Finding 7901 (2022-002)

Significant Deficiency
Requirement
AB
Questioned Costs
$1
Year
2022
Accepted
2024-01-08

AI Summary

  • Core Issue: Incorrect allocation percentages were charged for both nonpayroll and payroll expenses, indicating a significant deficiency in internal controls.
  • Impacted Requirements: Compliance with Title 2 CFR 200.303a and 200.405(a)(2) is necessary to ensure proper management of federal awards.
  • Recommended Follow-Up: Implement stronger internal controls to verify allocation percentages and address the identified questioned costs totaling approximately $22,000.

Finding Text

2022-002 – Allocation Percentage Charged – Significant Deficiency in Internal Controls over Compliance ALN: 84.126 Federal Award Title: Rehabilitation Services Vocational Rehabilitation Grants to States Federal Agency: United States Department of Education Pass-Through Entity: Texas Health and Human Services Commission Award Number(s): HHS000186000005, HHS000202900008 Federal Award Year: 2022 Condition: The Entity charged the incorrect allocation % in 9 out of 20 nonpayroll expenses and 5 out of 25 payroll expenses. Criteria: Per Title 2 US Code of Federal Regulations Part 200.303a, non-federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entities is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). According to 2 CFR 200.405(a)(2), costs allocated to a Federal award must be distributed in proportions that may be approximated using reasonable methods. Effect: The Entity may unintentionally under/over charge expenses to the grant which could lead to questioned costs and repayment of funds to the Grantor agency. Cause: The Entity does not have proper controls in place to verify the approved allocation % is charged on expenses. Questioned Costs: Nonpayroll allocated costs – known questioned costs of $727 and likely questioned costs of $14,513. Payroll allocated costs – No questioned costs. Federal award was undercharged by $71 and, when extrapolated, the undercharge was calculated at $7,132. Combined questioned costs: known questioned costs of $655 and likely questioned costs of $7,381

Corrective Action Plan

2022-002 – Allocation Percentage Charged – Significant Deficiency in Internal Controls over Compliance Recommendation: The auditor recommends LIFE enhance the design of its control activities and procedures over the allocation percentage forms used throughout the year to ensure the staff know how to apply percentages and are using the correct approved allocation form for the period in the year. Action Taken: LIFE Management will: • Update its allocation form by clearly labeling the document used and the period and type of expense for which it applies. • Communicate the revision of all forms to staff involved in the allocation process, followed by a training session to ensure understanding and proper application of the form. • Establish a monthly review process, whereby allocation forms will be audited for current updates and application consistency. Due Date of Completion: November 30, 2023 Responsible Official: Executive Director

Categories

Questioned Costs Allowable Costs / Cost Principles Significant Deficiency Matching / Level of Effort / Earmarking

Other Findings in this Audit

  • 7902 2022-003
    Significant Deficiency
  • 7903 2022-004
    Significant Deficiency
  • 7904 2022-002
    Significant Deficiency
  • 7905 2022-003
    Significant Deficiency
  • 7906 2022-004
    Significant Deficiency
  • 584343 2022-002
    Significant Deficiency
  • 584344 2022-003
    Significant Deficiency
  • 584345 2022-004
    Significant Deficiency
  • 584346 2022-002
    Significant Deficiency
  • 584347 2022-003
    Significant Deficiency
  • 584348 2022-004
    Significant Deficiency

Programs in Audit

ALN Program Name Expenditures
93.432 Acl Centers for Independent Living $218,803
93.432 Covid-19: Acl Centers for Independent Living $137,715
84.126 Rehabilitation Services_vocational Rehabilitation Grants to States $100,270
93.369 Acl Independent Living State Grants $96,337
93.268 Immunization Cooperative Agreements $5,913