Finding Text
Finding 2023-001 – Allowable Costs/Cost Principles, Internal Control
Identification of the federal program
Assistance listing number and title: 93.493 Congressional Directives
Agency: U.S. Department of Health and Human Services
Federal award identification number (FAIN): H79FG000881
Federal award year: 2022
Criteria or specific requirement (including statutory, regulatory or other citation)
2 CFR 200.303(a) requires that a non-federal entity must “(a) establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls would be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States and the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).”
2 CFR 200.430(i)(1)(i) states that charges to Federal awards for salaries and wages must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. 2 CFR 200.430(i)(1)(v) also provides that salaries and wages must comply with the established accounting policies and practices of the non-Federal entity.
Condition
For four (4) of forty (40) payroll expenditures selected for testing, the System’s management did not perform the internal controls over the required allowability criteria.
Cause
The System failed to effectively implement controls over the required allowability criteria.
Effect or potential effect
Costs charged to Federal awards may be inaccurate, unallowable, or improperly allocated.
Questioned costs
None.
Context
From the population of payroll expenditures totaling $939,170, EY randomly selected 40 employees from different pay periods in 2023 totaling $94,279. Out of the 40 selections, 4 (or 10%) of employees’ timecards did not have evidence of manager’s review and approval of their time charged to the grant totaling $12,463 prior to processing payroll.
Identification as a repeat finding, if applicable
Not a repeat finding.
Recommendation
We recommend management to implement effective internal controls over the allowability of costs charged to the federal program. Management must ensure that costs charged to the federal program are adequately documented and reviewed.
Views of responsible officials
Management will implement an additional review and approval process. Staff assigned to grant activities will provide a screenshot of their bi-weekly timecard to their manager for review and approval. Upon manager review, the document will be forwarded to the grant program leadership team for approval and documentation.