Audit 10152

Federal Award Programs: U.S. Department of State Professional and Cultural Exchange Program – Citizen Exchanges (Assistance Listing # 19.415) and U.S. Agency for International Development (USAID) Foreign Assistance for Programs Overseas (Assistance Listing # 98.001) Type of Finding: Material weakness in internal control over compliance and instance of immaterial noncompliance. Compliance Requirement: Allowable costs Criteria: The Uniform Guidance (2 CFR §200.430) states that the salaries or wages of employees must be distributed among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect activity. The Organization’s written policies rely on the use of time sheets and activity reports which document actual hours worked by program/grant. Condition: During the course of our audit testing, we noted the Organization changed the process for recording payroll costs to grants and programs for 2022. Rather than charging individual employee payroll costs to grants and programs, the Organization began aggregating total employee hours by grant/program activity. The aggregated hours for each activity were then divided by total hours for each pay period in order to obtain percentages for each respective activity, which were then multiplied by total employee earnings for the pay period as a basis for allocating the payroll costs to activities. The process using aggregated hours for each activity resulted in an improper allocation of payroll costs due to the differing pay rates of employees included in the allocation. Effect and Context: The condition resulted in incorrect amounts of costs and/or unallowable costs charged to the federal programs. All federal programs were impacted by the improper allocation of payroll costs due to the Organization’s aggregation of total employee hours by activity as a basis for allocating total payroll costs for each pay period. As a result, major programs U.S. Department of State Professional and Cultural Exchange Program – Citizen Exchanges (Assistance Listing # 19.415) was undercharged by approximately $18,683 and U.S. Agency for International Development (USAID) Foreign Assistance for Programs Overseas (Assistance Listing # 98.001) was undercharged by approximately $2,864. Our sample size was 40 payroll transactions and was not a statistically valid sample as it was selected haphazardly. We noted all selections in our sample used the improper allocation methodology and all payroll costs for 2022 were improperly allocated among activities benefited. Questioned Costs: None Repeat finding: No Auditor’s recommendation: We recommend management return to the previous process for recording payroll costs to grants and programs by which individual employee salaries and wages are allocated based on actual time spent on various activities and are directly charged to the respective activity cost centers benefited. Management’s response: Management is in agreement with the auditor’s finding and have implemented changes – see MIUSA’s attached corrective action plan.

Federal Award Programs: U.S. Department of State Professional and Cultural Exchange Program – Citizen Exchanges (Assistance Listing # 19.415) and U.S. Agency for International Development (USAID) Foreign Assistance for Programs Overseas (Assistance Listing # 98.001) Type of Finding: Material weakness in internal control over compliance and instance of immaterial noncompliance. Compliance Requirement: Allowable costs Criteria: The Uniform Guidance (2 CFR §200.430) states that the salaries or wages of employees must be distributed among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect activity. The Organization’s written policies rely on the use of time sheets and activity reports which document actual hours worked by program/grant. Condition: During the course of our audit testing, we noted the Organization changed the process for recording payroll costs to grants and programs for 2022. Rather than charging individual employee payroll costs to grants and programs, the Organization began aggregating total employee hours by grant/program activity. The aggregated hours for each activity were then divided by total hours for each pay period in order to obtain percentages for each respective activity, which were then multiplied by total employee earnings for the pay period as a basis for allocating the payroll costs to activities. The process using aggregated hours for each activity resulted in an improper allocation of payroll costs due to the differing pay rates of employees included in the allocation. Effect and Context: The condition resulted in incorrect amounts of costs and/or unallowable costs charged to the federal programs. All federal programs were impacted by the improper allocation of payroll costs due to the Organization’s aggregation of total employee hours by activity as a basis for allocating total payroll costs for each pay period. As a result, major programs U.S. Department of State Professional and Cultural Exchange Program – Citizen Exchanges (Assistance Listing # 19.415) was undercharged by approximately $18,683 and U.S. Agency for International Development (USAID) Foreign Assistance for Programs Overseas (Assistance Listing # 98.001) was undercharged by approximately $2,864. Our sample size was 40 payroll transactions and was not a statistically valid sample as it was selected haphazardly. We noted all selections in our sample used the improper allocation methodology and all payroll costs for 2022 were improperly allocated among activities benefited. Questioned Costs: None Repeat finding: No Auditor’s recommendation: We recommend management return to the previous process for recording payroll costs to grants and programs by which individual employee salaries and wages are allocated based on actual time spent on various activities and are directly charged to the respective activity cost centers benefited. Management’s response: Management is in agreement with the auditor’s finding and have implemented changes – see MIUSA’s attached corrective action plan.

Federal Award Programs: U.S. Department of State Professional and Cultural Exchange Program – Citizen Exchanges (Assistance Listing # 19.415) and U.S. Agency for International Development (USAID) Foreign Assistance for Programs Overseas (Assistance Listing # 98.001) Type of Finding: Material weakness in internal control over compliance and instance of immaterial noncompliance. Compliance Requirement: Allowable costs Criteria: The Uniform Guidance (2 CFR §200.430) states that the salaries or wages of employees must be distributed among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect activity. The Organization’s written policies rely on the use of time sheets and activity reports which document actual hours worked by program/grant. Condition: During the course of our audit testing, we noted the Organization changed the process for recording payroll costs to grants and programs for 2022. Rather than charging individual employee payroll costs to grants and programs, the Organization began aggregating total employee hours by grant/program activity. The aggregated hours for each activity were then divided by total hours for each pay period in order to obtain percentages for each respective activity, which were then multiplied by total employee earnings for the pay period as a basis for allocating the payroll costs to activities. The process using aggregated hours for each activity resulted in an improper allocation of payroll costs due to the differing pay rates of employees included in the allocation. Effect and Context: The condition resulted in incorrect amounts of costs and/or unallowable costs charged to the federal programs. All federal programs were impacted by the improper allocation of payroll costs due to the Organization’s aggregation of total employee hours by activity as a basis for allocating total payroll costs for each pay period. As a result, major programs U.S. Department of State Professional and Cultural Exchange Program – Citizen Exchanges (Assistance Listing # 19.415) was undercharged by approximately $18,683 and U.S. Agency for International Development (USAID) Foreign Assistance for Programs Overseas (Assistance Listing # 98.001) was undercharged by approximately $2,864. Our sample size was 40 payroll transactions and was not a statistically valid sample as it was selected haphazardly. We noted all selections in our sample used the improper allocation methodology and all payroll costs for 2022 were improperly allocated among activities benefited. Questioned Costs: None Repeat finding: No Auditor’s recommendation: We recommend management return to the previous process for recording payroll costs to grants and programs by which individual employee salaries and wages are allocated based on actual time spent on various activities and are directly charged to the respective activity cost centers benefited. Management’s response: Management is in agreement with the auditor’s finding and have implemented changes – see MIUSA’s attached corrective action plan.

Federal Award Programs: U.S. Department of State Professional and Cultural Exchange Program – Citizen Exchanges (Assistance Listing # 19.415) and U.S. Agency for International Development (USAID) Foreign Assistance for Programs Overseas (Assistance Listing # 98.001) Type of Finding: Material weakness in internal control over compliance and instance of immaterial noncompliance. Compliance Requirement: Allowable costs Criteria: The Uniform Guidance (2 CFR §200.430) states that the salaries or wages of employees must be distributed among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect activity. The Organization’s written policies rely on the use of time sheets and activity reports which document actual hours worked by program/grant. Condition: During the course of our audit testing, we noted the Organization changed the process for recording payroll costs to grants and programs for 2022. Rather than charging individual employee payroll costs to grants and programs, the Organization began aggregating total employee hours by grant/program activity. The aggregated hours for each activity were then divided by total hours for each pay period in order to obtain percentages for each respective activity, which were then multiplied by total employee earnings for the pay period as a basis for allocating the payroll costs to activities. The process using aggregated hours for each activity resulted in an improper allocation of payroll costs due to the differing pay rates of employees included in the allocation. Effect and Context: The condition resulted in incorrect amounts of costs and/or unallowable costs charged to the federal programs. All federal programs were impacted by the improper allocation of payroll costs due to the Organization’s aggregation of total employee hours by activity as a basis for allocating total payroll costs for each pay period. As a result, major programs U.S. Department of State Professional and Cultural Exchange Program – Citizen Exchanges (Assistance Listing # 19.415) was undercharged by approximately $18,683 and U.S. Agency for International Development (USAID) Foreign Assistance for Programs Overseas (Assistance Listing # 98.001) was undercharged by approximately $2,864. Our sample size was 40 payroll transactions and was not a statistically valid sample as it was selected haphazardly. We noted all selections in our sample used the improper allocation methodology and all payroll costs for 2022 were improperly allocated among activities benefited. Questioned Costs: None Repeat finding: No Auditor’s recommendation: We recommend management return to the previous process for recording payroll costs to grants and programs by which individual employee salaries and wages are allocated based on actual time spent on various activities and are directly charged to the respective activity cost centers benefited. Management’s response: Management is in agreement with the auditor’s finding and have implemented changes – see MIUSA’s attached corrective action plan.

Federal Award Programs: U.S. Department of State Professional and Cultural Exchange Program – Citizen Exchanges (Assistance Listing # 19.415) and U.S. Agency for International Development (USAID) Foreign Assistance for Programs Overseas (Assistance Listing # 98.001) Type of Finding: Material weakness in internal control over compliance and instance of immaterial noncompliance. Compliance Requirement: Allowable costs Criteria: The Uniform Guidance (2 CFR §200.430) states that the salaries or wages of employees must be distributed among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect activity. The Organization’s written policies rely on the use of time sheets and activity reports which document actual hours worked by program/grant. Condition: During the course of our audit testing, we noted the Organization changed the process for recording payroll costs to grants and programs for 2022. Rather than charging individual employee payroll costs to grants and programs, the Organization began aggregating total employee hours by grant/program activity. The aggregated hours for each activity were then divided by total hours for each pay period in order to obtain percentages for each respective activity, which were then multiplied by total employee earnings for the pay period as a basis for allocating the payroll costs to activities. The process using aggregated hours for each activity resulted in an improper allocation of payroll costs due to the differing pay rates of employees included in the allocation. Effect and Context: The condition resulted in incorrect amounts of costs and/or unallowable costs charged to the federal programs. All federal programs were impacted by the improper allocation of payroll costs due to the Organization’s aggregation of total employee hours by activity as a basis for allocating total payroll costs for each pay period. As a result, major programs U.S. Department of State Professional and Cultural Exchange Program – Citizen Exchanges (Assistance Listing # 19.415) was undercharged by approximately $18,683 and U.S. Agency for International Development (USAID) Foreign Assistance for Programs Overseas (Assistance Listing # 98.001) was undercharged by approximately $2,864. Our sample size was 40 payroll transactions and was not a statistically valid sample as it was selected haphazardly. We noted all selections in our sample used the improper allocation methodology and all payroll costs for 2022 were improperly allocated among activities benefited. Questioned Costs: None Repeat finding: No Auditor’s recommendation: We recommend management return to the previous process for recording payroll costs to grants and programs by which individual employee salaries and wages are allocated based on actual time spent on various activities and are directly charged to the respective activity cost centers benefited. Management’s response: Management is in agreement with the auditor’s finding and have implemented changes – see MIUSA’s attached corrective action plan.

Federal Award Programs: U.S. Department of State Professional and Cultural Exchange Program – Citizen Exchanges (Assistance Listing # 19.415) and U.S. Agency for International Development (USAID) Foreign Assistance for Programs Overseas (Assistance Listing # 98.001) Type of Finding: Material weakness in internal control over compliance and instance of immaterial noncompliance. Compliance Requirement: Allowable costs Criteria: The Uniform Guidance (2 CFR §200.430) states that the salaries or wages of employees must be distributed among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect activity. The Organization’s written policies rely on the use of time sheets and activity reports which document actual hours worked by program/grant. Condition: During the course of our audit testing, we noted the Organization changed the process for recording payroll costs to grants and programs for 2022. Rather than charging individual employee payroll costs to grants and programs, the Organization began aggregating total employee hours by grant/program activity. The aggregated hours for each activity were then divided by total hours for each pay period in order to obtain percentages for each respective activity, which were then multiplied by total employee earnings for the pay period as a basis for allocating the payroll costs to activities. The process using aggregated hours for each activity resulted in an improper allocation of payroll costs due to the differing pay rates of employees included in the allocation. Effect and Context: The condition resulted in incorrect amounts of costs and/or unallowable costs charged to the federal programs. All federal programs were impacted by the improper allocation of payroll costs due to the Organization’s aggregation of total employee hours by activity as a basis for allocating total payroll costs for each pay period. As a result, major programs U.S. Department of State Professional and Cultural Exchange Program – Citizen Exchanges (Assistance Listing # 19.415) was undercharged by approximately $18,683 and U.S. Agency for International Development (USAID) Foreign Assistance for Programs Overseas (Assistance Listing # 98.001) was undercharged by approximately $2,864. Our sample size was 40 payroll transactions and was not a statistically valid sample as it was selected haphazardly. We noted all selections in our sample used the improper allocation methodology and all payroll costs for 2022 were improperly allocated among activities benefited. Questioned Costs: None Repeat finding: No Auditor’s recommendation: We recommend management return to the previous process for recording payroll costs to grants and programs by which individual employee salaries and wages are allocated based on actual time spent on various activities and are directly charged to the respective activity cost centers benefited. Management’s response: Management is in agreement with the auditor’s finding and have implemented changes – see MIUSA’s attached corrective action plan.