFR Section 200.303, Internal Controls, requires that non-federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statutes, regulations, and the terms and conditions of the federal award. In addition, 2 CFR 200.430 ? Factors Affecting Allowability of Costs - Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (a)Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles.(b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items.(c) Be consistent with policies and procedures that apply uniformly to both federally financed and other activities of the non-Federal entity. (d) Be accorded consistent treatment. A cost may not be assigned to a federal award as a direct cost if any other incurred for the same purpose in like circumstances has been allocated to the Federal award as an indirect cost.(e) Be determined in accordance with generally accepted accounting principles (GAAP), except, for state and local governments and Indian tribes only, as otherwise provided for in this part. (f) Not included as a cost or used to meet cost sharing or matching requirements of any other federally financed program in either the current or a prior period. (g)Be adequately documented. (h)Cost must be incurred during the approved budget period. The Federal awarding agency is authorized, at its discretion, to waive prior written approvals to carry forward unobligated balances to subsequent budget periods pursuant to ?200.308(e)(3). Condition: We sampled 40 payroll expense transactions and noted the following: ? 17 payroll transactions did not satisfy the prohibited felony background requirements as specified in the Safe Passage Safe Block grant agreement for personnel hired under this award. ? 14 payroll transactions from the Safe Passage Safe Block award did not show evidence of clearance by the D.C. Child and Family Services Child Protection Registry (CPR) and four (4) transactions did not show evidence of Metropolitan Police Department Criminal Background Check as a condition for employment. ? CSC received four (4) separate awards funded under this CFDA number. Two of the four awards were funded under the Safe Passage Safe Blocks program and CSC failed to provide the detail expenses of $212,866 to support federal revenues received from one of the grantors. Questioned Costs:$242,698 Context: This is a condition identified per review of CSC?s compliance with the specified requirements using a statistically valid sample. The known amount of the payroll transactions totaled $29,832 and the total of the pass-through award without detail expenses amounted to $212,866. Effect:CSC is not in compliance with the stated provisions of the grant awards. Failure to properly review and support expenses can result in noncompliance with laws and regulations along with loss of funding. Cause:CSC did not appear to have adequate policies and procedures in place to ensure compliance with the required stipulations regarding background and other checks and ensuring that expenses exist prior to funds being reimbursed. Recommendation:We recommend that CSC ensure that personnel hired under the grant meet all the background and other checks within the stipulated time frame outlined in the grant agreement. We recommend that CSC strengthen its processes with respect to setting up and charging expenditures between various grant awards. We also recommend that CSC improve internal controls to ensure adherence to Federal regulations related to the fiscal and administrative requirements for expending and accounting for expenses incurred and reported.
Agency: Department of Health and Human Services, Centers for Disease Control and Prevention Federal Program: Immunization Research, Demonstration, Public Information and Education Training and Clinical Skills Improvement Projects Assistance Listing: 93.185 Grant Identification Numbers: NH231P922569 and NH231P922569C5 ? COVID-19 Grant Period: 2022 Finding 2022-001: Significant Deficiency - Internal Controls Over Payroll Criteria: Per 2 CFR 200.430(i), payroll charges must ?be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated?. Condition: There were deficiencies found when testing internal controls over payroll, impacting internal controls over financial reporting and internal controls over compliance. Documentation of review of timesheets by an appropriate level of supervisor was not consistent. Context: Statistical sampling was not utilized, however, sampling methods were applied using AICPA guidelines. Finding 2021-002 noted that AIM employees do maintain timesheets; however, documentation of a review of the time allocation by a supervisor was not consistent. We noted this issue continued at the beginning of the 2022 fiscal year. After policy changes as a result of addressing finding 2021-002, approval by a supervisor was documented consistently. Cause: A formal policy was not in place for the full year that would require approval of timesheets by a supervisor knowledgeable about the activity of the personnel. Effect: Internal controls were not in line with best practices and the lack of approval could result in an inaccurate charge to grants. Questioned costs: There were no questioned costs related to this finding. Repeat finding: This is a repeat finding of 2021-002. Auditor?s recommendation: We recommended that AIM adopt a policy in writing that would require all timesheets be approved by an appropriate level of supervisor. This approval must be documented and retained on file as part of the Organization?s records to support grant activity. Views of Responsible Officials and Corrective Action Plan (unaudited): See corrective action plan.
Agency: Department of Health and Human Services, Centers for Disease Control and Prevention Federal Program: Immunization Research, Demonstration, Public Information and Education Training and Clinical Skills Improvement Projects Assistance Listing: 93.185 Grant Identification Numbers: NH231P922569 and NH231P922569C5 ? COVID-19 Grant Period: 2022 Finding 2022-001: Significant Deficiency - Internal Controls Over Payroll Criteria: Per 2 CFR 200.430(i), payroll charges must ?be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated?. Condition: There were deficiencies found when testing internal controls over payroll, impacting internal controls over financial reporting and internal controls over compliance. Documentation of review of timesheets by an appropriate level of supervisor was not consistent. Context: Statistical sampling was not utilized, however, sampling methods were applied using AICPA guidelines. Finding 2021-002 noted that AIM employees do maintain timesheets; however, documentation of a review of the time allocation by a supervisor was not consistent. We noted this issue continued at the beginning of the 2022 fiscal year. After policy changes as a result of addressing finding 2021-002, approval by a supervisor was documented consistently. Cause: A formal policy was not in place for the full year that would require approval of timesheets by a supervisor knowledgeable about the activity of the personnel. Effect: Internal controls were not in line with best practices and the lack of approval could result in an inaccurate charge to grants. Questioned costs: There were no questioned costs related to this finding. Repeat finding: This is a repeat finding of 2021-002. Auditor?s recommendation: We recommended that AIM adopt a policy in writing that would require all timesheets be approved by an appropriate level of supervisor. This approval must be documented and retained on file as part of the Organization?s records to support grant activity. Views of Responsible Officials and Corrective Action Plan (unaudited): See corrective action plan.
2022-001 Noncompliance and Internal Controls over Compliance with Cost Principles ? Compensation ? 93.569 Criteria ? 2 CFR 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, ?200.430(i)(1)(viii) states budget estimates (i.e., estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that: (A) The system for establishing the estimates produces reasonable approximations of the activity actually performed; (B) Significant changes in the corresponding work activity (as defined by the non-Federal entity's written policies) are identified and entered into the records in a timely manner. Short term (such as one or two months) fluctuation between workload categories need not be considered as long as the distribution of salaries and wages is reasonable over the longer term; and (C) The non-Federal entity's system of internal controls includes processes to review after-the-fact interim charges made to a Federal award based on budget estimates. All necessary adjustment must be made such that the final amount charged to the Federal award is accurate, allowable, and properly allocated. Condition and Context ? Audit procedures revealed that there was a lack of clear documentation to support the actual hours that were allocated or expensed to each agreement. Cause ? The Association?s internal policy states all time entries are to reflect the time actually spent performing assigned duties on each job. In practice, the Association records payroll expenses by award based on an estimate with a set number of hours allocated per week to each award. Actual payroll hours expensed to the grant were not tracked. Effect ? The Association was not in compliance with financial management standards for maintaining payroll expenditure supporting documentation. Questioned Costs ? None Recommendations ? Management should strengthen their processes, controls, and review over payroll recording and documentation to ensure compliance with Uniform Administrative Requirements, as well as their own time entry policies. Views of Responsible Officials and Planned Corrective Actions ? Senior management has reviewed the Association?s policies for payroll time with the full management team. The Association will continue to use an estimate for payroll hours expensed to awards, but will also record or track actual hours and consider the need for a subsequent adjustment.
2022-001 Noncompliance and Internal Controls over Compliance with Cost Principles ? Compensation ? 93.569 Criteria ? 2 CFR 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, ?200.430(i)(1)(viii) states budget estimates (i.e., estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that: (A) The system for establishing the estimates produces reasonable approximations of the activity actually performed; (B) Significant changes in the corresponding work activity (as defined by the non-Federal entity's written policies) are identified and entered into the records in a timely manner. Short term (such as one or two months) fluctuation between workload categories need not be considered as long as the distribution of salaries and wages is reasonable over the longer term; and (C) The non-Federal entity's system of internal controls includes processes to review after-the-fact interim charges made to a Federal award based on budget estimates. All necessary adjustment must be made such that the final amount charged to the Federal award is accurate, allowable, and properly allocated. Condition and Context ? Audit procedures revealed that there was a lack of clear documentation to support the actual hours that were allocated or expensed to each agreement. Cause ? The Association?s internal policy states all time entries are to reflect the time actually spent performing assigned duties on each job. In practice, the Association records payroll expenses by award based on an estimate with a set number of hours allocated per week to each award. Actual payroll hours expensed to the grant were not tracked. Effect ? The Association was not in compliance with financial management standards for maintaining payroll expenditure supporting documentation. Questioned Costs ? None Recommendations ? Management should strengthen their processes, controls, and review over payroll recording and documentation to ensure compliance with Uniform Administrative Requirements, as well as their own time entry policies. Views of Responsible Officials and Planned Corrective Actions ? Senior management has reviewed the Association?s policies for payroll time with the full management team. The Association will continue to use an estimate for payroll hours expensed to awards, but will also record or track actual hours and consider the need for a subsequent adjustment.
2022-001 Noncompliance and Internal Controls over Compliance with Cost Principles ? Compensation ? 93.569 Criteria ? 2 CFR 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, ?200.430(i)(1)(viii) states budget estimates (i.e., estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that: (A) The system for establishing the estimates produces reasonable approximations of the activity actually performed; (B) Significant changes in the corresponding work activity (as defined by the non-Federal entity's written policies) are identified and entered into the records in a timely manner. Short term (such as one or two months) fluctuation between workload categories need not be considered as long as the distribution of salaries and wages is reasonable over the longer term; and (C) The non-Federal entity's system of internal controls includes processes to review after-the-fact interim charges made to a Federal award based on budget estimates. All necessary adjustment must be made such that the final amount charged to the Federal award is accurate, allowable, and properly allocated. Condition and Context ? Audit procedures revealed that there was a lack of clear documentation to support the actual hours that were allocated or expensed to each agreement. Cause ? The Association?s internal policy states all time entries are to reflect the time actually spent performing assigned duties on each job. In practice, the Association records payroll expenses by award based on an estimate with a set number of hours allocated per week to each award. Actual payroll hours expensed to the grant were not tracked. Effect ? The Association was not in compliance with financial management standards for maintaining payroll expenditure supporting documentation. Questioned Costs ? None Recommendations ? Management should strengthen their processes, controls, and review over payroll recording and documentation to ensure compliance with Uniform Administrative Requirements, as well as their own time entry policies. Views of Responsible Officials and Planned Corrective Actions ? Senior management has reviewed the Association?s policies for payroll time with the full management team. The Association will continue to use an estimate for payroll hours expensed to awards, but will also record or track actual hours and consider the need for a subsequent adjustment.
2022-001 Noncompliance and Internal Controls over Compliance with Cost Principles ? Compensation ? 93.569 Criteria ? 2 CFR 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, ?200.430(i)(1)(viii) states budget estimates (i.e., estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that: (A) The system for establishing the estimates produces reasonable approximations of the activity actually performed; (B) Significant changes in the corresponding work activity (as defined by the non-Federal entity's written policies) are identified and entered into the records in a timely manner. Short term (such as one or two months) fluctuation between workload categories need not be considered as long as the distribution of salaries and wages is reasonable over the longer term; and (C) The non-Federal entity's system of internal controls includes processes to review after-the-fact interim charges made to a Federal award based on budget estimates. All necessary adjustment must be made such that the final amount charged to the Federal award is accurate, allowable, and properly allocated. Condition and Context ? Audit procedures revealed that there was a lack of clear documentation to support the actual hours that were allocated or expensed to each agreement. Cause ? The Association?s internal policy states all time entries are to reflect the time actually spent performing assigned duties on each job. In practice, the Association records payroll expenses by award based on an estimate with a set number of hours allocated per week to each award. Actual payroll hours expensed to the grant were not tracked. Effect ? The Association was not in compliance with financial management standards for maintaining payroll expenditure supporting documentation. Questioned Costs ? None Recommendations ? Management should strengthen their processes, controls, and review over payroll recording and documentation to ensure compliance with Uniform Administrative Requirements, as well as their own time entry policies. Views of Responsible Officials and Planned Corrective Actions ? Senior management has reviewed the Association?s policies for payroll time with the full management team. The Association will continue to use an estimate for payroll hours expensed to awards, but will also record or track actual hours and consider the need for a subsequent adjustment.
Program: Shuttered Venue Operations Program Assisting Lister Number: 59.075 Federal Grantor: U.S. Small Business Administration Passed-through: N/A Award No. and Year: SBAHQ21SV002930.2 and 2022 Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles Type of Finding: Material Weakness in Internal Control and Instance of Non-Compliance Criteria: 2 CFR 200.430(i), Standards for Documentation of Personnel Expenses, states that charges to Federal awards for salaries and wage records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Condition: During our testing of the Foundation?s compliance with the Activities Allowed or Unallowed, and Allowable Costs/Costs Principles compliance requirements, we noted that in 37 of 40 payroll program expenditures selected, the employee?s timecard was not approved by a supervisor. Cause: The Foundation?s procedures did not consistently ensure that the review of timecards was documented. Effect: Lack of review and approval for personnel hours could lead to unallowable activities and costs to be charged to the Federal program. Questioned Costs: No questioned costs were identified as a result of our procedures. Repeat Finding from Prior Years: N/A ? First year of Single Audit. Recommendation: We recommend that the Foundation modify and strengthen its current policies and procedures to ensure that all timecards consistently document evidence of approval. The procedures should also address the compensating controls for circumstances where obtaining a supervisor?s approval is not possible. View of Responsible Officials: Management agrees and has designed controls for the supervisor to approve the timecards and ensure the costs are allowable costs.
Item: 2022-004 Assistance Listing Number: 14.241 Programs: Housing Opportunities for Persons with AIDS Federal Agency: U.S. Department of Housing and Urban Development Pass-Through Agencies: City of Phoenix Pass-Through Grantor Identifying Number: 144347 Award Year: July 1, 2021 ? June 30, 2022 and July 1, 2022 ? June 30, 2023 Compliance Requirement: Allowable Activities and Costs Criteria: Under cost principles established by 2 CFR 200.430, compensation for personal services includes all remuneration, paid currently or accrued, for services of employees rendered during the period of performance under the Federal award, including but not necessarily limited to wages and salaries. Condition: In our sampling of payroll expenditures charged to the program, we noted one employee's wage rate charged to the grant was not updated consistent with the employee's wage rate increase paid in their payroll. As a result, the incorrect amount of payroll costs was charged to the program (undercharged). Questioned Costs: n/a Context: In a population of over 250 payroll costs charged to the program, we conducted a non-statistical sample of 40 payroll costs charged to the program. In our sample of 40, we noted 2 of 40 payroll selections did not reflect the correct pay rate charged to the program. We noted the program was charged with an old wage rate that was lower than the actual paid rate. As a result, the program was undercharged. This is deemed to be a material weakness in internal control over compliance. Effect: The program was undercharged payroll costs totaling approximately $9. Cause: Southwest Behavioral Health Services, Inc. and Subsidiaries did not have adequate controls in place to ensure payroll costs charged to the grant properly reflected payroll changes and that amounts charged to the grant were properly supported by current wage rates. Identification as a Repeat Finding: Not a repeat finding Recommendation: Southwest Behavioral Health Services, Inc. and Subsidiaries should implement controls to ensure payroll costs charged to the grant properly reflected payroll changes and that amounts charged to the grant were properly supported by current wage rates. Views of Responsible Officials: Management of Southwest Behavioral Health Services concurs with the finding. See Corrective Action Plan.
Finding No. 2022-003 Federal Agency: U.S. Department of Education Assistance Listing No. and Title: 84.027 Special Education – Grants to States (IDEA, Part B) Area: Allowable Costs/Cost Principles Questioned Costs: $0 Criteria: The Schedule of Expenditures of Federal Awards (SEFA) must be supported by underlying accounting and other records used in preparing the financial statements. 2 CFR 200.403(g) provides that costs must be adequately documented to be considered allowable under Federal awards. 2 CFR 200.430(i)(1)(i) requires 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 which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Condition: 1. For the year ended September 30, 2022, the total amount of payroll expense under ALN 84.027 determined from the journal entry details supporting the SEFA (or general ledger) was lower by $480,743 as compared to the total amount of payroll expense per labor cost summary (or subsidiary ledger). It was further noted that $404,198 out of this amount pertains to costs initially charged under the program but were reclassified to the Education Stabilization Fund (ESF) federal program through a general ledger entry only. No questioned costs are raised as the payroll costs that caused the variance were identified in detail. 2. For 3 (or 8%) of 40 transactions tested aggregating $61,202 out of $3,196,892 in total payroll expenditures, employee timecards were not provided. No questioned costs are raised as summary timesheets were provided. See Schedule of Findings and Questioned Costs for chart/table. Cause: PSS did not perform a reconciliation of the general ledger and subsidiary ledger for payroll costs. In addition, PSS failed to ensure that costs charged to the grant are adequately supported. Effect: PSS is in noncompliance with applicable allowable costs/cost principles requirements. Recommendation: PSS should implement a regular reconciliation of its labor cost summary report with the general ledger journal entries and ensure that any discrepancies are resolved or validly supported. Further, PSS should strengthen recordkeeping procedures so that documents are readily available to substantiate costs charged to the grant. Views of responsible officials: The PSS Corrective Action Plan provides a detailed rationale for disagreement with the finding. Auditor response: Condition 1 – The finding does acknowledge that PSS reclassified the amount under ESF funds. Given the knowledge of the journal entry limitation, PSS failed to show evidence of effort to regularly reconcile the labor cost summary report with the general ledger. The condition remains. Condition 2 – Based on our understanding of PSS’ internal controls, timecards are required to be provided every pay period to support the payment of salaries and wages. The condition remains.
Finding No. 2022-003 Federal Agency: U.S. Department of Education Assistance Listing No. and Title: 84.027 Special Education – Grants to States (IDEA, Part B) Area: Allowable Costs/Cost Principles Questioned Costs: $0 Criteria: The Schedule of Expenditures of Federal Awards (SEFA) must be supported by underlying accounting and other records used in preparing the financial statements. 2 CFR 200.403(g) provides that costs must be adequately documented to be considered allowable under Federal awards. 2 CFR 200.430(i)(1)(i) requires 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 which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Condition: 1. For the year ended September 30, 2022, the total amount of payroll expense under ALN 84.027 determined from the journal entry details supporting the SEFA (or general ledger) was lower by $480,743 as compared to the total amount of payroll expense per labor cost summary (or subsidiary ledger). It was further noted that $404,198 out of this amount pertains to costs initially charged under the program but were reclassified to the Education Stabilization Fund (ESF) federal program through a general ledger entry only. No questioned costs are raised as the payroll costs that caused the variance were identified in detail. 2. For 3 (or 8%) of 40 transactions tested aggregating $61,202 out of $3,196,892 in total payroll expenditures, employee timecards were not provided. No questioned costs are raised as summary timesheets were provided. See Schedule of Findings and Questioned Costs for chart/table. Cause: PSS did not perform a reconciliation of the general ledger and subsidiary ledger for payroll costs. In addition, PSS failed to ensure that costs charged to the grant are adequately supported. Effect: PSS is in noncompliance with applicable allowable costs/cost principles requirements. Recommendation: PSS should implement a regular reconciliation of its labor cost summary report with the general ledger journal entries and ensure that any discrepancies are resolved or validly supported. Further, PSS should strengthen recordkeeping procedures so that documents are readily available to substantiate costs charged to the grant. Views of responsible officials: The PSS Corrective Action Plan provides a detailed rationale for disagreement with the finding. Auditor response: Condition 1 – The finding does acknowledge that PSS reclassified the amount under ESF funds. Given the knowledge of the journal entry limitation, PSS failed to show evidence of effort to regularly reconcile the labor cost summary report with the general ledger. The condition remains. Condition 2 – Based on our understanding of PSS’ internal controls, timecards are required to be provided every pay period to support the payment of salaries and wages. The condition remains.
Finding 2022-004 – Allowable costs – payroll Assistance Listing #: 93.243 Criteria: In accordance with the Uniform Guidance’s compensation requirements (2 CFR 200.430), payroll systems must be based on records that accurately reflect the work performed and supported by a system of internal controls that provides reasonable assurances that charges are accurate; allowable and reasonable; and properly allocated. The Uniform Guidance allows for use of budget estimates on an interim basis. When using budget estimates on an interim basis, grantees must reconcile estimates against actual time or effort on a regular basis to ensure that estimates conform to actual staff activity. Grantees must make adjustments in the payroll distribution to align with actual time. Condition: During fiscal year 2022, the Organization charged payroll costs to the federal award programs using a set percentage based on budget and not based on employee’s actual time or effort amongst various programs. Cause: As noted above, fiscal year 2022 is the Organization’s first Single Audit and management was unaware that using budget estimates was not allowed without further reconciliation against actual time or effort activities. Effect: The salary costs charged to the federal programs may have been under or over reported based on the actual level of effort. Questioned Costs: N/A Repeat Finding: No Recommendation: We recommend the Organization make changes overall its timekeeping processes to ensure that payroll costs accurately reflect the work performed and if budget estimates are utilized, that they are reconciled and trued up on a consistent basis. Response: The Organization is now aware that utilization of budget estimates is not allowed for charging payroll and will utilize proper accounting treatment going forward.
Finding 2022-004 – Allowable costs – payroll Assistance Listing #: 93.243 Criteria: In accordance with the Uniform Guidance’s compensation requirements (2 CFR 200.430), payroll systems must be based on records that accurately reflect the work performed and supported by a system of internal controls that provides reasonable assurances that charges are accurate; allowable and reasonable; and properly allocated. The Uniform Guidance allows for use of budget estimates on an interim basis. When using budget estimates on an interim basis, grantees must reconcile estimates against actual time or effort on a regular basis to ensure that estimates conform to actual staff activity. Grantees must make adjustments in the payroll distribution to align with actual time. Condition: During fiscal year 2022, the Organization charged payroll costs to the federal award programs using a set percentage based on budget and not based on employee’s actual time or effort amongst various programs. Cause: As noted above, fiscal year 2022 is the Organization’s first Single Audit and management was unaware that using budget estimates was not allowed without further reconciliation against actual time or effort activities. Effect: The salary costs charged to the federal programs may have been under or over reported based on the actual level of effort. Questioned Costs: N/A Repeat Finding: No Recommendation: We recommend the Organization make changes overall its timekeeping processes to ensure that payroll costs accurately reflect the work performed and if budget estimates are utilized, that they are reconciled and trued up on a consistent basis. Response: The Organization is now aware that utilization of budget estimates is not allowed for charging payroll and will utilize proper accounting treatment going forward.
Finding 2022-004 – Allowable costs – payroll Assistance Listing #: 93.243 Criteria: In accordance with the Uniform Guidance’s compensation requirements (2 CFR 200.430), payroll systems must be based on records that accurately reflect the work performed and supported by a system of internal controls that provides reasonable assurances that charges are accurate; allowable and reasonable; and properly allocated. The Uniform Guidance allows for use of budget estimates on an interim basis. When using budget estimates on an interim basis, grantees must reconcile estimates against actual time or effort on a regular basis to ensure that estimates conform to actual staff activity. Grantees must make adjustments in the payroll distribution to align with actual time. Condition: During fiscal year 2022, the Organization charged payroll costs to the federal award programs using a set percentage based on budget and not based on employee’s actual time or effort amongst various programs. Cause: As noted above, fiscal year 2022 is the Organization’s first Single Audit and management was unaware that using budget estimates was not allowed without further reconciliation against actual time or effort activities. Effect: The salary costs charged to the federal programs may have been under or over reported based on the actual level of effort. Questioned Costs: N/A Repeat Finding: No Recommendation: We recommend the Organization make changes overall its timekeeping processes to ensure that payroll costs accurately reflect the work performed and if budget estimates are utilized, that they are reconciled and trued up on a consistent basis. Response: The Organization is now aware that utilization of budget estimates is not allowed for charging payroll and will utilize proper accounting treatment going forward.
Federal Agency: U.S. Department of Health and Human Services Program: Family Violence Prevention and Services/Discretionary Assistance Listing Number: 93.592 Major Program Compliance Requirement: Allowable Costs/Activities Allowed Criteria: In accordance with 200.430(i) in Subpart E of Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), changes 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. Condition: Accurate and reliable records are necessary to meet ongoing financial reporting and operations needs and requirements. During our testing of the Organization’s compliance with Assistance Listing 93.592 Family Violence Prevention and Services/Discretionary, the Organization was unable to provide documentation that compensation rates were approved by management or the Board of Directors for all employees (5) selected for testing. Cause: The Organization did not consistently document in personnel records or elsewhere employee compensation or changes to employee compensation rates that were approved by management or the Board of Directors. Effect: The absence of approved employee compensation inhibits the Organization from complying with federal program requirements and the potential of disallowed costs and/or repayment to the federal agency. Recommendation: The Organization should retain all supporting documentation for reported expenditures.
Federal Agency: U.S. Department of Health and Human Services Program: Family Violence Prevention and Services/Discretionary Assistance Listing Number: 93.592 Major Program Compliance Requirement: Allowable Costs/Activities Allowed Criteria: In accordance with 200.430(i) in Subpart E of Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), changes 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. Condition: Accurate and reliable records are necessary to meet ongoing financial reporting and operations needs and requirements. During our testing of the Organization’s compliance with Assistance Listing 93.592 Family Violence Prevention and Services/Discretionary, the Organization was unable to provide documentation that compensation rates were approved by management or the Board of Directors for all employees (5) selected for testing. Cause: The Organization did not consistently document in personnel records or elsewhere employee compensation or changes to employee compensation rates that were approved by management or the Board of Directors. Effect: The absence of approved employee compensation inhibits the Organization from complying with federal program requirements and the potential of disallowed costs and/or repayment to the federal agency. Recommendation: The Organization should retain all supporting documentation for reported expenditures.
2022-004—Allowable Costs/Cost Principles Federal program information: Funding agency: All Title: All ALN: All Award year and number: All Pass-through entity (if applicable): All Criteria: According to 2 CFR Part 200.403, to be allowable under federal awards, costs must be adequately documented. Additionally, according to 2 CFR Part 200.430, charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed, be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated, and comply with established accounting policies and practices of the entity. Condition: Accurate and complete records to support payroll disbursements were not maintained for federal award programs. We specifically noted the following: • There is no documentation of an employee’s approved pay rate. • The Institute has not developed formal accounting or personnel policies and procedures that meet the requirements of federal statutes. Questioned Costs: Undeterminable Context: Six of six payroll disbursements tested were not adequately documented. Cause: The Institute was not aware of the Uniform Guidance requirements regarding allowable costs/cost principles (2 CFR Part 200.403), and compensation for personal services (2 CFR Part 200.430). Additionally, the Institute has not developed formal accounting or personnel policies. Effect: The Institute may not be able to demonstrate that costs charged to federal programs are allowable. Auditor’s Recommendations: The Institute should develop formal accounting and personnel policies and procedures that meet the requirements of the Uniform Guidance. Management’s Response: Management of the Institute did not provide any comments in response to this finding.
2022-004—Allowable Costs/Cost Principles Federal program information: Funding agency: All Title: All ALN: All Award year and number: All Pass-through entity (if applicable): All Criteria: According to 2 CFR Part 200.403, to be allowable under federal awards, costs must be adequately documented. Additionally, according to 2 CFR Part 200.430, charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed, be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated, and comply with established accounting policies and practices of the entity. Condition: Accurate and complete records to support payroll disbursements were not maintained for federal award programs. We specifically noted the following: • There is no documentation of an employee’s approved pay rate. • The Institute has not developed formal accounting or personnel policies and procedures that meet the requirements of federal statutes. Questioned Costs: Undeterminable Context: Six of six payroll disbursements tested were not adequately documented. Cause: The Institute was not aware of the Uniform Guidance requirements regarding allowable costs/cost principles (2 CFR Part 200.403), and compensation for personal services (2 CFR Part 200.430). Additionally, the Institute has not developed formal accounting or personnel policies. Effect: The Institute may not be able to demonstrate that costs charged to federal programs are allowable. Auditor’s Recommendations: The Institute should develop formal accounting and personnel policies and procedures that meet the requirements of the Uniform Guidance. Management’s Response: Management of the Institute did not provide any comments in response to this finding.
2022-004—Allowable Costs/Cost Principles Federal program information: Funding agency: All Title: All ALN: All Award year and number: All Pass-through entity (if applicable): All Criteria: According to 2 CFR Part 200.403, to be allowable under federal awards, costs must be adequately documented. Additionally, according to 2 CFR Part 200.430, charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed, be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated, and comply with established accounting policies and practices of the entity. Condition: Accurate and complete records to support payroll disbursements were not maintained for federal award programs. We specifically noted the following: • There is no documentation of an employee’s approved pay rate. • The Institute has not developed formal accounting or personnel policies and procedures that meet the requirements of federal statutes. Questioned Costs: Undeterminable Context: Six of six payroll disbursements tested were not adequately documented. Cause: The Institute was not aware of the Uniform Guidance requirements regarding allowable costs/cost principles (2 CFR Part 200.403), and compensation for personal services (2 CFR Part 200.430). Additionally, the Institute has not developed formal accounting or personnel policies. Effect: The Institute may not be able to demonstrate that costs charged to federal programs are allowable. Auditor’s Recommendations: The Institute should develop formal accounting and personnel policies and procedures that meet the requirements of the Uniform Guidance. Management’s Response: Management of the Institute did not provide any comments in response to this finding.
2022-004—Allowable Costs/Cost Principles Federal program information: Funding agency: All Title: All ALN: All Award year and number: All Pass-through entity (if applicable): All Criteria: According to 2 CFR Part 200.403, to be allowable under federal awards, costs must be adequately documented. Additionally, according to 2 CFR Part 200.430, charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed, be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated, and comply with established accounting policies and practices of the entity. Condition: Accurate and complete records to support payroll disbursements were not maintained for federal award programs. We specifically noted the following: • There is no documentation of an employee’s approved pay rate. • The Institute has not developed formal accounting or personnel policies and procedures that meet the requirements of federal statutes. Questioned Costs: Undeterminable Context: Six of six payroll disbursements tested were not adequately documented. Cause: The Institute was not aware of the Uniform Guidance requirements regarding allowable costs/cost principles (2 CFR Part 200.403), and compensation for personal services (2 CFR Part 200.430). Additionally, the Institute has not developed formal accounting or personnel policies. Effect: The Institute may not be able to demonstrate that costs charged to federal programs are allowable. Auditor’s Recommendations: The Institute should develop formal accounting and personnel policies and procedures that meet the requirements of the Uniform Guidance. Management’s Response: Management of the Institute did not provide any comments in response to this finding.
2022-004—Allowable Costs/Cost Principles Federal program information: Funding agency: All Title: All ALN: All Award year and number: All Pass-through entity (if applicable): All Criteria: According to 2 CFR Part 200.403, to be allowable under federal awards, costs must be adequately documented. Additionally, according to 2 CFR Part 200.430, charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed, be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated, and comply with established accounting policies and practices of the entity. Condition: Accurate and complete records to support payroll disbursements were not maintained for federal award programs. We specifically noted the following: • There is no documentation of an employee’s approved pay rate. • The Institute has not developed formal accounting or personnel policies and procedures that meet the requirements of federal statutes. Questioned Costs: Undeterminable Context: Six of six payroll disbursements tested were not adequately documented. Cause: The Institute was not aware of the Uniform Guidance requirements regarding allowable costs/cost principles (2 CFR Part 200.403), and compensation for personal services (2 CFR Part 200.430). Additionally, the Institute has not developed formal accounting or personnel policies. Effect: The Institute may not be able to demonstrate that costs charged to federal programs are allowable. Auditor’s Recommendations: The Institute should develop formal accounting and personnel policies and procedures that meet the requirements of the Uniform Guidance. Management’s Response: Management of the Institute did not provide any comments in response to this finding.
2022-004—Allowable Costs/Cost Principles Federal program information: Funding agency: All Title: All ALN: All Award year and number: All Pass-through entity (if applicable): All Criteria: According to 2 CFR Part 200.403, to be allowable under federal awards, costs must be adequately documented. Additionally, according to 2 CFR Part 200.430, charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed, be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated, and comply with established accounting policies and practices of the entity. Condition: Accurate and complete records to support payroll disbursements were not maintained for federal award programs. We specifically noted the following: • There is no documentation of an employee’s approved pay rate. • The Institute has not developed formal accounting or personnel policies and procedures that meet the requirements of federal statutes. Questioned Costs: Undeterminable Context: Six of six payroll disbursements tested were not adequately documented. Cause: The Institute was not aware of the Uniform Guidance requirements regarding allowable costs/cost principles (2 CFR Part 200.403), and compensation for personal services (2 CFR Part 200.430). Additionally, the Institute has not developed formal accounting or personnel policies. Effect: The Institute may not be able to demonstrate that costs charged to federal programs are allowable. Auditor’s Recommendations: The Institute should develop formal accounting and personnel policies and procedures that meet the requirements of the Uniform Guidance. Management’s Response: Management of the Institute did not provide any comments in response to this finding.
2022-002—Unallowable Gift Card Disbursements Charged to Federal Program Type of Finding: (F) Instance of Noncompliance Related to Federal Awards Funding Agency: U.S. Department of Health and Human Services AL #: 93.231 – COVID-19: Epidemiology and Laboratory Capacity Award #: Various Award Period: 09/30/2021 – 09/29/2026 Estimated Questioned Costs: $15,300 Compliance Requirement: Allowable Costs/Cost Principles Statement of Condition AAIHB distributed gift cards to both salaried employees and independent contractors as a gesture of appreciation for working extended hours related to COVID-19 contact tracing efforts. The total value of the gift cards was approximately $15,300 and was charged to the COVID-19: Epidemiology and Laboratory Capacity grant (AL #93.231). For contractors, these gift cards were provided in addition to their regular compensation. The gift card disbursements were not processed through payroll nor formalized in contract terms, and there is no documentation indicating the entity obtained approval from the awarding agency. Criteria In accordance with 2 CFR § 200.403, costs charged to federal awards must be necessary, reasonable, allocable, and conform to limitations set forth in federal regulations. Per 2 CFR § 200.421(e)(3), the cost of gifts—including cash or cash equivalents such as gift cards—is generally unallowable. Compensation for employees must comply with 2 CFR § 200.430, including support through written policies and documentation of time and effort. Contractor payments must align with procurement standards in 2 CFR § 200.318–200.324 and be governed by written contracts. Effect The use of federal funds to provide gift cards constitutes an unallowable cost under Uniform Guidance. The questioned amount may be subject to repayment to the awarding agency or passthrough entity. Cause The auditee sought to recognize the extraordinary efforts of personnel during the COVID-19 public health response. However, they were unaware that the use of gift cards for this purpose was inconsistent with Uniform Guidance and lacked prior approval or supporting policy. Recommendation We recommend the auditee discontinue the use of federal funds for gift card distributions. All compensation for employees should be processed through payroll, supported by appropriate documentation and internal policies. Payments to contractors should be governed by written contracts and comply with applicable procurement standards. If the auditee believes these costs are justifiable, they should consult the awarding agency for a determination and, if necessary, reimburse the federal award.
2022-002—Unallowable Gift Card Disbursements Charged to Federal Program Type of Finding: (F) Instance of Noncompliance Related to Federal Awards Funding Agency: U.S. Department of Health and Human Services AL #: 93.231 – COVID-19: Epidemiology and Laboratory Capacity Award #: Various Award Period: 09/30/2021 – 09/29/2026 Estimated Questioned Costs: $15,300 Compliance Requirement: Allowable Costs/Cost Principles Statement of Condition AAIHB distributed gift cards to both salaried employees and independent contractors as a gesture of appreciation for working extended hours related to COVID-19 contact tracing efforts. The total value of the gift cards was approximately $15,300 and was charged to the COVID-19: Epidemiology and Laboratory Capacity grant (AL #93.231). For contractors, these gift cards were provided in addition to their regular compensation. The gift card disbursements were not processed through payroll nor formalized in contract terms, and there is no documentation indicating the entity obtained approval from the awarding agency. Criteria In accordance with 2 CFR § 200.403, costs charged to federal awards must be necessary, reasonable, allocable, and conform to limitations set forth in federal regulations. Per 2 CFR § 200.421(e)(3), the cost of gifts—including cash or cash equivalents such as gift cards—is generally unallowable. Compensation for employees must comply with 2 CFR § 200.430, including support through written policies and documentation of time and effort. Contractor payments must align with procurement standards in 2 CFR § 200.318–200.324 and be governed by written contracts. Effect The use of federal funds to provide gift cards constitutes an unallowable cost under Uniform Guidance. The questioned amount may be subject to repayment to the awarding agency or passthrough entity. Cause The auditee sought to recognize the extraordinary efforts of personnel during the COVID-19 public health response. However, they were unaware that the use of gift cards for this purpose was inconsistent with Uniform Guidance and lacked prior approval or supporting policy. Recommendation We recommend the auditee discontinue the use of federal funds for gift card distributions. All compensation for employees should be processed through payroll, supported by appropriate documentation and internal policies. Payments to contractors should be governed by written contracts and comply with applicable procurement standards. If the auditee believes these costs are justifiable, they should consult the awarding agency for a determination and, if necessary, reimburse the federal award.
2022-002—Unallowable Gift Card Disbursements Charged to Federal Program Type of Finding: (F) Instance of Noncompliance Related to Federal Awards Funding Agency: U.S. Department of Health and Human Services AL #: 93.231 – COVID-19: Epidemiology and Laboratory Capacity Award #: Various Award Period: 09/30/2021 – 09/29/2026 Estimated Questioned Costs: $15,300 Compliance Requirement: Allowable Costs/Cost Principles Statement of Condition AAIHB distributed gift cards to both salaried employees and independent contractors as a gesture of appreciation for working extended hours related to COVID-19 contact tracing efforts. The total value of the gift cards was approximately $15,300 and was charged to the COVID-19: Epidemiology and Laboratory Capacity grant (AL #93.231). For contractors, these gift cards were provided in addition to their regular compensation. The gift card disbursements were not processed through payroll nor formalized in contract terms, and there is no documentation indicating the entity obtained approval from the awarding agency. Criteria In accordance with 2 CFR § 200.403, costs charged to federal awards must be necessary, reasonable, allocable, and conform to limitations set forth in federal regulations. Per 2 CFR § 200.421(e)(3), the cost of gifts—including cash or cash equivalents such as gift cards—is generally unallowable. Compensation for employees must comply with 2 CFR § 200.430, including support through written policies and documentation of time and effort. Contractor payments must align with procurement standards in 2 CFR § 200.318–200.324 and be governed by written contracts. Effect The use of federal funds to provide gift cards constitutes an unallowable cost under Uniform Guidance. The questioned amount may be subject to repayment to the awarding agency or passthrough entity. Cause The auditee sought to recognize the extraordinary efforts of personnel during the COVID-19 public health response. However, they were unaware that the use of gift cards for this purpose was inconsistent with Uniform Guidance and lacked prior approval or supporting policy. Recommendation We recommend the auditee discontinue the use of federal funds for gift card distributions. All compensation for employees should be processed through payroll, supported by appropriate documentation and internal policies. Payments to contractors should be governed by written contracts and comply with applicable procurement standards. If the auditee believes these costs are justifiable, they should consult the awarding agency for a determination and, if necessary, reimburse the federal award.
2022-002—Unallowable Gift Card Disbursements Charged to Federal Program Type of Finding: (F) Instance of Noncompliance Related to Federal Awards Funding Agency: U.S. Department of Health and Human Services AL #: 93.231 – COVID-19: Epidemiology and Laboratory Capacity Award #: Various Award Period: 09/30/2021 – 09/29/2026 Estimated Questioned Costs: $15,300 Compliance Requirement: Allowable Costs/Cost Principles Statement of Condition AAIHB distributed gift cards to both salaried employees and independent contractors as a gesture of appreciation for working extended hours related to COVID-19 contact tracing efforts. The total value of the gift cards was approximately $15,300 and was charged to the COVID-19: Epidemiology and Laboratory Capacity grant (AL #93.231). For contractors, these gift cards were provided in addition to their regular compensation. The gift card disbursements were not processed through payroll nor formalized in contract terms, and there is no documentation indicating the entity obtained approval from the awarding agency. Criteria In accordance with 2 CFR § 200.403, costs charged to federal awards must be necessary, reasonable, allocable, and conform to limitations set forth in federal regulations. Per 2 CFR § 200.421(e)(3), the cost of gifts—including cash or cash equivalents such as gift cards—is generally unallowable. Compensation for employees must comply with 2 CFR § 200.430, including support through written policies and documentation of time and effort. Contractor payments must align with procurement standards in 2 CFR § 200.318–200.324 and be governed by written contracts. Effect The use of federal funds to provide gift cards constitutes an unallowable cost under Uniform Guidance. The questioned amount may be subject to repayment to the awarding agency or passthrough entity. Cause The auditee sought to recognize the extraordinary efforts of personnel during the COVID-19 public health response. However, they were unaware that the use of gift cards for this purpose was inconsistent with Uniform Guidance and lacked prior approval or supporting policy. Recommendation We recommend the auditee discontinue the use of federal funds for gift card distributions. All compensation for employees should be processed through payroll, supported by appropriate documentation and internal policies. Payments to contractors should be governed by written contracts and comply with applicable procurement standards. If the auditee believes these costs are justifiable, they should consult the awarding agency for a determination and, if necessary, reimburse the federal award.
2022-002—Unallowable Gift Card Disbursements Charged to Federal Program Type of Finding: (F) Instance of Noncompliance Related to Federal Awards Funding Agency: U.S. Department of Health and Human Services AL #: 93.231 – COVID-19: Epidemiology and Laboratory Capacity Award #: Various Award Period: 09/30/2021 – 09/29/2026 Estimated Questioned Costs: $15,300 Compliance Requirement: Allowable Costs/Cost Principles Statement of Condition AAIHB distributed gift cards to both salaried employees and independent contractors as a gesture of appreciation for working extended hours related to COVID-19 contact tracing efforts. The total value of the gift cards was approximately $15,300 and was charged to the COVID-19: Epidemiology and Laboratory Capacity grant (AL #93.231). For contractors, these gift cards were provided in addition to their regular compensation. The gift card disbursements were not processed through payroll nor formalized in contract terms, and there is no documentation indicating the entity obtained approval from the awarding agency. Criteria In accordance with 2 CFR § 200.403, costs charged to federal awards must be necessary, reasonable, allocable, and conform to limitations set forth in federal regulations. Per 2 CFR § 200.421(e)(3), the cost of gifts—including cash or cash equivalents such as gift cards—is generally unallowable. Compensation for employees must comply with 2 CFR § 200.430, including support through written policies and documentation of time and effort. Contractor payments must align with procurement standards in 2 CFR § 200.318–200.324 and be governed by written contracts. Effect The use of federal funds to provide gift cards constitutes an unallowable cost under Uniform Guidance. The questioned amount may be subject to repayment to the awarding agency or passthrough entity. Cause The auditee sought to recognize the extraordinary efforts of personnel during the COVID-19 public health response. However, they were unaware that the use of gift cards for this purpose was inconsistent with Uniform Guidance and lacked prior approval or supporting policy. Recommendation We recommend the auditee discontinue the use of federal funds for gift card distributions. All compensation for employees should be processed through payroll, supported by appropriate documentation and internal policies. Payments to contractors should be governed by written contracts and comply with applicable procurement standards. If the auditee believes these costs are justifiable, they should consult the awarding agency for a determination and, if necessary, reimburse the federal award.
2022-002—Unallowable Gift Card Disbursements Charged to Federal Program Type of Finding: (F) Instance of Noncompliance Related to Federal Awards Funding Agency: U.S. Department of Health and Human Services AL #: 93.231 – COVID-19: Epidemiology and Laboratory Capacity Award #: Various Award Period: 09/30/2021 – 09/29/2026 Estimated Questioned Costs: $15,300 Compliance Requirement: Allowable Costs/Cost Principles Statement of Condition AAIHB distributed gift cards to both salaried employees and independent contractors as a gesture of appreciation for working extended hours related to COVID-19 contact tracing efforts. The total value of the gift cards was approximately $15,300 and was charged to the COVID-19: Epidemiology and Laboratory Capacity grant (AL #93.231). For contractors, these gift cards were provided in addition to their regular compensation. The gift card disbursements were not processed through payroll nor formalized in contract terms, and there is no documentation indicating the entity obtained approval from the awarding agency. Criteria In accordance with 2 CFR § 200.403, costs charged to federal awards must be necessary, reasonable, allocable, and conform to limitations set forth in federal regulations. Per 2 CFR § 200.421(e)(3), the cost of gifts—including cash or cash equivalents such as gift cards—is generally unallowable. Compensation for employees must comply with 2 CFR § 200.430, including support through written policies and documentation of time and effort. Contractor payments must align with procurement standards in 2 CFR § 200.318–200.324 and be governed by written contracts. Effect The use of federal funds to provide gift cards constitutes an unallowable cost under Uniform Guidance. The questioned amount may be subject to repayment to the awarding agency or passthrough entity. Cause The auditee sought to recognize the extraordinary efforts of personnel during the COVID-19 public health response. However, they were unaware that the use of gift cards for this purpose was inconsistent with Uniform Guidance and lacked prior approval or supporting policy. Recommendation We recommend the auditee discontinue the use of federal funds for gift card distributions. All compensation for employees should be processed through payroll, supported by appropriate documentation and internal policies. Payments to contractors should be governed by written contracts and comply with applicable procurement standards. If the auditee believes these costs are justifiable, they should consult the awarding agency for a determination and, if necessary, reimburse the federal award.
Finding Number: 2022-023 Prior Year Finding Number: N/A Compliance Requirement: Activities Allowed or Unallowed and Allowable Costs/Cost Principles – Payroll Activities Program: U.S. Department of Agriculture Child Nutrition Cluster ALN: 10.555, 10.559, 10.582 Award #: 4V1300308 Award Period: 10/01/2021 – 9/30/2022 Government Department/Agency: Department of Education (VIDE) Criteria – The Uniform Guidance in 2 CFR Section 200.303, Internal Controls, requires the non-federal entities receiving Federal awards (1.e., auditee management) establish and maintain internal control designed to reasonable ensure compliance with Federal statutes, regulations, and other terms and conditions of the Federal Award. Management is responsible for establishing and maintaining a system of internal control that should include controls over its activities allowed or unallowed, allowable cost/cost principal process. CFR 200.403(g) states that for costs to be allowed under federal awards, they must be adequately documented. Additionally, salaries and wages charged to Federal awards are subject to the standards of documentation as described by 2 CFR Section 200.430(i) and must be based on records that accurately reflect the work performed. These records must: • Be incorporated into the organization’s official records. • Reasonably reflect the total activity for which the employee is compensated across all grant-related and non-grant related activities (100%); and • Support the distribution of employee salary across multiple activities or cost objectives. Condition – During our testing of allowable costs for payroll expenditures incurred throughout the year, we sampled and selected 11 of 104 payroll disbursements and noted the following: • 11 instances where the approved timesheet for the pay period selected was not available for review. • 11 instances where VIDE did not provide support that time and effort is charged in accordance with A-87 requirements. • 4 instances where the NOPA provided did not include any evidence that the employee was approved to be federally reimbursed for the project code utilized in the payroll register. • One instance where the project code on the approved NOPA did not agree with the project code utilized on the payroll register. • 7 instances where the payroll register did not include and employee’s retirement and health insurance benefits for the pay period selected. • One instance where the employee’s pay rate in the approved NOPA provided did not agree with the pay rate in the payroll register. • One instance where the payroll register did not show any hours worked by the employee for the pay period selected. Questioned Costs – None. Context – This is a condition identified per review of VIDE’s compliance with the specified requirements using a statistically valid sample. The total payroll expenditures charged to the program in fiscal year 2022 were $205,418. The amount sampled is $22,738 The known amount of the instances of inconsistent funding allocation is $22,738. Effect – An ineffective control system related to review of transactions to ensure that only allowable costs are allocated to federal programs can lead to noncompliance with federal statutes, regulations, and the provisions of grant agreements that could ultimately lead to disallowed costs for the major programs. Cause – VIDE does not appear to have adequate policies and procedures to ensure compliance with applicable cost principles and ensure that an appropriate level of review and approval was completed prior to charging costs to a federal program. Recommendation – We recommend that VIDE reevaluate and improve internal controls to ensure adherence to federal regulations related to the fiscal administrative requirement for expending and accounting for payroll and to ensure proper and accurate funding allocation of payroll cost. Views of Responsible Officials – The Government concurs with the auditor’s findings and recommendations. The planned corrective actions are presented in the Government’s Corrective Action Plan attached as Appendix B to the Single Audit Report.
Finding Number: 2022-020 Prior Year Finding Number: 2021-019 Compliance Requirement: Allowable Costs/Cost Principles – Payroll Activities Program: U.S. Department of Agriculture Supplemental Nutrition Assistance Program Cluster (SNAP) ALN: 10.551, 10.561 Award #: 4VI400408 Award Year: 10/01/20 – 09/30/21 10/01/21 – 09/30/22 Government Department/Agency: Department of Human Services (DHS) Criteria – The Uniform Guidance in 2 CFR Section 200.303, Internal Controls, requires the non-federal entities receiving Federal awards (1.e., auditee management) establish and maintain internal control designed to reasonable ensure compliance with Federal statutes, regulations, and other terms and conditions of the Federal Award. Management is responsible for establishing and maintaining a system of internal control that should include controls over its activities allowed or unallowed, allowable cost/cost principal process. CFR 200.403(g) states that for costs to be allowed under federal awards, they must be adequately documented. Additionally, salaries and wages charged to Federal awards are subject to the standards of documentation as described by 2 CFR Section 200.430(i) and must be based on records that accurately reflect the work performed. These records must: • Be incorporated into the organization’s official records. • Reasonably reflect the total activity for which the employee is compensated across all grant-related and non-grant related activities (100%); and • Support the distribution of employee salary across multiple activities or cost objectives. Condition – During our testing of allowable costs for payroll expenditures incurred throughout the year, we sampled and selected 60 of 1,854 payroll disbursements and noted the following: • 13 instances where DHS did not consistently apply funding allocation in accordance with the Notice of Personnel Action (NOPA). Of the 13, we found 5 instances where hours that should have been charged 100% to federal funds were split 50/50 (local/federal) and 8 instances in which hours that should have been split 50/50 were charged 100% (3), 95% (3), 75% (1), and 55% (1) to federal funds. • One instance where an employee’s compensation was charged to SNAP while working on a different federal program. • One instance in which overtime hours noted per the employees’ timesheet did not agree to the overtime hours in the payroll register. Further, we noted that internal controls identified did not appear to be operating at a level of precision to ensure compliance with the above-mentioned requirements. Questioned Costs – Not Determinable. Context – This is a condition identified per review of DHS’ compliance with the specified requirements using a statistically valid sample. The total payroll expenditures charged to the program in fiscal year 2022 were $3,354,155. The amount sampled is $132,885. The known amount of the instances of inconsistent funding allocation is $6,453. Effect – An ineffective control system related to review of transactions to ensure that only allowable costs are allocated to federal programs can lead to noncompliance with federal statutes, regulations, and the provisions of grant agreements that could ultimately lead to disallowed costs for the major programs. Cause – DHS does not appear to have adequate policies and procedures to ensure compliance with applicable cost principles and ensure that an appropriate level of review and approval was completed prior to charging costs to a federal program. Recommendation – We recommend that DHS reevaluate and improve internal controls to ensure adherence to federal regulations related to the fiscal administrative requirement for expending and accounting for payroll and to ensure proper and accurate funding allocation of payroll cost. Views of Responsible Officials – The Government concurs with the auditor’s findings and recommendations. The Department of Human Services (DHS) adopted the electronic Timeforce (STATS) system for payroll, replacing manual processes. Time and attendance are approved through management levels, with payroll based on Notice of Personnel Action (NOPA) cost centers. Financial Analysts reconcile payroll, and a workflow ensures accurate NOPA listings for payroll purposes. The planned corrective actions are presented in the Government’s Corrective Action Plan attached as Appendix B to the Single Audit Report.