Finding 1148618 (2024-004)

Item 2024-004 - Activities Allowed or Unallowed, Allowable Costs/Cost Principles - U.S. Department of Health and Human Services, Unaccompanied Alien Children Program (Assistance Listing Number 93.676), FAIN # 90ZU0385, 90ZU0603, 90ZU0567, and 90ZU0536, for FY 2024 - Significant Deficiency Criteria In accordance with 2 CFR, Part 200.430(i)(1) of the Office of Management and Budget's Uniform Guidance, charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed, which must, among other things: (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. Statement of Condition During our audit, we noted that for one of the employees tested, the percentage of salary allocation per time and effort attestation form did not agree to the salary charged per the general ledger. Cause Inconsistent application of the internal control. Effect The deficiency in the Agency's controls over compliance with activities allowed or unallowed, and allowable cost/cost principles could result in unallowed payroll costs being charged to the grant. Questioned Costs None Context We selected 25 salary transactions charged to the federal program to test controls over compliance for allowable costs/activities allowed. Out of the 25 transactions tested, we noted one instance where the percentage allocation of salary per time and effort attestation form did not agree to the salary charged per the general ledger. Identification as a repeat finding This is not a repeat finding. Recommendation We recommend that the Agency strengthen their internal control policies and procedures to ensure that the allocations per the time and effort attestation forms agree with the amount charged to the grant per the general ledger. Management response We acknowledge the recommendation and recognize the importance of aligning time and effort attestations with the amounts charged to grants in the general ledger. We ensure that any changes to employee allocations are reflected timely in our payroll and accounting systems to maintain consistency between documentation and financial records. Additionally, we are reviewing our internal controls and procedures to identify any process gaps and reinforce communication between HR, Payroll, and Finance teams. Going forward, we will enhance oversight to ensure that updates related to employee funding sources are promptly recorded, which will help maintain accurate grant reporting and compliance with applicable regulations.