Finding Text
Finding Number: 2023-005
Activities Allowed or Unallowed; Allowable Costs/Cost Principles (Material Weakness)
Information on Federal Program:
U.S. Department of Health and Human Services
ALN Number: 93.676
ALN Name: Unaccompanied Alien Children Program
Contract Period: 07/01/2022 - 6/30/2023
Criteria:
The Uniform Guidance Section §200.403(g) states that for costs to be allowable under federal awards, they must be adequately documented, and there must be sufficient documentation.
Condition:
During our testing of personnel costs, we noted that management’s method of allocating shared personnel costs is performed after the fiscal year ended, instead of performing timely allocations throughout the fiscal year. Additionally, out of the 60 payroll samples selected for testing, we were unable to obtain adequate documentation to support the approval of two employees’ pay rates.
Questioned Costs:
Not determinable.
Context:
This is a condition identified per our compliance testing of personnel costs.
Effect or Potential Effect:
We were unable to confirm the allowability, validity, and completeness of the expenses on a monthly basis.
Repeat Finding:
This is a repeated finding from prior year. See Finding No. 2022-004 on the Summary Schedule of Prior Audit Findings.
Cause:
There is no effectively established periodic review or assessment process to ensure the accuracy of employee assignments within ADP throughout the year.
Recommendation:
The lack of proper monthly federal and state cost allocation prevents Lincoln Hall from presenting functionally accurate interim financial statements. We recommend implementing a process to ensure these costs are allocated correctly within Lincoln Hall’s general ledger monthly.
Regular cost allocation will enable Lincoln Hall to submit accurate and well-supported interim financial data to its funding sources. Additionally, maintaining proper tracking and allocation throughout the year will help prevent the need for significant cost reallocations by function at year-end.
We also recommend that management maintain adequate documentation of employee pay rates to ensure the accuracy of personnel costs and the proper authorization of employee salaries.
Views of Responsible Official:
Lincoln Hall agrees with the finding. Lincoln Hall continues to take steps to improve this process. See Lincoln Hall’s further response to this finding as described in the accompanying management’s planned corrective actions, Appendix A.