Finding Text
Department of Health and Human Services
FFAL #93.696, 1H79SM087069, 9/30/2022 – 9/30/2026
Certified Community Behavior Health Clinic Expansion Grants
Activities Allowed or Unallowed and Allowable Costs and Cost Principles
Significant Deficiency in Internal Control over Compliance
Criteria: The Center is required to have procedures in place to ensure that federal awards are expended only for allowable costs in accordance with Subpart E – Cost Principles of the Uniform Guidance. Allowable costs are supported by appropriate documentation and correctly charged as to account, amount, and period. 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. 2 CFR 200.430(i) establishes the standards for documentation of personnel expenses including charges to Federal awards for salaries and wages. Charges must be based on records that accurately reflect the work performed with the records meeting the following standards:
a) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated.
b) Be incorporated into the office records of the non-Federal entity.
c) Reasonably reflect the total activity for which the employee is compensated by the non-Federal entity, not exceeding 100% of compensated activities.
d) Encompass both federally assisted and all other activities compensated by the non-Federal entity on an integrated basis, but may include the use of subsidiary records as defined in the non-Federal entity’s written policy.
e) Comply with the established accounting policies and practices of the non-Federal entity.
f) Support the distribution of the employee’s salary or wages among specific activities or cost objectives.
g) Budget estimates alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes.
Condition: In our sample of expenditures selected for testing, we noted the following items:
a) ClickTime timecard, which tracks federal and nonfederal hours for employees, did not properly reflect the employees total federal and nonfederal hours being paid within the payroll register (1 instances).
b) Calculation errors for expenses allocated to the grant (3 instances).
c) Employee tracked 2.7 hours under the federal program and a nonfederal program line in ClickTime (1 instance) causing it to be double counted.
Cause: An employee entered 8 hours of PTO into ClickTime for two days each; however, the employee was only paid for 4 hours of PTO for each day. The calculation errors were due to the use of a wrong employee’s allocation percentage and a keying error for payroll expenses for an employee. The secondary review of the employee ClickTime timecards did not identify the incorrectly tracked hours and double tracked time. Also, the secondary review of federal grant expenditure tracking spreadsheet did not identify the calculation errors.
Effect: The Center’s controls did not detect or correct the errors identified, which results in a reasonable possibility that the Center could submit disallowed costs under the federal awards and would not be able to detect and correct noncompliance in a timely manner.
Questioned Costs: The program was overcharged by $1,134.
Context: A total non-statistical sample of 60 nonpayroll and payroll transactions out of more than 250 transactions were selected for testing, which accounted for $239,541 of $886,400 of federal payroll and nonpayroll direct program expenditures.
Repeat Finding from Prior Year: No
Recommendation: We recommend management review the procedures and control processes involving timecards, allocating payroll expenses and the federal grant expenditure tracking spreadsheet to ensure compliance with the federal grant.
Views of Responsible Officials: Management is in agreement.