2024-001. Allowable Costs/Cost Principles: Compensation – Personal Services United States Department of Education, Passed Through New York State, Department of Education: Special Education Cluster Special Education Grants to States: IDEA Part B ALN: 84.027 Special Education Grants to States: IDEA 611 ARP Allocations ALN: 84.027X Special Education Preschool Grants: IDEA Preschool ALN: 84.173 Special Education Preschool Grants: IDEA 619 ARP Allocations ALN: 84.173X Criteria: Salaries and wages charged to federal awards must be supported by documentation prescribed by the Uniform Guidance at Subpart E, 2 CFR §200.430. Condition: Subpart E, 2 CFR §200.430 of the Uniform Guidance requires that charges to “Federal awards for salaries and wages must be based on records that accurately reflect the work performed.” The documentation should support the distribution of the employee's compensation among specific activities if the employee works on more than one federal award, or a federal award and non-federal award. The preparation of personnel activity reports (PARs) or periodic certifications or the equivalent is the most effective way to comply with this requirement. During the current year, the District prepared periodic certification equivalents, but it did not comply with Subpart E, 2 CFR §200.430. Cause: The staff that were responsible for maintaining records that accurately reflect the work performed, as described in Subpart E, 2 CFR §200.430, to support salaries charged to federal awards, on occasion prepared PARs, which were not signed by the employee or supervisory official having first-hand knowledge of the work performed by the employee. In some situations, sufficient details regarding the duties performed by the employes did not exist. Effect: Noncompliance could result in the incorrect amount for services rendered being charged to the federal award. Questioned Costs: None reported. Context: Time records for employees charged to federal awards to be maintained by the District are supportive of amounts included in budgets approved by the State. Identification of a Repeat Finding: This is not a repeat finding. Recommendation: The District should monitor its procedures to ascertain that documentation to support actual salaries and wages charged to federal awards are in a format that complies with the requirements of the Uniform Guidance at Subpart E, 2 CFR §200.430. Views of Responsible Officials of Auditee: The District agrees with the finding. Reza Kolahifar, Assistant Superintendent for Human Resources and Personnel, will oversee the monitoring of procedures to ensure appropriate documentation will be prepared to comply with Subpart E, 2 CFR §200.430.
2024-001. Allowable Costs/Cost Principles: Compensation – Personal Services United States Department of Education, Passed Through New York State, Department of Education: Special Education Cluster Special Education Grants to States: IDEA Part B ALN: 84.027 Special Education Grants to States: IDEA 611 ARP Allocations ALN: 84.027X Special Education Preschool Grants: IDEA Preschool ALN: 84.173 Special Education Preschool Grants: IDEA 619 ARP Allocations ALN: 84.173X Criteria: Salaries and wages charged to federal awards must be supported by documentation prescribed by the Uniform Guidance at Subpart E, 2 CFR §200.430. Condition: Subpart E, 2 CFR §200.430 of the Uniform Guidance requires that charges to “Federal awards for salaries and wages must be based on records that accurately reflect the work performed.” The documentation should support the distribution of the employee's compensation among specific activities if the employee works on more than one federal award, or a federal award and non-federal award. The preparation of personnel activity reports (PARs) or periodic certifications or the equivalent is the most effective way to comply with this requirement. During the current year, the District prepared periodic certification equivalents, but it did not comply with Subpart E, 2 CFR §200.430. Cause: The staff that were responsible for maintaining records that accurately reflect the work performed, as described in Subpart E, 2 CFR §200.430, to support salaries charged to federal awards, on occasion prepared PARs, which were not signed by the employee or supervisory official having first-hand knowledge of the work performed by the employee. In some situations, sufficient details regarding the duties performed by the employes did not exist. Effect: Noncompliance could result in the incorrect amount for services rendered being charged to the federal award. Questioned Costs: None reported. Context: Time records for employees charged to federal awards to be maintained by the District are supportive of amounts included in budgets approved by the State. Identification of a Repeat Finding: This is not a repeat finding. Recommendation: The District should monitor its procedures to ascertain that documentation to support actual salaries and wages charged to federal awards are in a format that complies with the requirements of the Uniform Guidance at Subpart E, 2 CFR §200.430. Views of Responsible Officials of Auditee: The District agrees with the finding. Reza Kolahifar, Assistant Superintendent for Human Resources and Personnel, will oversee the monitoring of procedures to ensure appropriate documentation will be prepared to comply with Subpart E, 2 CFR §200.430.
2024-001. Allowable Costs/Cost Principles: Compensation – Personal Services United States Department of Education, Passed Through New York State, Department of Education: Special Education Cluster Special Education Grants to States: IDEA Part B ALN: 84.027 Special Education Grants to States: IDEA 611 ARP Allocations ALN: 84.027X Special Education Preschool Grants: IDEA Preschool ALN: 84.173 Special Education Preschool Grants: IDEA 619 ARP Allocations ALN: 84.173X Criteria: Salaries and wages charged to federal awards must be supported by documentation prescribed by the Uniform Guidance at Subpart E, 2 CFR §200.430. Condition: Subpart E, 2 CFR §200.430 of the Uniform Guidance requires that charges to “Federal awards for salaries and wages must be based on records that accurately reflect the work performed.” The documentation should support the distribution of the employee's compensation among specific activities if the employee works on more than one federal award, or a federal award and non-federal award. The preparation of personnel activity reports (PARs) or periodic certifications or the equivalent is the most effective way to comply with this requirement. During the current year, the District prepared periodic certification equivalents, but it did not comply with Subpart E, 2 CFR §200.430. Cause: The staff that were responsible for maintaining records that accurately reflect the work performed, as described in Subpart E, 2 CFR §200.430, to support salaries charged to federal awards, on occasion prepared PARs, which were not signed by the employee or supervisory official having first-hand knowledge of the work performed by the employee. In some situations, sufficient details regarding the duties performed by the employes did not exist. Effect: Noncompliance could result in the incorrect amount for services rendered being charged to the federal award. Questioned Costs: None reported. Context: Time records for employees charged to federal awards to be maintained by the District are supportive of amounts included in budgets approved by the State. Identification of a Repeat Finding: This is not a repeat finding. Recommendation: The District should monitor its procedures to ascertain that documentation to support actual salaries and wages charged to federal awards are in a format that complies with the requirements of the Uniform Guidance at Subpart E, 2 CFR §200.430. Views of Responsible Officials of Auditee: The District agrees with the finding. Reza Kolahifar, Assistant Superintendent for Human Resources and Personnel, will oversee the monitoring of procedures to ensure appropriate documentation will be prepared to comply with Subpart E, 2 CFR §200.430.
2024-001. Allowable Costs/Cost Principles: Compensation – Personal Services United States Department of Education, Passed Through New York State, Department of Education: Special Education Cluster Special Education Grants to States: IDEA Part B ALN: 84.027 Special Education Grants to States: IDEA 611 ARP Allocations ALN: 84.027X Special Education Preschool Grants: IDEA Preschool ALN: 84.173 Special Education Preschool Grants: IDEA 619 ARP Allocations ALN: 84.173X Criteria: Salaries and wages charged to federal awards must be supported by documentation prescribed by the Uniform Guidance at Subpart E, 2 CFR §200.430. Condition: Subpart E, 2 CFR §200.430 of the Uniform Guidance requires that charges to “Federal awards for salaries and wages must be based on records that accurately reflect the work performed.” The documentation should support the distribution of the employee's compensation among specific activities if the employee works on more than one federal award, or a federal award and non-federal award. The preparation of personnel activity reports (PARs) or periodic certifications or the equivalent is the most effective way to comply with this requirement. During the current year, the District prepared periodic certification equivalents, but it did not comply with Subpart E, 2 CFR §200.430. Cause: The staff that were responsible for maintaining records that accurately reflect the work performed, as described in Subpart E, 2 CFR §200.430, to support salaries charged to federal awards, on occasion prepared PARs, which were not signed by the employee or supervisory official having first-hand knowledge of the work performed by the employee. In some situations, sufficient details regarding the duties performed by the employes did not exist. Effect: Noncompliance could result in the incorrect amount for services rendered being charged to the federal award. Questioned Costs: None reported. Context: Time records for employees charged to federal awards to be maintained by the District are supportive of amounts included in budgets approved by the State. Identification of a Repeat Finding: This is not a repeat finding. Recommendation: The District should monitor its procedures to ascertain that documentation to support actual salaries and wages charged to federal awards are in a format that complies with the requirements of the Uniform Guidance at Subpart E, 2 CFR §200.430. Views of Responsible Officials of Auditee: The District agrees with the finding. Reza Kolahifar, Assistant Superintendent for Human Resources and Personnel, will oversee the monitoring of procedures to ensure appropriate documentation will be prepared to comply with Subpart E, 2 CFR §200.430.
Criteria Part 2, CFR Part 200.430 notes “Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed”. The document continues to state that documentation must “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.” Additionally, Part 200.431 states “The cost of fringe benefits in the form of regular compensation paid to employees during periods of authorized absences from the job, such as for annual leave, family-related leave, sick leave, holidays, court leave, military leave, administrative leave, and other similar benefits, are allowable is all of the following criteria are met:”. The criteria include that “the costs are equitably allocated to all related activities, including Federal awards.” Condition While performing tests of NBCC’s internal controls over payroll transactions, we noted the Organization had incorrectly allocated time for 8 of the 50 selections. Additionally, we noted that the Organization had allocated time for leave based on pre-determined budgets, rather than actual hours worked in the pay period, for 27 of the 50 selections. Cause NBCC has not implemented proper internal control policies to adhere to the requirements of the Uniform Guidance. Repeat Finding No. Effect Noncompliance may impact future funding from Federal awards. Recommendation We recommend NBCC implement proper internal control procedures to document hours worked, by employee and by grant; and maintain the documentation to support charges allocated to each Federal award.
Criteria Part 2, CFR Part 200.430 notes “Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed”. The document continues to state that documentation must “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.” Additionally, Part 200.431 states “The cost of fringe benefits in the form of regular compensation paid to employees during periods of authorized absences from the job, such as for annual leave, family-related leave, sick leave, holidays, court leave, military leave, administrative leave, and other similar benefits, are allowable is all of the following criteria are met:”. The criteria include that “the costs are equitably allocated to all related activities, including Federal awards.” Condition While performing tests of NBCC’s internal controls over payroll transactions, we noted the Organization had incorrectly allocated time for 8 of the 50 selections. Additionally, we noted that the Organization had allocated time for leave based on pre-determined budgets, rather than actual hours worked in the pay period, for 27 of the 50 selections. Cause NBCC has not implemented proper internal control policies to adhere to the requirements of the Uniform Guidance. Repeat Finding No. Effect Noncompliance may impact future funding from Federal awards. Recommendation We recommend NBCC implement proper internal control procedures to document hours worked, by employee and by grant; and maintain the documentation to support charges allocated to each Federal award.
Criteria Part 2, CFR Part 200.430 notes “Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed”. The document continues to state that documentation must “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.” Additionally, Part 200.431 states “The cost of fringe benefits in the form of regular compensation paid to employees during periods of authorized absences from the job, such as for annual leave, family-related leave, sick leave, holidays, court leave, military leave, administrative leave, and other similar benefits, are allowable is all of the following criteria are met:”. The criteria include that “the costs are equitably allocated to all related activities, including Federal awards.” Condition While performing tests of NBCC’s internal controls over payroll transactions, we noted the Organization had incorrectly allocated time for 8 of the 50 selections. Additionally, we noted that the Organization had allocated time for leave based on pre-determined budgets, rather than actual hours worked in the pay period, for 27 of the 50 selections. Cause NBCC has not implemented proper internal control policies to adhere to the requirements of the Uniform Guidance. Repeat Finding No. Effect Noncompliance may impact future funding from Federal awards. Recommendation We recommend NBCC implement proper internal control procedures to document hours worked, by employee and by grant; and maintain the documentation to support charges allocated to each Federal award.
Criteria Part 2, CFR Part 200.430 notes “Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed”. The document continues to state that documentation must “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.” Additionally, Part 200.431 states “The cost of fringe benefits in the form of regular compensation paid to employees during periods of authorized absences from the job, such as for annual leave, family-related leave, sick leave, holidays, court leave, military leave, administrative leave, and other similar benefits, are allowable is all of the following criteria are met:”. The criteria include that “the costs are equitably allocated to all related activities, including Federal awards.” Condition While performing tests of NBCC’s internal controls over payroll transactions, we noted the Organization had incorrectly allocated time for 8 of the 50 selections. Additionally, we noted that the Organization had allocated time for leave based on pre-determined budgets, rather than actual hours worked in the pay period, for 27 of the 50 selections. Cause NBCC has not implemented proper internal control policies to adhere to the requirements of the Uniform Guidance. Repeat Finding No. Effect Noncompliance may impact future funding from Federal awards. Recommendation We recommend NBCC implement proper internal control procedures to document hours worked, by employee and by grant; and maintain the documentation to support charges allocated to each Federal award.
Information on the federal program: Subject: Education Stabilization Fund (ESSER) – Internal Controls Federal Agency: Department of Education Federal Program: COVID-19 – Education Stabilization Fund Assistance Listing Number: 84.425D, 84.425U Federal Award Numbers and Years (or Other Identifying Numbers): S425D210013, S425U210013 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Allowable Costs/Cost Principles Audit Finding: Material Weakness Criteria: 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (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. . . . (g) Be adequately documented. . . ." 2 CFR 200.430(i) states in part: "Standards for documentation of Personnel Expenses (1) Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (ii) Be incorporated into the official records of the non-Federal entity; (iii) Reasonably reflect the total activity for which the employee is compensated by the non- Federal entity, not exceeding 100% of compensated activities (for IHE, this per the IHE's definition of IBS); . . . (vii) Support the distribution of the employee's salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. . . ." Condition: An effective internal control system was not in place at the School Corporation in order to ensure compliance with requirements related to the grant agreement and the Allowable Costs/Cost Principles compliance requirements. Cause: The School Corporation’s management had not developed an effective system of internal controls that would have ensured compliance with the grant agreement and the Allowable Costs/Cost Principles compliance requirement. Effect: The failure to establish an effective system of internal controls enabled noncompliance to go undetected. Noncompliance with the grant agreement and the Allowable Costs/Cost Principles compliance requirement could result in the loss of future federal funds to the School Corporation. Questioned Costs: There were $1,944 of known questioned costs identified. Context: During testing of the Allowable Costs/Cost Principles compliance requirements, there were two vendor vouchers in a sample of 60, where the School Corporation was unable to locate any supporting documentation. These two selections totaled $1,530 charged to the grant. It was further noted that during our testing of payroll costs charged to the COVID-19 – Education Stabilization Fund, for 2 selections in a sample of 40, the School Corporation was unable to provide any support to validate the amount of payroll charged to the grant. These two selections totaled $414 charged to the COVID-19 – Education Stabilization Fund. Identification as a repeat finding: No. Recommendation: We recommend the School Corporation’s management establish a system of internal controls to ensure that documentation will be maintained and that expenditures charged to the grant comply with the grant agreement and the Allowable Costs/Cost Principles compliance requirement. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.
Information on the federal program: Subject: Education Stabilization Fund (ESSER) – Internal Controls Federal Agency: Department of Education Federal Program: COVID-19 – Education Stabilization Fund Assistance Listing Number: 84.425D, 84.425U Federal Award Numbers and Years (or Other Identifying Numbers): S425D210013, S425U210013 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Allowable Costs/Cost Principles Audit Finding: Material Weakness Criteria: 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (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. . . . (g) Be adequately documented. . . ." 2 CFR 200.430(i) states in part: "Standards for documentation of Personnel Expenses (1) Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (ii) Be incorporated into the official records of the non-Federal entity; (iii) Reasonably reflect the total activity for which the employee is compensated by the non- Federal entity, not exceeding 100% of compensated activities (for IHE, this per the IHE's definition of IBS); . . . (vii) Support the distribution of the employee's salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. . . ." Condition: An effective internal control system was not in place at the School Corporation in order to ensure compliance with requirements related to the grant agreement and the Allowable Costs/Cost Principles compliance requirements. Cause: The School Corporation’s management had not developed an effective system of internal controls that would have ensured compliance with the grant agreement and the Allowable Costs/Cost Principles compliance requirement. Effect: The failure to establish an effective system of internal controls enabled noncompliance to go undetected. Noncompliance with the grant agreement and the Allowable Costs/Cost Principles compliance requirement could result in the loss of future federal funds to the School Corporation. Questioned Costs: There were $1,944 of known questioned costs identified. Context: During testing of the Allowable Costs/Cost Principles compliance requirements, there were two vendor vouchers in a sample of 60, where the School Corporation was unable to locate any supporting documentation. These two selections totaled $1,530 charged to the grant. It was further noted that during our testing of payroll costs charged to the COVID-19 – Education Stabilization Fund, for 2 selections in a sample of 40, the School Corporation was unable to provide any support to validate the amount of payroll charged to the grant. These two selections totaled $414 charged to the COVID-19 – Education Stabilization Fund. Identification as a repeat finding: No. Recommendation: We recommend the School Corporation’s management establish a system of internal controls to ensure that documentation will be maintained and that expenditures charged to the grant comply with the grant agreement and the Allowable Costs/Cost Principles compliance requirement. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.
FINDING 2024-003 Information on the federal program: Subject: Child Nutrition Cluster - Internal Controls Federal Agency: Department of Agriculture Federal Program: School Breakfast Program, National School Lunch Program Assistance Listing Number: 10.553, 10.555 Federal Award Numbers and Years (or Other Identifying Numbers): FY2024 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Activities Allowed or Unallowed, Allowable Costs/Cost Principles Audit Finding: Significant Deficiency Criteria: 2 CFR section 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.430 states in part: (1) Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (ii) Be incorporated into the official records of the non-Federal entity; (iii) Reasonably reflect the total activity for which the employee is compensated by the non-Federal entity, (iv) Encompass both federally assisted and all other activities compensated by the non-Federal entity on an integrated basis, but may include the use of subsidiary records as defined in the non-Federal entity's written policy; (v) Comply with the established accounting policies and practices of the non-Federal entity (See paragraph (h)(1)(ii) above for treatment of incidental work for IHEs.); and vii) Support the distribution of the employee's salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. Condition: An effective internal control system was not in place at the School Corporation in order to ensure compliance with requirements related to the grant agreement and the activities allowed or unallowed and allowable costs/cost principle compliance requirements. Cause: The School Corporation's management had not developed a system of internal controls to ensure compliance with the compliance requirements listed above. Effect: The failure to establish an effective internal control system placed the School Corporation at risk of noncompliance with the grant agreement and the compliance requirements. A lack of segregation of duties within an internal control system could have also allowed noncompliance with the compliance requirements and allowed the misuse and mismanagement of federal funds and assets by not having proper oversight, reviews, and approvals over the activities of the programs. Questioned Costs: $5,338 (Known questioned costs) Context: For 5 selections, in a sample of 5 payroll transactions, the School Corporation did not have time and effort logs to support the portion of the employee’s time charged to the grant. The employees’ time was split with a non-federal fund; however, the School Corporation did not have support for the allocation of the time charged to the School Lunch fund. Identification as a repeat finding: No. Recommendation: We recommend management ensure semi-annual certifications are completed for all employees charged to the grant awards at 100% and time and effort logs are maintained for all employees not charged at 100% to support work performed and charged to the grant awards. We recommend management establish a documented review by management of semi-annual certifications and time and effort logs to ensure time charged to grant awards is allowable and allocable based on work performed in accordance with grant requirements. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.
FINDING 2024-003 Information on the federal program: Subject: Child Nutrition Cluster - Internal Controls Federal Agency: Department of Agriculture Federal Program: School Breakfast Program, National School Lunch Program Assistance Listing Number: 10.553, 10.555 Federal Award Numbers and Years (or Other Identifying Numbers): FY2024 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Activities Allowed or Unallowed, Allowable Costs/Cost Principles Audit Finding: Significant Deficiency Criteria: 2 CFR section 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.430 states in part: (1) Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (ii) Be incorporated into the official records of the non-Federal entity; (iii) Reasonably reflect the total activity for which the employee is compensated by the non-Federal entity, (iv) Encompass both federally assisted and all other activities compensated by the non-Federal entity on an integrated basis, but may include the use of subsidiary records as defined in the non-Federal entity's written policy; (v) Comply with the established accounting policies and practices of the non-Federal entity (See paragraph (h)(1)(ii) above for treatment of incidental work for IHEs.); and vii) Support the distribution of the employee's salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. Condition: An effective internal control system was not in place at the School Corporation in order to ensure compliance with requirements related to the grant agreement and the activities allowed or unallowed and allowable costs/cost principle compliance requirements. Cause: The School Corporation's management had not developed a system of internal controls to ensure compliance with the compliance requirements listed above. Effect: The failure to establish an effective internal control system placed the School Corporation at risk of noncompliance with the grant agreement and the compliance requirements. A lack of segregation of duties within an internal control system could have also allowed noncompliance with the compliance requirements and allowed the misuse and mismanagement of federal funds and assets by not having proper oversight, reviews, and approvals over the activities of the programs. Questioned Costs: $5,338 (Known questioned costs) Context: For 5 selections, in a sample of 5 payroll transactions, the School Corporation did not have time and effort logs to support the portion of the employee’s time charged to the grant. The employees’ time was split with a non-federal fund; however, the School Corporation did not have support for the allocation of the time charged to the School Lunch fund. Identification as a repeat finding: No. Recommendation: We recommend management ensure semi-annual certifications are completed for all employees charged to the grant awards at 100% and time and effort logs are maintained for all employees not charged at 100% to support work performed and charged to the grant awards. We recommend management establish a documented review by management of semi-annual certifications and time and effort logs to ensure time charged to grant awards is allowable and allocable based on work performed in accordance with grant requirements. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.
FINDING 2024-003 Information on the federal program: Subject: Child Nutrition Cluster - Internal Controls Federal Agency: Department of Agriculture Federal Program: School Breakfast Program, National School Lunch Program Assistance Listing Number: 10.553, 10.555 Federal Award Numbers and Years (or Other Identifying Numbers): FY2024 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Activities Allowed or Unallowed, Allowable Costs/Cost Principles Audit Finding: Significant Deficiency Criteria: 2 CFR section 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.430 states in part: (1) Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (ii) Be incorporated into the official records of the non-Federal entity; (iii) Reasonably reflect the total activity for which the employee is compensated by the non-Federal entity, (iv) Encompass both federally assisted and all other activities compensated by the non-Federal entity on an integrated basis, but may include the use of subsidiary records as defined in the non-Federal entity's written policy; (v) Comply with the established accounting policies and practices of the non-Federal entity (See paragraph (h)(1)(ii) above for treatment of incidental work for IHEs.); and vii) Support the distribution of the employee's salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. Condition: An effective internal control system was not in place at the School Corporation in order to ensure compliance with requirements related to the grant agreement and the activities allowed or unallowed and allowable costs/cost principle compliance requirements. Cause: The School Corporation's management had not developed a system of internal controls to ensure compliance with the compliance requirements listed above. Effect: The failure to establish an effective internal control system placed the School Corporation at risk of noncompliance with the grant agreement and the compliance requirements. A lack of segregation of duties within an internal control system could have also allowed noncompliance with the compliance requirements and allowed the misuse and mismanagement of federal funds and assets by not having proper oversight, reviews, and approvals over the activities of the programs. Questioned Costs: $5,338 (Known questioned costs) Context: For 5 selections, in a sample of 5 payroll transactions, the School Corporation did not have time and effort logs to support the portion of the employee’s time charged to the grant. The employees’ time was split with a non-federal fund; however, the School Corporation did not have support for the allocation of the time charged to the School Lunch fund. Identification as a repeat finding: No. Recommendation: We recommend management ensure semi-annual certifications are completed for all employees charged to the grant awards at 100% and time and effort logs are maintained for all employees not charged at 100% to support work performed and charged to the grant awards. We recommend management establish a documented review by management of semi-annual certifications and time and effort logs to ensure time charged to grant awards is allowable and allocable based on work performed in accordance with grant requirements. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.
2 CFR § 3474.1 gives regulatory effect to the Department of Education for 2 CFR § 200.430 which states, in part, that costs of compensation are allowable to the extent that they satisfy the specific requirements of this part, and that the total compensation for individual employees is reasonable for the services rendered and conforms to the established written policy of the non-federal entity consistently applied to both Federal and non-Federal activities. In addition, charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; be incorporated into the official records of the non-Federal entity; reasonably reflect the total activity for which the employee is compensated by the non-Federal entity; and support the distribution of the employee’s salary or wages among specific activities or cost objectives if the employee works on more than one Federal award, a Federal award and non-Federal award, an indirect cost activity and a direct cost activity, two or more indirect activities which are allocated using different allocation bases, or an unallowable activity and a direct or indirect cost activity. Service Center Policy 6116 for Time and Effort Reporting indicates the reports should support the distribution of the employee’s salary or wages among specific activities or cost objectives if the employee works on more than one federal award, a Federal award and non-Federal award, an indirect and direct cost activity, two or more indirect activities which are allocated using different allocation bases, or an unallowable activity and a direct or indirect cost activity. The payroll office is responsible for the distribution, collection, and retention of all employee time and effort reports. The Service Center did not follow policy 6116 relating to time and effort resulting in the following errors: • The wages and related benefits for four out of 40 employee payroll checks tested totaling $2,569 were charged to the Special Education Grant Fund without any time and effort documentation. Semi-Annual Certifications, Personnel Activity Reports (PARs), or a Substitute System were not maintained to support the amount of time worked on the grant. Therefore, we consider the wages and related benefits for these employees in the amount of $2,569 to be questioned costs. Failure to maintain the appropriate time and effort documentation could lead to future questioned costs, reduced future federal funding, and the requirement to repay the Ohio Department of Education and Workforce. The Service Center should ensure all employees charging wages and benefits to federal grants maintain the appropriate documentation supporting the time spent on the grant, in accordance with the Service Center’s policy. Appropriate supporting documentation could include semi-annual certifications for employees working solely on a single cost objective or personal activity reports or timesheets with sufficient detail when an employee works on multiple activities.
2 CFR § 3474.1 gives regulatory effect to the Department of Education for 2 CFR § 200.430 which states, in part, that costs of compensation are allowable to the extent that they satisfy the specific requirements of this part, and that the total compensation for individual employees is reasonable for the services rendered and conforms to the established written policy of the non-federal entity consistently applied to both Federal and non-Federal activities. In addition, charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; be incorporated into the official records of the non-Federal entity; reasonably reflect the total activity for which the employee is compensated by the non-Federal entity; and support the distribution of the employee’s salary or wages among specific activities or cost objectives if the employee works on more than one Federal award, a Federal award and non-Federal award, an indirect cost activity and a direct cost activity, two or more indirect activities which are allocated using different allocation bases, or an unallowable activity and a direct or indirect cost activity. Service Center Policy 6116 for Time and Effort Reporting indicates the reports should support the distribution of the employee’s salary or wages among specific activities or cost objectives if the employee works on more than one federal award, a Federal award and non-Federal award, an indirect and direct cost activity, two or more indirect activities which are allocated using different allocation bases, or an unallowable activity and a direct or indirect cost activity. The payroll office is responsible for the distribution, collection, and retention of all employee time and effort reports. The Service Center did not follow policy 6116 relating to time and effort resulting in the following errors: • The wages and related benefits for four out of 40 employee payroll checks tested totaling $2,569 were charged to the Special Education Grant Fund without any time and effort documentation. Semi-Annual Certifications, Personnel Activity Reports (PARs), or a Substitute System were not maintained to support the amount of time worked on the grant. Therefore, we consider the wages and related benefits for these employees in the amount of $2,569 to be questioned costs. Failure to maintain the appropriate time and effort documentation could lead to future questioned costs, reduced future federal funding, and the requirement to repay the Ohio Department of Education and Workforce. The Service Center should ensure all employees charging wages and benefits to federal grants maintain the appropriate documentation supporting the time spent on the grant, in accordance with the Service Center’s policy. Appropriate supporting documentation could include semi-annual certifications for employees working solely on a single cost objective or personal activity reports or timesheets with sufficient detail when an employee works on multiple activities.
Federal Agency: U.S. Department of Health and Human Services Federal Program Name: Immunization Cooperative Agreements Assistance Listing Number: 93.268 Pass-through Agency: Pennsylvania Department of Health Pass-through Number: 4100090652 Award Period: July 1, 2021 - June 30, 2025 Compliance Requirement Affected: Allowable Costs Type of Finding: • Significant Deficiency in Internal Control over Compliance • Other Matters Criteria: 3 CFR Part 200 Subpart E General Provisions for Selected Items of Cost Section 200.430 Compensation – requires charges to federal awards for salaries and wages must be based on records that accurately reflect the work performed. Budget estimates determined before the services are performed alone do not qualify as support for charges to the federal awards. The Chapter’s system of internal controls should include processes to perform periodic after-the-fact reviews of interim charges made to a federal award based on budget estimates. All necessary adjustments must be made so that the final amount charged to the federal award is accurate, allowable, and properly allocated. Condition: During our testing, we noted the Chapter charges fringe benefits to the program based on an estimated allocation on the percentage of salaries as determined in the contract budget. However, we noted the Chapter does not have internal controls in place to provide a review of the actual fringe benefits incurred. Questioned Costs: No questioned costs above the $25,000 threshold have been identified. Context: During our testing, we noted the Chapter charges fringe benefits to the programs based on an estimated allocation on the percentage of salaries as determined in the contract budget. Cause: The Chapter does not have internal controls in place to provide a review of the actual fringe benefits incurred. Effect: Allocated costs that are not appropriately budgeted and invoiced could result in inaccurate reporting and misrepresentation of the program's expenses. Inaccurate reporting of expenses can result in noncompliance with federal regulations, which may lead to the requirement to return funds to the federal agency. Repeat Finding: N/A: Not a repeat finding. Recommendation: We recommend Pennsylvania Chapter, American Academy of Pediatrics establish a process for periodic after-the-fact reviews of interim charges made to federal awards based on budget estimates. Based on the review, management should make any necessary adjustments to the interim charges based on the results of the periodic reviews. This would ensure that the final amount charged to the federal award is accurate, allowable, and properly allocated. Viewed of Responsible Officials and Planned Corrective Actions: Please refer to Pennsylvania Chapter, American Academy of Pediatrics Corrective Action Plan.
Finding 2024-002 – Allowable Costs / Principles & Activities Allowed or Unallowed Federal Agency: U.S. Department of Health and Human Services Federal Program: Block Grants for Substance Use Prevention, Treatment, and Recovery Services AL Number: 93.959 Award Number: 24-05-128 & 6B08TI085827-01M002 Award Year: 2024 Type of Finding: Significant Deficiency in Internal Control over Compliance and Noncompliance Criteria: Per 2 CFR 200.430(g)(1)(i) & (ii), “Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: Be supported by a system of internal control that provides reasonable assurance that the charges are accurate, allowable, and properly allocated and be incorporated into the official records of the recipient or subrecipient.” Condition: During our testing of allowable costs and activities, it was determined that the Company’s internal controls over salaries and wages were not sufficient. Although the Organization maintained copies of employees’ original hiring documents, pay raises that were subsequent to the original hiring, and the related approvals, were not documented or maintained. Additionally, we noted that there is not a formal process to review employee timesheets or the payroll submission process as a whole. Context: There were 40 instances of employees’ salaries and wages tested. The sample consisted of six employees tested for seven pay periods, with one employee tested for five pay periods. For each instance tested, the deficiency in internal controls around payroll costs, as described in the Condition section, applied. Cause: The Organization did not maintain documentation of employee pay raises or the necessary approvals for those pay raises. The Organization’s internal control process around payroll costs does not include review of employee timesheets to ensure that reported time is reasonable and accurate. Effect: Lack of internal controls surrounding payroll costs could potentially lead to improper allocation of payroll costs to the Federal grant. Repeat finding: Not applicable. Recommendation: We recommend the Organization improve it’s internal control processes surrounding payroll costs. Specifically, documenting the approval of pay raises and maintaining that documentation as well as documenting the review and approval of employee timesheets and processing payroll for each pay run. Management’s Response: See Corrective Action Plan.
Finding 2024-002 – Allowable Costs / Principles & Activities Allowed or Unallowed Federal Agency: U.S. Department of Health and Human Services Federal Program: Block Grants for Substance Use Prevention, Treatment, and Recovery Services AL Number: 93.959 Award Number: 24-05-128 & 6B08TI085827-01M002 Award Year: 2024 Type of Finding: Significant Deficiency in Internal Control over Compliance and Noncompliance Criteria: Per 2 CFR 200.430(g)(1)(i) & (ii), “Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: Be supported by a system of internal control that provides reasonable assurance that the charges are accurate, allowable, and properly allocated and be incorporated into the official records of the recipient or subrecipient.” Condition: During our testing of allowable costs and activities, it was determined that the Company’s internal controls over salaries and wages were not sufficient. Although the Organization maintained copies of employees’ original hiring documents, pay raises that were subsequent to the original hiring, and the related approvals, were not documented or maintained. Additionally, we noted that there is not a formal process to review employee timesheets or the payroll submission process as a whole. Context: There were 40 instances of employees’ salaries and wages tested. The sample consisted of six employees tested for seven pay periods, with one employee tested for five pay periods. For each instance tested, the deficiency in internal controls around payroll costs, as described in the Condition section, applied. Cause: The Organization did not maintain documentation of employee pay raises or the necessary approvals for those pay raises. The Organization’s internal control process around payroll costs does not include review of employee timesheets to ensure that reported time is reasonable and accurate. Effect: Lack of internal controls surrounding payroll costs could potentially lead to improper allocation of payroll costs to the Federal grant. Repeat finding: Not applicable. Recommendation: We recommend the Organization improve it’s internal control processes surrounding payroll costs. Specifically, documenting the approval of pay raises and maintaining that documentation as well as documenting the review and approval of employee timesheets and processing payroll for each pay run. Management’s Response: See Corrective Action Plan.
Finding 2024-001: Time Tracking and Reporting (Significant Deficiency) Information on the Federal Program: 93.958 - Block Grants for Community Mental Health Services Criteria or Specific Requirement: According to 2 CFR Section 200.430(i) charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: 1. Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; 2. Be incorporated into the official records of the non-Federal entity; 3. Reasonably reflect the total activity for which the employee is compensated by the non-Federal entity, not exceeding 100% of compensated activities; 4. Encompass Federally-assisted and all other activities compensated by the non-Federal entity on an integrated basis, but may include the use of subsidiary records as defined in the non- Federal entity’s written policy; 5. Comply with the established accounting policies and practices of the non-Federal entity; 6. Support the distribution of the employee’s salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non- Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. 7. Budget estimates (i.e., estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards.” Condition: During our testwork, we determined that the Association did not adequately document employee time spent on the Federal programs versus other programs. Cause: The Association does not require that all employees complete timesheets documenting time spent on the Federal award versus other awards. Effect or Potential Effect: The Association could inadvertently charge time to the Federal award that was not truly spent working on the Federal award. This could result in the Federal government over-paying for salaries associated with the award. Questioned Costs: Undetermined. The allocations of time were ultimately determined based on Management's evaluation of employee level of effort during the year. While the allocation was approved by management, there was degree of subjectivity applied in management's evaluation. Context: We noted that employees selected for testing did not have completed, detailed timesheets to indicate time spent on the Federal awards and other programs. Identification as a Repeat Finding, if Applicable: N/A Recommendation: We recommend that the Association implement formal time tracking policies to require all employees to complete a detailed timesheet in order to track actual time spent on various programs. All timesheets should have evidence of both employee and supervisory approval.
Finding 2024-001: Time Tracking and Reporting (Significant Deficiency) Information on the Federal Program: 93.958 - Block Grants for Community Mental Health Services Criteria or Specific Requirement: According to 2 CFR Section 200.430(i) charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: 1. Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; 2. Be incorporated into the official records of the non-Federal entity; 3. Reasonably reflect the total activity for which the employee is compensated by the non-Federal entity, not exceeding 100% of compensated activities; 4. Encompass Federally-assisted and all other activities compensated by the non-Federal entity on an integrated basis, but may include the use of subsidiary records as defined in the non- Federal entity’s written policy; 5. Comply with the established accounting policies and practices of the non-Federal entity; 6. Support the distribution of the employee’s salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non- Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. 7. Budget estimates (i.e., estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards.” Condition: During our testwork, we determined that the Association did not adequately document employee time spent on the Federal programs versus other programs. Cause: The Association does not require that all employees complete timesheets documenting time spent on the Federal award versus other awards. Effect or Potential Effect: The Association could inadvertently charge time to the Federal award that was not truly spent working on the Federal award. This could result in the Federal government over-paying for salaries associated with the award. Questioned Costs: Undetermined. The allocations of time were ultimately determined based on Management's evaluation of employee level of effort during the year. While the allocation was approved by management, there was degree of subjectivity applied in management's evaluation. Context: We noted that employees selected for testing did not have completed, detailed timesheets to indicate time spent on the Federal awards and other programs. Identification as a Repeat Finding, if Applicable: N/A Recommendation: We recommend that the Association implement formal time tracking policies to require all employees to complete a detailed timesheet in order to track actual time spent on various programs. All timesheets should have evidence of both employee and supervisory approval.
Allowable Activities and Costs Federal Agency: U.S. Department of Health and Human Services Federal Program Name: Health Centers Cluster Assistance Listing Number: 93.224 and 93.527 Federal Award Identification Number: H80CS00824-22 and H80CS00824-23 Award Periods: May 1, 2023 – April 30, 2024, May 1, 2024 – April 30, 2025 Type of Finding: Immaterial noncompliance and significant deficiency in internal control over compliance Criteria: A grantee's system of internal control should include processes to review after-the-fact interim charges made to a federal award based on budget estimates. 45 CFR 75.430(i)(1). In addition, CFR 200.430 indicates costs of compensation are allowable to the extent that they satisfy the specific requirement of determining and supporting the salary and wages based on records that accurately reflect the work performed. Salaries and wages charged to a grant should be tagged/identified by employee to ensure expenses are not counted or charged twice. Condition: During the testing of payroll expenses charged to the grant, it was noted that a formula error resulted in the incorrect calculation of payroll expense for a particular employee. The Organization’s review did not identify that the wages being charged to the grant were inconsistent with the amount actually paid to the identified employee. Questioned Costs: $757. Context: The above condition impacted three (3) of sixty (60) transactions selected for testing, all of which related to the same employee. Cause: The Organization’s process for tracking and aggregating wages charged to the grant was dependent upon a VLOOKUP formula based on the employee’s last name. As a result of there being two employees with the same last name, the formula returned the first such employee from the payroll records. This resulted in the incorrect calculation of payroll expense for the employee selected for testing. Effect: The amount of wages charges to the grant could be different from the actual amount of wages paid to the employee. Repeat Finding: Yes. Recommendation: We recommend the Organization implement a comprehensive and thorough process to review all wages charged to federal and state grant prior to initiating a drawdown request or submitting a reimbursement request to the grantor. As part of this, the Organization should implement a process to review changes to salary and wage information as changes are made or identified.
Allowable Activities and Costs Federal Agency: U.S. Department of Health and Human Services Federal Program Name: Health Centers Cluster Assistance Listing Number: 93.224 and 93.527 Federal Award Identification Number: H80CS00824-22 and H80CS00824-23 Award Periods: May 1, 2023 – April 30, 2024, May 1, 2024 – April 30, 2025 Type of Finding: Immaterial noncompliance and significant deficiency in internal control over compliance Criteria: A grantee's system of internal control should include processes to review after-the-fact interim charges made to a federal award based on budget estimates. 45 CFR 75.430(i)(1). In addition, CFR 200.430 indicates costs of compensation are allowable to the extent that they satisfy the specific requirement of determining and supporting the salary and wages based on records that accurately reflect the work performed. Salaries and wages charged to a grant should be tagged/identified by employee to ensure expenses are not counted or charged twice. Condition: During the testing of payroll expenses charged to the grant, it was noted that a formula error resulted in the incorrect calculation of payroll expense for a particular employee. The Organization’s review did not identify that the wages being charged to the grant were inconsistent with the amount actually paid to the identified employee. Questioned Costs: $757. Context: The above condition impacted three (3) of sixty (60) transactions selected for testing, all of which related to the same employee. Cause: The Organization’s process for tracking and aggregating wages charged to the grant was dependent upon a VLOOKUP formula based on the employee’s last name. As a result of there being two employees with the same last name, the formula returned the first such employee from the payroll records. This resulted in the incorrect calculation of payroll expense for the employee selected for testing. Effect: The amount of wages charges to the grant could be different from the actual amount of wages paid to the employee. Repeat Finding: Yes. Recommendation: We recommend the Organization implement a comprehensive and thorough process to review all wages charged to federal and state grant prior to initiating a drawdown request or submitting a reimbursement request to the grantor. As part of this, the Organization should implement a process to review changes to salary and wage information as changes are made or identified.
2024-005 - Noncompliance with and Weakness in Controls over Federal Research and Development Expenses State Entity: Louisiana State University Health Sciences Center - Shreveport (LSUHSC-S) Award Years: Various Award Numbers: Various Compliance Requirements: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Cash Management Pass-Through Entities: Various Repeat Finding: Yes (Prior Year Finding No. 2023-006) See Schedule of Findings and Questioned Costs for chart/table. Condition: For the sixth consecutive year, LSUHSC-S did not ensure internal controls over documentation of personnel services were operating effectively, and did not ensure compliance with federal guidance regarding cost transfers applicable to the Research and Development (R&D) Cluster. In a non-statistical random sample of 27 out of 2,933 payroll adjusting entries affecting R&D, we noted the following exceptions for 15 adjusting entries, some of which had multiple exceptions: • Seven (26%) adjustments did not have adequate documentation to fully explain how the error occurred and/or the transfer was not accomplished within 90 days of when the error was discovered. • For five (19%) adjustments, LSUHSC-S did not provide sufficient information to determine if the cost transfers were completed timely. • For three (11%) adjustments, LSUHSC-S did not provide sufficient information to verify the new charge was certified by a responsible organizational official. • For three (11%) adjustments, LSUHSC-S did not provide sufficient documentation to determine whether adjustments were allowable per the award, which resulted in questioned costs totaling $2,686. • For twelve (44%) adjustments, LSUHSC-S did not provide sufficient documentation to evidence that expenses were incurred prior to reimbursement and that funds were returned to the federal agency for expenses that were removed from the federal award. We also performed an analysis of interim payroll adjusting journal entries to record cost transfers to and/or from R&D awards. We noted that 465 (20%) out of 2,309 adjusting journal entries were made more than 90 days after the end of the biannual period from the original transactions. The adjustments were made 103 to 430 days after the end of the biannual period. In addition, in a non-statistical random sample of 53 out of 11,272 expense transactions charged to R&D during the fiscal year ending June 30, 2024, we noted the following exceptions for 10 transactions, some of which had multiple exceptions: • Six (11%) time and effort certifications for salary and related benefit expenses tested were completed 92 to 248 days after the end of the biannual period, or LSUHSC-S did not provide sufficient documentation to determine that the certifications were completed timely. • For one (2%) transaction, LSUHSC-S did not provide documentation approving the employee’s salary on the applicable award. • For four (8%) transactions, LSUHSC-S did not provide documentation that indicated expenses were reconciled and approved prior to submitting reimbursement requests. Additionally, for three of these transactions, LSUHSC-S did not provide sufficient support to determine if the expenses were incurred prior to the reimbursement request or if LSUHSC-S minimized the time that elapsed between the transfer of funds from the federal government and LSUHSC-S’s disbursement for federal program purposes Finally, it was noted during our procedures related to requisition transactions that LSUHSC-S lacked proper segregation of duties in the online requisition process. We noted in an analysis of all requisition transactions that are subject to online approvals (14,941 transactions totaling $25,349,749) that 4,916 transactions totaling $7,222,206 (28%) did not have adequate segregation of duties. Of these, 306 transactions totaling $338,679 related to the R&D Cluster. Criteria: 2 CFR 200.430(i)(1)(i) requires that charges to federal awards for salaries and wages must be supported by a system of internal control which provides reasonable assurance the charges are accurate, allowable, and properly allocated. Per 2 CFR 200.430(i)(1)(viii), budget estimates alone do not qualify as support for charges to federal awards, but may be used for interim accounting purposes, provided that the system for establishing the estimates produces reasonable approximations of the activity performed, significant changes in work activity are identified and entered into the records in a timely manner, and the non-federal entity’s system of internal controls includes processes to review after-the-fact interim charges and make necessary adjustments. Per LSUHSC-S’s Time and Effort Certification Policy and Procedures, LSUHSC-S utilizes time and effort certifications to support salary charges to sponsored projects as an after-the-fact certification of effort of all individuals when all or a portion of their salaries are charged to a sponsored project. Based on LSUHSC-S’s policy, time and effort certifications should be completed within approximately 90 days of the end of the biannual period. Management interprets the end of the period to be when the time and effort reports are sent to the departments once the last month of the biannual period is closed in the accounting system. If there is a substantial (five percent or more) difference between the salary charges and the effort actually expended by the individual on projects during the biannual reporting period, a payroll reallocation must be created within 30 days. Per 2 CFR 200.303, the non-federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Per the Standards for Internal Control in the Federal Government, examples of common categories of control activities include accurate and timely recording of transactions. In addition, the National Institutes of Health (NIH) is the grantor for the majority of the LSUHSC-S’s R&D grant awards. Per the NIH Grants Policy Statement §7.5, cost transfers that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. An explanation merely stating that the transfer was made “to correct error" or "to transfer to correct project" is not sufficient. Transfers of costs from one project to another or from one competitive segment to the next solely to cover cost overruns are not allowable. Cause: LSUHSC-S faculty are not completing time and effort certifications timely, which contributes to untimely adjustments for compensation. In addition, LSUHSC-S did not provide sufficient supporting documentation for the auditor to test federal regulations related to cash management for all sample items selected due to an insufficient method for sorting and storing the documentation related to each federal award. Finally, the lack of segregation of duties was caused by LSUHSC-S granting certain employees’ access that allowed for self-approvals. Effect: Untimely certifications and the untimely discovery and correction of errors increases the risk of inaccurate reporting and may result in an inability to complete approved projects within the approved budget and/or period of performance. As a result, LSUHSC-S may have to utilize university funds to complete approved projects. In addition, inadequate controls and noncompliance with federal awards increases the likelihood of disallowed costs, which LSUHSC-S may have to repay to the federal grantor. Recommendation: Management should ensure they have adequate controls over time and effort certifications, purchases, and reimbursement requests. In addition, management should ensure adequate segregation of duties covering approvals of all transaction types. Management’s Response and Corrective Action Plan: Management concurred with the finding and outlined a plan of corrective action (B-47).
2024-005 - Noncompliance with and Weakness in Controls over Federal Research and Development Expenses State Entity: Louisiana State University Health Sciences Center - Shreveport (LSUHSC-S) Award Years: Various Award Numbers: Various Compliance Requirements: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Cash Management Pass-Through Entities: Various Repeat Finding: Yes (Prior Year Finding No. 2023-006) See Schedule of Findings and Questioned Costs for chart/table. Condition: For the sixth consecutive year, LSUHSC-S did not ensure internal controls over documentation of personnel services were operating effectively, and did not ensure compliance with federal guidance regarding cost transfers applicable to the Research and Development (R&D) Cluster. In a non-statistical random sample of 27 out of 2,933 payroll adjusting entries affecting R&D, we noted the following exceptions for 15 adjusting entries, some of which had multiple exceptions: • Seven (26%) adjustments did not have adequate documentation to fully explain how the error occurred and/or the transfer was not accomplished within 90 days of when the error was discovered. • For five (19%) adjustments, LSUHSC-S did not provide sufficient information to determine if the cost transfers were completed timely. • For three (11%) adjustments, LSUHSC-S did not provide sufficient information to verify the new charge was certified by a responsible organizational official. • For three (11%) adjustments, LSUHSC-S did not provide sufficient documentation to determine whether adjustments were allowable per the award, which resulted in questioned costs totaling $2,686. • For twelve (44%) adjustments, LSUHSC-S did not provide sufficient documentation to evidence that expenses were incurred prior to reimbursement and that funds were returned to the federal agency for expenses that were removed from the federal award. We also performed an analysis of interim payroll adjusting journal entries to record cost transfers to and/or from R&D awards. We noted that 465 (20%) out of 2,309 adjusting journal entries were made more than 90 days after the end of the biannual period from the original transactions. The adjustments were made 103 to 430 days after the end of the biannual period. In addition, in a non-statistical random sample of 53 out of 11,272 expense transactions charged to R&D during the fiscal year ending June 30, 2024, we noted the following exceptions for 10 transactions, some of which had multiple exceptions: • Six (11%) time and effort certifications for salary and related benefit expenses tested were completed 92 to 248 days after the end of the biannual period, or LSUHSC-S did not provide sufficient documentation to determine that the certifications were completed timely. • For one (2%) transaction, LSUHSC-S did not provide documentation approving the employee’s salary on the applicable award. • For four (8%) transactions, LSUHSC-S did not provide documentation that indicated expenses were reconciled and approved prior to submitting reimbursement requests. Additionally, for three of these transactions, LSUHSC-S did not provide sufficient support to determine if the expenses were incurred prior to the reimbursement request or if LSUHSC-S minimized the time that elapsed between the transfer of funds from the federal government and LSUHSC-S’s disbursement for federal program purposes Finally, it was noted during our procedures related to requisition transactions that LSUHSC-S lacked proper segregation of duties in the online requisition process. We noted in an analysis of all requisition transactions that are subject to online approvals (14,941 transactions totaling $25,349,749) that 4,916 transactions totaling $7,222,206 (28%) did not have adequate segregation of duties. Of these, 306 transactions totaling $338,679 related to the R&D Cluster. Criteria: 2 CFR 200.430(i)(1)(i) requires that charges to federal awards for salaries and wages must be supported by a system of internal control which provides reasonable assurance the charges are accurate, allowable, and properly allocated. Per 2 CFR 200.430(i)(1)(viii), budget estimates alone do not qualify as support for charges to federal awards, but may be used for interim accounting purposes, provided that the system for establishing the estimates produces reasonable approximations of the activity performed, significant changes in work activity are identified and entered into the records in a timely manner, and the non-federal entity’s system of internal controls includes processes to review after-the-fact interim charges and make necessary adjustments. Per LSUHSC-S’s Time and Effort Certification Policy and Procedures, LSUHSC-S utilizes time and effort certifications to support salary charges to sponsored projects as an after-the-fact certification of effort of all individuals when all or a portion of their salaries are charged to a sponsored project. Based on LSUHSC-S’s policy, time and effort certifications should be completed within approximately 90 days of the end of the biannual period. Management interprets the end of the period to be when the time and effort reports are sent to the departments once the last month of the biannual period is closed in the accounting system. If there is a substantial (five percent or more) difference between the salary charges and the effort actually expended by the individual on projects during the biannual reporting period, a payroll reallocation must be created within 30 days. Per 2 CFR 200.303, the non-federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Per the Standards for Internal Control in the Federal Government, examples of common categories of control activities include accurate and timely recording of transactions. In addition, the National Institutes of Health (NIH) is the grantor for the majority of the LSUHSC-S’s R&D grant awards. Per the NIH Grants Policy Statement §7.5, cost transfers that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. An explanation merely stating that the transfer was made “to correct error" or "to transfer to correct project" is not sufficient. Transfers of costs from one project to another or from one competitive segment to the next solely to cover cost overruns are not allowable. Cause: LSUHSC-S faculty are not completing time and effort certifications timely, which contributes to untimely adjustments for compensation. In addition, LSUHSC-S did not provide sufficient supporting documentation for the auditor to test federal regulations related to cash management for all sample items selected due to an insufficient method for sorting and storing the documentation related to each federal award. Finally, the lack of segregation of duties was caused by LSUHSC-S granting certain employees’ access that allowed for self-approvals. Effect: Untimely certifications and the untimely discovery and correction of errors increases the risk of inaccurate reporting and may result in an inability to complete approved projects within the approved budget and/or period of performance. As a result, LSUHSC-S may have to utilize university funds to complete approved projects. In addition, inadequate controls and noncompliance with federal awards increases the likelihood of disallowed costs, which LSUHSC-S may have to repay to the federal grantor. Recommendation: Management should ensure they have adequate controls over time and effort certifications, purchases, and reimbursement requests. In addition, management should ensure adequate segregation of duties covering approvals of all transaction types. Management’s Response and Corrective Action Plan: Management concurred with the finding and outlined a plan of corrective action (B-47).
2024-006 - Control Weakness and Noncompliance with Personnel Expenses Charged to Federal Awards State Entity: University of Louisiana at Lafayette (UL Lafayette) Award Years: 2020, 2021, 2022 Award Numbers: 1R01MH125395, 2046460, R37AI094595 Compliance Requirements: Allowable Costs/Cost Principles; Special Tests and Provisions Pass-Through Entity: Northwestern University Repeat Finding: Yes (Prior Year Finding No. 2023-007) See Schedule of Findings and Questioned Costs for chart/table. Condition: For the fourth consecutive year, the University of Louisiana at Lafayette (UL Lafayette) did not have adequate controls in place to ensure personnel expenses charged to federal Research and Development (R&D) awards accurately reflected work performed. From a population of 14,024 payroll and non-payroll expenses charged to R&D grants for the fiscal year ending June 30, 2024, a non-statistical sample of 25 transactions were tested for compliance with allowable costs and cost principles requirements. For three (12%) of the payroll transactions, UL Lafayette was unable to provide documentation to show that personnel-related expenses totaling $18,707 were supported by time and effort certifications to ensure the accuracy of budget estimates charged to federal awards as required by federal regulations. Additionally, UL Lafayette did not perform time and effort certifications for the period January 1, 2024, through June 30, 2024. Because there is no after-the-fact review to ensure the accuracy of personnel costs and efforts charged to the awards, UL Lafayette could not ensure compliance with the requirements of special tests and provisions related to key personnel effort. Criteria: 2 CFR 200.430(i) specifies the documentation standards for personnel expenses. In order to be allowable, charges to federal awards for personnel expenses must be based on records that accurately reflect the work performed and must be supported by a system of internal control, which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Budget estimates alone do not qualify as support for charges to federal awards, but can be used for interim accounting purposes provided that internal controls include an after-the fact review to confirm the accuracy of final amounts charged to federal awards. Prior approval requirements related to key personnel effort are contained in 2 CFR 200.308(c) and within grant terms and conditions. A reduction of 25% or greater in time devoted to the project from key personnel requires prior approval, as does disengagement of key personnel from the project for three or more months. Cause: UL Lafayette noted in their prior-year corrective action that certifications for employees charging time to federal awards would be required annually. Annual certifications are not sufficient to timely detect changes in key personnel effort and ensure prior approvals are obtained when applicable. Furthermore, UL Lafayette noted that the next effort reporting cycle would cover July 1, 2023, through December 31, 2023. The time certification period only covered half of the audit period. As a result, time and effort certifications were not completed by employees on the latter half of the audit period to support that the charges to federal awards for salaries and wages were based on records that accurately reflect the work performed during this period. Effect: Inadequate controls related to federal documentation standards for personnel expenses could result in noncompliance with federal allowable costs and cost principles, as well as noncompliance with special tests and provisions related to key personnel effort. Recommendation: Management should strengthen internal controls to ensure that personnel expenses charged to the federal awards are supported by a system of internal control, which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Additionally, Management should revise the Time & Effort Certification policy and/or implement alternative controls designed to ensure compliance with Special Tests and Provisions requirements. Management should monitor changes in effort for key personnel and ensure that prior written approval is obtained from the federal grantor for changes that exceed the thresholds set in federal regulations. Management’s Response and Corrective Action Plan: Management partially concurred with the finding and provided a corrective action plan (B-60).
2024-005 - Noncompliance with and Weakness in Controls over Federal Research and Development Expenses State Entity: Louisiana State University Health Sciences Center - Shreveport (LSUHSC-S) Award Years: Various Award Numbers: Various Compliance Requirements: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Cash Management Pass-Through Entities: Various Repeat Finding: Yes (Prior Year Finding No. 2023-006) See Schedule of Findings and Questioned Costs for chart/table. Condition: For the sixth consecutive year, LSUHSC-S did not ensure internal controls over documentation of personnel services were operating effectively, and did not ensure compliance with federal guidance regarding cost transfers applicable to the Research and Development (R&D) Cluster. In a non-statistical random sample of 27 out of 2,933 payroll adjusting entries affecting R&D, we noted the following exceptions for 15 adjusting entries, some of which had multiple exceptions: • Seven (26%) adjustments did not have adequate documentation to fully explain how the error occurred and/or the transfer was not accomplished within 90 days of when the error was discovered. • For five (19%) adjustments, LSUHSC-S did not provide sufficient information to determine if the cost transfers were completed timely. • For three (11%) adjustments, LSUHSC-S did not provide sufficient information to verify the new charge was certified by a responsible organizational official. • For three (11%) adjustments, LSUHSC-S did not provide sufficient documentation to determine whether adjustments were allowable per the award, which resulted in questioned costs totaling $2,686. • For twelve (44%) adjustments, LSUHSC-S did not provide sufficient documentation to evidence that expenses were incurred prior to reimbursement and that funds were returned to the federal agency for expenses that were removed from the federal award. We also performed an analysis of interim payroll adjusting journal entries to record cost transfers to and/or from R&D awards. We noted that 465 (20%) out of 2,309 adjusting journal entries were made more than 90 days after the end of the biannual period from the original transactions. The adjustments were made 103 to 430 days after the end of the biannual period. In addition, in a non-statistical random sample of 53 out of 11,272 expense transactions charged to R&D during the fiscal year ending June 30, 2024, we noted the following exceptions for 10 transactions, some of which had multiple exceptions: • Six (11%) time and effort certifications for salary and related benefit expenses tested were completed 92 to 248 days after the end of the biannual period, or LSUHSC-S did not provide sufficient documentation to determine that the certifications were completed timely. • For one (2%) transaction, LSUHSC-S did not provide documentation approving the employee’s salary on the applicable award. • For four (8%) transactions, LSUHSC-S did not provide documentation that indicated expenses were reconciled and approved prior to submitting reimbursement requests. Additionally, for three of these transactions, LSUHSC-S did not provide sufficient support to determine if the expenses were incurred prior to the reimbursement request or if LSUHSC-S minimized the time that elapsed between the transfer of funds from the federal government and LSUHSC-S’s disbursement for federal program purposes Finally, it was noted during our procedures related to requisition transactions that LSUHSC-S lacked proper segregation of duties in the online requisition process. We noted in an analysis of all requisition transactions that are subject to online approvals (14,941 transactions totaling $25,349,749) that 4,916 transactions totaling $7,222,206 (28%) did not have adequate segregation of duties. Of these, 306 transactions totaling $338,679 related to the R&D Cluster. Criteria: 2 CFR 200.430(i)(1)(i) requires that charges to federal awards for salaries and wages must be supported by a system of internal control which provides reasonable assurance the charges are accurate, allowable, and properly allocated. Per 2 CFR 200.430(i)(1)(viii), budget estimates alone do not qualify as support for charges to federal awards, but may be used for interim accounting purposes, provided that the system for establishing the estimates produces reasonable approximations of the activity performed, significant changes in work activity are identified and entered into the records in a timely manner, and the non-federal entity’s system of internal controls includes processes to review after-the-fact interim charges and make necessary adjustments. Per LSUHSC-S’s Time and Effort Certification Policy and Procedures, LSUHSC-S utilizes time and effort certifications to support salary charges to sponsored projects as an after-the-fact certification of effort of all individuals when all or a portion of their salaries are charged to a sponsored project. Based on LSUHSC-S’s policy, time and effort certifications should be completed within approximately 90 days of the end of the biannual period. Management interprets the end of the period to be when the time and effort reports are sent to the departments once the last month of the biannual period is closed in the accounting system. If there is a substantial (five percent or more) difference between the salary charges and the effort actually expended by the individual on projects during the biannual reporting period, a payroll reallocation must be created within 30 days. Per 2 CFR 200.303, the non-federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Per the Standards for Internal Control in the Federal Government, examples of common categories of control activities include accurate and timely recording of transactions. In addition, the National Institutes of Health (NIH) is the grantor for the majority of the LSUHSC-S’s R&D grant awards. Per the NIH Grants Policy Statement §7.5, cost transfers that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. An explanation merely stating that the transfer was made “to correct error" or "to transfer to correct project" is not sufficient. Transfers of costs from one project to another or from one competitive segment to the next solely to cover cost overruns are not allowable. Cause: LSUHSC-S faculty are not completing time and effort certifications timely, which contributes to untimely adjustments for compensation. In addition, LSUHSC-S did not provide sufficient supporting documentation for the auditor to test federal regulations related to cash management for all sample items selected due to an insufficient method for sorting and storing the documentation related to each federal award. Finally, the lack of segregation of duties was caused by LSUHSC-S granting certain employees’ access that allowed for self-approvals. Effect: Untimely certifications and the untimely discovery and correction of errors increases the risk of inaccurate reporting and may result in an inability to complete approved projects within the approved budget and/or period of performance. As a result, LSUHSC-S may have to utilize university funds to complete approved projects. In addition, inadequate controls and noncompliance with federal awards increases the likelihood of disallowed costs, which LSUHSC-S may have to repay to the federal grantor. Recommendation: Management should ensure they have adequate controls over time and effort certifications, purchases, and reimbursement requests. In addition, management should ensure adequate segregation of duties covering approvals of all transaction types. Management’s Response and Corrective Action Plan: Management concurred with the finding and outlined a plan of corrective action (B-47).
2024-005 - Noncompliance with and Weakness in Controls over Federal Research and Development Expenses State Entity: Louisiana State University Health Sciences Center - Shreveport (LSUHSC-S) Award Years: Various Award Numbers: Various Compliance Requirements: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Cash Management Pass-Through Entities: Various Repeat Finding: Yes (Prior Year Finding No. 2023-006) See Schedule of Findings and Questioned Costs for chart/table. Condition: For the sixth consecutive year, LSUHSC-S did not ensure internal controls over documentation of personnel services were operating effectively, and did not ensure compliance with federal guidance regarding cost transfers applicable to the Research and Development (R&D) Cluster. In a non-statistical random sample of 27 out of 2,933 payroll adjusting entries affecting R&D, we noted the following exceptions for 15 adjusting entries, some of which had multiple exceptions: • Seven (26%) adjustments did not have adequate documentation to fully explain how the error occurred and/or the transfer was not accomplished within 90 days of when the error was discovered. • For five (19%) adjustments, LSUHSC-S did not provide sufficient information to determine if the cost transfers were completed timely. • For three (11%) adjustments, LSUHSC-S did not provide sufficient information to verify the new charge was certified by a responsible organizational official. • For three (11%) adjustments, LSUHSC-S did not provide sufficient documentation to determine whether adjustments were allowable per the award, which resulted in questioned costs totaling $2,686. • For twelve (44%) adjustments, LSUHSC-S did not provide sufficient documentation to evidence that expenses were incurred prior to reimbursement and that funds were returned to the federal agency for expenses that were removed from the federal award. We also performed an analysis of interim payroll adjusting journal entries to record cost transfers to and/or from R&D awards. We noted that 465 (20%) out of 2,309 adjusting journal entries were made more than 90 days after the end of the biannual period from the original transactions. The adjustments were made 103 to 430 days after the end of the biannual period. In addition, in a non-statistical random sample of 53 out of 11,272 expense transactions charged to R&D during the fiscal year ending June 30, 2024, we noted the following exceptions for 10 transactions, some of which had multiple exceptions: • Six (11%) time and effort certifications for salary and related benefit expenses tested were completed 92 to 248 days after the end of the biannual period, or LSUHSC-S did not provide sufficient documentation to determine that the certifications were completed timely. • For one (2%) transaction, LSUHSC-S did not provide documentation approving the employee’s salary on the applicable award. • For four (8%) transactions, LSUHSC-S did not provide documentation that indicated expenses were reconciled and approved prior to submitting reimbursement requests. Additionally, for three of these transactions, LSUHSC-S did not provide sufficient support to determine if the expenses were incurred prior to the reimbursement request or if LSUHSC-S minimized the time that elapsed between the transfer of funds from the federal government and LSUHSC-S’s disbursement for federal program purposes Finally, it was noted during our procedures related to requisition transactions that LSUHSC-S lacked proper segregation of duties in the online requisition process. We noted in an analysis of all requisition transactions that are subject to online approvals (14,941 transactions totaling $25,349,749) that 4,916 transactions totaling $7,222,206 (28%) did not have adequate segregation of duties. Of these, 306 transactions totaling $338,679 related to the R&D Cluster. Criteria: 2 CFR 200.430(i)(1)(i) requires that charges to federal awards for salaries and wages must be supported by a system of internal control which provides reasonable assurance the charges are accurate, allowable, and properly allocated. Per 2 CFR 200.430(i)(1)(viii), budget estimates alone do not qualify as support for charges to federal awards, but may be used for interim accounting purposes, provided that the system for establishing the estimates produces reasonable approximations of the activity performed, significant changes in work activity are identified and entered into the records in a timely manner, and the non-federal entity’s system of internal controls includes processes to review after-the-fact interim charges and make necessary adjustments. Per LSUHSC-S’s Time and Effort Certification Policy and Procedures, LSUHSC-S utilizes time and effort certifications to support salary charges to sponsored projects as an after-the-fact certification of effort of all individuals when all or a portion of their salaries are charged to a sponsored project. Based on LSUHSC-S’s policy, time and effort certifications should be completed within approximately 90 days of the end of the biannual period. Management interprets the end of the period to be when the time and effort reports are sent to the departments once the last month of the biannual period is closed in the accounting system. If there is a substantial (five percent or more) difference between the salary charges and the effort actually expended by the individual on projects during the biannual reporting period, a payroll reallocation must be created within 30 days. Per 2 CFR 200.303, the non-federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Per the Standards for Internal Control in the Federal Government, examples of common categories of control activities include accurate and timely recording of transactions. In addition, the National Institutes of Health (NIH) is the grantor for the majority of the LSUHSC-S’s R&D grant awards. Per the NIH Grants Policy Statement §7.5, cost transfers that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. An explanation merely stating that the transfer was made “to correct error" or "to transfer to correct project" is not sufficient. Transfers of costs from one project to another or from one competitive segment to the next solely to cover cost overruns are not allowable. Cause: LSUHSC-S faculty are not completing time and effort certifications timely, which contributes to untimely adjustments for compensation. In addition, LSUHSC-S did not provide sufficient supporting documentation for the auditor to test federal regulations related to cash management for all sample items selected due to an insufficient method for sorting and storing the documentation related to each federal award. Finally, the lack of segregation of duties was caused by LSUHSC-S granting certain employees’ access that allowed for self-approvals. Effect: Untimely certifications and the untimely discovery and correction of errors increases the risk of inaccurate reporting and may result in an inability to complete approved projects within the approved budget and/or period of performance. As a result, LSUHSC-S may have to utilize university funds to complete approved projects. In addition, inadequate controls and noncompliance with federal awards increases the likelihood of disallowed costs, which LSUHSC-S may have to repay to the federal grantor. Recommendation: Management should ensure they have adequate controls over time and effort certifications, purchases, and reimbursement requests. In addition, management should ensure adequate segregation of duties covering approvals of all transaction types. Management’s Response and Corrective Action Plan: Management concurred with the finding and outlined a plan of corrective action (B-47).
2024-006 - Control Weakness and Noncompliance with Personnel Expenses Charged to Federal Awards State Entity: University of Louisiana at Lafayette (UL Lafayette) Award Years: 2020, 2021, 2022 Award Numbers: 1R01MH125395, 2046460, R37AI094595 Compliance Requirements: Allowable Costs/Cost Principles; Special Tests and Provisions Pass-Through Entity: Northwestern University Repeat Finding: Yes (Prior Year Finding No. 2023-007) See Schedule of Findings and Questioned Costs for chart/table. Condition: For the fourth consecutive year, the University of Louisiana at Lafayette (UL Lafayette) did not have adequate controls in place to ensure personnel expenses charged to federal Research and Development (R&D) awards accurately reflected work performed. From a population of 14,024 payroll and non-payroll expenses charged to R&D grants for the fiscal year ending June 30, 2024, a non-statistical sample of 25 transactions were tested for compliance with allowable costs and cost principles requirements. For three (12%) of the payroll transactions, UL Lafayette was unable to provide documentation to show that personnel-related expenses totaling $18,707 were supported by time and effort certifications to ensure the accuracy of budget estimates charged to federal awards as required by federal regulations. Additionally, UL Lafayette did not perform time and effort certifications for the period January 1, 2024, through June 30, 2024. Because there is no after-the-fact review to ensure the accuracy of personnel costs and efforts charged to the awards, UL Lafayette could not ensure compliance with the requirements of special tests and provisions related to key personnel effort. Criteria: 2 CFR 200.430(i) specifies the documentation standards for personnel expenses. In order to be allowable, charges to federal awards for personnel expenses must be based on records that accurately reflect the work performed and must be supported by a system of internal control, which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Budget estimates alone do not qualify as support for charges to federal awards, but can be used for interim accounting purposes provided that internal controls include an after-the fact review to confirm the accuracy of final amounts charged to federal awards. Prior approval requirements related to key personnel effort are contained in 2 CFR 200.308(c) and within grant terms and conditions. A reduction of 25% or greater in time devoted to the project from key personnel requires prior approval, as does disengagement of key personnel from the project for three or more months. Cause: UL Lafayette noted in their prior-year corrective action that certifications for employees charging time to federal awards would be required annually. Annual certifications are not sufficient to timely detect changes in key personnel effort and ensure prior approvals are obtained when applicable. Furthermore, UL Lafayette noted that the next effort reporting cycle would cover July 1, 2023, through December 31, 2023. The time certification period only covered half of the audit period. As a result, time and effort certifications were not completed by employees on the latter half of the audit period to support that the charges to federal awards for salaries and wages were based on records that accurately reflect the work performed during this period. Effect: Inadequate controls related to federal documentation standards for personnel expenses could result in noncompliance with federal allowable costs and cost principles, as well as noncompliance with special tests and provisions related to key personnel effort. Recommendation: Management should strengthen internal controls to ensure that personnel expenses charged to the federal awards are supported by a system of internal control, which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Additionally, Management should revise the Time & Effort Certification policy and/or implement alternative controls designed to ensure compliance with Special Tests and Provisions requirements. Management should monitor changes in effort for key personnel and ensure that prior written approval is obtained from the federal grantor for changes that exceed the thresholds set in federal regulations. Management’s Response and Corrective Action Plan: Management partially concurred with the finding and provided a corrective action plan (B-60).
2024-005 - Noncompliance with and Weakness in Controls over Federal Research and Development Expenses State Entity: Louisiana State University Health Sciences Center - Shreveport (LSUHSC-S) Award Years: Various Award Numbers: Various Compliance Requirements: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Cash Management Pass-Through Entities: Various Repeat Finding: Yes (Prior Year Finding No. 2023-006) See Schedule of Findings and Questioned Costs for chart/table. Condition: For the sixth consecutive year, LSUHSC-S did not ensure internal controls over documentation of personnel services were operating effectively, and did not ensure compliance with federal guidance regarding cost transfers applicable to the Research and Development (R&D) Cluster. In a non-statistical random sample of 27 out of 2,933 payroll adjusting entries affecting R&D, we noted the following exceptions for 15 adjusting entries, some of which had multiple exceptions: • Seven (26%) adjustments did not have adequate documentation to fully explain how the error occurred and/or the transfer was not accomplished within 90 days of when the error was discovered. • For five (19%) adjustments, LSUHSC-S did not provide sufficient information to determine if the cost transfers were completed timely. • For three (11%) adjustments, LSUHSC-S did not provide sufficient information to verify the new charge was certified by a responsible organizational official. • For three (11%) adjustments, LSUHSC-S did not provide sufficient documentation to determine whether adjustments were allowable per the award, which resulted in questioned costs totaling $2,686. • For twelve (44%) adjustments, LSUHSC-S did not provide sufficient documentation to evidence that expenses were incurred prior to reimbursement and that funds were returned to the federal agency for expenses that were removed from the federal award. We also performed an analysis of interim payroll adjusting journal entries to record cost transfers to and/or from R&D awards. We noted that 465 (20%) out of 2,309 adjusting journal entries were made more than 90 days after the end of the biannual period from the original transactions. The adjustments were made 103 to 430 days after the end of the biannual period. In addition, in a non-statistical random sample of 53 out of 11,272 expense transactions charged to R&D during the fiscal year ending June 30, 2024, we noted the following exceptions for 10 transactions, some of which had multiple exceptions: • Six (11%) time and effort certifications for salary and related benefit expenses tested were completed 92 to 248 days after the end of the biannual period, or LSUHSC-S did not provide sufficient documentation to determine that the certifications were completed timely. • For one (2%) transaction, LSUHSC-S did not provide documentation approving the employee’s salary on the applicable award. • For four (8%) transactions, LSUHSC-S did not provide documentation that indicated expenses were reconciled and approved prior to submitting reimbursement requests. Additionally, for three of these transactions, LSUHSC-S did not provide sufficient support to determine if the expenses were incurred prior to the reimbursement request or if LSUHSC-S minimized the time that elapsed between the transfer of funds from the federal government and LSUHSC-S’s disbursement for federal program purposes Finally, it was noted during our procedures related to requisition transactions that LSUHSC-S lacked proper segregation of duties in the online requisition process. We noted in an analysis of all requisition transactions that are subject to online approvals (14,941 transactions totaling $25,349,749) that 4,916 transactions totaling $7,222,206 (28%) did not have adequate segregation of duties. Of these, 306 transactions totaling $338,679 related to the R&D Cluster. Criteria: 2 CFR 200.430(i)(1)(i) requires that charges to federal awards for salaries and wages must be supported by a system of internal control which provides reasonable assurance the charges are accurate, allowable, and properly allocated. Per 2 CFR 200.430(i)(1)(viii), budget estimates alone do not qualify as support for charges to federal awards, but may be used for interim accounting purposes, provided that the system for establishing the estimates produces reasonable approximations of the activity performed, significant changes in work activity are identified and entered into the records in a timely manner, and the non-federal entity’s system of internal controls includes processes to review after-the-fact interim charges and make necessary adjustments. Per LSUHSC-S’s Time and Effort Certification Policy and Procedures, LSUHSC-S utilizes time and effort certifications to support salary charges to sponsored projects as an after-the-fact certification of effort of all individuals when all or a portion of their salaries are charged to a sponsored project. Based on LSUHSC-S’s policy, time and effort certifications should be completed within approximately 90 days of the end of the biannual period. Management interprets the end of the period to be when the time and effort reports are sent to the departments once the last month of the biannual period is closed in the accounting system. If there is a substantial (five percent or more) difference between the salary charges and the effort actually expended by the individual on projects during the biannual reporting period, a payroll reallocation must be created within 30 days. Per 2 CFR 200.303, the non-federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Per the Standards for Internal Control in the Federal Government, examples of common categories of control activities include accurate and timely recording of transactions. In addition, the National Institutes of Health (NIH) is the grantor for the majority of the LSUHSC-S’s R&D grant awards. Per the NIH Grants Policy Statement §7.5, cost transfers that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. An explanation merely stating that the transfer was made “to correct error" or "to transfer to correct project" is not sufficient. Transfers of costs from one project to another or from one competitive segment to the next solely to cover cost overruns are not allowable. Cause: LSUHSC-S faculty are not completing time and effort certifications timely, which contributes to untimely adjustments for compensation. In addition, LSUHSC-S did not provide sufficient supporting documentation for the auditor to test federal regulations related to cash management for all sample items selected due to an insufficient method for sorting and storing the documentation related to each federal award. Finally, the lack of segregation of duties was caused by LSUHSC-S granting certain employees’ access that allowed for self-approvals. Effect: Untimely certifications and the untimely discovery and correction of errors increases the risk of inaccurate reporting and may result in an inability to complete approved projects within the approved budget and/or period of performance. As a result, LSUHSC-S may have to utilize university funds to complete approved projects. In addition, inadequate controls and noncompliance with federal awards increases the likelihood of disallowed costs, which LSUHSC-S may have to repay to the federal grantor. Recommendation: Management should ensure they have adequate controls over time and effort certifications, purchases, and reimbursement requests. In addition, management should ensure adequate segregation of duties covering approvals of all transaction types. Management’s Response and Corrective Action Plan: Management concurred with the finding and outlined a plan of corrective action (B-47).
2024-005 - Noncompliance with and Weakness in Controls over Federal Research and Development Expenses State Entity: Louisiana State University Health Sciences Center - Shreveport (LSUHSC-S) Award Years: Various Award Numbers: Various Compliance Requirements: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Cash Management Pass-Through Entities: Various Repeat Finding: Yes (Prior Year Finding No. 2023-006) See Schedule of Findings and Questioned Costs for chart/table. Condition: For the sixth consecutive year, LSUHSC-S did not ensure internal controls over documentation of personnel services were operating effectively, and did not ensure compliance with federal guidance regarding cost transfers applicable to the Research and Development (R&D) Cluster. In a non-statistical random sample of 27 out of 2,933 payroll adjusting entries affecting R&D, we noted the following exceptions for 15 adjusting entries, some of which had multiple exceptions: • Seven (26%) adjustments did not have adequate documentation to fully explain how the error occurred and/or the transfer was not accomplished within 90 days of when the error was discovered. • For five (19%) adjustments, LSUHSC-S did not provide sufficient information to determine if the cost transfers were completed timely. • For three (11%) adjustments, LSUHSC-S did not provide sufficient information to verify the new charge was certified by a responsible organizational official. • For three (11%) adjustments, LSUHSC-S did not provide sufficient documentation to determine whether adjustments were allowable per the award, which resulted in questioned costs totaling $2,686. • For twelve (44%) adjustments, LSUHSC-S did not provide sufficient documentation to evidence that expenses were incurred prior to reimbursement and that funds were returned to the federal agency for expenses that were removed from the federal award. We also performed an analysis of interim payroll adjusting journal entries to record cost transfers to and/or from R&D awards. We noted that 465 (20%) out of 2,309 adjusting journal entries were made more than 90 days after the end of the biannual period from the original transactions. The adjustments were made 103 to 430 days after the end of the biannual period. In addition, in a non-statistical random sample of 53 out of 11,272 expense transactions charged to R&D during the fiscal year ending June 30, 2024, we noted the following exceptions for 10 transactions, some of which had multiple exceptions: • Six (11%) time and effort certifications for salary and related benefit expenses tested were completed 92 to 248 days after the end of the biannual period, or LSUHSC-S did not provide sufficient documentation to determine that the certifications were completed timely. • For one (2%) transaction, LSUHSC-S did not provide documentation approving the employee’s salary on the applicable award. • For four (8%) transactions, LSUHSC-S did not provide documentation that indicated expenses were reconciled and approved prior to submitting reimbursement requests. Additionally, for three of these transactions, LSUHSC-S did not provide sufficient support to determine if the expenses were incurred prior to the reimbursement request or if LSUHSC-S minimized the time that elapsed between the transfer of funds from the federal government and LSUHSC-S’s disbursement for federal program purposes Finally, it was noted during our procedures related to requisition transactions that LSUHSC-S lacked proper segregation of duties in the online requisition process. We noted in an analysis of all requisition transactions that are subject to online approvals (14,941 transactions totaling $25,349,749) that 4,916 transactions totaling $7,222,206 (28%) did not have adequate segregation of duties. Of these, 306 transactions totaling $338,679 related to the R&D Cluster. Criteria: 2 CFR 200.430(i)(1)(i) requires that charges to federal awards for salaries and wages must be supported by a system of internal control which provides reasonable assurance the charges are accurate, allowable, and properly allocated. Per 2 CFR 200.430(i)(1)(viii), budget estimates alone do not qualify as support for charges to federal awards, but may be used for interim accounting purposes, provided that the system for establishing the estimates produces reasonable approximations of the activity performed, significant changes in work activity are identified and entered into the records in a timely manner, and the non-federal entity’s system of internal controls includes processes to review after-the-fact interim charges and make necessary adjustments. Per LSUHSC-S’s Time and Effort Certification Policy and Procedures, LSUHSC-S utilizes time and effort certifications to support salary charges to sponsored projects as an after-the-fact certification of effort of all individuals when all or a portion of their salaries are charged to a sponsored project. Based on LSUHSC-S’s policy, time and effort certifications should be completed within approximately 90 days of the end of the biannual period. Management interprets the end of the period to be when the time and effort reports are sent to the departments once the last month of the biannual period is closed in the accounting system. If there is a substantial (five percent or more) difference between the salary charges and the effort actually expended by the individual on projects during the biannual reporting period, a payroll reallocation must be created within 30 days. Per 2 CFR 200.303, the non-federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Per the Standards for Internal Control in the Federal Government, examples of common categories of control activities include accurate and timely recording of transactions. In addition, the National Institutes of Health (NIH) is the grantor for the majority of the LSUHSC-S’s R&D grant awards. Per the NIH Grants Policy Statement §7.5, cost transfers that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. An explanation merely stating that the transfer was made “to correct error" or "to transfer to correct project" is not sufficient. Transfers of costs from one project to another or from one competitive segment to the next solely to cover cost overruns are not allowable. Cause: LSUHSC-S faculty are not completing time and effort certifications timely, which contributes to untimely adjustments for compensation. In addition, LSUHSC-S did not provide sufficient supporting documentation for the auditor to test federal regulations related to cash management for all sample items selected due to an insufficient method for sorting and storing the documentation related to each federal award. Finally, the lack of segregation of duties was caused by LSUHSC-S granting certain employees’ access that allowed for self-approvals. Effect: Untimely certifications and the untimely discovery and correction of errors increases the risk of inaccurate reporting and may result in an inability to complete approved projects within the approved budget and/or period of performance. As a result, LSUHSC-S may have to utilize university funds to complete approved projects. In addition, inadequate controls and noncompliance with federal awards increases the likelihood of disallowed costs, which LSUHSC-S may have to repay to the federal grantor. Recommendation: Management should ensure they have adequate controls over time and effort certifications, purchases, and reimbursement requests. In addition, management should ensure adequate segregation of duties covering approvals of all transaction types. Management’s Response and Corrective Action Plan: Management concurred with the finding and outlined a plan of corrective action (B-47).
2024-005 - Noncompliance with and Weakness in Controls over Federal Research and Development Expenses State Entity: Louisiana State University Health Sciences Center - Shreveport (LSUHSC-S) Award Years: Various Award Numbers: Various Compliance Requirements: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Cash Management Pass-Through Entities: Various Repeat Finding: Yes (Prior Year Finding No. 2023-006) See Schedule of Findings and Questioned Costs for chart/table. Condition: For the sixth consecutive year, LSUHSC-S did not ensure internal controls over documentation of personnel services were operating effectively, and did not ensure compliance with federal guidance regarding cost transfers applicable to the Research and Development (R&D) Cluster. In a non-statistical random sample of 27 out of 2,933 payroll adjusting entries affecting R&D, we noted the following exceptions for 15 adjusting entries, some of which had multiple exceptions: • Seven (26%) adjustments did not have adequate documentation to fully explain how the error occurred and/or the transfer was not accomplished within 90 days of when the error was discovered. • For five (19%) adjustments, LSUHSC-S did not provide sufficient information to determine if the cost transfers were completed timely. • For three (11%) adjustments, LSUHSC-S did not provide sufficient information to verify the new charge was certified by a responsible organizational official. • For three (11%) adjustments, LSUHSC-S did not provide sufficient documentation to determine whether adjustments were allowable per the award, which resulted in questioned costs totaling $2,686. • For twelve (44%) adjustments, LSUHSC-S did not provide sufficient documentation to evidence that expenses were incurred prior to reimbursement and that funds were returned to the federal agency for expenses that were removed from the federal award. We also performed an analysis of interim payroll adjusting journal entries to record cost transfers to and/or from R&D awards. We noted that 465 (20%) out of 2,309 adjusting journal entries were made more than 90 days after the end of the biannual period from the original transactions. The adjustments were made 103 to 430 days after the end of the biannual period. In addition, in a non-statistical random sample of 53 out of 11,272 expense transactions charged to R&D during the fiscal year ending June 30, 2024, we noted the following exceptions for 10 transactions, some of which had multiple exceptions: • Six (11%) time and effort certifications for salary and related benefit expenses tested were completed 92 to 248 days after the end of the biannual period, or LSUHSC-S did not provide sufficient documentation to determine that the certifications were completed timely. • For one (2%) transaction, LSUHSC-S did not provide documentation approving the employee’s salary on the applicable award. • For four (8%) transactions, LSUHSC-S did not provide documentation that indicated expenses were reconciled and approved prior to submitting reimbursement requests. Additionally, for three of these transactions, LSUHSC-S did not provide sufficient support to determine if the expenses were incurred prior to the reimbursement request or if LSUHSC-S minimized the time that elapsed between the transfer of funds from the federal government and LSUHSC-S’s disbursement for federal program purposes Finally, it was noted during our procedures related to requisition transactions that LSUHSC-S lacked proper segregation of duties in the online requisition process. We noted in an analysis of all requisition transactions that are subject to online approvals (14,941 transactions totaling $25,349,749) that 4,916 transactions totaling $7,222,206 (28%) did not have adequate segregation of duties. Of these, 306 transactions totaling $338,679 related to the R&D Cluster. Criteria: 2 CFR 200.430(i)(1)(i) requires that charges to federal awards for salaries and wages must be supported by a system of internal control which provides reasonable assurance the charges are accurate, allowable, and properly allocated. Per 2 CFR 200.430(i)(1)(viii), budget estimates alone do not qualify as support for charges to federal awards, but may be used for interim accounting purposes, provided that the system for establishing the estimates produces reasonable approximations of the activity performed, significant changes in work activity are identified and entered into the records in a timely manner, and the non-federal entity’s system of internal controls includes processes to review after-the-fact interim charges and make necessary adjustments. Per LSUHSC-S’s Time and Effort Certification Policy and Procedures, LSUHSC-S utilizes time and effort certifications to support salary charges to sponsored projects as an after-the-fact certification of effort of all individuals when all or a portion of their salaries are charged to a sponsored project. Based on LSUHSC-S’s policy, time and effort certifications should be completed within approximately 90 days of the end of the biannual period. Management interprets the end of the period to be when the time and effort reports are sent to the departments once the last month of the biannual period is closed in the accounting system. If there is a substantial (five percent or more) difference between the salary charges and the effort actually expended by the individual on projects during the biannual reporting period, a payroll reallocation must be created within 30 days. Per 2 CFR 200.303, the non-federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Per the Standards for Internal Control in the Federal Government, examples of common categories of control activities include accurate and timely recording of transactions. In addition, the National Institutes of Health (NIH) is the grantor for the majority of the LSUHSC-S’s R&D grant awards. Per the NIH Grants Policy Statement §7.5, cost transfers that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. An explanation merely stating that the transfer was made “to correct error" or "to transfer to correct project" is not sufficient. Transfers of costs from one project to another or from one competitive segment to the next solely to cover cost overruns are not allowable. Cause: LSUHSC-S faculty are not completing time and effort certifications timely, which contributes to untimely adjustments for compensation. In addition, LSUHSC-S did not provide sufficient supporting documentation for the auditor to test federal regulations related to cash management for all sample items selected due to an insufficient method for sorting and storing the documentation related to each federal award. Finally, the lack of segregation of duties was caused by LSUHSC-S granting certain employees’ access that allowed for self-approvals. Effect: Untimely certifications and the untimely discovery and correction of errors increases the risk of inaccurate reporting and may result in an inability to complete approved projects within the approved budget and/or period of performance. As a result, LSUHSC-S may have to utilize university funds to complete approved projects. In addition, inadequate controls and noncompliance with federal awards increases the likelihood of disallowed costs, which LSUHSC-S may have to repay to the federal grantor. Recommendation: Management should ensure they have adequate controls over time and effort certifications, purchases, and reimbursement requests. In addition, management should ensure adequate segregation of duties covering approvals of all transaction types. Management’s Response and Corrective Action Plan: Management concurred with the finding and outlined a plan of corrective action (B-47).
2024-005 - Noncompliance with and Weakness in Controls over Federal Research and Development Expenses State Entity: Louisiana State University Health Sciences Center - Shreveport (LSUHSC-S) Award Years: Various Award Numbers: Various Compliance Requirements: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Cash Management Pass-Through Entities: Various Repeat Finding: Yes (Prior Year Finding No. 2023-006) See Schedule of Findings and Questioned Costs for chart/table. Condition: For the sixth consecutive year, LSUHSC-S did not ensure internal controls over documentation of personnel services were operating effectively, and did not ensure compliance with federal guidance regarding cost transfers applicable to the Research and Development (R&D) Cluster. In a non-statistical random sample of 27 out of 2,933 payroll adjusting entries affecting R&D, we noted the following exceptions for 15 adjusting entries, some of which had multiple exceptions: • Seven (26%) adjustments did not have adequate documentation to fully explain how the error occurred and/or the transfer was not accomplished within 90 days of when the error was discovered. • For five (19%) adjustments, LSUHSC-S did not provide sufficient information to determine if the cost transfers were completed timely. • For three (11%) adjustments, LSUHSC-S did not provide sufficient information to verify the new charge was certified by a responsible organizational official. • For three (11%) adjustments, LSUHSC-S did not provide sufficient documentation to determine whether adjustments were allowable per the award, which resulted in questioned costs totaling $2,686. • For twelve (44%) adjustments, LSUHSC-S did not provide sufficient documentation to evidence that expenses were incurred prior to reimbursement and that funds were returned to the federal agency for expenses that were removed from the federal award. We also performed an analysis of interim payroll adjusting journal entries to record cost transfers to and/or from R&D awards. We noted that 465 (20%) out of 2,309 adjusting journal entries were made more than 90 days after the end of the biannual period from the original transactions. The adjustments were made 103 to 430 days after the end of the biannual period. In addition, in a non-statistical random sample of 53 out of 11,272 expense transactions charged to R&D during the fiscal year ending June 30, 2024, we noted the following exceptions for 10 transactions, some of which had multiple exceptions: • Six (11%) time and effort certifications for salary and related benefit expenses tested were completed 92 to 248 days after the end of the biannual period, or LSUHSC-S did not provide sufficient documentation to determine that the certifications were completed timely. • For one (2%) transaction, LSUHSC-S did not provide documentation approving the employee’s salary on the applicable award. • For four (8%) transactions, LSUHSC-S did not provide documentation that indicated expenses were reconciled and approved prior to submitting reimbursement requests. Additionally, for three of these transactions, LSUHSC-S did not provide sufficient support to determine if the expenses were incurred prior to the reimbursement request or if LSUHSC-S minimized the time that elapsed between the transfer of funds from the federal government and LSUHSC-S’s disbursement for federal program purposes Finally, it was noted during our procedures related to requisition transactions that LSUHSC-S lacked proper segregation of duties in the online requisition process. We noted in an analysis of all requisition transactions that are subject to online approvals (14,941 transactions totaling $25,349,749) that 4,916 transactions totaling $7,222,206 (28%) did not have adequate segregation of duties. Of these, 306 transactions totaling $338,679 related to the R&D Cluster. Criteria: 2 CFR 200.430(i)(1)(i) requires that charges to federal awards for salaries and wages must be supported by a system of internal control which provides reasonable assurance the charges are accurate, allowable, and properly allocated. Per 2 CFR 200.430(i)(1)(viii), budget estimates alone do not qualify as support for charges to federal awards, but may be used for interim accounting purposes, provided that the system for establishing the estimates produces reasonable approximations of the activity performed, significant changes in work activity are identified and entered into the records in a timely manner, and the non-federal entity’s system of internal controls includes processes to review after-the-fact interim charges and make necessary adjustments. Per LSUHSC-S’s Time and Effort Certification Policy and Procedures, LSUHSC-S utilizes time and effort certifications to support salary charges to sponsored projects as an after-the-fact certification of effort of all individuals when all or a portion of their salaries are charged to a sponsored project. Based on LSUHSC-S’s policy, time and effort certifications should be completed within approximately 90 days of the end of the biannual period. Management interprets the end of the period to be when the time and effort reports are sent to the departments once the last month of the biannual period is closed in the accounting system. If there is a substantial (five percent or more) difference between the salary charges and the effort actually expended by the individual on projects during the biannual reporting period, a payroll reallocation must be created within 30 days. Per 2 CFR 200.303, the non-federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Per the Standards for Internal Control in the Federal Government, examples of common categories of control activities include accurate and timely recording of transactions. In addition, the National Institutes of Health (NIH) is the grantor for the majority of the LSUHSC-S’s R&D grant awards. Per the NIH Grants Policy Statement §7.5, cost transfers that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. An explanation merely stating that the transfer was made “to correct error" or "to transfer to correct project" is not sufficient. Transfers of costs from one project to another or from one competitive segment to the next solely to cover cost overruns are not allowable. Cause: LSUHSC-S faculty are not completing time and effort certifications timely, which contributes to untimely adjustments for compensation. In addition, LSUHSC-S did not provide sufficient supporting documentation for the auditor to test federal regulations related to cash management for all sample items selected due to an insufficient method for sorting and storing the documentation related to each federal award. Finally, the lack of segregation of duties was caused by LSUHSC-S granting certain employees’ access that allowed for self-approvals. Effect: Untimely certifications and the untimely discovery and correction of errors increases the risk of inaccurate reporting and may result in an inability to complete approved projects within the approved budget and/or period of performance. As a result, LSUHSC-S may have to utilize university funds to complete approved projects. In addition, inadequate controls and noncompliance with federal awards increases the likelihood of disallowed costs, which LSUHSC-S may have to repay to the federal grantor. Recommendation: Management should ensure they have adequate controls over time and effort certifications, purchases, and reimbursement requests. In addition, management should ensure adequate segregation of duties covering approvals of all transaction types. Management’s Response and Corrective Action Plan: Management concurred with the finding and outlined a plan of corrective action (B-47).
2024-005 - Noncompliance with and Weakness in Controls over Federal Research and Development Expenses State Entity: Louisiana State University Health Sciences Center - Shreveport (LSUHSC-S) Award Years: Various Award Numbers: Various Compliance Requirements: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Cash Management Pass-Through Entities: Various Repeat Finding: Yes (Prior Year Finding No. 2023-006) See Schedule of Findings and Questioned Costs for chart/table. Condition: For the sixth consecutive year, LSUHSC-S did not ensure internal controls over documentation of personnel services were operating effectively, and did not ensure compliance with federal guidance regarding cost transfers applicable to the Research and Development (R&D) Cluster. In a non-statistical random sample of 27 out of 2,933 payroll adjusting entries affecting R&D, we noted the following exceptions for 15 adjusting entries, some of which had multiple exceptions: • Seven (26%) adjustments did not have adequate documentation to fully explain how the error occurred and/or the transfer was not accomplished within 90 days of when the error was discovered. • For five (19%) adjustments, LSUHSC-S did not provide sufficient information to determine if the cost transfers were completed timely. • For three (11%) adjustments, LSUHSC-S did not provide sufficient information to verify the new charge was certified by a responsible organizational official. • For three (11%) adjustments, LSUHSC-S did not provide sufficient documentation to determine whether adjustments were allowable per the award, which resulted in questioned costs totaling $2,686. • For twelve (44%) adjustments, LSUHSC-S did not provide sufficient documentation to evidence that expenses were incurred prior to reimbursement and that funds were returned to the federal agency for expenses that were removed from the federal award. We also performed an analysis of interim payroll adjusting journal entries to record cost transfers to and/or from R&D awards. We noted that 465 (20%) out of 2,309 adjusting journal entries were made more than 90 days after the end of the biannual period from the original transactions. The adjustments were made 103 to 430 days after the end of the biannual period. In addition, in a non-statistical random sample of 53 out of 11,272 expense transactions charged to R&D during the fiscal year ending June 30, 2024, we noted the following exceptions for 10 transactions, some of which had multiple exceptions: • Six (11%) time and effort certifications for salary and related benefit expenses tested were completed 92 to 248 days after the end of the biannual period, or LSUHSC-S did not provide sufficient documentation to determine that the certifications were completed timely. • For one (2%) transaction, LSUHSC-S did not provide documentation approving the employee’s salary on the applicable award. • For four (8%) transactions, LSUHSC-S did not provide documentation that indicated expenses were reconciled and approved prior to submitting reimbursement requests. Additionally, for three of these transactions, LSUHSC-S did not provide sufficient support to determine if the expenses were incurred prior to the reimbursement request or if LSUHSC-S minimized the time that elapsed between the transfer of funds from the federal government and LSUHSC-S’s disbursement for federal program purposes Finally, it was noted during our procedures related to requisition transactions that LSUHSC-S lacked proper segregation of duties in the online requisition process. We noted in an analysis of all requisition transactions that are subject to online approvals (14,941 transactions totaling $25,349,749) that 4,916 transactions totaling $7,222,206 (28%) did not have adequate segregation of duties. Of these, 306 transactions totaling $338,679 related to the R&D Cluster. Criteria: 2 CFR 200.430(i)(1)(i) requires that charges to federal awards for salaries and wages must be supported by a system of internal control which provides reasonable assurance the charges are accurate, allowable, and properly allocated. Per 2 CFR 200.430(i)(1)(viii), budget estimates alone do not qualify as support for charges to federal awards, but may be used for interim accounting purposes, provided that the system for establishing the estimates produces reasonable approximations of the activity performed, significant changes in work activity are identified and entered into the records in a timely manner, and the non-federal entity’s system of internal controls includes processes to review after-the-fact interim charges and make necessary adjustments. Per LSUHSC-S’s Time and Effort Certification Policy and Procedures, LSUHSC-S utilizes time and effort certifications to support salary charges to sponsored projects as an after-the-fact certification of effort of all individuals when all or a portion of their salaries are charged to a sponsored project. Based on LSUHSC-S’s policy, time and effort certifications should be completed within approximately 90 days of the end of the biannual period. Management interprets the end of the period to be when the time and effort reports are sent to the departments once the last month of the biannual period is closed in the accounting system. If there is a substantial (five percent or more) difference between the salary charges and the effort actually expended by the individual on projects during the biannual reporting period, a payroll reallocation must be created within 30 days. Per 2 CFR 200.303, the non-federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Per the Standards for Internal Control in the Federal Government, examples of common categories of control activities include accurate and timely recording of transactions. In addition, the National Institutes of Health (NIH) is the grantor for the majority of the LSUHSC-S’s R&D grant awards. Per the NIH Grants Policy Statement §7.5, cost transfers that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. An explanation merely stating that the transfer was made “to correct error" or "to transfer to correct project" is not sufficient. Transfers of costs from one project to another or from one competitive segment to the next solely to cover cost overruns are not allowable. Cause: LSUHSC-S faculty are not completing time and effort certifications timely, which contributes to untimely adjustments for compensation. In addition, LSUHSC-S did not provide sufficient supporting documentation for the auditor to test federal regulations related to cash management for all sample items selected due to an insufficient method for sorting and storing the documentation related to each federal award. Finally, the lack of segregation of duties was caused by LSUHSC-S granting certain employees’ access that allowed for self-approvals. Effect: Untimely certifications and the untimely discovery and correction of errors increases the risk of inaccurate reporting and may result in an inability to complete approved projects within the approved budget and/or period of performance. As a result, LSUHSC-S may have to utilize university funds to complete approved projects. In addition, inadequate controls and noncompliance with federal awards increases the likelihood of disallowed costs, which LSUHSC-S may have to repay to the federal grantor. Recommendation: Management should ensure they have adequate controls over time and effort certifications, purchases, and reimbursement requests. In addition, management should ensure adequate segregation of duties covering approvals of all transaction types. Management’s Response and Corrective Action Plan: Management concurred with the finding and outlined a plan of corrective action (B-47).
2024-005 - Noncompliance with and Weakness in Controls over Federal Research and Development Expenses State Entity: Louisiana State University Health Sciences Center - Shreveport (LSUHSC-S) Award Years: Various Award Numbers: Various Compliance Requirements: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Cash Management Pass-Through Entities: Various Repeat Finding: Yes (Prior Year Finding No. 2023-006) See Schedule of Findings and Questioned Costs for chart/table. Condition: For the sixth consecutive year, LSUHSC-S did not ensure internal controls over documentation of personnel services were operating effectively, and did not ensure compliance with federal guidance regarding cost transfers applicable to the Research and Development (R&D) Cluster. In a non-statistical random sample of 27 out of 2,933 payroll adjusting entries affecting R&D, we noted the following exceptions for 15 adjusting entries, some of which had multiple exceptions: • Seven (26%) adjustments did not have adequate documentation to fully explain how the error occurred and/or the transfer was not accomplished within 90 days of when the error was discovered. • For five (19%) adjustments, LSUHSC-S did not provide sufficient information to determine if the cost transfers were completed timely. • For three (11%) adjustments, LSUHSC-S did not provide sufficient information to verify the new charge was certified by a responsible organizational official. • For three (11%) adjustments, LSUHSC-S did not provide sufficient documentation to determine whether adjustments were allowable per the award, which resulted in questioned costs totaling $2,686. • For twelve (44%) adjustments, LSUHSC-S did not provide sufficient documentation to evidence that expenses were incurred prior to reimbursement and that funds were returned to the federal agency for expenses that were removed from the federal award. We also performed an analysis of interim payroll adjusting journal entries to record cost transfers to and/or from R&D awards. We noted that 465 (20%) out of 2,309 adjusting journal entries were made more than 90 days after the end of the biannual period from the original transactions. The adjustments were made 103 to 430 days after the end of the biannual period. In addition, in a non-statistical random sample of 53 out of 11,272 expense transactions charged to R&D during the fiscal year ending June 30, 2024, we noted the following exceptions for 10 transactions, some of which had multiple exceptions: • Six (11%) time and effort certifications for salary and related benefit expenses tested were completed 92 to 248 days after the end of the biannual period, or LSUHSC-S did not provide sufficient documentation to determine that the certifications were completed timely. • For one (2%) transaction, LSUHSC-S did not provide documentation approving the employee’s salary on the applicable award. • For four (8%) transactions, LSUHSC-S did not provide documentation that indicated expenses were reconciled and approved prior to submitting reimbursement requests. Additionally, for three of these transactions, LSUHSC-S did not provide sufficient support to determine if the expenses were incurred prior to the reimbursement request or if LSUHSC-S minimized the time that elapsed between the transfer of funds from the federal government and LSUHSC-S’s disbursement for federal program purposes Finally, it was noted during our procedures related to requisition transactions that LSUHSC-S lacked proper segregation of duties in the online requisition process. We noted in an analysis of all requisition transactions that are subject to online approvals (14,941 transactions totaling $25,349,749) that 4,916 transactions totaling $7,222,206 (28%) did not have adequate segregation of duties. Of these, 306 transactions totaling $338,679 related to the R&D Cluster. Criteria: 2 CFR 200.430(i)(1)(i) requires that charges to federal awards for salaries and wages must be supported by a system of internal control which provides reasonable assurance the charges are accurate, allowable, and properly allocated. Per 2 CFR 200.430(i)(1)(viii), budget estimates alone do not qualify as support for charges to federal awards, but may be used for interim accounting purposes, provided that the system for establishing the estimates produces reasonable approximations of the activity performed, significant changes in work activity are identified and entered into the records in a timely manner, and the non-federal entity’s system of internal controls includes processes to review after-the-fact interim charges and make necessary adjustments. Per LSUHSC-S’s Time and Effort Certification Policy and Procedures, LSUHSC-S utilizes time and effort certifications to support salary charges to sponsored projects as an after-the-fact certification of effort of all individuals when all or a portion of their salaries are charged to a sponsored project. Based on LSUHSC-S’s policy, time and effort certifications should be completed within approximately 90 days of the end of the biannual period. Management interprets the end of the period to be when the time and effort reports are sent to the departments once the last month of the biannual period is closed in the accounting system. If there is a substantial (five percent or more) difference between the salary charges and the effort actually expended by the individual on projects during the biannual reporting period, a payroll reallocation must be created within 30 days. Per 2 CFR 200.303, the non-federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Per the Standards for Internal Control in the Federal Government, examples of common categories of control activities include accurate and timely recording of transactions. In addition, the National Institutes of Health (NIH) is the grantor for the majority of the LSUHSC-S’s R&D grant awards. Per the NIH Grants Policy Statement §7.5, cost transfers that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. An explanation merely stating that the transfer was made “to correct error" or "to transfer to correct project" is not sufficient. Transfers of costs from one project to another or from one competitive segment to the next solely to cover cost overruns are not allowable. Cause: LSUHSC-S faculty are not completing time and effort certifications timely, which contributes to untimely adjustments for compensation. In addition, LSUHSC-S did not provide sufficient supporting documentation for the auditor to test federal regulations related to cash management for all sample items selected due to an insufficient method for sorting and storing the documentation related to each federal award. Finally, the lack of segregation of duties was caused by LSUHSC-S granting certain employees’ access that allowed for self-approvals. Effect: Untimely certifications and the untimely discovery and correction of errors increases the risk of inaccurate reporting and may result in an inability to complete approved projects within the approved budget and/or period of performance. As a result, LSUHSC-S may have to utilize university funds to complete approved projects. In addition, inadequate controls and noncompliance with federal awards increases the likelihood of disallowed costs, which LSUHSC-S may have to repay to the federal grantor. Recommendation: Management should ensure they have adequate controls over time and effort certifications, purchases, and reimbursement requests. In addition, management should ensure adequate segregation of duties covering approvals of all transaction types. Management’s Response and Corrective Action Plan: Management concurred with the finding and outlined a plan of corrective action (B-47).
2024-005 - Noncompliance with and Weakness in Controls over Federal Research and Development Expenses State Entity: Louisiana State University Health Sciences Center - Shreveport (LSUHSC-S) Award Years: Various Award Numbers: Various Compliance Requirements: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Cash Management Pass-Through Entities: Various Repeat Finding: Yes (Prior Year Finding No. 2023-006) See Schedule of Findings and Questioned Costs for chart/table. Condition: For the sixth consecutive year, LSUHSC-S did not ensure internal controls over documentation of personnel services were operating effectively, and did not ensure compliance with federal guidance regarding cost transfers applicable to the Research and Development (R&D) Cluster. In a non-statistical random sample of 27 out of 2,933 payroll adjusting entries affecting R&D, we noted the following exceptions for 15 adjusting entries, some of which had multiple exceptions: • Seven (26%) adjustments did not have adequate documentation to fully explain how the error occurred and/or the transfer was not accomplished within 90 days of when the error was discovered. • For five (19%) adjustments, LSUHSC-S did not provide sufficient information to determine if the cost transfers were completed timely. • For three (11%) adjustments, LSUHSC-S did not provide sufficient information to verify the new charge was certified by a responsible organizational official. • For three (11%) adjustments, LSUHSC-S did not provide sufficient documentation to determine whether adjustments were allowable per the award, which resulted in questioned costs totaling $2,686. • For twelve (44%) adjustments, LSUHSC-S did not provide sufficient documentation to evidence that expenses were incurred prior to reimbursement and that funds were returned to the federal agency for expenses that were removed from the federal award. We also performed an analysis of interim payroll adjusting journal entries to record cost transfers to and/or from R&D awards. We noted that 465 (20%) out of 2,309 adjusting journal entries were made more than 90 days after the end of the biannual period from the original transactions. The adjustments were made 103 to 430 days after the end of the biannual period. In addition, in a non-statistical random sample of 53 out of 11,272 expense transactions charged to R&D during the fiscal year ending June 30, 2024, we noted the following exceptions for 10 transactions, some of which had multiple exceptions: • Six (11%) time and effort certifications for salary and related benefit expenses tested were completed 92 to 248 days after the end of the biannual period, or LSUHSC-S did not provide sufficient documentation to determine that the certifications were completed timely. • For one (2%) transaction, LSUHSC-S did not provide documentation approving the employee’s salary on the applicable award. • For four (8%) transactions, LSUHSC-S did not provide documentation that indicated expenses were reconciled and approved prior to submitting reimbursement requests. Additionally, for three of these transactions, LSUHSC-S did not provide sufficient support to determine if the expenses were incurred prior to the reimbursement request or if LSUHSC-S minimized the time that elapsed between the transfer of funds from the federal government and LSUHSC-S’s disbursement for federal program purposes Finally, it was noted during our procedures related to requisition transactions that LSUHSC-S lacked proper segregation of duties in the online requisition process. We noted in an analysis of all requisition transactions that are subject to online approvals (14,941 transactions totaling $25,349,749) that 4,916 transactions totaling $7,222,206 (28%) did not have adequate segregation of duties. Of these, 306 transactions totaling $338,679 related to the R&D Cluster. Criteria: 2 CFR 200.430(i)(1)(i) requires that charges to federal awards for salaries and wages must be supported by a system of internal control which provides reasonable assurance the charges are accurate, allowable, and properly allocated. Per 2 CFR 200.430(i)(1)(viii), budget estimates alone do not qualify as support for charges to federal awards, but may be used for interim accounting purposes, provided that the system for establishing the estimates produces reasonable approximations of the activity performed, significant changes in work activity are identified and entered into the records in a timely manner, and the non-federal entity’s system of internal controls includes processes to review after-the-fact interim charges and make necessary adjustments. Per LSUHSC-S’s Time and Effort Certification Policy and Procedures, LSUHSC-S utilizes time and effort certifications to support salary charges to sponsored projects as an after-the-fact certification of effort of all individuals when all or a portion of their salaries are charged to a sponsored project. Based on LSUHSC-S’s policy, time and effort certifications should be completed within approximately 90 days of the end of the biannual period. Management interprets the end of the period to be when the time and effort reports are sent to the departments once the last month of the biannual period is closed in the accounting system. If there is a substantial (five percent or more) difference between the salary charges and the effort actually expended by the individual on projects during the biannual reporting period, a payroll reallocation must be created within 30 days. Per 2 CFR 200.303, the non-federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Per the Standards for Internal Control in the Federal Government, examples of common categories of control activities include accurate and timely recording of transactions. In addition, the National Institutes of Health (NIH) is the grantor for the majority of the LSUHSC-S’s R&D grant awards. Per the NIH Grants Policy Statement §7.5, cost transfers that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. An explanation merely stating that the transfer was made “to correct error" or "to transfer to correct project" is not sufficient. Transfers of costs from one project to another or from one competitive segment to the next solely to cover cost overruns are not allowable. Cause: LSUHSC-S faculty are not completing time and effort certifications timely, which contributes to untimely adjustments for compensation. In addition, LSUHSC-S did not provide sufficient supporting documentation for the auditor to test federal regulations related to cash management for all sample items selected due to an insufficient method for sorting and storing the documentation related to each federal award. Finally, the lack of segregation of duties was caused by LSUHSC-S granting certain employees’ access that allowed for self-approvals. Effect: Untimely certifications and the untimely discovery and correction of errors increases the risk of inaccurate reporting and may result in an inability to complete approved projects within the approved budget and/or period of performance. As a result, LSUHSC-S may have to utilize university funds to complete approved projects. In addition, inadequate controls and noncompliance with federal awards increases the likelihood of disallowed costs, which LSUHSC-S may have to repay to the federal grantor. Recommendation: Management should ensure they have adequate controls over time and effort certifications, purchases, and reimbursement requests. In addition, management should ensure adequate segregation of duties covering approvals of all transaction types. Management’s Response and Corrective Action Plan: Management concurred with the finding and outlined a plan of corrective action (B-47).
2024-005 - Noncompliance with and Weakness in Controls over Federal Research and Development Expenses State Entity: Louisiana State University Health Sciences Center - Shreveport (LSUHSC-S) Award Years: Various Award Numbers: Various Compliance Requirements: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Cash Management Pass-Through Entities: Various Repeat Finding: Yes (Prior Year Finding No. 2023-006) See Schedule of Findings and Questioned Costs for chart/table. Condition: For the sixth consecutive year, LSUHSC-S did not ensure internal controls over documentation of personnel services were operating effectively, and did not ensure compliance with federal guidance regarding cost transfers applicable to the Research and Development (R&D) Cluster. In a non-statistical random sample of 27 out of 2,933 payroll adjusting entries affecting R&D, we noted the following exceptions for 15 adjusting entries, some of which had multiple exceptions: • Seven (26%) adjustments did not have adequate documentation to fully explain how the error occurred and/or the transfer was not accomplished within 90 days of when the error was discovered. • For five (19%) adjustments, LSUHSC-S did not provide sufficient information to determine if the cost transfers were completed timely. • For three (11%) adjustments, LSUHSC-S did not provide sufficient information to verify the new charge was certified by a responsible organizational official. • For three (11%) adjustments, LSUHSC-S did not provide sufficient documentation to determine whether adjustments were allowable per the award, which resulted in questioned costs totaling $2,686. • For twelve (44%) adjustments, LSUHSC-S did not provide sufficient documentation to evidence that expenses were incurred prior to reimbursement and that funds were returned to the federal agency for expenses that were removed from the federal award. We also performed an analysis of interim payroll adjusting journal entries to record cost transfers to and/or from R&D awards. We noted that 465 (20%) out of 2,309 adjusting journal entries were made more than 90 days after the end of the biannual period from the original transactions. The adjustments were made 103 to 430 days after the end of the biannual period. In addition, in a non-statistical random sample of 53 out of 11,272 expense transactions charged to R&D during the fiscal year ending June 30, 2024, we noted the following exceptions for 10 transactions, some of which had multiple exceptions: • Six (11%) time and effort certifications for salary and related benefit expenses tested were completed 92 to 248 days after the end of the biannual period, or LSUHSC-S did not provide sufficient documentation to determine that the certifications were completed timely. • For one (2%) transaction, LSUHSC-S did not provide documentation approving the employee’s salary on the applicable award. • For four (8%) transactions, LSUHSC-S did not provide documentation that indicated expenses were reconciled and approved prior to submitting reimbursement requests. Additionally, for three of these transactions, LSUHSC-S did not provide sufficient support to determine if the expenses were incurred prior to the reimbursement request or if LSUHSC-S minimized the time that elapsed between the transfer of funds from the federal government and LSUHSC-S’s disbursement for federal program purposes Finally, it was noted during our procedures related to requisition transactions that LSUHSC-S lacked proper segregation of duties in the online requisition process. We noted in an analysis of all requisition transactions that are subject to online approvals (14,941 transactions totaling $25,349,749) that 4,916 transactions totaling $7,222,206 (28%) did not have adequate segregation of duties. Of these, 306 transactions totaling $338,679 related to the R&D Cluster. Criteria: 2 CFR 200.430(i)(1)(i) requires that charges to federal awards for salaries and wages must be supported by a system of internal control which provides reasonable assurance the charges are accurate, allowable, and properly allocated. Per 2 CFR 200.430(i)(1)(viii), budget estimates alone do not qualify as support for charges to federal awards, but may be used for interim accounting purposes, provided that the system for establishing the estimates produces reasonable approximations of the activity performed, significant changes in work activity are identified and entered into the records in a timely manner, and the non-federal entity’s system of internal controls includes processes to review after-the-fact interim charges and make necessary adjustments. Per LSUHSC-S’s Time and Effort Certification Policy and Procedures, LSUHSC-S utilizes time and effort certifications to support salary charges to sponsored projects as an after-the-fact certification of effort of all individuals when all or a portion of their salaries are charged to a sponsored project. Based on LSUHSC-S’s policy, time and effort certifications should be completed within approximately 90 days of the end of the biannual period. Management interprets the end of the period to be when the time and effort reports are sent to the departments once the last month of the biannual period is closed in the accounting system. If there is a substantial (five percent or more) difference between the salary charges and the effort actually expended by the individual on projects during the biannual reporting period, a payroll reallocation must be created within 30 days. Per 2 CFR 200.303, the non-federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Per the Standards for Internal Control in the Federal Government, examples of common categories of control activities include accurate and timely recording of transactions. In addition, the National Institutes of Health (NIH) is the grantor for the majority of the LSUHSC-S’s R&D grant awards. Per the NIH Grants Policy Statement §7.5, cost transfers that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. An explanation merely stating that the transfer was made “to correct error" or "to transfer to correct project" is not sufficient. Transfers of costs from one project to another or from one competitive segment to the next solely to cover cost overruns are not allowable. Cause: LSUHSC-S faculty are not completing time and effort certifications timely, which contributes to untimely adjustments for compensation. In addition, LSUHSC-S did not provide sufficient supporting documentation for the auditor to test federal regulations related to cash management for all sample items selected due to an insufficient method for sorting and storing the documentation related to each federal award. Finally, the lack of segregation of duties was caused by LSUHSC-S granting certain employees’ access that allowed for self-approvals. Effect: Untimely certifications and the untimely discovery and correction of errors increases the risk of inaccurate reporting and may result in an inability to complete approved projects within the approved budget and/or period of performance. As a result, LSUHSC-S may have to utilize university funds to complete approved projects. In addition, inadequate controls and noncompliance with federal awards increases the likelihood of disallowed costs, which LSUHSC-S may have to repay to the federal grantor. Recommendation: Management should ensure they have adequate controls over time and effort certifications, purchases, and reimbursement requests. In addition, management should ensure adequate segregation of duties covering approvals of all transaction types. Management’s Response and Corrective Action Plan: Management concurred with the finding and outlined a plan of corrective action (B-47).
2024-005 - Noncompliance with and Weakness in Controls over Federal Research and Development Expenses State Entity: Louisiana State University Health Sciences Center - Shreveport (LSUHSC-S) Award Years: Various Award Numbers: Various Compliance Requirements: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Cash Management Pass-Through Entities: Various Repeat Finding: Yes (Prior Year Finding No. 2023-006) See Schedule of Findings and Questioned Costs for chart/table. Condition: For the sixth consecutive year, LSUHSC-S did not ensure internal controls over documentation of personnel services were operating effectively, and did not ensure compliance with federal guidance regarding cost transfers applicable to the Research and Development (R&D) Cluster. In a non-statistical random sample of 27 out of 2,933 payroll adjusting entries affecting R&D, we noted the following exceptions for 15 adjusting entries, some of which had multiple exceptions: • Seven (26%) adjustments did not have adequate documentation to fully explain how the error occurred and/or the transfer was not accomplished within 90 days of when the error was discovered. • For five (19%) adjustments, LSUHSC-S did not provide sufficient information to determine if the cost transfers were completed timely. • For three (11%) adjustments, LSUHSC-S did not provide sufficient information to verify the new charge was certified by a responsible organizational official. • For three (11%) adjustments, LSUHSC-S did not provide sufficient documentation to determine whether adjustments were allowable per the award, which resulted in questioned costs totaling $2,686. • For twelve (44%) adjustments, LSUHSC-S did not provide sufficient documentation to evidence that expenses were incurred prior to reimbursement and that funds were returned to the federal agency for expenses that were removed from the federal award. We also performed an analysis of interim payroll adjusting journal entries to record cost transfers to and/or from R&D awards. We noted that 465 (20%) out of 2,309 adjusting journal entries were made more than 90 days after the end of the biannual period from the original transactions. The adjustments were made 103 to 430 days after the end of the biannual period. In addition, in a non-statistical random sample of 53 out of 11,272 expense transactions charged to R&D during the fiscal year ending June 30, 2024, we noted the following exceptions for 10 transactions, some of which had multiple exceptions: • Six (11%) time and effort certifications for salary and related benefit expenses tested were completed 92 to 248 days after the end of the biannual period, or LSUHSC-S did not provide sufficient documentation to determine that the certifications were completed timely. • For one (2%) transaction, LSUHSC-S did not provide documentation approving the employee’s salary on the applicable award. • For four (8%) transactions, LSUHSC-S did not provide documentation that indicated expenses were reconciled and approved prior to submitting reimbursement requests. Additionally, for three of these transactions, LSUHSC-S did not provide sufficient support to determine if the expenses were incurred prior to the reimbursement request or if LSUHSC-S minimized the time that elapsed between the transfer of funds from the federal government and LSUHSC-S’s disbursement for federal program purposes Finally, it was noted during our procedures related to requisition transactions that LSUHSC-S lacked proper segregation of duties in the online requisition process. We noted in an analysis of all requisition transactions that are subject to online approvals (14,941 transactions totaling $25,349,749) that 4,916 transactions totaling $7,222,206 (28%) did not have adequate segregation of duties. Of these, 306 transactions totaling $338,679 related to the R&D Cluster. Criteria: 2 CFR 200.430(i)(1)(i) requires that charges to federal awards for salaries and wages must be supported by a system of internal control which provides reasonable assurance the charges are accurate, allowable, and properly allocated. Per 2 CFR 200.430(i)(1)(viii), budget estimates alone do not qualify as support for charges to federal awards, but may be used for interim accounting purposes, provided that the system for establishing the estimates produces reasonable approximations of the activity performed, significant changes in work activity are identified and entered into the records in a timely manner, and the non-federal entity’s system of internal controls includes processes to review after-the-fact interim charges and make necessary adjustments. Per LSUHSC-S’s Time and Effort Certification Policy and Procedures, LSUHSC-S utilizes time and effort certifications to support salary charges to sponsored projects as an after-the-fact certification of effort of all individuals when all or a portion of their salaries are charged to a sponsored project. Based on LSUHSC-S’s policy, time and effort certifications should be completed within approximately 90 days of the end of the biannual period. Management interprets the end of the period to be when the time and effort reports are sent to the departments once the last month of the biannual period is closed in the accounting system. If there is a substantial (five percent or more) difference between the salary charges and the effort actually expended by the individual on projects during the biannual reporting period, a payroll reallocation must be created within 30 days. Per 2 CFR 200.303, the non-federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Per the Standards for Internal Control in the Federal Government, examples of common categories of control activities include accurate and timely recording of transactions. In addition, the National Institutes of Health (NIH) is the grantor for the majority of the LSUHSC-S’s R&D grant awards. Per the NIH Grants Policy Statement §7.5, cost transfers that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. An explanation merely stating that the transfer was made “to correct error" or "to transfer to correct project" is not sufficient. Transfers of costs from one project to another or from one competitive segment to the next solely to cover cost overruns are not allowable. Cause: LSUHSC-S faculty are not completing time and effort certifications timely, which contributes to untimely adjustments for compensation. In addition, LSUHSC-S did not provide sufficient supporting documentation for the auditor to test federal regulations related to cash management for all sample items selected due to an insufficient method for sorting and storing the documentation related to each federal award. Finally, the lack of segregation of duties was caused by LSUHSC-S granting certain employees’ access that allowed for self-approvals. Effect: Untimely certifications and the untimely discovery and correction of errors increases the risk of inaccurate reporting and may result in an inability to complete approved projects within the approved budget and/or period of performance. As a result, LSUHSC-S may have to utilize university funds to complete approved projects. In addition, inadequate controls and noncompliance with federal awards increases the likelihood of disallowed costs, which LSUHSC-S may have to repay to the federal grantor. Recommendation: Management should ensure they have adequate controls over time and effort certifications, purchases, and reimbursement requests. In addition, management should ensure adequate segregation of duties covering approvals of all transaction types. Management’s Response and Corrective Action Plan: Management concurred with the finding and outlined a plan of corrective action (B-47).
2024-005 - Noncompliance with and Weakness in Controls over Federal Research and Development Expenses State Entity: Louisiana State University Health Sciences Center - Shreveport (LSUHSC-S) Award Years: Various Award Numbers: Various Compliance Requirements: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Cash Management Pass-Through Entities: Various Repeat Finding: Yes (Prior Year Finding No. 2023-006) See Schedule of Findings and Questioned Costs for chart/table. Condition: For the sixth consecutive year, LSUHSC-S did not ensure internal controls over documentation of personnel services were operating effectively, and did not ensure compliance with federal guidance regarding cost transfers applicable to the Research and Development (R&D) Cluster. In a non-statistical random sample of 27 out of 2,933 payroll adjusting entries affecting R&D, we noted the following exceptions for 15 adjusting entries, some of which had multiple exceptions: • Seven (26%) adjustments did not have adequate documentation to fully explain how the error occurred and/or the transfer was not accomplished within 90 days of when the error was discovered. • For five (19%) adjustments, LSUHSC-S did not provide sufficient information to determine if the cost transfers were completed timely. • For three (11%) adjustments, LSUHSC-S did not provide sufficient information to verify the new charge was certified by a responsible organizational official. • For three (11%) adjustments, LSUHSC-S did not provide sufficient documentation to determine whether adjustments were allowable per the award, which resulted in questioned costs totaling $2,686. • For twelve (44%) adjustments, LSUHSC-S did not provide sufficient documentation to evidence that expenses were incurred prior to reimbursement and that funds were returned to the federal agency for expenses that were removed from the federal award. We also performed an analysis of interim payroll adjusting journal entries to record cost transfers to and/or from R&D awards. We noted that 465 (20%) out of 2,309 adjusting journal entries were made more than 90 days after the end of the biannual period from the original transactions. The adjustments were made 103 to 430 days after the end of the biannual period. In addition, in a non-statistical random sample of 53 out of 11,272 expense transactions charged to R&D during the fiscal year ending June 30, 2024, we noted the following exceptions for 10 transactions, some of which had multiple exceptions: • Six (11%) time and effort certifications for salary and related benefit expenses tested were completed 92 to 248 days after the end of the biannual period, or LSUHSC-S did not provide sufficient documentation to determine that the certifications were completed timely. • For one (2%) transaction, LSUHSC-S did not provide documentation approving the employee’s salary on the applicable award. • For four (8%) transactions, LSUHSC-S did not provide documentation that indicated expenses were reconciled and approved prior to submitting reimbursement requests. Additionally, for three of these transactions, LSUHSC-S did not provide sufficient support to determine if the expenses were incurred prior to the reimbursement request or if LSUHSC-S minimized the time that elapsed between the transfer of funds from the federal government and LSUHSC-S’s disbursement for federal program purposes Finally, it was noted during our procedures related to requisition transactions that LSUHSC-S lacked proper segregation of duties in the online requisition process. We noted in an analysis of all requisition transactions that are subject to online approvals (14,941 transactions totaling $25,349,749) that 4,916 transactions totaling $7,222,206 (28%) did not have adequate segregation of duties. Of these, 306 transactions totaling $338,679 related to the R&D Cluster. Criteria: 2 CFR 200.430(i)(1)(i) requires that charges to federal awards for salaries and wages must be supported by a system of internal control which provides reasonable assurance the charges are accurate, allowable, and properly allocated. Per 2 CFR 200.430(i)(1)(viii), budget estimates alone do not qualify as support for charges to federal awards, but may be used for interim accounting purposes, provided that the system for establishing the estimates produces reasonable approximations of the activity performed, significant changes in work activity are identified and entered into the records in a timely manner, and the non-federal entity’s system of internal controls includes processes to review after-the-fact interim charges and make necessary adjustments. Per LSUHSC-S’s Time and Effort Certification Policy and Procedures, LSUHSC-S utilizes time and effort certifications to support salary charges to sponsored projects as an after-the-fact certification of effort of all individuals when all or a portion of their salaries are charged to a sponsored project. Based on LSUHSC-S’s policy, time and effort certifications should be completed within approximately 90 days of the end of the biannual period. Management interprets the end of the period to be when the time and effort reports are sent to the departments once the last month of the biannual period is closed in the accounting system. If there is a substantial (five percent or more) difference between the salary charges and the effort actually expended by the individual on projects during the biannual reporting period, a payroll reallocation must be created within 30 days. Per 2 CFR 200.303, the non-federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Per the Standards for Internal Control in the Federal Government, examples of common categories of control activities include accurate and timely recording of transactions. In addition, the National Institutes of Health (NIH) is the grantor for the majority of the LSUHSC-S’s R&D grant awards. Per the NIH Grants Policy Statement §7.5, cost transfers that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. An explanation merely stating that the transfer was made “to correct error" or "to transfer to correct project" is not sufficient. Transfers of costs from one project to another or from one competitive segment to the next solely to cover cost overruns are not allowable. Cause: LSUHSC-S faculty are not completing time and effort certifications timely, which contributes to untimely adjustments for compensation. In addition, LSUHSC-S did not provide sufficient supporting documentation for the auditor to test federal regulations related to cash management for all sample items selected due to an insufficient method for sorting and storing the documentation related to each federal award. Finally, the lack of segregation of duties was caused by LSUHSC-S granting certain employees’ access that allowed for self-approvals. Effect: Untimely certifications and the untimely discovery and correction of errors increases the risk of inaccurate reporting and may result in an inability to complete approved projects within the approved budget and/or period of performance. As a result, LSUHSC-S may have to utilize university funds to complete approved projects. In addition, inadequate controls and noncompliance with federal awards increases the likelihood of disallowed costs, which LSUHSC-S may have to repay to the federal grantor. Recommendation: Management should ensure they have adequate controls over time and effort certifications, purchases, and reimbursement requests. In addition, management should ensure adequate segregation of duties covering approvals of all transaction types. Management’s Response and Corrective Action Plan: Management concurred with the finding and outlined a plan of corrective action (B-47).
2024-005 - Noncompliance with and Weakness in Controls over Federal Research and Development Expenses State Entity: Louisiana State University Health Sciences Center - Shreveport (LSUHSC-S) Award Years: Various Award Numbers: Various Compliance Requirements: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Cash Management Pass-Through Entities: Various Repeat Finding: Yes (Prior Year Finding No. 2023-006) See Schedule of Findings and Questioned Costs for chart/table. Condition: For the sixth consecutive year, LSUHSC-S did not ensure internal controls over documentation of personnel services were operating effectively, and did not ensure compliance with federal guidance regarding cost transfers applicable to the Research and Development (R&D) Cluster. In a non-statistical random sample of 27 out of 2,933 payroll adjusting entries affecting R&D, we noted the following exceptions for 15 adjusting entries, some of which had multiple exceptions: • Seven (26%) adjustments did not have adequate documentation to fully explain how the error occurred and/or the transfer was not accomplished within 90 days of when the error was discovered. • For five (19%) adjustments, LSUHSC-S did not provide sufficient information to determine if the cost transfers were completed timely. • For three (11%) adjustments, LSUHSC-S did not provide sufficient information to verify the new charge was certified by a responsible organizational official. • For three (11%) adjustments, LSUHSC-S did not provide sufficient documentation to determine whether adjustments were allowable per the award, which resulted in questioned costs totaling $2,686. • For twelve (44%) adjustments, LSUHSC-S did not provide sufficient documentation to evidence that expenses were incurred prior to reimbursement and that funds were returned to the federal agency for expenses that were removed from the federal award. We also performed an analysis of interim payroll adjusting journal entries to record cost transfers to and/or from R&D awards. We noted that 465 (20%) out of 2,309 adjusting journal entries were made more than 90 days after the end of the biannual period from the original transactions. The adjustments were made 103 to 430 days after the end of the biannual period. In addition, in a non-statistical random sample of 53 out of 11,272 expense transactions charged to R&D during the fiscal year ending June 30, 2024, we noted the following exceptions for 10 transactions, some of which had multiple exceptions: • Six (11%) time and effort certifications for salary and related benefit expenses tested were completed 92 to 248 days after the end of the biannual period, or LSUHSC-S did not provide sufficient documentation to determine that the certifications were completed timely. • For one (2%) transaction, LSUHSC-S did not provide documentation approving the employee’s salary on the applicable award. • For four (8%) transactions, LSUHSC-S did not provide documentation that indicated expenses were reconciled and approved prior to submitting reimbursement requests. Additionally, for three of these transactions, LSUHSC-S did not provide sufficient support to determine if the expenses were incurred prior to the reimbursement request or if LSUHSC-S minimized the time that elapsed between the transfer of funds from the federal government and LSUHSC-S’s disbursement for federal program purposes Finally, it was noted during our procedures related to requisition transactions that LSUHSC-S lacked proper segregation of duties in the online requisition process. We noted in an analysis of all requisition transactions that are subject to online approvals (14,941 transactions totaling $25,349,749) that 4,916 transactions totaling $7,222,206 (28%) did not have adequate segregation of duties. Of these, 306 transactions totaling $338,679 related to the R&D Cluster. Criteria: 2 CFR 200.430(i)(1)(i) requires that charges to federal awards for salaries and wages must be supported by a system of internal control which provides reasonable assurance the charges are accurate, allowable, and properly allocated. Per 2 CFR 200.430(i)(1)(viii), budget estimates alone do not qualify as support for charges to federal awards, but may be used for interim accounting purposes, provided that the system for establishing the estimates produces reasonable approximations of the activity performed, significant changes in work activity are identified and entered into the records in a timely manner, and the non-federal entity’s system of internal controls includes processes to review after-the-fact interim charges and make necessary adjustments. Per LSUHSC-S’s Time and Effort Certification Policy and Procedures, LSUHSC-S utilizes time and effort certifications to support salary charges to sponsored projects as an after-the-fact certification of effort of all individuals when all or a portion of their salaries are charged to a sponsored project. Based on LSUHSC-S’s policy, time and effort certifications should be completed within approximately 90 days of the end of the biannual period. Management interprets the end of the period to be when the time and effort reports are sent to the departments once the last month of the biannual period is closed in the accounting system. If there is a substantial (five percent or more) difference between the salary charges and the effort actually expended by the individual on projects during the biannual reporting period, a payroll reallocation must be created within 30 days. Per 2 CFR 200.303, the non-federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Per the Standards for Internal Control in the Federal Government, examples of common categories of control activities include accurate and timely recording of transactions. In addition, the National Institutes of Health (NIH) is the grantor for the majority of the LSUHSC-S’s R&D grant awards. Per the NIH Grants Policy Statement §7.5, cost transfers that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. An explanation merely stating that the transfer was made “to correct error" or "to transfer to correct project" is not sufficient. Transfers of costs from one project to another or from one competitive segment to the next solely to cover cost overruns are not allowable. Cause: LSUHSC-S faculty are not completing time and effort certifications timely, which contributes to untimely adjustments for compensation. In addition, LSUHSC-S did not provide sufficient supporting documentation for the auditor to test federal regulations related to cash management for all sample items selected due to an insufficient method for sorting and storing the documentation related to each federal award. Finally, the lack of segregation of duties was caused by LSUHSC-S granting certain employees’ access that allowed for self-approvals. Effect: Untimely certifications and the untimely discovery and correction of errors increases the risk of inaccurate reporting and may result in an inability to complete approved projects within the approved budget and/or period of performance. As a result, LSUHSC-S may have to utilize university funds to complete approved projects. In addition, inadequate controls and noncompliance with federal awards increases the likelihood of disallowed costs, which LSUHSC-S may have to repay to the federal grantor. Recommendation: Management should ensure they have adequate controls over time and effort certifications, purchases, and reimbursement requests. In addition, management should ensure adequate segregation of duties covering approvals of all transaction types. Management’s Response and Corrective Action Plan: Management concurred with the finding and outlined a plan of corrective action (B-47).
2024-005 - Noncompliance with and Weakness in Controls over Federal Research and Development Expenses State Entity: Louisiana State University Health Sciences Center - Shreveport (LSUHSC-S) Award Years: Various Award Numbers: Various Compliance Requirements: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Cash Management Pass-Through Entities: Various Repeat Finding: Yes (Prior Year Finding No. 2023-006) See Schedule of Findings and Questioned Costs for chart/table. Condition: For the sixth consecutive year, LSUHSC-S did not ensure internal controls over documentation of personnel services were operating effectively, and did not ensure compliance with federal guidance regarding cost transfers applicable to the Research and Development (R&D) Cluster. In a non-statistical random sample of 27 out of 2,933 payroll adjusting entries affecting R&D, we noted the following exceptions for 15 adjusting entries, some of which had multiple exceptions: • Seven (26%) adjustments did not have adequate documentation to fully explain how the error occurred and/or the transfer was not accomplished within 90 days of when the error was discovered. • For five (19%) adjustments, LSUHSC-S did not provide sufficient information to determine if the cost transfers were completed timely. • For three (11%) adjustments, LSUHSC-S did not provide sufficient information to verify the new charge was certified by a responsible organizational official. • For three (11%) adjustments, LSUHSC-S did not provide sufficient documentation to determine whether adjustments were allowable per the award, which resulted in questioned costs totaling $2,686. • For twelve (44%) adjustments, LSUHSC-S did not provide sufficient documentation to evidence that expenses were incurred prior to reimbursement and that funds were returned to the federal agency for expenses that were removed from the federal award. We also performed an analysis of interim payroll adjusting journal entries to record cost transfers to and/or from R&D awards. We noted that 465 (20%) out of 2,309 adjusting journal entries were made more than 90 days after the end of the biannual period from the original transactions. The adjustments were made 103 to 430 days after the end of the biannual period. In addition, in a non-statistical random sample of 53 out of 11,272 expense transactions charged to R&D during the fiscal year ending June 30, 2024, we noted the following exceptions for 10 transactions, some of which had multiple exceptions: • Six (11%) time and effort certifications for salary and related benefit expenses tested were completed 92 to 248 days after the end of the biannual period, or LSUHSC-S did not provide sufficient documentation to determine that the certifications were completed timely. • For one (2%) transaction, LSUHSC-S did not provide documentation approving the employee’s salary on the applicable award. • For four (8%) transactions, LSUHSC-S did not provide documentation that indicated expenses were reconciled and approved prior to submitting reimbursement requests. Additionally, for three of these transactions, LSUHSC-S did not provide sufficient support to determine if the expenses were incurred prior to the reimbursement request or if LSUHSC-S minimized the time that elapsed between the transfer of funds from the federal government and LSUHSC-S’s disbursement for federal program purposes Finally, it was noted during our procedures related to requisition transactions that LSUHSC-S lacked proper segregation of duties in the online requisition process. We noted in an analysis of all requisition transactions that are subject to online approvals (14,941 transactions totaling $25,349,749) that 4,916 transactions totaling $7,222,206 (28%) did not have adequate segregation of duties. Of these, 306 transactions totaling $338,679 related to the R&D Cluster. Criteria: 2 CFR 200.430(i)(1)(i) requires that charges to federal awards for salaries and wages must be supported by a system of internal control which provides reasonable assurance the charges are accurate, allowable, and properly allocated. Per 2 CFR 200.430(i)(1)(viii), budget estimates alone do not qualify as support for charges to federal awards, but may be used for interim accounting purposes, provided that the system for establishing the estimates produces reasonable approximations of the activity performed, significant changes in work activity are identified and entered into the records in a timely manner, and the non-federal entity’s system of internal controls includes processes to review after-the-fact interim charges and make necessary adjustments. Per LSUHSC-S’s Time and Effort Certification Policy and Procedures, LSUHSC-S utilizes time and effort certifications to support salary charges to sponsored projects as an after-the-fact certification of effort of all individuals when all or a portion of their salaries are charged to a sponsored project. Based on LSUHSC-S’s policy, time and effort certifications should be completed within approximately 90 days of the end of the biannual period. Management interprets the end of the period to be when the time and effort reports are sent to the departments once the last month of the biannual period is closed in the accounting system. If there is a substantial (five percent or more) difference between the salary charges and the effort actually expended by the individual on projects during the biannual reporting period, a payroll reallocation must be created within 30 days. Per 2 CFR 200.303, the non-federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Per the Standards for Internal Control in the Federal Government, examples of common categories of control activities include accurate and timely recording of transactions. In addition, the National Institutes of Health (NIH) is the grantor for the majority of the LSUHSC-S’s R&D grant awards. Per the NIH Grants Policy Statement §7.5, cost transfers that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. An explanation merely stating that the transfer was made “to correct error" or "to transfer to correct project" is not sufficient. Transfers of costs from one project to another or from one competitive segment to the next solely to cover cost overruns are not allowable. Cause: LSUHSC-S faculty are not completing time and effort certifications timely, which contributes to untimely adjustments for compensation. In addition, LSUHSC-S did not provide sufficient supporting documentation for the auditor to test federal regulations related to cash management for all sample items selected due to an insufficient method for sorting and storing the documentation related to each federal award. Finally, the lack of segregation of duties was caused by LSUHSC-S granting certain employees’ access that allowed for self-approvals. Effect: Untimely certifications and the untimely discovery and correction of errors increases the risk of inaccurate reporting and may result in an inability to complete approved projects within the approved budget and/or period of performance. As a result, LSUHSC-S may have to utilize university funds to complete approved projects. In addition, inadequate controls and noncompliance with federal awards increases the likelihood of disallowed costs, which LSUHSC-S may have to repay to the federal grantor. Recommendation: Management should ensure they have adequate controls over time and effort certifications, purchases, and reimbursement requests. In addition, management should ensure adequate segregation of duties covering approvals of all transaction types. Management’s Response and Corrective Action Plan: Management concurred with the finding and outlined a plan of corrective action (B-47).
2024-005 - Noncompliance with and Weakness in Controls over Federal Research and Development Expenses State Entity: Louisiana State University Health Sciences Center - Shreveport (LSUHSC-S) Award Years: Various Award Numbers: Various Compliance Requirements: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Cash Management Pass-Through Entities: Various Repeat Finding: Yes (Prior Year Finding No. 2023-006) See Schedule of Findings and Questioned Costs for chart/table. Condition: For the sixth consecutive year, LSUHSC-S did not ensure internal controls over documentation of personnel services were operating effectively, and did not ensure compliance with federal guidance regarding cost transfers applicable to the Research and Development (R&D) Cluster. In a non-statistical random sample of 27 out of 2,933 payroll adjusting entries affecting R&D, we noted the following exceptions for 15 adjusting entries, some of which had multiple exceptions: • Seven (26%) adjustments did not have adequate documentation to fully explain how the error occurred and/or the transfer was not accomplished within 90 days of when the error was discovered. • For five (19%) adjustments, LSUHSC-S did not provide sufficient information to determine if the cost transfers were completed timely. • For three (11%) adjustments, LSUHSC-S did not provide sufficient information to verify the new charge was certified by a responsible organizational official. • For three (11%) adjustments, LSUHSC-S did not provide sufficient documentation to determine whether adjustments were allowable per the award, which resulted in questioned costs totaling $2,686. • For twelve (44%) adjustments, LSUHSC-S did not provide sufficient documentation to evidence that expenses were incurred prior to reimbursement and that funds were returned to the federal agency for expenses that were removed from the federal award. We also performed an analysis of interim payroll adjusting journal entries to record cost transfers to and/or from R&D awards. We noted that 465 (20%) out of 2,309 adjusting journal entries were made more than 90 days after the end of the biannual period from the original transactions. The adjustments were made 103 to 430 days after the end of the biannual period. In addition, in a non-statistical random sample of 53 out of 11,272 expense transactions charged to R&D during the fiscal year ending June 30, 2024, we noted the following exceptions for 10 transactions, some of which had multiple exceptions: • Six (11%) time and effort certifications for salary and related benefit expenses tested were completed 92 to 248 days after the end of the biannual period, or LSUHSC-S did not provide sufficient documentation to determine that the certifications were completed timely. • For one (2%) transaction, LSUHSC-S did not provide documentation approving the employee’s salary on the applicable award. • For four (8%) transactions, LSUHSC-S did not provide documentation that indicated expenses were reconciled and approved prior to submitting reimbursement requests. Additionally, for three of these transactions, LSUHSC-S did not provide sufficient support to determine if the expenses were incurred prior to the reimbursement request or if LSUHSC-S minimized the time that elapsed between the transfer of funds from the federal government and LSUHSC-S’s disbursement for federal program purposes Finally, it was noted during our procedures related to requisition transactions that LSUHSC-S lacked proper segregation of duties in the online requisition process. We noted in an analysis of all requisition transactions that are subject to online approvals (14,941 transactions totaling $25,349,749) that 4,916 transactions totaling $7,222,206 (28%) did not have adequate segregation of duties. Of these, 306 transactions totaling $338,679 related to the R&D Cluster. Criteria: 2 CFR 200.430(i)(1)(i) requires that charges to federal awards for salaries and wages must be supported by a system of internal control which provides reasonable assurance the charges are accurate, allowable, and properly allocated. Per 2 CFR 200.430(i)(1)(viii), budget estimates alone do not qualify as support for charges to federal awards, but may be used for interim accounting purposes, provided that the system for establishing the estimates produces reasonable approximations of the activity performed, significant changes in work activity are identified and entered into the records in a timely manner, and the non-federal entity’s system of internal controls includes processes to review after-the-fact interim charges and make necessary adjustments. Per LSUHSC-S’s Time and Effort Certification Policy and Procedures, LSUHSC-S utilizes time and effort certifications to support salary charges to sponsored projects as an after-the-fact certification of effort of all individuals when all or a portion of their salaries are charged to a sponsored project. Based on LSUHSC-S’s policy, time and effort certifications should be completed within approximately 90 days of the end of the biannual period. Management interprets the end of the period to be when the time and effort reports are sent to the departments once the last month of the biannual period is closed in the accounting system. If there is a substantial (five percent or more) difference between the salary charges and the effort actually expended by the individual on projects during the biannual reporting period, a payroll reallocation must be created within 30 days. Per 2 CFR 200.303, the non-federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Per the Standards for Internal Control in the Federal Government, examples of common categories of control activities include accurate and timely recording of transactions. In addition, the National Institutes of Health (NIH) is the grantor for the majority of the LSUHSC-S’s R&D grant awards. Per the NIH Grants Policy Statement §7.5, cost transfers that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. An explanation merely stating that the transfer was made “to correct error" or "to transfer to correct project" is not sufficient. Transfers of costs from one project to another or from one competitive segment to the next solely to cover cost overruns are not allowable. Cause: LSUHSC-S faculty are not completing time and effort certifications timely, which contributes to untimely adjustments for compensation. In addition, LSUHSC-S did not provide sufficient supporting documentation for the auditor to test federal regulations related to cash management for all sample items selected due to an insufficient method for sorting and storing the documentation related to each federal award. Finally, the lack of segregation of duties was caused by LSUHSC-S granting certain employees’ access that allowed for self-approvals. Effect: Untimely certifications and the untimely discovery and correction of errors increases the risk of inaccurate reporting and may result in an inability to complete approved projects within the approved budget and/or period of performance. As a result, LSUHSC-S may have to utilize university funds to complete approved projects. In addition, inadequate controls and noncompliance with federal awards increases the likelihood of disallowed costs, which LSUHSC-S may have to repay to the federal grantor. Recommendation: Management should ensure they have adequate controls over time and effort certifications, purchases, and reimbursement requests. In addition, management should ensure adequate segregation of duties covering approvals of all transaction types. Management’s Response and Corrective Action Plan: Management concurred with the finding and outlined a plan of corrective action (B-47).
2024-005 - Noncompliance with and Weakness in Controls over Federal Research and Development Expenses State Entity: Louisiana State University Health Sciences Center - Shreveport (LSUHSC-S) Award Years: Various Award Numbers: Various Compliance Requirements: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Cash Management Pass-Through Entities: Various Repeat Finding: Yes (Prior Year Finding No. 2023-006) See Schedule of Findings and Questioned Costs for chart/table. Condition: For the sixth consecutive year, LSUHSC-S did not ensure internal controls over documentation of personnel services were operating effectively, and did not ensure compliance with federal guidance regarding cost transfers applicable to the Research and Development (R&D) Cluster. In a non-statistical random sample of 27 out of 2,933 payroll adjusting entries affecting R&D, we noted the following exceptions for 15 adjusting entries, some of which had multiple exceptions: • Seven (26%) adjustments did not have adequate documentation to fully explain how the error occurred and/or the transfer was not accomplished within 90 days of when the error was discovered. • For five (19%) adjustments, LSUHSC-S did not provide sufficient information to determine if the cost transfers were completed timely. • For three (11%) adjustments, LSUHSC-S did not provide sufficient information to verify the new charge was certified by a responsible organizational official. • For three (11%) adjustments, LSUHSC-S did not provide sufficient documentation to determine whether adjustments were allowable per the award, which resulted in questioned costs totaling $2,686. • For twelve (44%) adjustments, LSUHSC-S did not provide sufficient documentation to evidence that expenses were incurred prior to reimbursement and that funds were returned to the federal agency for expenses that were removed from the federal award. We also performed an analysis of interim payroll adjusting journal entries to record cost transfers to and/or from R&D awards. We noted that 465 (20%) out of 2,309 adjusting journal entries were made more than 90 days after the end of the biannual period from the original transactions. The adjustments were made 103 to 430 days after the end of the biannual period. In addition, in a non-statistical random sample of 53 out of 11,272 expense transactions charged to R&D during the fiscal year ending June 30, 2024, we noted the following exceptions for 10 transactions, some of which had multiple exceptions: • Six (11%) time and effort certifications for salary and related benefit expenses tested were completed 92 to 248 days after the end of the biannual period, or LSUHSC-S did not provide sufficient documentation to determine that the certifications were completed timely. • For one (2%) transaction, LSUHSC-S did not provide documentation approving the employee’s salary on the applicable award. • For four (8%) transactions, LSUHSC-S did not provide documentation that indicated expenses were reconciled and approved prior to submitting reimbursement requests. Additionally, for three of these transactions, LSUHSC-S did not provide sufficient support to determine if the expenses were incurred prior to the reimbursement request or if LSUHSC-S minimized the time that elapsed between the transfer of funds from the federal government and LSUHSC-S’s disbursement for federal program purposes Finally, it was noted during our procedures related to requisition transactions that LSUHSC-S lacked proper segregation of duties in the online requisition process. We noted in an analysis of all requisition transactions that are subject to online approvals (14,941 transactions totaling $25,349,749) that 4,916 transactions totaling $7,222,206 (28%) did not have adequate segregation of duties. Of these, 306 transactions totaling $338,679 related to the R&D Cluster. Criteria: 2 CFR 200.430(i)(1)(i) requires that charges to federal awards for salaries and wages must be supported by a system of internal control which provides reasonable assurance the charges are accurate, allowable, and properly allocated. Per 2 CFR 200.430(i)(1)(viii), budget estimates alone do not qualify as support for charges to federal awards, but may be used for interim accounting purposes, provided that the system for establishing the estimates produces reasonable approximations of the activity performed, significant changes in work activity are identified and entered into the records in a timely manner, and the non-federal entity’s system of internal controls includes processes to review after-the-fact interim charges and make necessary adjustments. Per LSUHSC-S’s Time and Effort Certification Policy and Procedures, LSUHSC-S utilizes time and effort certifications to support salary charges to sponsored projects as an after-the-fact certification of effort of all individuals when all or a portion of their salaries are charged to a sponsored project. Based on LSUHSC-S’s policy, time and effort certifications should be completed within approximately 90 days of the end of the biannual period. Management interprets the end of the period to be when the time and effort reports are sent to the departments once the last month of the biannual period is closed in the accounting system. If there is a substantial (five percent or more) difference between the salary charges and the effort actually expended by the individual on projects during the biannual reporting period, a payroll reallocation must be created within 30 days. Per 2 CFR 200.303, the non-federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Per the Standards for Internal Control in the Federal Government, examples of common categories of control activities include accurate and timely recording of transactions. In addition, the National Institutes of Health (NIH) is the grantor for the majority of the LSUHSC-S’s R&D grant awards. Per the NIH Grants Policy Statement §7.5, cost transfers that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. An explanation merely stating that the transfer was made “to correct error" or "to transfer to correct project" is not sufficient. Transfers of costs from one project to another or from one competitive segment to the next solely to cover cost overruns are not allowable. Cause: LSUHSC-S faculty are not completing time and effort certifications timely, which contributes to untimely adjustments for compensation. In addition, LSUHSC-S did not provide sufficient supporting documentation for the auditor to test federal regulations related to cash management for all sample items selected due to an insufficient method for sorting and storing the documentation related to each federal award. Finally, the lack of segregation of duties was caused by LSUHSC-S granting certain employees’ access that allowed for self-approvals. Effect: Untimely certifications and the untimely discovery and correction of errors increases the risk of inaccurate reporting and may result in an inability to complete approved projects within the approved budget and/or period of performance. As a result, LSUHSC-S may have to utilize university funds to complete approved projects. In addition, inadequate controls and noncompliance with federal awards increases the likelihood of disallowed costs, which LSUHSC-S may have to repay to the federal grantor. Recommendation: Management should ensure they have adequate controls over time and effort certifications, purchases, and reimbursement requests. In addition, management should ensure adequate segregation of duties covering approvals of all transaction types. Management’s Response and Corrective Action Plan: Management concurred with the finding and outlined a plan of corrective action (B-47).
2024-005 - Noncompliance with and Weakness in Controls over Federal Research and Development Expenses State Entity: Louisiana State University Health Sciences Center - Shreveport (LSUHSC-S) Award Years: Various Award Numbers: Various Compliance Requirements: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Cash Management Pass-Through Entities: Various Repeat Finding: Yes (Prior Year Finding No. 2023-006) See Schedule of Findings and Questioned Costs for chart/table. Condition: For the sixth consecutive year, LSUHSC-S did not ensure internal controls over documentation of personnel services were operating effectively, and did not ensure compliance with federal guidance regarding cost transfers applicable to the Research and Development (R&D) Cluster. In a non-statistical random sample of 27 out of 2,933 payroll adjusting entries affecting R&D, we noted the following exceptions for 15 adjusting entries, some of which had multiple exceptions: • Seven (26%) adjustments did not have adequate documentation to fully explain how the error occurred and/or the transfer was not accomplished within 90 days of when the error was discovered. • For five (19%) adjustments, LSUHSC-S did not provide sufficient information to determine if the cost transfers were completed timely. • For three (11%) adjustments, LSUHSC-S did not provide sufficient information to verify the new charge was certified by a responsible organizational official. • For three (11%) adjustments, LSUHSC-S did not provide sufficient documentation to determine whether adjustments were allowable per the award, which resulted in questioned costs totaling $2,686. • For twelve (44%) adjustments, LSUHSC-S did not provide sufficient documentation to evidence that expenses were incurred prior to reimbursement and that funds were returned to the federal agency for expenses that were removed from the federal award. We also performed an analysis of interim payroll adjusting journal entries to record cost transfers to and/or from R&D awards. We noted that 465 (20%) out of 2,309 adjusting journal entries were made more than 90 days after the end of the biannual period from the original transactions. The adjustments were made 103 to 430 days after the end of the biannual period. In addition, in a non-statistical random sample of 53 out of 11,272 expense transactions charged to R&D during the fiscal year ending June 30, 2024, we noted the following exceptions for 10 transactions, some of which had multiple exceptions: • Six (11%) time and effort certifications for salary and related benefit expenses tested were completed 92 to 248 days after the end of the biannual period, or LSUHSC-S did not provide sufficient documentation to determine that the certifications were completed timely. • For one (2%) transaction, LSUHSC-S did not provide documentation approving the employee’s salary on the applicable award. • For four (8%) transactions, LSUHSC-S did not provide documentation that indicated expenses were reconciled and approved prior to submitting reimbursement requests. Additionally, for three of these transactions, LSUHSC-S did not provide sufficient support to determine if the expenses were incurred prior to the reimbursement request or if LSUHSC-S minimized the time that elapsed between the transfer of funds from the federal government and LSUHSC-S’s disbursement for federal program purposes Finally, it was noted during our procedures related to requisition transactions that LSUHSC-S lacked proper segregation of duties in the online requisition process. We noted in an analysis of all requisition transactions that are subject to online approvals (14,941 transactions totaling $25,349,749) that 4,916 transactions totaling $7,222,206 (28%) did not have adequate segregation of duties. Of these, 306 transactions totaling $338,679 related to the R&D Cluster. Criteria: 2 CFR 200.430(i)(1)(i) requires that charges to federal awards for salaries and wages must be supported by a system of internal control which provides reasonable assurance the charges are accurate, allowable, and properly allocated. Per 2 CFR 200.430(i)(1)(viii), budget estimates alone do not qualify as support for charges to federal awards, but may be used for interim accounting purposes, provided that the system for establishing the estimates produces reasonable approximations of the activity performed, significant changes in work activity are identified and entered into the records in a timely manner, and the non-federal entity’s system of internal controls includes processes to review after-the-fact interim charges and make necessary adjustments. Per LSUHSC-S’s Time and Effort Certification Policy and Procedures, LSUHSC-S utilizes time and effort certifications to support salary charges to sponsored projects as an after-the-fact certification of effort of all individuals when all or a portion of their salaries are charged to a sponsored project. Based on LSUHSC-S’s policy, time and effort certifications should be completed within approximately 90 days of the end of the biannual period. Management interprets the end of the period to be when the time and effort reports are sent to the departments once the last month of the biannual period is closed in the accounting system. If there is a substantial (five percent or more) difference between the salary charges and the effort actually expended by the individual on projects during the biannual reporting period, a payroll reallocation must be created within 30 days. Per 2 CFR 200.303, the non-federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Per the Standards for Internal Control in the Federal Government, examples of common categories of control activities include accurate and timely recording of transactions. In addition, the National Institutes of Health (NIH) is the grantor for the majority of the LSUHSC-S’s R&D grant awards. Per the NIH Grants Policy Statement §7.5, cost transfers that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. An explanation merely stating that the transfer was made “to correct error" or "to transfer to correct project" is not sufficient. Transfers of costs from one project to another or from one competitive segment to the next solely to cover cost overruns are not allowable. Cause: LSUHSC-S faculty are not completing time and effort certifications timely, which contributes to untimely adjustments for compensation. In addition, LSUHSC-S did not provide sufficient supporting documentation for the auditor to test federal regulations related to cash management for all sample items selected due to an insufficient method for sorting and storing the documentation related to each federal award. Finally, the lack of segregation of duties was caused by LSUHSC-S granting certain employees’ access that allowed for self-approvals. Effect: Untimely certifications and the untimely discovery and correction of errors increases the risk of inaccurate reporting and may result in an inability to complete approved projects within the approved budget and/or period of performance. As a result, LSUHSC-S may have to utilize university funds to complete approved projects. In addition, inadequate controls and noncompliance with federal awards increases the likelihood of disallowed costs, which LSUHSC-S may have to repay to the federal grantor. Recommendation: Management should ensure they have adequate controls over time and effort certifications, purchases, and reimbursement requests. In addition, management should ensure adequate segregation of duties covering approvals of all transaction types. Management’s Response and Corrective Action Plan: Management concurred with the finding and outlined a plan of corrective action (B-47).
2024-006 - Control Weakness and Noncompliance with Personnel Expenses Charged to Federal Awards State Entity: University of Louisiana at Lafayette (UL Lafayette) Award Years: 2020, 2021, 2022 Award Numbers: 1R01MH125395, 2046460, R37AI094595 Compliance Requirements: Allowable Costs/Cost Principles; Special Tests and Provisions Pass-Through Entity: Northwestern University Repeat Finding: Yes (Prior Year Finding No. 2023-007) See Schedule of Findings and Questioned Costs for chart/table. Condition: For the fourth consecutive year, the University of Louisiana at Lafayette (UL Lafayette) did not have adequate controls in place to ensure personnel expenses charged to federal Research and Development (R&D) awards accurately reflected work performed. From a population of 14,024 payroll and non-payroll expenses charged to R&D grants for the fiscal year ending June 30, 2024, a non-statistical sample of 25 transactions were tested for compliance with allowable costs and cost principles requirements. For three (12%) of the payroll transactions, UL Lafayette was unable to provide documentation to show that personnel-related expenses totaling $18,707 were supported by time and effort certifications to ensure the accuracy of budget estimates charged to federal awards as required by federal regulations. Additionally, UL Lafayette did not perform time and effort certifications for the period January 1, 2024, through June 30, 2024. Because there is no after-the-fact review to ensure the accuracy of personnel costs and efforts charged to the awards, UL Lafayette could not ensure compliance with the requirements of special tests and provisions related to key personnel effort. Criteria: 2 CFR 200.430(i) specifies the documentation standards for personnel expenses. In order to be allowable, charges to federal awards for personnel expenses must be based on records that accurately reflect the work performed and must be supported by a system of internal control, which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Budget estimates alone do not qualify as support for charges to federal awards, but can be used for interim accounting purposes provided that internal controls include an after-the fact review to confirm the accuracy of final amounts charged to federal awards. Prior approval requirements related to key personnel effort are contained in 2 CFR 200.308(c) and within grant terms and conditions. A reduction of 25% or greater in time devoted to the project from key personnel requires prior approval, as does disengagement of key personnel from the project for three or more months. Cause: UL Lafayette noted in their prior-year corrective action that certifications for employees charging time to federal awards would be required annually. Annual certifications are not sufficient to timely detect changes in key personnel effort and ensure prior approvals are obtained when applicable. Furthermore, UL Lafayette noted that the next effort reporting cycle would cover July 1, 2023, through December 31, 2023. The time certification period only covered half of the audit period. As a result, time and effort certifications were not completed by employees on the latter half of the audit period to support that the charges to federal awards for salaries and wages were based on records that accurately reflect the work performed during this period. Effect: Inadequate controls related to federal documentation standards for personnel expenses could result in noncompliance with federal allowable costs and cost principles, as well as noncompliance with special tests and provisions related to key personnel effort. Recommendation: Management should strengthen internal controls to ensure that personnel expenses charged to the federal awards are supported by a system of internal control, which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Additionally, Management should revise the Time & Effort Certification policy and/or implement alternative controls designed to ensure compliance with Special Tests and Provisions requirements. Management should monitor changes in effort for key personnel and ensure that prior written approval is obtained from the federal grantor for changes that exceed the thresholds set in federal regulations. Management’s Response and Corrective Action Plan: Management partially concurred with the finding and provided a corrective action plan (B-60).
2024-005 - Noncompliance with and Weakness in Controls over Federal Research and Development Expenses State Entity: Louisiana State University Health Sciences Center - Shreveport (LSUHSC-S) Award Years: Various Award Numbers: Various Compliance Requirements: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Cash Management Pass-Through Entities: Various Repeat Finding: Yes (Prior Year Finding No. 2023-006) See Schedule of Findings and Questioned Costs for chart/table. Condition: For the sixth consecutive year, LSUHSC-S did not ensure internal controls over documentation of personnel services were operating effectively, and did not ensure compliance with federal guidance regarding cost transfers applicable to the Research and Development (R&D) Cluster. In a non-statistical random sample of 27 out of 2,933 payroll adjusting entries affecting R&D, we noted the following exceptions for 15 adjusting entries, some of which had multiple exceptions: • Seven (26%) adjustments did not have adequate documentation to fully explain how the error occurred and/or the transfer was not accomplished within 90 days of when the error was discovered. • For five (19%) adjustments, LSUHSC-S did not provide sufficient information to determine if the cost transfers were completed timely. • For three (11%) adjustments, LSUHSC-S did not provide sufficient information to verify the new charge was certified by a responsible organizational official. • For three (11%) adjustments, LSUHSC-S did not provide sufficient documentation to determine whether adjustments were allowable per the award, which resulted in questioned costs totaling $2,686. • For twelve (44%) adjustments, LSUHSC-S did not provide sufficient documentation to evidence that expenses were incurred prior to reimbursement and that funds were returned to the federal agency for expenses that were removed from the federal award. We also performed an analysis of interim payroll adjusting journal entries to record cost transfers to and/or from R&D awards. We noted that 465 (20%) out of 2,309 adjusting journal entries were made more than 90 days after the end of the biannual period from the original transactions. The adjustments were made 103 to 430 days after the end of the biannual period. In addition, in a non-statistical random sample of 53 out of 11,272 expense transactions charged to R&D during the fiscal year ending June 30, 2024, we noted the following exceptions for 10 transactions, some of which had multiple exceptions: • Six (11%) time and effort certifications for salary and related benefit expenses tested were completed 92 to 248 days after the end of the biannual period, or LSUHSC-S did not provide sufficient documentation to determine that the certifications were completed timely. • For one (2%) transaction, LSUHSC-S did not provide documentation approving the employee’s salary on the applicable award. • For four (8%) transactions, LSUHSC-S did not provide documentation that indicated expenses were reconciled and approved prior to submitting reimbursement requests. Additionally, for three of these transactions, LSUHSC-S did not provide sufficient support to determine if the expenses were incurred prior to the reimbursement request or if LSUHSC-S minimized the time that elapsed between the transfer of funds from the federal government and LSUHSC-S’s disbursement for federal program purposes Finally, it was noted during our procedures related to requisition transactions that LSUHSC-S lacked proper segregation of duties in the online requisition process. We noted in an analysis of all requisition transactions that are subject to online approvals (14,941 transactions totaling $25,349,749) that 4,916 transactions totaling $7,222,206 (28%) did not have adequate segregation of duties. Of these, 306 transactions totaling $338,679 related to the R&D Cluster. Criteria: 2 CFR 200.430(i)(1)(i) requires that charges to federal awards for salaries and wages must be supported by a system of internal control which provides reasonable assurance the charges are accurate, allowable, and properly allocated. Per 2 CFR 200.430(i)(1)(viii), budget estimates alone do not qualify as support for charges to federal awards, but may be used for interim accounting purposes, provided that the system for establishing the estimates produces reasonable approximations of the activity performed, significant changes in work activity are identified and entered into the records in a timely manner, and the non-federal entity’s system of internal controls includes processes to review after-the-fact interim charges and make necessary adjustments. Per LSUHSC-S’s Time and Effort Certification Policy and Procedures, LSUHSC-S utilizes time and effort certifications to support salary charges to sponsored projects as an after-the-fact certification of effort of all individuals when all or a portion of their salaries are charged to a sponsored project. Based on LSUHSC-S’s policy, time and effort certifications should be completed within approximately 90 days of the end of the biannual period. Management interprets the end of the period to be when the time and effort reports are sent to the departments once the last month of the biannual period is closed in the accounting system. If there is a substantial (five percent or more) difference between the salary charges and the effort actually expended by the individual on projects during the biannual reporting period, a payroll reallocation must be created within 30 days. Per 2 CFR 200.303, the non-federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Per the Standards for Internal Control in the Federal Government, examples of common categories of control activities include accurate and timely recording of transactions. In addition, the National Institutes of Health (NIH) is the grantor for the majority of the LSUHSC-S’s R&D grant awards. Per the NIH Grants Policy Statement §7.5, cost transfers that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. An explanation merely stating that the transfer was made “to correct error" or "to transfer to correct project" is not sufficient. Transfers of costs from one project to another or from one competitive segment to the next solely to cover cost overruns are not allowable. Cause: LSUHSC-S faculty are not completing time and effort certifications timely, which contributes to untimely adjustments for compensation. In addition, LSUHSC-S did not provide sufficient supporting documentation for the auditor to test federal regulations related to cash management for all sample items selected due to an insufficient method for sorting and storing the documentation related to each federal award. Finally, the lack of segregation of duties was caused by LSUHSC-S granting certain employees’ access that allowed for self-approvals. Effect: Untimely certifications and the untimely discovery and correction of errors increases the risk of inaccurate reporting and may result in an inability to complete approved projects within the approved budget and/or period of performance. As a result, LSUHSC-S may have to utilize university funds to complete approved projects. In addition, inadequate controls and noncompliance with federal awards increases the likelihood of disallowed costs, which LSUHSC-S may have to repay to the federal grantor. Recommendation: Management should ensure they have adequate controls over time and effort certifications, purchases, and reimbursement requests. In addition, management should ensure adequate segregation of duties covering approvals of all transaction types. Management’s Response and Corrective Action Plan: Management concurred with the finding and outlined a plan of corrective action (B-47).
2024-005 - Noncompliance with and Weakness in Controls over Federal Research and Development Expenses State Entity: Louisiana State University Health Sciences Center - Shreveport (LSUHSC-S) Award Years: Various Award Numbers: Various Compliance Requirements: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Cash Management Pass-Through Entities: Various Repeat Finding: Yes (Prior Year Finding No. 2023-006) See Schedule of Findings and Questioned Costs for chart/table. Condition: For the sixth consecutive year, LSUHSC-S did not ensure internal controls over documentation of personnel services were operating effectively, and did not ensure compliance with federal guidance regarding cost transfers applicable to the Research and Development (R&D) Cluster. In a non-statistical random sample of 27 out of 2,933 payroll adjusting entries affecting R&D, we noted the following exceptions for 15 adjusting entries, some of which had multiple exceptions: • Seven (26%) adjustments did not have adequate documentation to fully explain how the error occurred and/or the transfer was not accomplished within 90 days of when the error was discovered. • For five (19%) adjustments, LSUHSC-S did not provide sufficient information to determine if the cost transfers were completed timely. • For three (11%) adjustments, LSUHSC-S did not provide sufficient information to verify the new charge was certified by a responsible organizational official. • For three (11%) adjustments, LSUHSC-S did not provide sufficient documentation to determine whether adjustments were allowable per the award, which resulted in questioned costs totaling $2,686. • For twelve (44%) adjustments, LSUHSC-S did not provide sufficient documentation to evidence that expenses were incurred prior to reimbursement and that funds were returned to the federal agency for expenses that were removed from the federal award. We also performed an analysis of interim payroll adjusting journal entries to record cost transfers to and/or from R&D awards. We noted that 465 (20%) out of 2,309 adjusting journal entries were made more than 90 days after the end of the biannual period from the original transactions. The adjustments were made 103 to 430 days after the end of the biannual period. In addition, in a non-statistical random sample of 53 out of 11,272 expense transactions charged to R&D during the fiscal year ending June 30, 2024, we noted the following exceptions for 10 transactions, some of which had multiple exceptions: • Six (11%) time and effort certifications for salary and related benefit expenses tested were completed 92 to 248 days after the end of the biannual period, or LSUHSC-S did not provide sufficient documentation to determine that the certifications were completed timely. • For one (2%) transaction, LSUHSC-S did not provide documentation approving the employee’s salary on the applicable award. • For four (8%) transactions, LSUHSC-S did not provide documentation that indicated expenses were reconciled and approved prior to submitting reimbursement requests. Additionally, for three of these transactions, LSUHSC-S did not provide sufficient support to determine if the expenses were incurred prior to the reimbursement request or if LSUHSC-S minimized the time that elapsed between the transfer of funds from the federal government and LSUHSC-S’s disbursement for federal program purposes Finally, it was noted during our procedures related to requisition transactions that LSUHSC-S lacked proper segregation of duties in the online requisition process. We noted in an analysis of all requisition transactions that are subject to online approvals (14,941 transactions totaling $25,349,749) that 4,916 transactions totaling $7,222,206 (28%) did not have adequate segregation of duties. Of these, 306 transactions totaling $338,679 related to the R&D Cluster. Criteria: 2 CFR 200.430(i)(1)(i) requires that charges to federal awards for salaries and wages must be supported by a system of internal control which provides reasonable assurance the charges are accurate, allowable, and properly allocated. Per 2 CFR 200.430(i)(1)(viii), budget estimates alone do not qualify as support for charges to federal awards, but may be used for interim accounting purposes, provided that the system for establishing the estimates produces reasonable approximations of the activity performed, significant changes in work activity are identified and entered into the records in a timely manner, and the non-federal entity’s system of internal controls includes processes to review after-the-fact interim charges and make necessary adjustments. Per LSUHSC-S’s Time and Effort Certification Policy and Procedures, LSUHSC-S utilizes time and effort certifications to support salary charges to sponsored projects as an after-the-fact certification of effort of all individuals when all or a portion of their salaries are charged to a sponsored project. Based on LSUHSC-S’s policy, time and effort certifications should be completed within approximately 90 days of the end of the biannual period. Management interprets the end of the period to be when the time and effort reports are sent to the departments once the last month of the biannual period is closed in the accounting system. If there is a substantial (five percent or more) difference between the salary charges and the effort actually expended by the individual on projects during the biannual reporting period, a payroll reallocation must be created within 30 days. Per 2 CFR 200.303, the non-federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Per the Standards for Internal Control in the Federal Government, examples of common categories of control activities include accurate and timely recording of transactions. In addition, the National Institutes of Health (NIH) is the grantor for the majority of the LSUHSC-S’s R&D grant awards. Per the NIH Grants Policy Statement §7.5, cost transfers that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. An explanation merely stating that the transfer was made “to correct error" or "to transfer to correct project" is not sufficient. Transfers of costs from one project to another or from one competitive segment to the next solely to cover cost overruns are not allowable. Cause: LSUHSC-S faculty are not completing time and effort certifications timely, which contributes to untimely adjustments for compensation. In addition, LSUHSC-S did not provide sufficient supporting documentation for the auditor to test federal regulations related to cash management for all sample items selected due to an insufficient method for sorting and storing the documentation related to each federal award. Finally, the lack of segregation of duties was caused by LSUHSC-S granting certain employees’ access that allowed for self-approvals. Effect: Untimely certifications and the untimely discovery and correction of errors increases the risk of inaccurate reporting and may result in an inability to complete approved projects within the approved budget and/or period of performance. As a result, LSUHSC-S may have to utilize university funds to complete approved projects. In addition, inadequate controls and noncompliance with federal awards increases the likelihood of disallowed costs, which LSUHSC-S may have to repay to the federal grantor. Recommendation: Management should ensure they have adequate controls over time and effort certifications, purchases, and reimbursement requests. In addition, management should ensure adequate segregation of duties covering approvals of all transaction types. Management’s Response and Corrective Action Plan: Management concurred with the finding and outlined a plan of corrective action (B-47).
2024-005 - Noncompliance with and Weakness in Controls over Federal Research and Development Expenses State Entity: Louisiana State University Health Sciences Center - Shreveport (LSUHSC-S) Award Years: Various Award Numbers: Various Compliance Requirements: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Cash Management Pass-Through Entities: Various Repeat Finding: Yes (Prior Year Finding No. 2023-006) See Schedule of Findings and Questioned Costs for chart/table. Condition: For the sixth consecutive year, LSUHSC-S did not ensure internal controls over documentation of personnel services were operating effectively, and did not ensure compliance with federal guidance regarding cost transfers applicable to the Research and Development (R&D) Cluster. In a non-statistical random sample of 27 out of 2,933 payroll adjusting entries affecting R&D, we noted the following exceptions for 15 adjusting entries, some of which had multiple exceptions: • Seven (26%) adjustments did not have adequate documentation to fully explain how the error occurred and/or the transfer was not accomplished within 90 days of when the error was discovered. • For five (19%) adjustments, LSUHSC-S did not provide sufficient information to determine if the cost transfers were completed timely. • For three (11%) adjustments, LSUHSC-S did not provide sufficient information to verify the new charge was certified by a responsible organizational official. • For three (11%) adjustments, LSUHSC-S did not provide sufficient documentation to determine whether adjustments were allowable per the award, which resulted in questioned costs totaling $2,686. • For twelve (44%) adjustments, LSUHSC-S did not provide sufficient documentation to evidence that expenses were incurred prior to reimbursement and that funds were returned to the federal agency for expenses that were removed from the federal award. We also performed an analysis of interim payroll adjusting journal entries to record cost transfers to and/or from R&D awards. We noted that 465 (20%) out of 2,309 adjusting journal entries were made more than 90 days after the end of the biannual period from the original transactions. The adjustments were made 103 to 430 days after the end of the biannual period. In addition, in a non-statistical random sample of 53 out of 11,272 expense transactions charged to R&D during the fiscal year ending June 30, 2024, we noted the following exceptions for 10 transactions, some of which had multiple exceptions: • Six (11%) time and effort certifications for salary and related benefit expenses tested were completed 92 to 248 days after the end of the biannual period, or LSUHSC-S did not provide sufficient documentation to determine that the certifications were completed timely. • For one (2%) transaction, LSUHSC-S did not provide documentation approving the employee’s salary on the applicable award. • For four (8%) transactions, LSUHSC-S did not provide documentation that indicated expenses were reconciled and approved prior to submitting reimbursement requests. Additionally, for three of these transactions, LSUHSC-S did not provide sufficient support to determine if the expenses were incurred prior to the reimbursement request or if LSUHSC-S minimized the time that elapsed between the transfer of funds from the federal government and LSUHSC-S’s disbursement for federal program purposes Finally, it was noted during our procedures related to requisition transactions that LSUHSC-S lacked proper segregation of duties in the online requisition process. We noted in an analysis of all requisition transactions that are subject to online approvals (14,941 transactions totaling $25,349,749) that 4,916 transactions totaling $7,222,206 (28%) did not have adequate segregation of duties. Of these, 306 transactions totaling $338,679 related to the R&D Cluster. Criteria: 2 CFR 200.430(i)(1)(i) requires that charges to federal awards for salaries and wages must be supported by a system of internal control which provides reasonable assurance the charges are accurate, allowable, and properly allocated. Per 2 CFR 200.430(i)(1)(viii), budget estimates alone do not qualify as support for charges to federal awards, but may be used for interim accounting purposes, provided that the system for establishing the estimates produces reasonable approximations of the activity performed, significant changes in work activity are identified and entered into the records in a timely manner, and the non-federal entity’s system of internal controls includes processes to review after-the-fact interim charges and make necessary adjustments. Per LSUHSC-S’s Time and Effort Certification Policy and Procedures, LSUHSC-S utilizes time and effort certifications to support salary charges to sponsored projects as an after-the-fact certification of effort of all individuals when all or a portion of their salaries are charged to a sponsored project. Based on LSUHSC-S’s policy, time and effort certifications should be completed within approximately 90 days of the end of the biannual period. Management interprets the end of the period to be when the time and effort reports are sent to the departments once the last month of the biannual period is closed in the accounting system. If there is a substantial (five percent or more) difference between the salary charges and the effort actually expended by the individual on projects during the biannual reporting period, a payroll reallocation must be created within 30 days. Per 2 CFR 200.303, the non-federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Per the Standards for Internal Control in the Federal Government, examples of common categories of control activities include accurate and timely recording of transactions. In addition, the National Institutes of Health (NIH) is the grantor for the majority of the LSUHSC-S’s R&D grant awards. Per the NIH Grants Policy Statement §7.5, cost transfers that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. An explanation merely stating that the transfer was made “to correct error" or "to transfer to correct project" is not sufficient. Transfers of costs from one project to another or from one competitive segment to the next solely to cover cost overruns are not allowable. Cause: LSUHSC-S faculty are not completing time and effort certifications timely, which contributes to untimely adjustments for compensation. In addition, LSUHSC-S did not provide sufficient supporting documentation for the auditor to test federal regulations related to cash management for all sample items selected due to an insufficient method for sorting and storing the documentation related to each federal award. Finally, the lack of segregation of duties was caused by LSUHSC-S granting certain employees’ access that allowed for self-approvals. Effect: Untimely certifications and the untimely discovery and correction of errors increases the risk of inaccurate reporting and may result in an inability to complete approved projects within the approved budget and/or period of performance. As a result, LSUHSC-S may have to utilize university funds to complete approved projects. In addition, inadequate controls and noncompliance with federal awards increases the likelihood of disallowed costs, which LSUHSC-S may have to repay to the federal grantor. Recommendation: Management should ensure they have adequate controls over time and effort certifications, purchases, and reimbursement requests. In addition, management should ensure adequate segregation of duties covering approvals of all transaction types. Management’s Response and Corrective Action Plan: Management concurred with the finding and outlined a plan of corrective action (B-47).
2024-005 - Noncompliance with and Weakness in Controls over Federal Research and Development Expenses State Entity: Louisiana State University Health Sciences Center - Shreveport (LSUHSC-S) Award Years: Various Award Numbers: Various Compliance Requirements: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Cash Management Pass-Through Entities: Various Repeat Finding: Yes (Prior Year Finding No. 2023-006) See Schedule of Findings and Questioned Costs for chart/table. Condition: For the sixth consecutive year, LSUHSC-S did not ensure internal controls over documentation of personnel services were operating effectively, and did not ensure compliance with federal guidance regarding cost transfers applicable to the Research and Development (R&D) Cluster. In a non-statistical random sample of 27 out of 2,933 payroll adjusting entries affecting R&D, we noted the following exceptions for 15 adjusting entries, some of which had multiple exceptions: • Seven (26%) adjustments did not have adequate documentation to fully explain how the error occurred and/or the transfer was not accomplished within 90 days of when the error was discovered. • For five (19%) adjustments, LSUHSC-S did not provide sufficient information to determine if the cost transfers were completed timely. • For three (11%) adjustments, LSUHSC-S did not provide sufficient information to verify the new charge was certified by a responsible organizational official. • For three (11%) adjustments, LSUHSC-S did not provide sufficient documentation to determine whether adjustments were allowable per the award, which resulted in questioned costs totaling $2,686. • For twelve (44%) adjustments, LSUHSC-S did not provide sufficient documentation to evidence that expenses were incurred prior to reimbursement and that funds were returned to the federal agency for expenses that were removed from the federal award. We also performed an analysis of interim payroll adjusting journal entries to record cost transfers to and/or from R&D awards. We noted that 465 (20%) out of 2,309 adjusting journal entries were made more than 90 days after the end of the biannual period from the original transactions. The adjustments were made 103 to 430 days after the end of the biannual period. In addition, in a non-statistical random sample of 53 out of 11,272 expense transactions charged to R&D during the fiscal year ending June 30, 2024, we noted the following exceptions for 10 transactions, some of which had multiple exceptions: • Six (11%) time and effort certifications for salary and related benefit expenses tested were completed 92 to 248 days after the end of the biannual period, or LSUHSC-S did not provide sufficient documentation to determine that the certifications were completed timely. • For one (2%) transaction, LSUHSC-S did not provide documentation approving the employee’s salary on the applicable award. • For four (8%) transactions, LSUHSC-S did not provide documentation that indicated expenses were reconciled and approved prior to submitting reimbursement requests. Additionally, for three of these transactions, LSUHSC-S did not provide sufficient support to determine if the expenses were incurred prior to the reimbursement request or if LSUHSC-S minimized the time that elapsed between the transfer of funds from the federal government and LSUHSC-S’s disbursement for federal program purposes Finally, it was noted during our procedures related to requisition transactions that LSUHSC-S lacked proper segregation of duties in the online requisition process. We noted in an analysis of all requisition transactions that are subject to online approvals (14,941 transactions totaling $25,349,749) that 4,916 transactions totaling $7,222,206 (28%) did not have adequate segregation of duties. Of these, 306 transactions totaling $338,679 related to the R&D Cluster. Criteria: 2 CFR 200.430(i)(1)(i) requires that charges to federal awards for salaries and wages must be supported by a system of internal control which provides reasonable assurance the charges are accurate, allowable, and properly allocated. Per 2 CFR 200.430(i)(1)(viii), budget estimates alone do not qualify as support for charges to federal awards, but may be used for interim accounting purposes, provided that the system for establishing the estimates produces reasonable approximations of the activity performed, significant changes in work activity are identified and entered into the records in a timely manner, and the non-federal entity’s system of internal controls includes processes to review after-the-fact interim charges and make necessary adjustments. Per LSUHSC-S’s Time and Effort Certification Policy and Procedures, LSUHSC-S utilizes time and effort certifications to support salary charges to sponsored projects as an after-the-fact certification of effort of all individuals when all or a portion of their salaries are charged to a sponsored project. Based on LSUHSC-S’s policy, time and effort certifications should be completed within approximately 90 days of the end of the biannual period. Management interprets the end of the period to be when the time and effort reports are sent to the departments once the last month of the biannual period is closed in the accounting system. If there is a substantial (five percent or more) difference between the salary charges and the effort actually expended by the individual on projects during the biannual reporting period, a payroll reallocation must be created within 30 days. Per 2 CFR 200.303, the non-federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Per the Standards for Internal Control in the Federal Government, examples of common categories of control activities include accurate and timely recording of transactions. In addition, the National Institutes of Health (NIH) is the grantor for the majority of the LSUHSC-S’s R&D grant awards. Per the NIH Grants Policy Statement §7.5, cost transfers that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. An explanation merely stating that the transfer was made “to correct error" or "to transfer to correct project" is not sufficient. Transfers of costs from one project to another or from one competitive segment to the next solely to cover cost overruns are not allowable. Cause: LSUHSC-S faculty are not completing time and effort certifications timely, which contributes to untimely adjustments for compensation. In addition, LSUHSC-S did not provide sufficient supporting documentation for the auditor to test federal regulations related to cash management for all sample items selected due to an insufficient method for sorting and storing the documentation related to each federal award. Finally, the lack of segregation of duties was caused by LSUHSC-S granting certain employees’ access that allowed for self-approvals. Effect: Untimely certifications and the untimely discovery and correction of errors increases the risk of inaccurate reporting and may result in an inability to complete approved projects within the approved budget and/or period of performance. As a result, LSUHSC-S may have to utilize university funds to complete approved projects. In addition, inadequate controls and noncompliance with federal awards increases the likelihood of disallowed costs, which LSUHSC-S may have to repay to the federal grantor. Recommendation: Management should ensure they have adequate controls over time and effort certifications, purchases, and reimbursement requests. In addition, management should ensure adequate segregation of duties covering approvals of all transaction types. Management’s Response and Corrective Action Plan: Management concurred with the finding and outlined a plan of corrective action (B-47).
2024-005 - Noncompliance with and Weakness in Controls over Federal Research and Development Expenses State Entity: Louisiana State University Health Sciences Center - Shreveport (LSUHSC-S) Award Years: Various Award Numbers: Various Compliance Requirements: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Cash Management Pass-Through Entities: Various Repeat Finding: Yes (Prior Year Finding No. 2023-006) See Schedule of Findings and Questioned Costs for chart/table. Condition: For the sixth consecutive year, LSUHSC-S did not ensure internal controls over documentation of personnel services were operating effectively, and did not ensure compliance with federal guidance regarding cost transfers applicable to the Research and Development (R&D) Cluster. In a non-statistical random sample of 27 out of 2,933 payroll adjusting entries affecting R&D, we noted the following exceptions for 15 adjusting entries, some of which had multiple exceptions: • Seven (26%) adjustments did not have adequate documentation to fully explain how the error occurred and/or the transfer was not accomplished within 90 days of when the error was discovered. • For five (19%) adjustments, LSUHSC-S did not provide sufficient information to determine if the cost transfers were completed timely. • For three (11%) adjustments, LSUHSC-S did not provide sufficient information to verify the new charge was certified by a responsible organizational official. • For three (11%) adjustments, LSUHSC-S did not provide sufficient documentation to determine whether adjustments were allowable per the award, which resulted in questioned costs totaling $2,686. • For twelve (44%) adjustments, LSUHSC-S did not provide sufficient documentation to evidence that expenses were incurred prior to reimbursement and that funds were returned to the federal agency for expenses that were removed from the federal award. We also performed an analysis of interim payroll adjusting journal entries to record cost transfers to and/or from R&D awards. We noted that 465 (20%) out of 2,309 adjusting journal entries were made more than 90 days after the end of the biannual period from the original transactions. The adjustments were made 103 to 430 days after the end of the biannual period. In addition, in a non-statistical random sample of 53 out of 11,272 expense transactions charged to R&D during the fiscal year ending June 30, 2024, we noted the following exceptions for 10 transactions, some of which had multiple exceptions: • Six (11%) time and effort certifications for salary and related benefit expenses tested were completed 92 to 248 days after the end of the biannual period, or LSUHSC-S did not provide sufficient documentation to determine that the certifications were completed timely. • For one (2%) transaction, LSUHSC-S did not provide documentation approving the employee’s salary on the applicable award. • For four (8%) transactions, LSUHSC-S did not provide documentation that indicated expenses were reconciled and approved prior to submitting reimbursement requests. Additionally, for three of these transactions, LSUHSC-S did not provide sufficient support to determine if the expenses were incurred prior to the reimbursement request or if LSUHSC-S minimized the time that elapsed between the transfer of funds from the federal government and LSUHSC-S’s disbursement for federal program purposes Finally, it was noted during our procedures related to requisition transactions that LSUHSC-S lacked proper segregation of duties in the online requisition process. We noted in an analysis of all requisition transactions that are subject to online approvals (14,941 transactions totaling $25,349,749) that 4,916 transactions totaling $7,222,206 (28%) did not have adequate segregation of duties. Of these, 306 transactions totaling $338,679 related to the R&D Cluster. Criteria: 2 CFR 200.430(i)(1)(i) requires that charges to federal awards for salaries and wages must be supported by a system of internal control which provides reasonable assurance the charges are accurate, allowable, and properly allocated. Per 2 CFR 200.430(i)(1)(viii), budget estimates alone do not qualify as support for charges to federal awards, but may be used for interim accounting purposes, provided that the system for establishing the estimates produces reasonable approximations of the activity performed, significant changes in work activity are identified and entered into the records in a timely manner, and the non-federal entity’s system of internal controls includes processes to review after-the-fact interim charges and make necessary adjustments. Per LSUHSC-S’s Time and Effort Certification Policy and Procedures, LSUHSC-S utilizes time and effort certifications to support salary charges to sponsored projects as an after-the-fact certification of effort of all individuals when all or a portion of their salaries are charged to a sponsored project. Based on LSUHSC-S’s policy, time and effort certifications should be completed within approximately 90 days of the end of the biannual period. Management interprets the end of the period to be when the time and effort reports are sent to the departments once the last month of the biannual period is closed in the accounting system. If there is a substantial (five percent or more) difference between the salary charges and the effort actually expended by the individual on projects during the biannual reporting period, a payroll reallocation must be created within 30 days. Per 2 CFR 200.303, the non-federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Per the Standards for Internal Control in the Federal Government, examples of common categories of control activities include accurate and timely recording of transactions. In addition, the National Institutes of Health (NIH) is the grantor for the majority of the LSUHSC-S’s R&D grant awards. Per the NIH Grants Policy Statement §7.5, cost transfers that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. An explanation merely stating that the transfer was made “to correct error" or "to transfer to correct project" is not sufficient. Transfers of costs from one project to another or from one competitive segment to the next solely to cover cost overruns are not allowable. Cause: LSUHSC-S faculty are not completing time and effort certifications timely, which contributes to untimely adjustments for compensation. In addition, LSUHSC-S did not provide sufficient supporting documentation for the auditor to test federal regulations related to cash management for all sample items selected due to an insufficient method for sorting and storing the documentation related to each federal award. Finally, the lack of segregation of duties was caused by LSUHSC-S granting certain employees’ access that allowed for self-approvals. Effect: Untimely certifications and the untimely discovery and correction of errors increases the risk of inaccurate reporting and may result in an inability to complete approved projects within the approved budget and/or period of performance. As a result, LSUHSC-S may have to utilize university funds to complete approved projects. In addition, inadequate controls and noncompliance with federal awards increases the likelihood of disallowed costs, which LSUHSC-S may have to repay to the federal grantor. Recommendation: Management should ensure they have adequate controls over time and effort certifications, purchases, and reimbursement requests. In addition, management should ensure adequate segregation of duties covering approvals of all transaction types. Management’s Response and Corrective Action Plan: Management concurred with the finding and outlined a plan of corrective action (B-47).
2024-005 - Noncompliance with and Weakness in Controls over Federal Research and Development Expenses State Entity: Louisiana State University Health Sciences Center - Shreveport (LSUHSC-S) Award Years: Various Award Numbers: Various Compliance Requirements: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Cash Management Pass-Through Entities: Various Repeat Finding: Yes (Prior Year Finding No. 2023-006) See Schedule of Findings and Questioned Costs for chart/table. Condition: For the sixth consecutive year, LSUHSC-S did not ensure internal controls over documentation of personnel services were operating effectively, and did not ensure compliance with federal guidance regarding cost transfers applicable to the Research and Development (R&D) Cluster. In a non-statistical random sample of 27 out of 2,933 payroll adjusting entries affecting R&D, we noted the following exceptions for 15 adjusting entries, some of which had multiple exceptions: • Seven (26%) adjustments did not have adequate documentation to fully explain how the error occurred and/or the transfer was not accomplished within 90 days of when the error was discovered. • For five (19%) adjustments, LSUHSC-S did not provide sufficient information to determine if the cost transfers were completed timely. • For three (11%) adjustments, LSUHSC-S did not provide sufficient information to verify the new charge was certified by a responsible organizational official. • For three (11%) adjustments, LSUHSC-S did not provide sufficient documentation to determine whether adjustments were allowable per the award, which resulted in questioned costs totaling $2,686. • For twelve (44%) adjustments, LSUHSC-S did not provide sufficient documentation to evidence that expenses were incurred prior to reimbursement and that funds were returned to the federal agency for expenses that were removed from the federal award. We also performed an analysis of interim payroll adjusting journal entries to record cost transfers to and/or from R&D awards. We noted that 465 (20%) out of 2,309 adjusting journal entries were made more than 90 days after the end of the biannual period from the original transactions. The adjustments were made 103 to 430 days after the end of the biannual period. In addition, in a non-statistical random sample of 53 out of 11,272 expense transactions charged to R&D during the fiscal year ending June 30, 2024, we noted the following exceptions for 10 transactions, some of which had multiple exceptions: • Six (11%) time and effort certifications for salary and related benefit expenses tested were completed 92 to 248 days after the end of the biannual period, or LSUHSC-S did not provide sufficient documentation to determine that the certifications were completed timely. • For one (2%) transaction, LSUHSC-S did not provide documentation approving the employee’s salary on the applicable award. • For four (8%) transactions, LSUHSC-S did not provide documentation that indicated expenses were reconciled and approved prior to submitting reimbursement requests. Additionally, for three of these transactions, LSUHSC-S did not provide sufficient support to determine if the expenses were incurred prior to the reimbursement request or if LSUHSC-S minimized the time that elapsed between the transfer of funds from the federal government and LSUHSC-S’s disbursement for federal program purposes Finally, it was noted during our procedures related to requisition transactions that LSUHSC-S lacked proper segregation of duties in the online requisition process. We noted in an analysis of all requisition transactions that are subject to online approvals (14,941 transactions totaling $25,349,749) that 4,916 transactions totaling $7,222,206 (28%) did not have adequate segregation of duties. Of these, 306 transactions totaling $338,679 related to the R&D Cluster. Criteria: 2 CFR 200.430(i)(1)(i) requires that charges to federal awards for salaries and wages must be supported by a system of internal control which provides reasonable assurance the charges are accurate, allowable, and properly allocated. Per 2 CFR 200.430(i)(1)(viii), budget estimates alone do not qualify as support for charges to federal awards, but may be used for interim accounting purposes, provided that the system for establishing the estimates produces reasonable approximations of the activity performed, significant changes in work activity are identified and entered into the records in a timely manner, and the non-federal entity’s system of internal controls includes processes to review after-the-fact interim charges and make necessary adjustments. Per LSUHSC-S’s Time and Effort Certification Policy and Procedures, LSUHSC-S utilizes time and effort certifications to support salary charges to sponsored projects as an after-the-fact certification of effort of all individuals when all or a portion of their salaries are charged to a sponsored project. Based on LSUHSC-S’s policy, time and effort certifications should be completed within approximately 90 days of the end of the biannual period. Management interprets the end of the period to be when the time and effort reports are sent to the departments once the last month of the biannual period is closed in the accounting system. If there is a substantial (five percent or more) difference between the salary charges and the effort actually expended by the individual on projects during the biannual reporting period, a payroll reallocation must be created within 30 days. Per 2 CFR 200.303, the non-federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Per the Standards for Internal Control in the Federal Government, examples of common categories of control activities include accurate and timely recording of transactions. In addition, the National Institutes of Health (NIH) is the grantor for the majority of the LSUHSC-S’s R&D grant awards. Per the NIH Grants Policy Statement §7.5, cost transfers that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. An explanation merely stating that the transfer was made “to correct error" or "to transfer to correct project" is not sufficient. Transfers of costs from one project to another or from one competitive segment to the next solely to cover cost overruns are not allowable. Cause: LSUHSC-S faculty are not completing time and effort certifications timely, which contributes to untimely adjustments for compensation. In addition, LSUHSC-S did not provide sufficient supporting documentation for the auditor to test federal regulations related to cash management for all sample items selected due to an insufficient method for sorting and storing the documentation related to each federal award. Finally, the lack of segregation of duties was caused by LSUHSC-S granting certain employees’ access that allowed for self-approvals. Effect: Untimely certifications and the untimely discovery and correction of errors increases the risk of inaccurate reporting and may result in an inability to complete approved projects within the approved budget and/or period of performance. As a result, LSUHSC-S may have to utilize university funds to complete approved projects. In addition, inadequate controls and noncompliance with federal awards increases the likelihood of disallowed costs, which LSUHSC-S may have to repay to the federal grantor. Recommendation: Management should ensure they have adequate controls over time and effort certifications, purchases, and reimbursement requests. In addition, management should ensure adequate segregation of duties covering approvals of all transaction types. Management’s Response and Corrective Action Plan: Management concurred with the finding and outlined a plan of corrective action (B-47).