Finding 1175365 (2025-006)

Section III – Federal Award Findings and Questioned Costs Finding Reference Number: 2025-006 Federal Agency: Department of Health and Human Services (DHHS) Program Name: Research and Development Cluster ALN: 93.778 Award Number: GSA 22-630-8000-0015 Federal Award Year: 2024-2025 Compliance Requirement: Allowable Costs Condition: During our testing over allowable fringe expenditures, we identified a transaction in which the fringe expenditure charged to the grant was incorrectly calculated resulting in the overstatement of fringe expenditures. Specifically, we tested 40 fringe samples and noted 1 sample in which the FICA expense was incorrectly calculated resulting in an overstatement of FICA expenditures charged to the grant of $1,245.93. Criteria: Per 2 CFR section 200.430(a), costs of compensation for personal services are allowable to the extent the total compensation for individual employee is reasonable for the services rendered and conforms to the established written policy of the recipient or subrecipient consistently applied to both federal and nonfederal activities. Per 2 CFR § 200.303 requires the recipient of federal funds to establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Effect: UNM claimed and received payment on an unallowable expenditure under the grant agreement of $1,245.93. Cause: While management’s review over payroll adjustments ensures reversals were fully offsetting against the original payroll entry in total, the review did not properly ensure that reversals were fully offsetting against the original payroll entry at the index-account level (individual grants are tracked via index accounts). Questioned Costs: $1,245.93. Represents the difference between the actual FICA expenditure charged to the grant and that calculated using the gross pay allocated to the grant and the applicable FICA rate. Repeat Finding: No Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Auditor’s Recommendation: We recommend that UNM revise its’ procedures related to the review of payroll and fringe adjustments to ensure that reversing entries are completely and accurately reversed at the index-account level as opposed to performing the review in aggregate.