Finding Text
Compliance Requirement: Activities Allowed or Unallowed and Allowable Costs/Cost Principles
Information on the Major Federal Program:
Federal agency: U.S. Department of Health and Human Services
Pass-through entity: Council of Medical Specialty Societies
Assistance listing number: 93.083
Assistance listing name: COVID-19 Prevention of Disease, Disability, and Death through Immunization and Control of Respiratory and Related Diseases
Award number: 1NH231P922656-01-00
Award name: Improving adult immunization rates for COVID-19, influenza and routine adult vaccination through partnerships with medical subspecialty societies
Award year: 9/30/2021 – 9/30/2026
Criteria – The Uniform Guidance in 2 CFR 200.430 states that charges to federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must be supported by a system of internal controls which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Such charges should reasonably reflect the total activity for which the employee is compensated by the non-federal entity, not exceeding 100% of compensated activities.
Condition – Payroll costs amounting to approximately $97,000 were over-allocated to the federal award for the year ended December 31, 2023 resulting from allocation of some payroll costs for hours not worked on the federal award. The federal award is a cost reimbursement grant and the over-allocation resulted in the federal award being charged more than the actual hours spent on the award. Reimbursement requests to the federal agency in 2024 were reduced by these over-allocated and unallowable costs of 2023.
Cause – The non-compliance was due to inadequate internal controls over the allocation of payroll costs to federal awards. Specifically, the College did not have sufficient review processes in place to ensure that payroll costs were accurately allocated according to the work performed on the federal award. This discrepancy was identified by the College’s own controls during the year-end review of the Schedule, but after the costs had been over-allocated and billed to the cognizant agency. Corrective action was subsequently taken to adjust the amount charged and billed under the federal award in the following year by the over-allocated amount in 2023.
Questioned Costs – There are approximately $97,000 of known questioned costs related to the items presented in the condition above.
Context – The over-allocation of payroll costs was identified by the College during review of the Schedule after year end, which resulted in non-compliance with activities allowed or unallowed and allowable costs/cost principles. The prevalence of this finding is detailed in the condition section above.
Effect – The over-allocation of payroll costs to federal awards may lead to improper use of federal funds.
Repeat Finding – This is not a repeat finding.
Recommendation – The College should strengthen its internal controls over the allocation of payroll costs to federal awards. This includes implementing a review process to ensure that payroll costs are accurately allocated based on the work performed and are supported by appropriate documentation. Additionally, the College should provide training to its personnel on the requirements of the Uniform Guidance related to allowable costs and cost principles.
Views of Responsible Officials – Management acknowledges the finding and recommendation presented. Management will improve staff knowledge of Uniform Guidance through additional training on allowable costs and compliance. Payroll costs will be based on certified actual hours, verified by the Controller for accuracy. Quarterly reviews by the Technical and Internal Controls Accountant will ensure payroll costs match certified hours, maintaining compliance.