Finding Number: 2022-001 Finding Type: Federal award finding Federal Assistance Listing No.: 64.033 Program Name: VA Supportive Services for Veteran Families Program Federal Agency: U.S. Department of Veterans Affairs Pass-Through Entity: Transition Projects, Inc. Grant Number: SSVF 19-ZZ-127 Federal Award Year: 2022 through 2023 Control Deficiency Type: Material weakness over compliance Instance of Noncompliance: Yes Compliance Requirement: Allowable costs/cost principles Questioned Costs: None Repeat Finding: No Criteria: In accordance with Title 38, U.S. Code of Federal Regulations, Part 62, Supportive Services for Veteran Families Program, the determination of allowable costs must be made in accordance with the applicable Federal Cost Principles set forth in 2 CFR Part 200. Title 2, U.S. Code of Federal Regulations, Part 200, Uniform Administrative Requirements, Costs Principles, and Audit Requirements for Federal Awards, Subpart E ? Cost Principles, states that payroll costs charged to a federal award must be supported by a system of internal controls which provides reasonable assurance that time charges are accurate, allowable, and properly allocated, and support the distribution of the employee?s salary among specific activities or costs objectives, if the employee works on projects supported by more than one Federal award or a Federal award and a non-Federal award. Condition: During our testing of payroll expenses charged to the major program, we noted the organization lacked a system of internal controls to provide reasonable assurance related to the accuracy of salaries charged to the major program grant for employees working on projects supported by multiple funding sources. Cause: Due in part to a transition in payroll and timekeeping systems during the year ended December 31, 2022, there was a lack of accurate timekeeping for employees who work on multiple projects, funded by both Federal and non-Federal sources. Effect: The distribution of employees? salaries among specific activities did not fully comply with the cost principles specified in the Federal Regulations. Questioned Costs: No known or likely questioned costs greater than $25,000. Audit Recommendation: We recommend that the organization implement the necessary procedures to ensure compensation costs are charged to federal awards based on a fair and equitable distribution method that is adequately documented and in accordance with Federal Regulations. Management?s Response: As noted by our auditors, Metropolitan Public Defender (MPD) made a payroll system transition in 2022, shifting from Paychex/UKG to ADP Workforce Now in September. At the time, there was a vacancy in the Accounting Manager position, and the agency also lacked a Payroll Specialist, leaving the accounting team short-staffed and without appropriate expertise during the design and deployment of the new system. This created a series of challenges that took some months to resolve. In December 2022, MPD hired an experienced Payroll Specialist, and in April 2023, the agency brought on a new Controller. As of April 15, 2023, all staff report hours through ADP Workforce Now timecards for each pay period. Codes for active grants, as well as MPD?s unrestricted general fund, are programmed into a custom field in ADP. Staff who work across multiple projects select a grant code for each timecard entry. Timecards are approved by the employee and then reviewed and approved by a supervisor prior to payroll processing. Based on timecard entries, the ADP software produces a general journal entry allocating wage and payroll tax cost to each grant and to the agency?s unrestricted general fund, and this entry is added to MPD?s accounting system after each pay cycle.
Finding Number: 2022-002 Finding Type: Federal award finding Federal Assistance Listing No.: 64.033 Program Name: VA Supportive Services for Veteran Families Program Federal Agency: U.S. Department of Veterans Affairs Pass-Through Entity: Transition Projects, Inc. Grant Number: SSVF 19-ZZ-127 Federal Award Year: 2022 through 2023 Control Deficiency Type: Significant deficiency over compliance Instance of Noncompliance: Yes Compliance Requirement: Allowable costs/cost principles Questioned Costs: None Repeat Finding: No Criteria: In accordance with Title 38, U.S. Code of Federal Regulations, Part 62, Supportive Services for Veteran Families Program, grantees may use up to 10 percent of supportive services grant funds for administrative costs that are allowable, allocable, and reasonable in conducting the work under the supportive services grant. The determination of allowable costs must be made in accordance with the applicable Federal Cost Principles set forth in 2 CFR Part 200. Condition: While the organization had sufficient allocable administrative costs in excess of the amount charged, we noted that such costs were charged at a fixed monthly rate, rather than the amount of allowable administrative costs. Cause: The organization did not have policies and procedures over cost principles establishing the determination of allowable costs in accordance with 2 CFR 200.405 and other applicable Federal Cost Principles. Effect: The organization did not fully comply with the allowable cost principles specified in the Code of Federal Regulations. As a result, there may be charges to awards that were not properly allocated, do not have ad-equate support, and/or were not accorded consistent treatment. Questioned Costs: No known or likely questioned costs greater than $25,000. Audit Recommendation: We recommend that the organization implement procedures over the administration of federal awards, including establishing written policies and procedures to ensure compliance with Uniform Guidance cost principles. Management?s Response: Throughout 2022, MPD had a policy of allocating all administrative cost to departments based on employee head count. Within each department managing grants, administrative costs were then allocated down to each grant based on the number of FTE funded by each program. The headcount calculation was set at the beginning of the year and was not updated during the year, leading to the same overhead allocation month after month. As of April 1, 2023, MPD has adopted a new written policy for administrative cost allocation. Costs that are not allowable for federal grants are flagged both on timecards and on purchasing transactions with a subaccount code that segregates them from overhead allocations. Costs related to facilities ? rent, equipment leases, office insurance, shared supplies, depreciation, etc. ? are now allocated to departments based on the square footage occupancy of each department, calculated using the guidance referenced in 2 CFR 200. Administrative costs that serve the entire organization such as Human Resources, Accounting, outsourced IT support, etc., are allocated to each department based on headcount, as we consider the number of personnel per department to be the best estimate of supporting services required by each team. The Payroll Specialist generates a current employee roster by department at the end of each month, which is used to update the administrative allocation. Once all costs have been allocated to the department level, both facilities and administrative costs are allocated down to individual grants based on the proportion of total wage costs assigned to each grant within the department for that month.
Finding Number: 2022-007 Finding Type: Federal award finding and financial statement finding Federal Assistance Listing No.: 64.033 Program Name: VA Supportive Services for Veteran Families Program Federal Agency: U.S. Department of Veterans Affairs Pass-Through Entity: Transition Projects, Inc. Grant Number: SSVF 19-ZZ-127 Federal Award Year: 2022 through 2023 Control Deficiency Type: Material weakness over compliance and financial reporting Instance of Noncompliance: Yes Compliance Requirement: Allowable costs/cost principles Questioned Costs: None Repeat Finding: No Criteria: The organization should maintain a system of internal controls designed to reasonably ensure that expenses related to payroll are properly recorded, that errors are detected in a timely manner, and that the allocation of payroll expense is appropriate. Such controls should be designed to comply with the requirements of Title 2, U.S. Code of Federal Regulations, Part 200, Uniform Administrative Requirements, Costs Principles, and Audit Requirements for Federal Awards, Subpart E ? Cost Principles. Condition: We noted that there was a lack of segregation of duties over the payroll process due to a lack of independent review of changes in payroll rates of non-represented staff and over bi-weekly payroll processing. Cause: It is our understanding that, due in part to staffing transitions during the year, there is no independent review of bi-weekly payroll processing, nor are there documented approvals or reviews of payroll rate changes for non-represented staff. Effect: Erroneous payments made to employees, misappropriation of assets, and errors in the allocation of payroll expense could go undetected. In addition, during our testwork of payroll expense charged to the major program, we noted an instance where the employee rate charged to the federal award had not been updated to reflect that employee?s rate at the time services were performed, resulting in under-charging of costs to the federal award. Questioned Costs: No known or likely questioned costs greater than $25,000. Audit Recommendation: We recommend that the organization review its current processes and procedures to ensure that all changes in pay rates are properly approved and documented and that the organization implement appropriate segregation of duties over the payroll process. Segregation of duties over the payroll process should include an independent review of pay rates, payroll allocations, and amounts withheld. Management?s Response: As noted in our response to Finding Number 2022-001, MPD made a software transition to ADP Workforce Now in September 2022. With this new system in place, all new hires, pay rate adjustments, bonuses, benefits withdrawals, and terminations are initiated by the Human Resources department and approved by the Director of Human Resources. These changes are automatically transferred to the payroll side of the software, where the Payroll Specialist can incorporate them into the next payroll. These fields cannot be adjusted by the Payroll Specialist; changes must be initiated by Human Resources. After timesheets are entered and approved for the bi-weekly pay cycle, the Payroll Specialist generates a draft payroll register and sends the register and a list of all payroll changes for the period to the Controller for review. The Controller confirms that any pay rate changes are processing correctly, reviews any bonus payments, checks entries for new hires and terminated employees, and reviews the pay detail for a regular sample of employees, comparing those entries to the prior pay cycle. If corrections are required, they are made, and a new draft register is generated. Payroll is submitted following the Controller?s approval, and a register of the transmitted payroll file is added to the electronic Payroll folder on the network. The Controller also reviews this file to ensure that no changes were made between the initial approval and final transmission.
Finding Number: 2022-001 Finding Type: Federal award finding Federal Assistance Listing No.: 64.033 Program Name: VA Supportive Services for Veteran Families Program Federal Agency: U.S. Department of Veterans Affairs Pass-Through Entity: Transition Projects, Inc. Grant Number: SSVF 19-ZZ-127 Federal Award Year: 2022 through 2023 Control Deficiency Type: Material weakness over compliance Instance of Noncompliance: Yes Compliance Requirement: Allowable costs/cost principles Questioned Costs: None Repeat Finding: No Criteria: In accordance with Title 38, U.S. Code of Federal Regulations, Part 62, Supportive Services for Veteran Families Program, the determination of allowable costs must be made in accordance with the applicable Federal Cost Principles set forth in 2 CFR Part 200. Title 2, U.S. Code of Federal Regulations, Part 200, Uniform Administrative Requirements, Costs Principles, and Audit Requirements for Federal Awards, Subpart E ? Cost Principles, states that payroll costs charged to a federal award must be supported by a system of internal controls which provides reasonable assurance that time charges are accurate, allowable, and properly allocated, and support the distribution of the employee?s salary among specific activities or costs objectives, if the employee works on projects supported by more than one Federal award or a Federal award and a non-Federal award. Condition: During our testing of payroll expenses charged to the major program, we noted the organization lacked a system of internal controls to provide reasonable assurance related to the accuracy of salaries charged to the major program grant for employees working on projects supported by multiple funding sources. Cause: Due in part to a transition in payroll and timekeeping systems during the year ended December 31, 2022, there was a lack of accurate timekeeping for employees who work on multiple projects, funded by both Federal and non-Federal sources. Effect: The distribution of employees? salaries among specific activities did not fully comply with the cost principles specified in the Federal Regulations. Questioned Costs: No known or likely questioned costs greater than $25,000. Audit Recommendation: We recommend that the organization implement the necessary procedures to ensure compensation costs are charged to federal awards based on a fair and equitable distribution method that is adequately documented and in accordance with Federal Regulations. Management?s Response: As noted by our auditors, Metropolitan Public Defender (MPD) made a payroll system transition in 2022, shifting from Paychex/UKG to ADP Workforce Now in September. At the time, there was a vacancy in the Accounting Manager position, and the agency also lacked a Payroll Specialist, leaving the accounting team short-staffed and without appropriate expertise during the design and deployment of the new system. This created a series of challenges that took some months to resolve. In December 2022, MPD hired an experienced Payroll Specialist, and in April 2023, the agency brought on a new Controller. As of April 15, 2023, all staff report hours through ADP Workforce Now timecards for each pay period. Codes for active grants, as well as MPD?s unrestricted general fund, are programmed into a custom field in ADP. Staff who work across multiple projects select a grant code for each timecard entry. Timecards are approved by the employee and then reviewed and approved by a supervisor prior to payroll processing. Based on timecard entries, the ADP software produces a general journal entry allocating wage and payroll tax cost to each grant and to the agency?s unrestricted general fund, and this entry is added to MPD?s accounting system after each pay cycle.
Finding Number: 2022-002 Finding Type: Federal award finding Federal Assistance Listing No.: 64.033 Program Name: VA Supportive Services for Veteran Families Program Federal Agency: U.S. Department of Veterans Affairs Pass-Through Entity: Transition Projects, Inc. Grant Number: SSVF 19-ZZ-127 Federal Award Year: 2022 through 2023 Control Deficiency Type: Significant deficiency over compliance Instance of Noncompliance: Yes Compliance Requirement: Allowable costs/cost principles Questioned Costs: None Repeat Finding: No Criteria: In accordance with Title 38, U.S. Code of Federal Regulations, Part 62, Supportive Services for Veteran Families Program, grantees may use up to 10 percent of supportive services grant funds for administrative costs that are allowable, allocable, and reasonable in conducting the work under the supportive services grant. The determination of allowable costs must be made in accordance with the applicable Federal Cost Principles set forth in 2 CFR Part 200. Condition: While the organization had sufficient allocable administrative costs in excess of the amount charged, we noted that such costs were charged at a fixed monthly rate, rather than the amount of allowable administrative costs. Cause: The organization did not have policies and procedures over cost principles establishing the determination of allowable costs in accordance with 2 CFR 200.405 and other applicable Federal Cost Principles. Effect: The organization did not fully comply with the allowable cost principles specified in the Code of Federal Regulations. As a result, there may be charges to awards that were not properly allocated, do not have ad-equate support, and/or were not accorded consistent treatment. Questioned Costs: No known or likely questioned costs greater than $25,000. Audit Recommendation: We recommend that the organization implement procedures over the administration of federal awards, including establishing written policies and procedures to ensure compliance with Uniform Guidance cost principles. Management?s Response: Throughout 2022, MPD had a policy of allocating all administrative cost to departments based on employee head count. Within each department managing grants, administrative costs were then allocated down to each grant based on the number of FTE funded by each program. The headcount calculation was set at the beginning of the year and was not updated during the year, leading to the same overhead allocation month after month. As of April 1, 2023, MPD has adopted a new written policy for administrative cost allocation. Costs that are not allowable for federal grants are flagged both on timecards and on purchasing transactions with a subaccount code that segregates them from overhead allocations. Costs related to facilities ? rent, equipment leases, office insurance, shared supplies, depreciation, etc. ? are now allocated to departments based on the square footage occupancy of each department, calculated using the guidance referenced in 2 CFR 200. Administrative costs that serve the entire organization such as Human Resources, Accounting, outsourced IT support, etc., are allocated to each department based on headcount, as we consider the number of personnel per department to be the best estimate of supporting services required by each team. The Payroll Specialist generates a current employee roster by department at the end of each month, which is used to update the administrative allocation. Once all costs have been allocated to the department level, both facilities and administrative costs are allocated down to individual grants based on the proportion of total wage costs assigned to each grant within the department for that month.
Finding Number: 2022-007 Finding Type: Federal award finding and financial statement finding Federal Assistance Listing No.: 64.033 Program Name: VA Supportive Services for Veteran Families Program Federal Agency: U.S. Department of Veterans Affairs Pass-Through Entity: Transition Projects, Inc. Grant Number: SSVF 19-ZZ-127 Federal Award Year: 2022 through 2023 Control Deficiency Type: Material weakness over compliance and financial reporting Instance of Noncompliance: Yes Compliance Requirement: Allowable costs/cost principles Questioned Costs: None Repeat Finding: No Criteria: The organization should maintain a system of internal controls designed to reasonably ensure that expenses related to payroll are properly recorded, that errors are detected in a timely manner, and that the allocation of payroll expense is appropriate. Such controls should be designed to comply with the requirements of Title 2, U.S. Code of Federal Regulations, Part 200, Uniform Administrative Requirements, Costs Principles, and Audit Requirements for Federal Awards, Subpart E ? Cost Principles. Condition: We noted that there was a lack of segregation of duties over the payroll process due to a lack of independent review of changes in payroll rates of non-represented staff and over bi-weekly payroll processing. Cause: It is our understanding that, due in part to staffing transitions during the year, there is no independent review of bi-weekly payroll processing, nor are there documented approvals or reviews of payroll rate changes for non-represented staff. Effect: Erroneous payments made to employees, misappropriation of assets, and errors in the allocation of payroll expense could go undetected. In addition, during our testwork of payroll expense charged to the major program, we noted an instance where the employee rate charged to the federal award had not been updated to reflect that employee?s rate at the time services were performed, resulting in under-charging of costs to the federal award. Questioned Costs: No known or likely questioned costs greater than $25,000. Audit Recommendation: We recommend that the organization review its current processes and procedures to ensure that all changes in pay rates are properly approved and documented and that the organization implement appropriate segregation of duties over the payroll process. Segregation of duties over the payroll process should include an independent review of pay rates, payroll allocations, and amounts withheld. Management?s Response: As noted in our response to Finding Number 2022-001, MPD made a software transition to ADP Workforce Now in September 2022. With this new system in place, all new hires, pay rate adjustments, bonuses, benefits withdrawals, and terminations are initiated by the Human Resources department and approved by the Director of Human Resources. These changes are automatically transferred to the payroll side of the software, where the Payroll Specialist can incorporate them into the next payroll. These fields cannot be adjusted by the Payroll Specialist; changes must be initiated by Human Resources. After timesheets are entered and approved for the bi-weekly pay cycle, the Payroll Specialist generates a draft payroll register and sends the register and a list of all payroll changes for the period to the Controller for review. The Controller confirms that any pay rate changes are processing correctly, reviews any bonus payments, checks entries for new hires and terminated employees, and reviews the pay detail for a regular sample of employees, comparing those entries to the prior pay cycle. If corrections are required, they are made, and a new draft register is generated. Payroll is submitted following the Controller?s approval, and a register of the transmitted payroll file is added to the electronic Payroll folder on the network. The Controller also reviews this file to ensure that no changes were made between the initial approval and final transmission.