Finding 1218974 (2025-101)

Material Weakness Repeat Finding
Requirement
B
Questioned Costs
-
Year
2025
Accepted
2026-06-26
Audit: 404984
Organization: Mainehealth (ME)

AI Summary

  • Core Issue: Payroll controls failed, leading to inaccurate time allocations and excess charges of $87,831.53 to R&D grants.
  • Impacted Requirements: Compliance with 2 CFR section 200.430 on allowable compensation and accurate record-keeping for federal awards.
  • Recommended Follow-Up: Enhance payroll controls, including updates to grant allocation procedures and improved oversight of time reporting.

Finding Text

PAYROLL CONTROLS Federal Agency: NIH, Department of Defense and Department of Health and Human Services. Award Name: Research and Development Cluster. Program Year: 2025. Assistance Listing Number: 12.420, 93.113, 93.350, 93.837, 93.838, 93.840, 93.846, 93.855, 93.859, 93.865, 93.866, 93.103, 93.084, 93.117, 93.145, 93.243. Criteria: In accordance with the documentation standards of 2 CFR section 200.430(a), costs of compensation for personal services are allowable to the extent the total compensation for individual employees is reasonable for the services rendered, conforms to the established written policy of the recipient or subrecipient and is determined and supported as provided in 2 CFR section 200.430(g), which states that charges to federal awards for salaries and wages must be based on records that accurately reflect the work performed. Condition: Payroll testing was completed for a sample of 40 individuals for which time and expenses were charged to R&D grants. Within that selection, we noted instances where payroll controls did not function properly in regard to percentage of time allocated to a grant, proper pay code inclusion, fringe benefit calculation and timely and supervisor level review of time sheets. Context: Management was able to isolate the time allocation error to 20 employees for which the time and costs charges to the grants were in excess of actual time allocation. This resulted in $87,831.53 in excess charged to the grants. Additional control deficiencies did not result in significant improper grant expenditures. Cause: A new payroll system was implemented in fiscal 2025. Grant allocation percentages were not accurately established in the payroll system upon conversion. Effect: Time charged to grant efforts by certain individuals exceeded actual time worked. Questioned Costs: $87,831.53. Recommendation: Review controls should be enhanced to ensure grant expenditures accurately reflect payroll costs. Views of Responsible Parties: Management acknowledges the control deficiencies identified related to payroll allocations within the newly implemented payroll system. These issues were identified early following implementation and were promptly investigated. Management isolated the issue to a population of 20 employees with unique circumstances and quantified the associated impact. Corrective actions have since been implemented to strengthen controls and ensure payroll charges to grant awards accurately reflect actual time worked. These actions include updates to grant allocation setup procedures within the payroll system, enhanced review and approval processes for time reporting, and additional oversight of payroll and grant charging activities. Management believes these enhancements mitigate the risk of similar errors occurring in the future.

Corrective Action Plan

PAYROLL CONTROLS Criteria: In accordance with the documentation standards of 2 CFR section 200.430(a), costs of compensation for personal services are allowable to the extent the total compensation for individual employees is reasonable for the services rendered, conforms to the established written policy of the recipient or subrecipient and is determined and supported as provided in 2 CFR section 200.430(g), which states that charges to federal awards for salaries and wages must be based on records that accurately reflect the work performed. Condition: Payroll testing was completed for a sample of 40 individuals for which time and expenses were charged to R&D grants. Within that selection, we noted instances where payroll controls did not function properly in regard to percentage of time allocated to a grant, proper pay code inclusion, fringe benefit calculation and timely and supervisor level review of time sheets. Context: Management was able to isolate the time allocation error to 20 employees for which the time and costs charges to the grants were in excess of actual time allocation. This resulted in $87,831.53 in excess charged to the grants. Additional control deficiencies did not result in significant improper grant expenditures. Cause: A new payroll system was implemented in fiscal 2025. Grant allocation percentages were not accurately established in the payroll system upon conversion. Effect: Time charged to grant efforts by certain individuals exceeded actual time worked. Recommendation: Review controls should be enhanced to ensure grant expenditures accurately reflect payroll costs. Corrective Actions Taken or Planned: Management identified the issue early following implementation of the new payroll system and performed a detailed review to isolate the impacted population. Corrections were made to payroll allocations for the affected employees, and reimbursement adjustments were processed as appropriate. To prevent recurrence, management has implemented the following control enhancements: - Standardized procedures for establishing and validating grant allocation percentages within the payroll system; - Enhanced supervisory review requirements for time reporting and payroll approvals; - Periodic monitoring and reconciliation of payroll charges to grant budgets; - Additional training for payroll and grant accounting personnel on system configuration and compliance requirements. Responsible Parties: VP of Accounting and Controller and VP of Audit & Compliance. Anticipated Completion Date: Completed in fiscal year 2025; ongoing monitoring procedures are in place.

Categories

Subrecipient Monitoring Allowable Costs / Cost Principles Reporting Internal Control / Segregation of Duties

Other Findings in this Audit

  • 1218941 2025-101
    Material Weakness Repeat
  • 1218942 2025-101
    Material Weakness Repeat
  • 1218943 2025-101
    Material Weakness Repeat
  • 1218944 2025-101
    Material Weakness Repeat
  • 1218945 2025-101
    Material Weakness Repeat
  • 1218946 2025-101
    Material Weakness Repeat
  • 1218947 2025-101
    Material Weakness Repeat
  • 1218948 2025-101
    Material Weakness Repeat
  • 1218949 2025-101
    Material Weakness Repeat
  • 1218950 2025-101
    Material Weakness Repeat
  • 1218951 2025-101
    Material Weakness Repeat
  • 1218952 2025-101
    Material Weakness Repeat
  • 1218953 2025-101
    Material Weakness Repeat
  • 1218954 2025-101
    Material Weakness Repeat
  • 1218955 2025-101
    Material Weakness Repeat
  • 1218956 2025-101
    Material Weakness Repeat
  • 1218957 2025-101
    Material Weakness Repeat
  • 1218958 2025-101
    Material Weakness Repeat
  • 1218959 2025-101
    Material Weakness Repeat
  • 1218960 2025-101
    Material Weakness Repeat
  • 1218961 2025-101
    Material Weakness Repeat
  • 1218962 2025-101
    Material Weakness Repeat
  • 1218963 2025-101
    Material Weakness Repeat
  • 1218964 2025-101
    Material Weakness Repeat
  • 1218965 2025-101
    Material Weakness Repeat
  • 1218966 2025-101
    Material Weakness Repeat
  • 1218967 2025-101
    Material Weakness Repeat
  • 1218968 2025-101
    Material Weakness Repeat
  • 1218969 2025-101
    Material Weakness Repeat
  • 1218970 2025-101
    Material Weakness Repeat
  • 1218971 2025-101
    Material Weakness Repeat
  • 1218972 2025-101
    Material Weakness Repeat
  • 1218973 2025-101
    Material Weakness Repeat

Programs in Audit

ALN Program Name Expenditures
97.036 DISASTER GRANTS - PUBLIC ASSISTANCE (PRESIDENTIALLY DECLARED DISASTERS) $57.99M
93.493 CONGRESSIONAL DIRECTIVES $1.64M
93.696 CERTIFIED COMMUNITY BEHAVIORAL HEALTH CLINIC EXPANSION GRANTS $997,660
93.310 TRANS-NIH RESEARCH SUPPORT $632,193
93.838 LUNG DISEASES RESEARCH $547,300
16.585 TREATMENT COURT DISCRETIONARY GRANT PROGRAM $486,896
93.117 PREVENTIVE MEDICINE RESIDENCY $451,541
93.351 RESEARCH INFRASTRUCTURE PROGRAMS $392,500
93.243 SUBSTANCE ABUSE AND MENTAL HEALTH SERVICES PROJECTS OF REGIONAL AND NATIONAL SIGNIFICANCE $382,753
93.958 BLOCK GRANTS FOR COMMUNITY MENTAL HEALTH SERVICES $369,272
16.589 RURAL DOMESTIC VIOLENCE, DATING VIOLENCE, SEXUAL ASSAULT, AND STALKING ASSISTANCE PROGRAM $354,698
10.579 CHILD NUTRITION DISCRETIONARY GRANTS LIMITED AVAILABILITY $327,566
96.008 SOCIAL SECURITY - WORK INCENTIVES PLANNING AND ASSISTANCE PROGRAM $305,461
84.126 REHABILITATION SERVICES VOCATIONAL REHABILITATION GRANTS TO STATES $296,134
93.470 ALZHEIMER€™S DISEASE PROGRAM INITIATIVE (ADPI) $248,211
93.253 POISON CENTER SUPPORT AND ENHANCEMENT GRANT $247,864
93.994 MATERNAL AND CHILD HEALTH SERVICES BLOCK GRANT TO THE STATES $206,915
93.687 MATERNAL OPIOID MISUSE MODEL $197,974
93.982 MENTAL HEALTH DISASTER ASSISTANCE AND EMERGENCY MENTAL HEALTH $195,981
16.831 CHILDREN OF INCARCERATED PARENTS $189,702
93.778 GRANTS TO STATES FOR MEDICAID $187,696
93.113 ENVIRONMENTAL HEALTH $161,517
93.472 TITLE IV-E PREVENTION PROGRAM $140,661
10.561 STATE ADMINISTRATIVE MATCHING GRANTS FOR THE SUPPLEMENTAL NUTRITION ASSISTANCE PROGRAM $131,654
21.027 CORONAVIRUS STATE AND LOCAL FISCAL RECOVERY FUNDS $131,321
93.847 DIABETES, DIGESTIVE, AND KIDNEY DISEASES EXTRAMURAL RESEARCH $125,517
93.107 AREA HEALTH EDUCATION CENTERS $120,353
66.202 CONGRESSIONALLY MANDATED PROJECTS $104,086
43.003 EXPLORATION $103,764
93.103 FOOD AND DRUG ADMINISTRATION RESEARCH $100,784
93.859 BIOMEDICAL RESEARCH AND RESEARCH TRAINING $100,000
93.959 BLOCK GRANTS FOR PREVENTION AND TREATMENT OF SUBSTANCE ABUSE $97,670
93.558 TEMPORARY ASSISTANCE FOR NEEDY FAMILIES $96,404
93.155 RURAL HEALTH RESEARCH CENTERS $93,802
10.028 WILDLIFE SERVICES $82,999
84.421 DISABILITY INNOVATION FUND (DIF) $81,432
93.866 AGING RESEARCH $80,444
93.889 NATIONAL BIOTERRORISM HOSPITAL PREPAREDNESS PROGRAM $80,346
93.912 RURAL HEALTHCARE SERVICES PROGRAMS $75,513
93.136 INJURY PREVENTION AND CONTROL RESEARCH AND STATE AND COMMUNITY BASED PROGRAMS $73,158
93.853 EXTRAMURAL RESEARCH PROGRAMS IN THE NEUROSCIENCES AND NEUROLOGICAL DISORDERS $69,180
93.840 TRANSLATION AND IMPLEMENTATION SCIENCE RESEARCH FOR HEART, LUNG, BLOOD DISEASES, AND SLEEP DISORDERS $61,401
93.110 SPECIAL PROJECTS OF REGIONAL AND NATIONAL SIGNIFICANCE $60,264
93.145 HIV-RELATED TRAINING AND TECHNICAL ASSISTANCE $58,538
93.823 PUBLIC HEALTH RESPONSE, FORECASTING, AND ANALYTIC CAPACITIES RELATED TO DISEASE OUTBREAKS, EPIDEMICS, AND PANDEMICS $56,996
93.387 NATIONAL AND STATE TOBACCO CONTROL PROGRAM $51,869
93.312 CHILD DEVELOPMENT AND, SURVEILLANCE, RESEARCH AND PREVENTION $51,555
93.276 DRUG-FREE COMMUNITIES SUPPORT PROGRAM GRANTS $48,304
93.647 SOCIAL SERVICES RESEARCH AND DEMONSTRATION $48,202
93.667 SOCIAL SERVICES BLOCK GRANT $43,202
10.446 RURAL COMMUNITY DEVELOPMENT INITIATIVE $39,761
93.846 ARTHRITIS, MUSCULOSKELETAL AND SKIN DISEASES RESEARCH $38,118
93.788 OPIOID STR $35,158
93.898 CANCER PREVENTION AND CONTROL PROGRAMS FOR STATE, TERRITORIAL AND TRIBAL ORGANIZATIONS $35,119
93.048 SPECIAL PROGRAMS FOR THE AGING, TITLE IV, AND TITLE II, DISCRETIONARY PROJECTS $35,013
93.084 PREVENTION OF DISEASE, DISABILITY, AND DEATH BY INFECTIOUS DISEASES $34,411
93.495 COMMUNITY HEALTH WORKERS FOR PUBLIC HEALTH RESPONSE AND RESILIENT $33,923
93.361 NURSING RESEARCH $31,130
93.359 NURSE EDUCATION, PRACTICE QUALITY AND RETENTION GRANTS $29,006
16.548 DELINQUENCY PREVENTION PROGRAM $26,496
93.837 CARDIOVASCULAR DISEASES RESEARCH $24,961
93.080 BLOOD DISORDER PROGRAM: PREVENTION, SURVEILLANCE, AND RESEARCH $24,000
93.323 EPIDEMIOLOGY AND LABORATORY CAPACITY FOR INFECTIOUS DISEASES (ELC) $19,898
93.855 ALLERGY AND INFECTIOUS DISEASES RESEARCH $19,087
16.838 COMPREHENSIVE OPIOID, STIMULANT, AND SUBSTANCE USE PROGRAM $17,153
93.350 NATIONAL CENTER FOR ADVANCING TRANSLATIONAL SCIENCES $16,094
93.969 PPHF GERIATRIC EDUCATION CENTERS $14,854
93.865 CHILD HEALTH AND HUMAN DEVELOPMENT EXTRAMURAL RESEARCH $12,551
93.070 ENVIRONMENTAL PUBLIC HEALTH AND EMERGENCY RESPONSE $8,481
93.870 MATERNAL, INFANT AND EARLY CHILDHOOD HOME VISITING GRANT $8,203
16.710 PUBLIC SAFETY PARTNERSHIP AND COMMUNITY POLICING GRANTS $7,680
93.395 CANCER TREATMENT RESEARCH $7,085
93.226 RESEARCH ON HEALTHCARE COSTS, QUALITY AND OUTCOMES $6,500
93.279 DRUG USE AND ADDICTION RESEARCH PROGRAMS $5,956
93.286 DISCOVERY AND APPLIED RESEARCH FOR TECHNOLOGICAL INNOVATIONS TO IMPROVE HUMAN HEALTH $5,457
93.365 SICKLE CELL TREATMENT DEMONSTRATION PROGRAM $5,000
93.839 BLOOD DISEASES AND RESOURCES RESEARCH $3,056
10.310 AGRICULTURE AND FOOD RESEARCH INITIATIVE (AFRI) $1,381
93.069 PUBLIC HEALTH EMERGENCY PREPAREDNESS $688
12.420 MILITARY MEDICAL RESEARCH AND DEVELOPMENT $649
93.399 CANCER CONTROL $558
93.391 ACTIVITIES TO SUPPORT STATE, TRIBAL, LOCAL AND TERRITORIAL (STLT) HEALTH DEPARTMENT RESPONSE TO PUBLIC HEALTH OR HEALTHCARE CRISES $128