Finding Text
Department of Health and Human Services
FFLA #93.958, 6H79SM085542, 9/30/2021 – 9/29/2023
Block Grants for Community Mental Health Services
Activities Allowed and Allowable Costs
Significant Deficiency in Internal Control over Compliance
Criteria: The Center is required to have procedures in place to ensure that federal awards are expended only for allowable costs in accordance with Subpart E – Cost Principles of the Uniform Guidance. Allowable costs are supported by appropriate documentation and correctly charged as to account, amount, and period. 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. 2 CFR 200.430(i) establishes the standards for documentation of personnel expenses including charges to Federal awards for salaries and wages. Charges must be based on records that accurately reflect the work performed with the records meeting the following standards:
a) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated.
b) Be incorporated into the office records of the non-Federal entity.
c) Reasonably reflect the total activity for which the employee is compensated by the non-Federal entity, not exceeding 100% of compensated activities.
d) Encompass both federally assisted and all other activities compensated by the non-Federal entity on an integrated basis, but may include the use of subsidiary records as defined in the non-Federal entity’s written policy.
e) Comply with the established accounting policies and practices of the non-Federal entity.
f) Support the distribution of the employee’s salary or wages among specific activities or cost objectives.
g) Budget estimates alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes.
Condition: In our sample of expenditures selected for testing, we noted the following items:
a) ClickTime timecard, which tracks federal and nonfederal hours for employees, did not properly reflect the employees total federal and nonfederal hours being paid within the payroll register (2 instances).
b) The tracking spreadsheet did not reflect the entire months payroll and instead only included 2 weeks of payroll and benefits which resulted in a calculation error for expenses allocated to the grant (1 instance).
Cause: Employees did not enter all nonfederal hours within the ClickTime system and the secondary review of the employee ClickTime timecards did not identify the missing hours. In addition, the secondary review of federal grant expenditure tracking spreadsheet did not identify the missing pay periods.
Effect: The Center’s controls did not detect or correct the errors identified, which results in a reasonable possibility that the Center could submit disallowed costs under the federal awards and would not be able to detect and correct noncompliance in a timely manner.
Questioned Costs: None reported. The program was underallocated.
Context: A total non-statistical sample of 60 nonpayroll and payroll transactions were tested which accounted for $99,320 out of $844,289 of federal payroll and nonpayroll direct program expenditures.
Repeat Finding from Prior Year: No.
Recommendation: We recommend management review the procedures and control processes involving timecards and the federal grant expenditure tracking spreadsheet to ensure compliance with the federal grant.
Views of Responsible Officials: Management is in agreement.