Finding Text
Significant deficiency in internal controls over compliance and instances of noncompliance related to allowable costs. Federal Agency: Department of Health and Human Services Program Title: National Organizations of State and Local Officials CFDA Number: 93.011 Award Numbers: 1 G32HS42592-01-00 Award Period: July 31, 2021 - July 31, 2023 Criteria 2 U.S. Code of Federal Regulations (CFR) 200 Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) Subpart E section 2 CFR 200.405 (as codified by the Department of Health and Human Services [DHHS] in 45 CFR 75) requires direct costs be allocated based on the proportional benefit received by each award. Condition/Context for Evaluation In a population of 25 payroll costs, we noted four instances in which the amount allocated to the award was a rounded percentage instead of the true calculated percentage. This resulted in three instances of overcharge to the award and one instance of undercharge to the award. Questioned Costs $76.58. Cause Due to turnover in staff, there was no standard procedure followed for how the payroll costs should be calculated and applied to the federal award. This resulted in an overall overcharge to the award compared to what the actual allocation percentage would have charged. Effect or Potential Effect The Organization did not have sufficient internal controls in place to review allocated costs for accuracy. Repeat Finding Not applicable. Recommendation We recommend that the Organization implement internal controls over payroll costs charged to awards to ensure they are calculated and allocated in accordance with 2 CFR 200.405. Views of Responsible Officials of Auditee Management concurs with the finding and has provided the accompanying corrective action plan.