Finding Text
Finding 2022-002: Failure to Maintain Proper Documentation of Time and Effort Reporting Federal Agency: U.S. Department of Health and Human Services (HHS) Program Name: Illinois SOR2 ALN and Program Expenditures: 93.788 ($1,232,160) Federal Award Numbers: H79TI083278 Federal Award Year: 2022/2023 Questioned Costs: None Compliance Requirement: Allowable Costs Type of Finding: Material Weakness and Material Noncompliance Condition Found: Carle did not have proper documentation of time and effort relating to personnel costs charged to the program. In testing of 27 selected payroll costs, Carle was unable to provide physical documentation of timesheets or other effort tracking to support the amounts allocated by percentage to the Illinois SOR2 award. Though Carle was able to provide rationale for the amounts allocated including estimated time spent on the award, allocations do not meet standards for documentation of personnel expenses. Criteria or Requirement: 2 CFR 200.430(i) requires 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 control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Budget estimates alone do not qualify as support for charges to Federal awards. 2 CFR 200.303 requires non-Federal entities receiving Federal awards to establish and maintain internal controls designed to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements. Effective internal controls should include procedures to ensure time charged to federal grants is appropriately tracked and certified. Cause: In discussion with Carle management, internal controls were not effectively implemented at the organizational level or cascaded to department leadership. This was the first grant for the department and while internal controls were in place, it is clear they were not sufficient. Possible Asserted Effect: Failure to maintain appropriate documentation of personnel costs may lead to questioned costs or inaccurate reporting of federal expenditures. Repeat Finding: A similar finding was not reported in the prior year audit. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendation: We recommend Carle evaluate its process for preparing and reviewing time tracking for federal awards and implement the procedures necessary to ensure documentation of personnel costs are complete and accurate. Views of Management: There is an understanding of the finding, and a need for corrective action. Actions have already been put into place to improve internal controls and ensure compliance in maintaining proper documentation of time and effort reporting for federal awards.