Finding Text
Finding 2023-001 – Internal Controls Over Payroll Charges of Employees Funded by Grants
(Significant Deficiency)
Impacted Federal Programs:
Federal Agency: Department of Health and Human Services
Pass-through Entity: State of Nevada Department of Welfare and Supportive Services
Program: Child Support Enforcement
Assistance Listing No.: 93.563
Federal Award Number: Interlocal
Federal Agency: Department of Health and Human Services
Pass-through Entity: State of Nevada Division of Public and Behavioral Health
Program: COVID-19 – Block Grants for Community Mental Health Services
Assistance Listing No.: 93.958
Federal Award Number: B09SM085370, B09SM083986, B09SM083988
Federal Agency: Department of Health and Human Services
Pass-through Entity: State of Nevada Division of Public and Behavioral Health
Program: COVID-19 – Block Grants for Prevention and Treatment of Substance Abuse
Assistance Listing No.: 93.959
Federal Award Number: B08TI084628, B08TI083130-01, B09SM085370, B09SM083986, B09SM083988
Federal Agency: Department of Health and Human Services
Pass-through Entity: Nevada System of Higher Education
Program: Opioid STR
Assistance Listing No.: 93.788
Federal Award Number: H79TI083310
Award Year: Fiscal year 2022-2023
Category of Finding: Activities Allowed or Unallowed, Allowable Costs/Cost Principles
Criteria: As a condition of receiving Federal awards, non-Federal entities agree to comply with laws,
regulations, and the provisions of grant agreements and contracts, and to maintain internal control to
provide reasonable assurance of compliance with these requirements.
Title 2, Subtitle A, Chapter II, Part 200 Subpart E, paragraph 430 of the Code of Federal Regulations
stipulates that 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;
Be incorporated into the official records of the non-Federal entity;
Reasonably reflect the total activity for which the employee is compensated by the non-Federal
entity, not exceeding 100% of compensated activities;
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; 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, a Federal award and non-
Federal award, an indirect cost activity and a direct cost activity, two or more indirect activities
which are allocated using different allocation bases, or an unallowable activity and a direct or
indirect cost activity;
Comply with the established accounting policies and practices of the non-Federal entity.
Condition: Our walkthrough of internal controls over payroll transactions charged against federal grants
identified that while the Court reviews all expenditures submitted for reimbursement, they did not have
individual time certifications completed by employees 100% funded solely through grants to ensure only
program eligible activities were worked on during the year.
Cause: Management did not have employees complete individual time certifications for those employees
100% funded solely through grants.
Effect: Grants could be charged for service time and employee effort which were not performed for eligible
program activities.
Questioned Costs: None
Context: These programs had roughly $5.5m in total federal expenditures of which $1.72m (31%) were
related to payroll. Across the programs Crowe tested 80 payroll transactions and did not identify any
instances of noncompliance.
Recommendation: We recommend that Court employees 100% funded solely by grant programs
periodically certify their time and effort assigned to the respective grant through which they are funded and
their supervisor approve the certification.