Finding Text
U.S. Department of Health and Human Services Leading Edge Acceleration Projects (LEAP) in Health Information Technology - 93.345 Award# 90AX0034/01-00 Criteria or Specific Requirement – Allowable Costs/Cost Principles/Cash Management Federal regulations state that “charges to federal awards for salaries and wages, must be based on records that accurately reflect the work performed.” The regulations also state that “the records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated” and “budget estimates alone do not qualify as support for charges to federal awards” (2 CFR 200.430(i)). Additionally, costs may not be included as a cost of any other federally-financed program in either the current or a prior period (2 CFR 200.403(f)). Non-federal entities must minimize the time elapsing between the transfer of funds from the U.S. Treasury or pass-through entity and disbursement by the non-federal entity for direct program or project costs and the proportionate share of allowable indirect costs, whether the payment is made by electronic funds transfer, or issuance or redemption of checks, warrants, or payment by other means (2 CFR Section 200.305(b)).issuance or redemption of checks, warrants, or payment by other means (2 CFR Section 200.305(b)). Condition – During our test work over the LEAP grant, we noted the Organization did not have time and activity records with sufficient detail per federal regulations to support its compensation and fringe benefit expenses. Additionally, it appeared a substantial portion of certain employee's time was 100% charged to the LEAP award; however, may have also been included on other federal awards and been reimbursed. Lastly, indirect costs were charged to the federal program on the salary expenses which were not fully supported as required by the Uniform Guidance. Cause – There is a lack of understanding of the requirements of the time and activity reports and a lack of detail tracking by project of personnel time. Effect – Based on testing completed, the Organization did not have sufficient procedures to record and verify employees time and activity throughout fiscal year 2023. This resulted in the Organization drawing down funds for unsupported expenses. Questioned Costs – Total questioned costs are $278,735. This includes $192,231 of all salaries and benefits charged to the award which lacked documentation to support the charge and allocation to the grant and $86,504 in indirect costs charged on these related expenses. Context - There was a total of $192,231 in salaries and fringe benefits charged to the LEAP award during the year ended June 30, 2023 which encompassed six employees. One hundred percent of the employees were reviewed and none had proper documentation to support the charge and allocation to the grant (e.g ., daily time and activity records, etc.). Per discussions with management and further review, the amounts charged to the grant were based on the approved budget for the position and the internal allocation performed each payroll period. Additionally, it is uncertain how much of these employees' were also charged to other federally financed programs during the year. Identification as a Repeat Finding, if applicable – Not applicable Recommendation – We recommend that management utilize a time and activity method which meets the requirements of federal regulations. We also recommend employees and their supervisors are provided training on the requirements. Views of Responsible Official and Planned Corrective Actions – Management agrees with finding. See corrective action plan.