Finding Text
Finding 2022-002 Identification of the federal program: R&D Cluster Federal Agency: U.S. Department of Health and Human Services Assistance Listing: 93.399 Award numbers: 5UG1CA189830-08, 5UG1CA189830-09 Criteria or specific requirement (including statutory, regulatory or other citation): 2 CFR Section 200.303 of the Uniform Guidance states the following regarding internal control: ?The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework?, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).? 45 CFR Appendix-IX-to-Part-75 I.2 (4) states: ?Preparation of Estimates of Effort: Where required under paragraph (3) above, estimates of effort spent by a member of the professional staff on each research agreement should be prepared by the individual who performed the services or by a responsible individual such as a department head or supervisor having first hand knowledge of the services performed on each research agreement. Estimates must show the allocation of effort between organized research and all other hospital activities in terms of the percentage of total effort devoted to each of the broad functional categories referred to in (2) above. The estimate of effort spent on a research agreement may include a reasonable amount of time spent in activities contributing and intimately related to work under the agreement, such as preparing and delivering special lectures about specific aspects of the ongoing research, writing research reports and articles, participating in appropriate research seminars, consulting with colleagues with respect to related research, and attending appropriate scientific meetings and conferences. The term ?all other hospital activities? would include departmental research, administration, committee work, and public services undertaken on behalf of the hospital.? Condition: Management did not have policies and procedures for the entire fiscal year to certify 100% of employee effort. Management did not consistently record salary expenses to R&D federal grants based on the effort that had been certified to the grant. Cause: Management does not have a sufficient understanding of the effort reporting requirements in 45 CFR Appendix-IX to Part-75 I.2. Management?s policy over effort reporting was not designed sufficiently to require 100% of an employee?s effort to be certified. Management?s review and approval of effort report was not precise enough to identify and correct errors in effort charged to the R&D federal grants. Effect or potential effect: If 100% of effort is not certified, effort charged to a federal grant may be inaccurate. The lack of precision of the review and approval of effort certification resulted in inaccurate payroll being recorded to the R&D federal grants. Questioned costs: $6,064; $4,422 related to payroll expense, $1,460 related to fringe benefits and $182 related to indirect costs. Context: In obtaining an understanding of Management?s process for charging payroll expense, we noted certain selections where the calculation for salary expense did not use the appropriate effort percentage or the base salary was incorrect. We tested 40 payroll transactions ($110,463) and identified seven exceptions. For the following transactions, the employees? salaries and related fringe and indirect costs were charged incorrectly to the grant. See Schedule of Findings and Questioned Costs for table. The total R&D Cluster expenditures reported on the SEFA are $3,578,529 for the year ended September 30, 2022, including payroll costs of $1,134,569, which represents 31.7% of total R&D Cluster expenditures. Identification as a repeat finding, if applicable: Partial repeat of finding 2021-006 Recommendation: Management should update its policies to require effort certifications to include 100% of each employee?s effort. In addition, Management should assess their effort calculations to ensure that the appropriate effort percentages are applied to total payroll expense. Management should design and implement more precise controls over the review of the payroll expense workbook used to determine salary expense. Views of responsible officials: On or before September 30, 2023, Management will review all time & effort reporting covering its fiscal year 2023 and implement updates to its certification reporting to ensure calculations are accurately derived and verified through independent review for 100% of each employee?s time and effort and ensure amounts charged to the grant in fiscal year 2023 are supported by these certified records.