Finding Text
Federal Agency: U.S. Department of Health and Human Services
Federal Program Title: Child Care and Development Block Grant
Assistance Listing Number: 93.575
Award Period: July 1, 2020 to June 30, 2021
Type of Finding: Material Weakness in Internal Control over Compliance and Material Non-Compliance
Criteria: Recipients of federal funds are required to establish and maintain effective internal controls over federal funds received, per 2 CFR section 200.303. Allowable costs must be approved by the awarding agency (2 CFR section 200.407) and necessary and reasonable for the performance of the federal award and allocable under the principles of 2 CFR, Subpart E. Additionally, costs must be adequately documented.
Condition: Direct costs incurred were allocated through journal entries to the grant without support of an allocation methodology. Management was unable to provide an understanding of how to trace the allocated amounts to a consistent methodology or to original source documentation. Additionally, time and effort documentation for actual time incurred should be maintained for payroll charges to the grant.
Context: Of the general disbursement population, $67,985 of general disbursements were booked via unsupported journal entry (allocated). Of the payroll and fringe benefit disbursement population, $87,777 were booked via unsupported journal entry (allocated).
Questioned Costs: $155,762
Cause: Internal controls surrounding allocations were not properly designed and implemented and an audit trail for allocation journal entries/source documentation was not maintained.
Effect: The lack of evidence for audit trail and lack of effective internal controls over allocations provides an opportunity for noncompliance and errors.
Repeat Finding: N/A
Recommendation: We recommend that the Organization design, implement and monitor internal controls over allocations as well as maintain source documentation to support amounts charged to the grant.
Views of Responsible Officials of the Auditee: There is no disagreement with the audit finding.