Finding Text
System of Internal Controls Over Compliance for Activities Allowed or Unallowed, Allowable Costs/Cost Principles, and Period of Performance
Federal Agency: U.S. Department of Health and Human Services
Pass-Through Entity: State of Nevada
Federal Program: Block Grants for Community Mental Health Services (AL# 93.958); Block Grants for Prevention and Treatment of Substance Abuse (AL# 93.959)
Criteria: In accordance with 2 CFR 200.400 and 45 CFR 75.303, the Organization is responsible for effective administration of federal awards through sound management practices, to include effective internal controls over supporting documentation for cost allocations.
Condition: A primary control over employee time entry and subsequent billing to grants is the review and approval of bimonthly timesheets by supervisors, and this review and approval is indicated by the supervisor signing the timesheet. During our testing, we noted that the signature of supervisors indicating this review was absent from 8 of the 64 timesheets tested for Block Grants for Community Mental Health Services, AL# 93.958 and 11 of the 68 timesheets tested for Block Grants for Prevention and Treatment of Substance Abuse, AL# 93.959. These grants had multiple duplicate employees tested between the two grants. Total unduplicated findings were that the signature of supervisors indicating this review was absent from 11 of the 88 unduplicated timesheets selected, indicating this primary control was not operating effectively during the year.
Cause: Digital signatures were utilized during the fiscal year that, at times, did not save properly. Timesheets were not re-reviewed or re-signed if they did not save properly. While a compensating control existed whereby the overall expenditures were reviewed during the request for reimbursement process prior to submission, the primary control was not consistently evidenced.
Effect: Lack of indication of review and approval of timesheets could cause inaccurate time entry and inaccurate requests for reimbursements to be processed.
Recommendation: We recommend that all timesheets are signed by a supervisor immediately after their review and approval to ensure documentation of the control exists and to ensure timesheet accuracy. We further recommend that, if timesheets with no signature are noted during the request for reimbursement process, they be returned to the supervisor for review and signature prior to the request for reimbursement being submitted.
Views of Responsible Officials and Planned Corrective Actions: As of April 2024, the organization implemented a new electronic timekeeping system (SwipeClock) in partnership with a third-party payroll provider. This system includes:
• Supervisor approval of all time entries.
• A final review by a member of the executive team (CEO, Operations Manager, or Accounting Coordinator).
This three-tiered approval process ensures accuracy and accountability in payroll allocation to federal grants.