Finding 555118 (2024-001)

Material Weakness
Requirement
A
Questioned Costs
-
Year
2024
Accepted
2025-04-15

AI Summary

  • Core Issue: The Association did not establish effective internal controls for reviewing and approving payroll costs related to the Federal grant program.
  • Impacted Requirements: This violates 2 CFR Part 910 Subpart F, which mandates proper internal controls to minimize compliance risks.
  • Recommended Follow-Up: Implement procedures to accurately track employee time on Federal grants and ensure documented reviews and approvals are in place.

Finding Text

Identification of Federal Program: Name of Program: Developmental Disabilities Projects of National Significance Assistance Listing Number: 93.631 Award Year: 2024 Pass-Through Entity: Direct Name of Federal Agency: U.S. Department of Health and Human Services Criteria: 2 CFR Part 910 Subpart F requires auditors to perform procedures to obtain an understanding of internal control over Federal programs sufficient to plan the audit to support a low assessed level of control risk of noncompliance for major programs. Internal control should be implemented to the degree possible to assign to different individuals the responsibility for approving, executing and recording transactions. The basic premise is that no one individual should have access to both physical assets and the related accounting records or to all phases of a transaction. Condition: The Association failed to properly design and implement internal control procedures for the review and approval of payroll costs charged to the Federal grant program. Cause: The failure was due to a lack of proper policies and procedures and management turnover. Effect: Because of the lack of properly designed and implemented internal controls over payroll costs charged to the Federal grant program, we were unable to test internal controls to support a low control risk assessment. Recommendation: The Association should design and implement procedures to track and verify employees’ time worked on Federal grant programs along with documented reviews and approvals. Views of Responsible Officials: Management of the Association concurs with the audit finding. See the attached Corrective Action Plan.

Corrective Action Plan

Recommendation: The Association should design and implement procedures to track and verify employees’ time worked on Federal grant programs along with documented reviews and approvals. Views of Responsible Officials and Planned Corrective Actions: NACDD has created an FTE allocation chart for allocating set payroll costs for each time period based on estimated time and effort functions of the employee for each grant and for our unrestricted core funding. NACDD also currently uses an online timecard system, Prime Pay Swipe clock for time keeping and payroll functions. We have already added project labels for all grants and sub-awardee grants in the system’s time keeping section and have trained staff on how to properly record their time for each grant they are working on daily. At the end of each semi-monthly pay period, staff must approve their timecards, and then the Operations Director reviews each of them and signs off on staff timecards (with the Executive Director signing off on the Operations Director’s.) The Operations Director has access to staff calendars, including scheduled meetings and other requirements for each grant. Twice a fiscal year, leadership will review grant hours actually logged with employees and decide if the current estimates of time and effort are accurate or need adjusting. If adjustments are needed, set payroll costs based on FTE allocation will be updated with our accountants.

Categories

Subrecipient Monitoring Internal Control / Segregation of Duties HUD Housing Programs

Other Findings in this Audit

  • 1131560 2024-001
    Material Weakness

Programs in Audit

ALN Program Name Expenditures
93.000 Technical Assistance $646,112
93.631 Developmental Disabilities Projects of National Significance $253,234
93.048 Special Programs for the Aging, Title Iv, and Title Ii, Discretionary Projects $43,333