Finding Text
Finding 2023-003 – Activities Allowed or Unallowed and Allowable Costs/Cost Principles
Information of the federal program:
Federal Grantor: United States Department of Health and Human Services
Assistance Listing No.: 93.866, Aging Research
Federal Grantor: United States Department of Health and Human Services (HHS)
Assistance Listing No.: 93.837, Cardiovascular Diseases Research
Pass-Through Grantor: University of Wisconsin – Madison
Criteria or specific requirement (including statutory, regulatory or other citation):
Section 200.303 of the Uniform Guidance states the following regarding internal control: “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).”
Section 200.430 states the following: (d) Unallowable costs.
The NIH allowable compensation for certain employees is subject to a ceiling in accordance with statute.
(1) Costs which are unallowable under other sections of these principles must not be allowable under this section solely on the basis that they constitute personnel compensation.
(2) For the amount of the ceiling for cost-reimbursement contracts, the covered compensation subject to the ceiling, the covered employees, and other relevant provisions, see 10 U.S.C. 2324(e)(1)(P), and 41 U.S.C. 1127 and 4304(a)(16). For other types of Federal awards, other statutory ceilings may apply.The NIH allowable compensation for certain employees is subject to a ceiling in accordance with statute.
Condition:
The salary expense recorded for employees above the NIH salary cap was not calculated correctly as it did not properly take into consideration the NIH salary cap requirements.
Cause:
Management did not calculate the NIH salary cap requirement correctly; therefore, the allowable payroll expense reported was overstated.
Effect or potential effect:
Payroll expenditures exceeding the NIH salary cap were charged to the research and development grants.
Questioned costs:
$819, which represents the payroll costs incurred for the pay period selected in excess of the salary cap amounts related to the following federal awards:
93.866 $434
93.837 $385
Context:
We selected 40 payroll transactions which totaled $32,051 from a payroll population of $5,471,507 for the year ended December 31, 2023. We identified 4 instances, which represented total salary cost of $2,337, where the salary cap amounts were not calculated correctly and, therefore, the salary expense charged to the grants was overstated by $819.
Identification as a repeat finding, if applicable:
This finding is not a repeat finding from the prior year.
Recommendation:
Management should implement internal controls to review the salary cap adjustment calculation to ensure that the salary expenses charged to the program are appropriate.
Views of responsible officials:
The Research Institute has had a long-standing practice of reviewing salary cap limitations on grants. During the initial meeting for a new award (“The Kick-Off meeting”), the level of effort for proposed staff is confirmed, and any staff salaries exceeding the current salary cap were identified. This ensured that appointments on grants were appropriately updated. Due to changes in the GM10 not under the purview of the Research Institute select effort distributions were inadvertently changed to accommodate salary changes.