Finding Text
Finding 2022-001 ? Internal Control Deficiency over Activities Allowed/Allowable Costs Principles, Period of Performance Identification of the federal program: Federal Grantor: United States Department of Health and Human Services Assistance Listing No.: 93.048 Program Name: Special Programs for the Aging, Title IV, and Title II, Discretionary Projects Criteria or Specific Requirement (including statutory, regulatory or other citation): 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). Condition: AdviseWell did not have adequately designed internal controls in place over expenses charged to the federal program. Cause: Management did not have effective internal controls in place Effect or potential effect: Ineffective internal controls could result in expenses being charged to the federal program that are not allowed or are outside the Period of Performance. Questioned Costs: None. Context: Payroll controls are designed where the Executive Director reviews time sheets of the employees working on the program, however, no one reviews the time submitted by the Executive Director and if the Executive Director is not available to review the employees timesheets, a third-party payroll servicer approves the time. The third-party servicer does not have first-hand knowledge of the activities of each employee. Because the internal controls were not designed effectively, we did not test controls surrounding payroll. For direct expenses, internal requisitions are to be approved by either the Executive Director or the Assistant Program Director if under $5,000 and if over $5,000 by the Executive Director prior to the Organization entering into a transaction. For 20 out of 40 transactions selected for testing, the requisition was approved after entering into the transaction. Because the internal controls were not designed effectively, we did not test controls surrounding direct expenses. For indirect expenses and fringe benefits, the Executive Director calculates the amount and requests reimbursement from the federal program. There is no independent review of the Executive Director?s calculations prior to submitting the request for reimbursement. Management asserts that it has internal controls in place to ensure that expenditures are charged to the federal programs within the period of performance. AdviseWell did not retain documentation to evidence the internal controls over their review of expenditures to ensure they were within the period of performance. Because documentation was not retained for Period of Performance, we could not test internal controls. Identification as a repeat finding, if applicable: Not a repeat finding Recommendation: AdviseWell should develop and implement effective internal controls to ensure expenses charged to the federal program are appropriately reviewed and approved by an individual knowledgeable of the program requirements, reviewed prior to entering into the expenditure, and charged within the period of performance. AdviseWell should maintain effective segregation of duties. View of Responsible Officials: Management agrees with the finding. Internal controls will be implemented to ensure expenditures are appropriately reviewed and approved prior to entering into the expenditure or requesting reimbursement from the federal program. Documentation will be maintained to support that expenditures were reviewed for appropriate period of performance. Management will ensure all duties are appropriately segregated.