Finding Text
Finding 2025-010 – B. Allowable Costs/Cost Principles Information on Federal Program(s) – Research and Development Cluster (ALN 43.009, ALN 93.859) Criteria or Specific Requirement - 2 CFR §200.430(i)(1)(i) indicates that charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Additionally, 2 CFR §200 requires that costs charged to programs are adequately documented. Condition – The summary level hourly documentation retained for payroll expenditures charged to the program was not formally supported with an adequate system of internal controls. Additionally, for certain non-payroll expenditures selected for testing, the University was unable to provide documentation adequately supporting the amount charged to the federal award. Cause - Administrative oversight and insufficient internal controls. Effect or Potential Effect – Noncompliance with documentation of payroll and non-payroll expenditure standards. Questioned Costs – Below reportable threshold. Context – Context is as follows: • Payroll Expenditures: For 4 of 4 employees selected for testing, the summary level hourly documentation retained was not formally supported with an adequate system of internal controls. • Non-Payroll Expenditures: For 2 of 8 expenditures selected for testing, the University was unable to provide adequate documentation to fully substantiate the expenditure balance. We also noted that the University did not have formalized internal controls over indirect costs charged to the federal programs. Indication of Repeat Finding - This is a repeat of prior year Finding 2024-011. Recommendation – We recommend that the University enhance its internal controls over compliance to ensure that time and effort records are appropriately maintained. We also recommend that the University enhance its internal controls over compliance to ensure all non-payroll expenditures are fully supported as required. Views of Responsible Officials – The University acknowledges that the internal controls surrounding the allowable costs during fiscal year 2025 were lacking and needed to be reinforced for future fiscal years. With the hire of the new CFO and HR leader post June 30, 2025 – these enhanced controls and processes have been put in place, and all payroll and other expenses are detailed, supported, and filed appropriately.