Finding 401009 (2022-002)

U. S. Department of Health and Human Services 2022-002 Allowable Costs Program(s) Name of Federal Program (Assistance Listing Number) Urban Indian Health Services (93.193) Special Diabetes Program for Indians - Diabetes Prevention and Treatment Projects (93.237) Criteria - Recipients of federal awards must follow the costs principles set out at 2 CFR section 200.430 to substantiate compensation and other purchases charged to a federal program. “Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: …(iii) reasonable reflect the total activity for which the employee is compensated by the non-Federal entity” 2 CFR section 200.430(i). The Organization’s processes did not maintain sufficient documentation of the approval of the activity of each employee or the purchase of goods/services for the programs identified above. Context and Condition - We selected 27 paychecks from three pay periods to test for compliance with standards in these two programs. Records for six of the paychecks tested lacked documentation of approval of the employee’s supervisor. We also selected 16 transactions for purchased goods and services to test compliance with standards in these two programs. Records for two transactions tested lacked documentation of approval by the program director. Cause - The Organization replaced its payroll processing servicer subsequent to 2022. Access to certain records from the prior servicer were no longer available. Personnel turnover resulting in inconsistencies in maintaining required documentation. Effect - A federal program could be charged compensation for employees who did not provide services directly attributable to the program or charged for goods/services not related to the program. Questioned Costs - No costs were questioned. Repeat finding - No Statistically valid - Yes Recommendation - We recommend the Organization ensure it 1) maintains records of each employee’s activity and 2) monitors compliance with the job-costing system implemented. Views of responsible officials - The Organization believes the paychecks and purchases identified were approved prior to payment. We will ensure that documentation is downloaded each pay period to ensure such documentation is not lost when a change in servicer is made.