Activities Allowed or Unallowed and Allowable Costs/Cost Principles
Identification of the federal program:
Federal Agencies: U.S. Department of Health and Human Services and U.S. Department of Defense
Pass-Through Entities: Boston University, Georgia Institute of Technology, Massachusetts General Hospital, NYU Grossman School of Medicine, Stanford University, The University of Texas, University of Buffalo, University of Chicago, and Washington University
Federal Cluster: Research and Development (R&D)
Assistance Listing Nos.: 12.300, 12.420, 93.233, 93.273, 93.279, 93.310, 93.350, 93.393, 93.395, 93.396, 93.397, 93.837, 93.838, 93.846, 93.847, 93.853, 93.855, 93.859, 93.865, and 93.866
Award Numbers: Various
Award Periods: Various
Identification of the state projects:
State Grantor: State of Florida Department of Health (DOH)
Catalog of State Financial Assistance (CSFA) No.: 64.130, Endowed Chair for Cancer Research
Award Number: MOG07
Award Period: July 1, 2014 – until expended
State Grantor: State of Florida Department of Health (DOH)
Catalog of State Financial Assistance (CSFA) No.: 64.135, Ed and Ethel Moore Alzheimer’s Disease Research Program
Award Numbers: 20A10, 22A04, 22A05, 22A06, 22A07, 22A08, 22A09, 22K01, 23A03, 23A04, and 23K09
Award Periods: Various
Criteria or specific requirement (including statutory, regulatory or other citation):
Section 200.303 of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) states the following regarding internal control:
“The Non-Federal entity must:
(a) 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. 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).”
Section 215.97, Florida Single Audit Act, part (2)(j) states, “Internal control over state projects means a process, effected by a nonstate entity’s management and other personnel, designed to provide reasonable assurance regarding the achievement of objectives in the following categories:
1. Effectiveness and efficiency of operations.
2. Reliability of financial operations.
3. Compliance with applicable laws and regulations.”
Condition:
Internal controls over effort reporting were not operating effectively from April 1, 2023 through May 31, 2023 and, therefore, could not be relied upon.
Internal controls over salary cap were not operating effectively from April 1, 2023 through December 31, 2023 and therefore, could not be relied upon.
Cause:
The Clinic implemented a new general ledger system effective April 1, 2023. The general ledger implementation necessitated a rewrite of the effort certification system which delayed certification for the months of April and May. Therefore, for the period April 1, 2023 through May 31, 2023, effort certifications were not performed monthly.
The information technology application used to calculate salary cap adjustments to salary expenses resulting from the effort certification process was not functioning as designed from April 1, 2023 through December 31, 2023.
Effect or potential effect:
Salary cap adjustments to payroll costs charged to the federal program may not be recorded timely.
Unallowable payroll costs may be charged to the federal program or state project.
Questioned costs:
None.
Context:
Payroll and fringe benefit expenditures are $163,912,932, representing 36.8% of total Federal expenditures for the R&D Cluster of $445,961,340 for the year ended December 31, 2023.
Payroll and fringe benefit expenditures are $289,963, representing 30.8% of total state expenditures for CSFA 64.130 of $940,679 for the year ended December 31, 2023.
Payroll and fringe benefit expenditures are $551,321, representing 67.5% of total state expenditures for CSFA 64.135 of $816,958 for the year ended December 31, 2023.
Identification as a repeat finding, if applicable:
This finding is not a repeat finding from the prior year.
Recommendation:
Management should ensure effort report certifications and approvals are performed monthly. In addition, management should review the design of the payroll salary cap application to ensure it is appropriately calculating salary expenses during the effort certification process.
Views of responsible officials:
Effort certification was delayed for the months of April and May 2023. No certification periods in 2023 were missed and the effort certification system is operating as designed as of July 17, 2023.
Manual reconciliations of the salary cap application were performed on every award for fiscal year 2023 to ensure salaries were correctly charged. The salary cap application is working effectively as of January 1, 2024.