Finding Text
Finding 2023-002 – Activities Allowed or Unallowed and Allowable Costs/Cost Principles
Identification of the federal program:
Federal Grantor: Department of Defense (DOD)
Assistance Listing No.: 12.420, Military Medical Research and Development
Pass-Through Grantor: Johns Hopkins University
Federal Grantor: United States Department of Health and Human Services (HHS)
Assistance Listing No.: 93.242, Mental Health Research Grants
Pass-Through Grantor: Rutgers State University
Federal Grantor: United States Department of Health and Human Services (HHS)
Assistance Listing No.: 93.350, National Center for Advancing Translational Sciences
Pass-Through Grantor: University of Chicago
Federal Grantor: United States Department of Health and Human Services (HHS)
Assistance Listing No.: 93.368, 21st Century Cures Act – Precision Medicine Initiative
Pass-Through Grantor: University of Chicago
Federal Grantor: United States Department of Health and Human Services (HHS)
Assistance Listing No.: 93.837, Cardiovascular Diseases Research
Pass-Through Grantor: University of Rochester, University of Wisconsin – Madison.
Federal Grantor: United States Department of Health and Human Services (HHS)
Assistance Listing No.: 93.847, Diabetes, Digestive, and Kidney Diseases Extramural Research
Pass-Through Grantor: University of Washington
Federal Grantor: United States Department of Health and Human Services (HHS)
Assistance Listing No.: 93.853, Extramural Research Programs in the Neurosciences and Neurological Disorders
Pass-Through Grantor: Rush University Medical Center
Federal Grantor: United States Department of Health and Human Services (HHS)
Assistance Listing No.: 93.859, Biomedical Research and Research Training
Federal Grantor: United States Department of Health and Human Services (HHS)
Assistance Listing No.: 93.865, Child Health and Human Development Extramural Research
Federal Grantor: United States Department of Health and Human Services (HHS)
Assistance Listing No.: 93.946, Cooperative Agreements to Support State-Based Safe Motherhood and Infant Health Initiative Programs
Pass-Through Grantor: Northwestern University
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).”
Condition:
Management did not have sufficiently designed internal controls to retain documentation of the review of effort reports and, therefore, could not evidence the review of the effort reporting.
Cause:
Management did not retain evidence of approval of effort certifications for certain employees from January 1, 2023 to September 30, 2023.
In addition, the review of effort reports was not timely performed from October 1, 2023 to December 31, 2023.
Effect or potential effect:
Unallowable payroll costs may be charged to the federal program.
Questioned costs:
None.
Context:
We tested a sample of 18 payroll expenses, which totaled $11,080, for the period January 1, 2023 to September 30, 2023 and identified 5 transactions tested, which totaled $826, for which management did not retain support to document the effort report was reviewed for the period.
We tested a sample of 22 payroll expenses, which totaled $7,047, for the period October 1, 2023 to December 31, 2023 and noted that management did not perform a timely review of the effort certifications.
The total R&D Cluster expenditures reported on the Schedule are $13,409,825 for the year ended December 31, 2023. Payroll costs totaled $5,471,507, representing 40.79% of the total R&D Cluster expenditures.
Identification as a repeat finding, if applicable:
This finding is not a repeat finding from the prior year.
Recommendation:
Management should ensure effort report certifications and approvals are retained and timely performed.
Views of responsible officials:
The effort reporting practice at the Research Institute used automated messages to send certifications to the appropriate supervisor responsible for certifying the effort of the individuals charged to grants. The emails were maintained in a file that was checked to confirm the receipt of certifications. Management maintained records for the months January through August but the month of September is indeed missing. The process was disrupted in the last quarter of 2023 with the implementation of the new accounting system, Workday. The new Workday time and effort certification was not functional until the early months of 2024 and was the cause of the untimely certifications.
The new system is now operational. A new policy is being drafted along with new procedures. This system now requires that each individual certify their own time and effort and training will be provided to all staff this year.