Audit 298844

Criteria or specific requirement: Cost principles contained within 2 CFR Part 200 require that charges to federal awards for salaries and wages must be based on records that accurately reflect the work performed. Condition: During our audit we identified multiple instances of duplicate payroll charges against the grant program. In each instance a single transaction was processed and paid to the employee, however amounts reported as grant activity were duplicated. Additionally, we identified several instances of payroll transactions reported as grant activity in which the amount reported was less than the actual payroll charges allowable based on amounts paid to the employee as a result of errors in compiling the grant reporting. Cause: A grant tracking spreadsheet is used to track expenditures being funded by the grant. This spreadsheet is populated manually using payroll system generated information provided by payroll coordinators. A process did not exist to reconcile the amounts included within the grant tracking spreadsheet and the actual payroll expenditures charged within the general ledger. As a result, certain payroll transactions were charged to the grant at amounts less than the actual allowable expenditures incurred and intended to be charged, and multiple instances of duplicate transactions were included within the grant tracking spreadsheet. Effect of potential effect: The condition described has resulted in the County undercharging as well as overcharging the grant based on actual allowable expenditures. This could result in the County being reimbursed an amount other than what it is actually entitled to. In the event of overcharging a grant for unallowable costs this could also result in the County having to return funds back to the funding source. Questioned costs: Known questioned costs of $41,046 were identified through examination of expenditures charged to the program and identifying those expenditures that were duplicate charges. Context: While the total number of payroll charges attributed to the program amounts to several thousand, VCC noted a total of 109 duplicate charges. Additionally, of the 40 payroll transactions sampled for testing, VCC noted 4 transactions that were charged at a lesser amount to the grant in error. We consider the cause to be systemic as it involves the reconciliation process between the grant reporting and the general ledger. A spreadsheet alone does not provide the level of dual entry control that the general ledger offers, and so without a reconciliation process between the two, there is substantial risk of errors on the spreadsheet being undetected. Repeat finding: No Recommendation: We recommend that use of the general ledger be incorporated into the grant reconciliation process. This could be accomplished through the use of dedicated general ledger accounts used to accumulate and track grant expenditures or through a process of reconciling grant tracking spreadsheets back to existing general ledger information. Views of responsible officials: Management plans to perform a more robust review and reconciliation of future reported amounts. Management noted that in this instance the County had the option to either claim grant funds as a replacement for lost revenue or identify specific costs, so while it was agreed that the findings were valid because the County chose to identify specific costs and the amounts reported contained errors, they noted that the level of grant funding received would not have been impacted in this specific instance due to the available levels of lost revenue funds that were not utilized.

Criteria or specific requirement: Cost principles contained within 2 CFR Part 200 require that charges to federal awards for salaries and wages must be based on records that accurately reflect the work performed. Condition: During our audit we identified multiple instances of duplicate payroll charges against the grant program. In each instance a single transaction was processed and paid to the employee, however amounts reported as grant activity were duplicated. Additionally, we identified several instances of payroll transactions reported as grant activity in which the amount reported was less than the actual payroll charges allowable based on amounts paid to the employee as a result of errors in compiling the grant reporting. Cause: A grant tracking spreadsheet is used to track expenditures being funded by the grant. This spreadsheet is populated manually using payroll system generated information provided by payroll coordinators. A process did not exist to reconcile the amounts included within the grant tracking spreadsheet and the actual payroll expenditures charged within the general ledger. As a result, certain payroll transactions were charged to the grant at amounts less than the actual allowable expenditures incurred and intended to be charged, and multiple instances of duplicate transactions were included within the grant tracking spreadsheet. Effect of potential effect: The condition described has resulted in the County undercharging as well as overcharging the grant based on actual allowable expenditures. This could result in the County being reimbursed an amount other than what it is actually entitled to. In the event of overcharging a grant for unallowable costs this could also result in the County having to return funds back to the funding source. Questioned costs: Known questioned costs of $41,046 were identified through examination of expenditures charged to the program and identifying those expenditures that were duplicate charges. Context: While the total number of payroll charges attributed to the program amounts to several thousand, VCC noted a total of 109 duplicate charges. Additionally, of the 40 payroll transactions sampled for testing, VCC noted 4 transactions that were charged at a lesser amount to the grant in error. We consider the cause to be systemic as it involves the reconciliation process between the grant reporting and the general ledger. A spreadsheet alone does not provide the level of dual entry control that the general ledger offers, and so without a reconciliation process between the two, there is substantial risk of errors on the spreadsheet being undetected. Repeat finding: No Recommendation: We recommend that use of the general ledger be incorporated into the grant reconciliation process. This could be accomplished through the use of dedicated general ledger accounts used to accumulate and track grant expenditures or through a process of reconciling grant tracking spreadsheets back to existing general ledger information. Views of responsible officials: Management plans to perform a more robust review and reconciliation of future reported amounts. Management noted that in this instance the County had the option to either claim grant funds as a replacement for lost revenue or identify specific costs, so while it was agreed that the findings were valid because the County chose to identify specific costs and the amounts reported contained errors, they noted that the level of grant funding received would not have been impacted in this specific instance due to the available levels of lost revenue funds that were not utilized.