Finding Text
2023-002 Activities Allowed or Unallowed, Allowable Costs/Cost Principles and Period of Performance; Federal Agency: Department of Health and Human Services; Program: Social Services Research and Demonstration (ALN 93.647); Pass-through Entity: N/A; Federal Assistance Identification Number or Pass-Through Numbers: N/A; Federal Award Years: Year ended June 30, 2023; Type of Finding: Significant Deficiency in Internal Control over Compliance; Criteria: 2 CFR 200.303(a) requires that each non-Federal entity must "Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award." Expenditures are to be made for allowable activities and must be in accordance with 2 CFR Part 200, Subpart E and must be within the appropriate period of performance. Condition: During our testing, we noted that internal controls were not properly designed over activities allowed or unallowed, allowable costs/cost principles and period of performance to identify program expenditures from other expenditures in the cost center. Additionally, we noted controls were not operating as designed to ensure payroll expenses charged to the program were properly approved. In our sample of 20 payroll expenditures, two had no evidence of timesheet approval. Cause: There are multiple funding sources within the cost center and the client did not consistently use the fund # identifier to distinguish the expenditures that were program expenditures. Also, the client's payroll processing system allows unapproved timesheets to be processed and paid for one pay period before additional internal controls occur. Effect: Due to the issues noted with internal controls, inappropriate expenditures could have been charged to the program. Context: Applies to the entire population of expenditures. In addition, out of the population of payroll expenditures charged to the program, we noted that two out of our sample of 20 had no evidence of timesheet approval. The sample size was based on guidance from chapter 11 of the AICPA Audit Guide, Government Auditing Standards and Single Audits. Questioned Costs: None; Repeat Finding?: No; Recommendation: We recommend that internal controls over activities allowed or unallowed, allowable costs/cost principles and period of performance be strengthened. In addition, we recommend that internal controls in place when timesheets are not approved for more than one pay period be implemented any time a timesheet is not approved and that approval is always obtained. View of responsible officials of the auditee: Management agrees with the finding. See corrective action plan.