Finding Text
Significant Deficiency in Internal Controls over Compliance (Allowable Costs), and Noncompliance with Laws and Regulations. Condition: Fringe benefits, including bonus distributions and increased Health Savings Account (HSA) and retirement contributions, were provided and charged to federal programs in the absence of adequate written policies and procedures. Programs Affected: Child Welfare Continuum of Care programs; Assistance Listing Numbers: 93.558, 93.658, 93.659, 93.667, 93.778. Criteria: 2 CFR 200.431(c) states that the cost of fringe benefits in the form of employer contributions or expenses for social security; employee life, health, unemployment, and worker’s compensation insurance; pension plan costs; and other similar benefits are allowable, provided such benefits are granted under established written policies. Cause: Original policies and procedures for fringe benefits lacked necessary detail, and subsequent updates have not been made. Effect: Unallowed costs may have been charged to the grant. Questioned Costs: Unknown. Due to MDHHS’s funding methodology for the Continuum of Care grants, the total federal portion of fringe benefits cannot be determined. Context: Fringe benefit policies lacked specificity regarding the process by which benefits such as bonus distributions, and changes to other forms of compensation such as HSA and retirement contributions, were determined. The Organization performed various due diligence activities to support such determinations, including comparability studies and board approval of all decisions made, however written policies to reflect these activities did not exist. Recommendation: The Organization should establish a formal written policy that accurately reflects the fringe benefits charged to federal programs, including but not limited to the bonus structure, retirement contributions, and HSA contributions. Organization’s Response: The Organization agrees with the finding and will implement corrective action to address the condition.