Finding Text
Allowable Costs and Activities Federal Agency: U.S. Department of Health and Human Services Federal Program Title: Health Center Program Cluster Assistance Listing Number: 93.224 Federal Award Identification Numbers and Year: 6 H80CS29010; 6 H80CS29011 Award Period: June 1, 2024 – May 31, 2025; June 1, 2025 – May 31, 2026 Criteria or Specific Requirement: 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; reasonably reflect the total activity for which the employee is compensated by the non-federal entity, not exceeding 100% of compensated activities; and support the distribution of the employee's salary or wages among specific activities or cost objectives if the employee works on more than one federal award (2 CFR 200.430(i)(1)). Condition: Payroll costs for employees allocated to the grant at less than 100% were based on budgeted or estimated allocation percentages that varied by period; however, the Organization was unable to provide contemporaneous, after-the-fact documentation to support the actual distribution of effort for payroll transactions selected for testing (other than December 2025). Management maintains a dynamic allocation file that is updated monthly and does not retain historical, point-in-time versions of allocation support, resulting in a lack of auditable documentation to support payroll allocations to the program. Questioned Costs: $49,307 Context: Twenty-two (22) of forty (40) transactions selected for testing, related to payroll costs for employees allocated at less than 100% across multiple grants, based on budgeted percentages. Cause: The Organization has not implemented a formal process to retain contemporaneous time and effort documentation or point-in-time allocation records to support payroll costs charged to federal awards. Instead, management relies on a continuously updated allocation worksheet that is not version-controlled or archived, resulting in the inability to reconstruct actual effort allocations for prior periods. Effect: As a result, payroll costs charged to the grant may not be supported by records that accurately reflect the actual work performed, increasing the risk that allowable costs are misstated and not in compliance with 2 CFR 200.430. Repeat Finding: No Recommendation: Management should implement a formal time and effort reporting process that ensures payroll costs charged to federal awards are supported by contemporaneous documentation of actual work performed, requires retention of historical, point-in-time allocation records for each payroll period (e.g., version-controlled or archived reports), and includes a documented review and approval process that compares allocation percentages to employee attestations or activity reports to validate the reasonableness and accuracy of costs charged to the grant. Views of Responsible Officials: There is no disagreement with this finding.