Finding Text
Department of Health and Human Services
Federal Financial Assistance Listing #10.331, 93.136, 93.243, 93.279, 93.310, 93.393, 93.837, 93.838, 93.865, and 93.898
Research and Development Cluster
Activities Allowed and Allowable Costs
Significant Deficiency in Internal Control over Compliance and Noncompliance
Criteria: 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 conditions of the federal award.
Condition: Our testing over activities allowed and allowable costs identified one instance where an employee’s time was not properly allocated between two grants. Additionally, there were four instances where the grant was under/over-charged in our recalculation of payroll and fringe benefits.
Cause: The Organization changed the process for physician time in research grants which was initially in place for Medical Directorship payments. The grant team updated to a separate grant workflow which caused for the time to be allocated to the incorrect grant.
Effect: The Organization’s controls did not detect or correct the error identified, which resulted in a reasonable possibility that the Organization could submit disallowed costs under the federal awards and would not be able to detect and correct noncompliance in a timely manner.
Questioned Costs: $2,126
Context: A non-statistical sample of 60 payroll transactions was selected for testing, which accounted for $152,356 of $3,424,036 of federal program expenditures.
Repeat Finding from Prior Year: No
Recommendation: We recommend the Organization review and strengthen the controls surrounding the allocation calculation for the research grants.
Views of Responsible Officials: Management agrees with the finding.