Finding Text
Grantor: U.S. Department of Health and Human Services
Federal Program Names: Health Center Program Cluster: Health Center Program (Community Health Centers, Migrant Health Centers, Health Care for the Homeless, and Public Housing Primary Care), COVID-19 Health Center Program (Community Health Centers, Migrant Health Centers, Health Care for the Homeless, and Public Housing Primary Care), Grants for New and Expanded Services under the Health Center Program
CFDA Numbers: 93.224 and 93.527
Criteria
According to 2 CFR, Part 200.430(i)(1) charges to Federal awards for salaries and wages must be based on records that accurately reflect the actual work performed, which must, among other things: (i) be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (ii) be incorporated into the official records of the non-Federal entity; (iii) and reasonably reflect the total activity for which the employee is compensated by the non-Federal entity. Additionally, costs must be adequately documented, as per 2 CFR 200.403(g).
Condition
Charges to Federal awards for salaries and wages were not supported by properly approved payrates, and timesheets did not agree to payroll registers. Additionally, nonpayroll expenditures were not supported by properly approval.
Cause
The Center’s internal controls over payroll were not consistently followed to ensure payrates were approved and timesheets agreed to payroll registers. Additionally, the Center’s internal controls over nonpayroll expenditures were not consistently followed to ensure that expenditures were approved.
Effect
Failure to ensure accurate wage and allocation of employee time across programs could result in non-compliance with the grant requirements or unallowable costs being charged. Additionally, failure to ensure accurate nonpayroll expenditures could result in a non-compliance with the grant requirements or unallowable costs being charged.
Questioned Costs
None.
Context
We selected 25 payroll transactions charged to the federal program to test controls over allowable costs. Out of the 25 transactions tested, we noted 15 instances where there was no formal approval of payrates, 4 instances where timecards did not appropriately reflect in the payroll registers, and all 25 labor reports showed no formal approval documented. Additionally, for nonpayroll allowable costs, out of 3 transactions tested, we noted 3 instances where there was no formal approval showing review that the cost was allowable under the program.
Identification of Repeat Finding
Not a repeat finding.
Recommendation
We recommend that the Center consistently enforce its internal controls over payroll to ensure that the timesheet and payrates are reviewed and approved by the appropriate supervisor. Additionally, we recommend that the Center consistently enforce its internal controls over nonpayroll expenditures to ensure all expenditures are approved by the appropriate supervisor.
Views of Responsible Officials
Management and the Board of Directors agree with the finding and will implement additional controls to ensure all expenditures have evidence of formal approval of review