Finding Text
FINDINGS AND QUESTIONED COSTS – MAJOR FEDERAL AWARD PROGRAMS AUDIT
2022-005 Significant Deficiency in Internal Controls over Compliance – Allowability – Payroll Transactions
Agency: U.S. Department of Health and Human Services Program(s) and
Federal Award Identification
Number(s): Special Programs for The Aging – Title III, Part B—Grants For Supportive Services And Senior Centers, Cares Act For Supportive Services Under Title III-B Of The Older Americans Act, And American Rescue Plan For Supportive Services Under Title III-B Of The Older Americans Act
AL 93.044
Nutrition Services for Nutrition Services Under Title III-C Of The Older Americans Act, Cares Act For Nutrition Services Under Title III-C Of The Older Americans Act, And American Rescue Plan For Nutrition Services Under Title III-C Of The Older Americans Act AL 93.045
Nutrition Services Incentive Program AL 93.053
Special Programs for the Aging, Title VI, Part A, Grants to Indian Tribes AL 93.047
Children’s Advocacy Centers
AL 93.558
New or Repeat: Repeat
Criteria: Per 2 CFR 200.303, the non-Federal entity is responsible for maintaining effective internal control over federal awards that provides reasonable assurance that awards are being managed in compliance with the terms and conditions of the Federal award. Additionally, 2 CFR 200.430(i)(1) requires that charges to federal awards for salaries and wages must be based on records that accurately reflect the work being performed and are supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated.
Condition: Internal controls over payroll transactions were not properly designed or implemented to ensure that payroll transactions posted to the accounting system are accurate, allowable, and properly allocated.
Cause: Vacancies in key financial positions and lack of adequate resources in the finance department lead to a breakdown of established controls and inadequate monitoring of account balances for compliance with requirements.
Context: Audit procedures identified the following conditions:
• Payroll-related journal entries were not reviewed or approved by an individual other than the preparer prior to posting.
• During fiscal year 2022, CCS outsourced payroll services to an external service organization. CCS did not perform reviews or reconciliations of payroll journal entries generated by the external service organization, including entries to record payroll costs allocated to grant awards, prior to posting the payroll entries to the CCS accounting system.
• CCS uses multiple allocation pools and the accounting system automatically allocates costs based on system configurations. During fiscal year 2022, CCS had been running the monthly system allocations before all month-end adjustments had been made. Consequently, the allocations were not capturing the system changes to costs that had been made after the allocations had been run. Through substantive procedures, we were able to conclude that costs that were eligible to be allocated to the federal major programs exceeded what was actually allocated and unallowable costs were not identified.
Effect: Lack of review or approval of payroll journal entries, system cost pool allocations, and payroll amounts generated by the external payroll service organization could result in inaccurate or unallowable payroll costs charged to grant awards.
Questioned costs: No questioned costs.
Recommendation: We recommend management establish policies and procedures to ensure controls are properly designed and implemented to ensure that payroll costs charged to federal awards are accurate, allowable, and properly allocated.
View of responsible
officials: Management concurs with this finding, see corrective action plan.