Finding Text
Federal Agency: Department of Health and Human Services Federal Program Name: Block Grants for Community Mental Health Services and Block Grants for Prevention and Treatment of Substance Abuse Federal Assistance Listing Number: 93.958 and 93.959 Pass-Through Agency: State of Connecticut Department of Mental Health and Addiction Services, and State of Connecticut Department Children and Family Services Award Period: 7/1/2024-6/30/2025 and 3/1/2023-8/31/2025 Type of Finding: Allowed Costs in Relation of Payroll Allocations Criteria or Specific Requirement: The Office of Management and Budget (OMB) Cost Principles and Uniform Guidance require expenditures charged to federal awards to be recorded in accordance with applicable cost standards and the entity’s cost allocation policies, including proper allocations of payroll related costs. Time and effort reported must correspond to the actual hours worked and be consistent with the allocations of payroll costs reflected in the entity’s payroll records and general ledger. Condition: During testing of payroll transactions charged to federal awards, exceptions were identified across four employees in which the hours reflected on employee time cards did not agree to the labor costs allocated to federal awards in the general ledger and/or journal entries. The discrepancies noted indicate that payroll allocations to federal programs were not consistently supported by the underlying time records maintained by the entity. However, all federal funding is from Department of Health and Human Services. Questioned Costs: Immaterial Context: The exceptions identified relate to discrepancies between actual time worked as documented on employee time cards and the labor costs recorded and allocated to federal programs within the general ledger. While the employees performed work during the relevant periods and total payroll costs were accurately stated, the allocations to federal awards were not supported by the underlying time card records, resulting in labor charges to federal programs that were not reflective of actual time and effort spent on those programs. Cause: The payroll allocation process was not reconciled to individual employee time card records prior to posting journal entries to the general ledger. Recommendation: Management should implement reconciliation procedures to ensure that payroll allocations recorded to federal award programs are supported by and agree to actual time records prior to recording journal entries to the general ledger. Views of Responsible Officials and Planned Corrective Action: Management concurs with the finding.