Finding Text
Federal Agency: U.S. Department of Health and Human Services Federal Program Name: Special Programs for the Aging, Title IV, and Title II, Discretionary Projects Grants for New and Expanded Services under the Health Center Program and Senior Companion Program Assistance Listing Number: 93.048 Pass-Through: N/A Federal Award Identification Number and Year: All Award #s under ALN 93.048 Award Period: Project period multiple; Budget period: All Projects #s under ALN 93.048 Questioned Costs: None We note over/under-billing by pay period. Type of Finding (F) Significant Deficiency in Internal Control Over Compliance of Federal Awards (G) Instances of Noncompliance related to Federal Awards Statement of Condition During our audit, we noted instances in which timesheets were not approved, and it appears that allocations are based mainly on budget rather than actual direct and indirect time spent on the grant. In July 2024, the timesheets were improved, however the general ledger amount is consistent indicating that the amount in general ledger is based on budget rather than the percentage of hours worked under the grant. Management implemented a true-up process to be able to verify the payroll charged over one year budget period. Note: the timesheet issue is related only to staff paid from multiple sources (5 out of 11 employees). Management progress: The Institute implemented a new timesheet and an annual reconciliation to verify if the allocations are truing up over one year Budget period and to adjust the Budget in the allowed threshold, if needed. Context 60 transactions were tested. Out of 60, 22 were payroll and payroll taxes related. 14 payroll transactions out of 22 tested, including wages and payroll taxes, seem to be allocated based on budget (per each pay period rather than direct time spent on grant. In some instances (paydays), some grants were underbilled and in some instances were overbilled and the net effect of questioned costs summed up close to $0 (if the overall reconciliation was taken in consideration). The Institute implemented one year reconciliation to make sure that the variations net to zero over the budget period. Criteria Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed (e.g., 2 CFR 200.430; for HHS awards, 45 CFR 75.430(i)). Records must be supported by internal controls, reflect total compensated activities, and support allocation among cost objectives. According to §75.430 (i) select standards for documentation of personal expenses are as follows: (1) Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (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, not exceeding 100% of compensated activities; (iv) Encompass both federally assisted, and all other activities compensated by the non-Federal entity on an integrated basis, but may include the use of subsidiary records as defined in the non-Federal entity's written policy; (v) Comply with the established accounting policies and practices of the non-Federal entity and (vii) Support the distribution of the employee's salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. Effect The organization does not appear to have sufficient internal controls in place and does not appear to be in compliance with grant requirements as set forth in 45 CFR Part 75. A potential effect of noncompliance of the federal award could result in disallowance of costs, suspension or termination of the award, or reduction of future allocations. Cause Internal controls over compliance do not appear to have been adequately implemented due to a lack of confirmation that the timesheet expenses match the general ledger. Recommendation We recommend the organization prevent recurrence of noncompliance through conducting regular reviews and reconciliations, providing timesheet training and guidance to staff and monitoring compliance. We also recommend a re-design of the timesheets, so grant allocations and calculations for direct and indirect cost are more easily performed and traceable to the grant general ledger. View of Responsible Official: The timesheet implemented in July 2024 properly reflects the actual vs budgeted hours for employees with multiple funding sources. We will continue to analyze discrepancies to determine if budget revisions are necessary. Finding resolved timeline: October 2025 Designated of employee position responsible for meeting this deadline: Bruce Young-Candelaria, President; Ricardo Colon Padilla, financial officer.