Finding 403964 (2023-002)

Finding 2023-002 Significant deficiency in internal controls over compliance and instances of noncompliance related to allowable costs/cost principle compliance requirements. Federal Agency: U.S. Department of Health and Human Services Program Title: Developmental Disabilities Basic Support and Advocacy Grants Assistance Listing Number: 93.630 Awards Number: 2201WAPADD-00 & 03; 2001WAPAPH-00 & 01 Award Period: 10/01/2021 - 9/30/2024 Criteria 2 U.S. Code of Federal Regulations (CFR) 200 Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) Subpart E section 2 CFR 200.430 (as codified by the Department of Health and Human Services [DHHS] in 45 CFR 75) requires direct costs to be allocated based on the proportional benefit received by each award. Condition/Context For the year ended September 30, 2023, in a sample of 25 transactions, there were three instances of payroll costs being charged to the award that were not supported by proper documentation of the allocation applied. Effect/Potential Effect DRW was unable to substantiate allocations of payroll costs based on documentation retained. Questioned Costs $125.03 Cause DRW’s internal controls related to payroll costs allocation was not sufficient to prevent or detect errors in compliance with the standards and to ensure consistent treatment with policies and procedures. Repeat Finding Not applicable Recommendation We recommend that DRW implement internal controls to ensure that all payroll costs charged to the federal awards are supported by proper documentation. Views of Responsible Officials Management agrees with the finding and has provided the corrective action plan following the Single Audit Report.