Finding 635428 (2022-001)

Federal Program Research and Development Cluster Pass-through Entities University of Delaware Federal Agency U.S. Department of Health and Human Services Federal Award Number and Award Year 93.732 2M01HP31317-05 9/1/21-6/30/22 93.859 59449 7/1/21-6/30/22 Criteria In accordance with the documentation standards of 2 CFR section 200.430(i), costs of compensation for personal services are allowable to the extent the total compensation for individual employees: a) is reasonable for the services rendered and conforms to the established written policy of the non-federal entity consistently applied to both federal and non-federal activities; b) follows an appointment made in accordance with the non-federal entity?s rules or written policies and meets the requirements of federal statute, where applicable; and c) is determined and supported as provided in 2 CFR section 200.430(i), including that charges to federal awards for salaries and wages must be based on records that accurately reflect the work performed. Per 2 CFR 200.303, a non-Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal Award. Condition and Context We identified four of 60 payroll expenditure samples where the amount recorded and submitted as an allowable expenditure under the grant exceeded the amount that should have been recorded based on the records and inputs detailing the work performed by the employees on the related programs. The value of the errors was $5,783 and the value of the sample items tested was $66,269. Possible Cause and Effect As a result of the implementation of a new payroll system in 2022, payroll expenditures of employees working on these programs were allocated via a manual process to the applicable cost centers (activity codes) based on documented time and effort allocation rates. Allocation rates were updated throughout the year as employee effort changed via multiple forms of communication including the submission of support tickets and email follow ups. Due to the manual nature of this process, increased risk of differences between recorded allocations and actual work performed arose requiring subsequent adjustment. While the Foundation recorded correcting entries and cost transfers in some instances to subsequently update certain issues that arose, there is a missing control to ensure all such entries were made completely and accurately. The effect is that potentially unallowable costs are submitted to the granting agencies as certain corrections were not made accurately and completely. Questioned Costs Known questioned costs of $5,783. Statistically Valid Sample The sample was not intended to be, and was not, a statistically valid sample. Repeat of Prior Finding No Recommendations The Foundation should standardize, centralize, and potentially automate the process by which updates to effort allocation percentages of employees working on federally funded programs are communicated and recorded. Additionally, a periodic review of these rates by the employees to which they relate, or their direct supervisors, should be implemented to detect any issues or changes that need to be made. Lastly, a process to follow up on and review the completeness and accuracy of correcting entries and cost transfers to validate all required entries are recorded appropriately should be implemented. View of Responsible Official Management agrees with the noted finding.