Audit 19157

Reference Number: 2022-001 Federal Agency: U.S. Environmental Protection Agency Federal Program: Water Pollution Control Assistance Listing Number: 66.419 Award Number and Year: I-98339417 (10/1/2021 ? 9/30/2022) Compliance Requirement: Allowable Cost/Cost Principles ? Time and Effort Reporting Type of Finding: Significant Deficiency in Internal Control Over Compliance, Noncompliance Criteria or specific requirement: Compliance: 2 CFR Section 200.430 (8)(i) Standards for Documentation of Personnel Expenses states that: Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (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) Reasonably reflect the total activity for which the employee is compensated by the non-Federal entity, not exceeding 100% of compensated activities; (iv) Encompass both federally assisted and all other activities compensated by the non-Federal entity on an integrated basis, but may include the use of subsidiary records as defined in the non-Federal entity's written policy; (v) Comply with the established accounting policies and practices of the non-Federal entity; (vii) Support the distribution of the employee's salary or wages 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 cost activity. Control: Per 2 CFR section 200.303(a), a non-Federal entity must: 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 comply 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). Condition: The Commission did not have effective controls in place for monitoring and obtaining adequate support to validate actual payroll expenses applied to the federal program. Context: Forty payroll transactions were selected for testing and one of the transactions charged to the grant was not supported by a timesheet. The timesheet was also not approved by a supervisory or independent individual. Questioned costs: The amount charged to the grant for this transaction was $582. Cause: Controls were not operating effectively to ensure that payroll reporting was performed in a timely and accurate manner, in accordance with federal requirements. Effect: There is an increased risk of charging unallowed payroll costs to the program. Recommendation: The Commission should reevaluate its current process and update internal controls related to time and effort reporting. Views of responsible officials: One of our employee?s timesheets was supposed to charge Account #500, but the incorrect formula was used and summed to Account #802 in December. This resulted in $582 difference between the two projects identified as a questioned cost above. By the end of 2022 fiscal year, however, we didn't overcharge project #802. ICPRB expended nearly $80,000 more on this project than was charged to the federal government so this oversight had no effect. This minor error resulted from the termination of our former Admin Director and the resignation of his temporary replacement. Our new Office Manager (hired on February 15, 2023) has assumed the responsibility of reviewing the timesheets so this will not be repeated. In addition, we have decided to block employees from adding accounts directly into their monthly timesheets without first including the account into the YTD portion of the timesheet software.

Reference Number: 2022-001 Federal Agency: U.S. Environmental Protection Agency Federal Program: Water Pollution Control Assistance Listing Number: 66.419 Award Number and Year: I-98339417 (10/1/2021 ? 9/30/2022) Compliance Requirement: Allowable Cost/Cost Principles ? Time and Effort Reporting Type of Finding: Significant Deficiency in Internal Control Over Compliance, Noncompliance Criteria or specific requirement: Compliance: 2 CFR Section 200.430 (8)(i) Standards for Documentation of Personnel Expenses states that: Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (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) Reasonably reflect the total activity for which the employee is compensated by the non-Federal entity, not exceeding 100% of compensated activities; (iv) Encompass both federally assisted and all other activities compensated by the non-Federal entity on an integrated basis, but may include the use of subsidiary records as defined in the non-Federal entity's written policy; (v) Comply with the established accounting policies and practices of the non-Federal entity; (vii) Support the distribution of the employee's salary or wages 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 cost activity. Control: Per 2 CFR section 200.303(a), a non-Federal entity must: 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 comply 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). Condition: The Commission did not have effective controls in place for monitoring and obtaining adequate support to validate actual payroll expenses applied to the federal program. Context: Forty payroll transactions were selected for testing and one of the transactions charged to the grant was not supported by a timesheet. The timesheet was also not approved by a supervisory or independent individual. Questioned costs: The amount charged to the grant for this transaction was $582. Cause: Controls were not operating effectively to ensure that payroll reporting was performed in a timely and accurate manner, in accordance with federal requirements. Effect: There is an increased risk of charging unallowed payroll costs to the program. Recommendation: The Commission should reevaluate its current process and update internal controls related to time and effort reporting. Views of responsible officials: One of our employee?s timesheets was supposed to charge Account #500, but the incorrect formula was used and summed to Account #802 in December. This resulted in $582 difference between the two projects identified as a questioned cost above. By the end of 2022 fiscal year, however, we didn't overcharge project #802. ICPRB expended nearly $80,000 more on this project than was charged to the federal government so this oversight had no effect. This minor error resulted from the termination of our former Admin Director and the resignation of his temporary replacement. Our new Office Manager (hired on February 15, 2023) has assumed the responsibility of reviewing the timesheets so this will not be repeated. In addition, we have decided to block employees from adding accounts directly into their monthly timesheets without first including the account into the YTD portion of the timesheet software.