Finding Text
Department of Health and Human Services
FFLA #93.829, H79SM083331, 5/1/2021 – 12/31/2023
Section 223 Demonstration Programs to Improve Community Mental Health Services
Activities Allowed and Allowable Costs
Material Weakness in Internal Control over Compliance
Criteria: The Center is required to have procedures in place to ensure that federal awards are expended only for allowable costs in accordance with Subpart E – Cost Principles of the Uniform Guidance. Allowable costs are supported by appropriate documentation and correctly charged as to account, amount, and period. 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. 2 CFR 200.430(i) establishes the standards for documentation of personnel expenses including charges to Federal awards for salaries and wages. Charges must be based on records that accurately reflect the work performed with the records meeting the following standards:
a) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated.
b) Be incorporated into the office records of the non-Federal entity.
c) Reasonably reflect the total activity for which the employee is compensated by the non-Federal entity, not exceeding 100% of compensated activities.
d) Encompass both federally assisted and all other activities compensated by the non-Federal entity on an integrated basis, but may include the use of subsidiary records as defined in the non-Federal entity’s written policy.
e) Comply with the established accounting policies and practices of the non-Federal entity.
f) Support the distribution of the employee’s salary or wages among specific activities or cost objectives.
g) Budget estimates alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes.
Condition: In our sample of expenditures selected for testing, we noted the following items:
a) ClickTime timecard, which tracks federal and nonfederal hours for employees, did not properly reflect the employees total federal and nonfederal hours being paid within the payroll register (2 instances).
b) Calculation errors for expenses allocated to the grant (2 instances).
c) Employee’s overtime hours were not properly tracked in ClickTime (2 instances).
d) Employee tracked paid time off under PTO and CCBHC lines in ClickTime (1 instance) causing it to be double tracked.
e) Grant was overcharged as it relates to a client’s gym membership (1 instance).
Cause: Employees did not enter all nonfederal hours within the ClickTime system and the secondary review of the employee ClickTime timecards did not identify the missing hours, the incorrectly tracked hours, and double tracked time. Also, the secondary review of federal grant expenditure tracking spreadsheet did not identify the calculation errors. In addition, the grant was overcharged for nonpayroll as it relates to a gym membership claimed for a customer of the grant.
Effect: The Center’s controls did not detect or correct the errors identified, which results in a reasonable possibility that the Center could submit disallowed costs under the federal awards and would not be able to detect and correct noncompliance in a timely manner.
Questioned Costs: The program was overcharged by $127.
Context: A total non-statistical sample of 60 payroll and nonpayroll transactions were tested which accounted for $170,945 out of $702,139 of federal payroll and nonpayroll direct program expenditures.
Repeat Finding from Prior Year: Yes, prior year finding 2022-005
Recommendation: We recommend management review the procedures and control processes involving timecards and the federal grant expenditure tracking spreadsheet to ensure compliance with the federal grant.
Views of Responsible Officials: Management is in agreement.