Finding Text
2025-004 –ALNs 93.550 Transitional Living & 93.623 Basic Center Program Federal Agency: U.S. Department of Health and Human Services Pass-Through Agency: N/A Compliance Requirement: Allowable Activities and Allowable Costs/Cost Principles Type of Finding: Material Weakness in Internal Control over Compliance; Noncompliance Criteria: In accordance with Uniform Guidance and Chapter 10.650, costs charged to a federal award or state project must be necessary, reasonable, adequately documented, and consistently treated. Additionally, Uniform Guidance and Chapter 10.650 requires charges to federal awards for salaries and wages to be based on records that accurately reflect the work performed and are supported by a system of internal control that provides reasonable assurance the charges are accurate, allowable, and properly allocated. Further, Uniform Guidance and Chapter 10.650 requires recipients to maintain effective financial management systems and internal controls over federal awards. Condition: During testing of payroll expenditures charged to Assistance Listings 93.550 and 93.623, the Organization was unable to provide sufficient documentation to support employee pay rates for several payroll transactions selected for testing. Specifically: • For Assistance Listing 93.550, 20 of the 20 payroll transactions selected for testing lacked sufficient supporting documentation. • For Assistance Listing 93.623, 12 of the 12 payroll transactions selected for testing lacked sufficient supporting documentation. Questioned Costs: $0 Cause: Management did not maintain adequate controls to ensure payroll documentation, including employee pay rate authorizations, was retained and remained accessible during the audit period. Effect: The Organization was unable to demonstrate that payroll costs charged to the federal awards and state projects were adequately supported as required by Uniform Guidance and Chapter 10.650. As a result, there is an increased risk that unsupported or unallowable payroll costs could be charged to federal awards or state projects without timely detection. Recommendation: See the recommendation for finding 2025-004 in the financial statement findings section of this schedule.