Finding Text
Finding 2021-003: Activities Allowed or Unallowed - Material
Weakness
Grantor: U.S. Department of Health and Human
Services
Federal Program Names: Health Center Program Cluster:
Health Center Program (Community Health
Centers, Migrant Health Centers, Health
Care for the Homeless, and Public Housing
Primary Care)
COVID-19 Health Center Program
(Community Health Centers, Migrant Health
Centers, Health Care for the Homeless, and
Public Housing Primary Care)
Grants for New and Expanded Services
under the Health Center Program
Federal Assistance Listing Numbers: 93.224 and 93.527
Federal Award Identification Number and Year: H80CS26638 - 2020 and 2021,
H8DCS35487 - 2020, H8CCS34364 - 2020,
H8ECS38373 - 2020, and H8F40829 - 2021
Criteria
In accordance with 2 CFR, Part 200.430(i)(1), charges to Federal awards for salaries and wages
must be based on records that accurately reflect the actual work performed, which must, among
other things: (i) be supported by a system of internal control which provides reasonable assurance
that the charges are accurate, allowable, and properly allocated; (ii) be incorporated into the official
records of the non-Federal entity; (iii) and reasonably reflect the total activity for which the
employee is compensated by the non-Federal entity. Additionally, costs must be adequately
documented, as per 2 CFR 200.40.3(g).
Condition
Charges to Federal Awards for salaries and wages were not supported by properly approved
payrates, and timesheets did not agree to payroll registers. Additionally, nonpayroll expenditures
were not supported by proper approval.
Cause
The Center's internal controls over payroll were not consistently followed to ensure payrates were
approved and timesheets agreed to payroll registers. Additionally, the Center's internal controls
over nonpayroll expenditures were not consistently followed to ensure that expenditures were
approved.
Effect
Failure to ensure accurate wage and allocation of employee's time across programs could result in
non-compliance with the grant requirements or unallowable costs being charged. Additionally,
failure to ensure accurate nonpayroll expenditures could result in non-compliance with the grant
requirements or unallowable costs being charged.
Questioned Costs
None.
Context
We selected 25 payroll transactions charged to the federal program for testing. Out of the 25
transactions tested, we noted 21 instances where there was no formal approval of payrates and
where they were not appropriately reflected in the payroll registers, 15 instances where timecards
were not appropriately reflected in the payroll registers, and all 25 labor reports showed no formal
approval documented. Additionally, for nonpayroll allowable costs, out of five transactions tested,
we noted five instances where there was no formal approval showing review that the cost was
allowable under the program.
Identification of Repeat Finding
Yes, see finding 2020-003.
Recommendation
We recommend that the Center consistently enforce its internal controls over payroll to ensure that
the timesheet and payrates are reviewed and approved by the appropriate supervisor. Additionally,
we recommend that the Center consistently reinforces its internal controls over nonpayroll
expenditures to ensure all expenditures were approved by the appropriate supervisor.
Views of Responsible Officials
Management and the Board of Directors agree with the finding and will implement additional
controls to ensure all expenditures have evidence of formal approval of review.