Criteria or Specific Requirement: CFR section 200.403, Factors affecting allowability of costs,
states costs must: conform to limitations or exclusions, be accorded consistent treatment, a cost
may not be assigned to a Federal award as a direct cost if any other cost incurred for the same
purpose in like circumstances has been allocated to the Federal award as an indirect cost and be
adequately documented. 2 CFR section 200.405, Allowable costs, states this standard is met if the cost is incurred
specifically for the Federal award and can be distributed in proportions that may be approximated
using reasonable methods. Further, if costs benefit two or more projects or activities in proportions
that can be determined without undue effort or cost, the cost must be allocated to the projects based
on the proportional benefit. If a cost benefits two or more projects or activities in proportions that
cannot be determined, the costs must be allocated on any reasonable documented basis.
2 CFR section 200.430(i) Standards for Documentation of Personnel Expenses states charges to
Federal awards for salaries must be based on records that accurately reflect the work performed
and these records must be supported by a system of internal control which provides reasonable
assurance that the charges are accurate, allowable, and properly allocated, 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 and non-Federal award and charges for the salaries and
wages of nonexempt employees must be supported by records indicating the total number of hours
worked each day.
Condition: The Organization did not maintain an effective control environment to ensure costs
incurred for expenditures charged to the program were in accordance with contract requirements
and applicable cost principles. The method for allocation of non-payroll expenditures between federally funded programs and other programs was based on percentages that had not been to reflect current funding sources.
Payroll expenditures were allocated based on budget estimates and not upon the actual work
performed on various Federal awards and non-federal activities.
Cause: The Organization received new funding subject to Uniform Guidance and did not have
written internal control policies as required by Uniform Guidance. Processes and procedures were not updated to be in accordance with Uniform Guidance.
Effect or Potential Effect: Potential for unallowable activities and unallowable costs.
Questioned Costs: Related questioned costs are unknown.
Context: During the year under audit, the issues represent a systemic problem.
Recommendation: We recommend the Organization document all methods used to allocate
expenditures and ensure adequate support is maintained to substantiate allocation calculations.
Management should design and implement policies and procedures to ensure payroll expenditures
are based on actual time spent on the federal funded programs.
View of Responsible Officials: In response to finding number 2023-001, there is no disagreement
with the audit finding. As this is our first audit requiring Internal Controls over Compliance,
management will draft new policies and procedures to ensure payroll expenditures are based on
actual time spent of the federal funded programs.
Managers will allocate employees’ time based on tasks performed and the amount of time worked
on federal award activities. The allocation of non-payroll expenses will be based on percentages
of current funding sources.
These new policies and procedures will be in full effect throughout fiscal year 2025 and beyond.
Criteria or Specific Requirement: CFR section 200.403, Factors affecting allowability of costs,
states costs must: conform to limitations or exclusions, be accorded consistent treatment, a cost
may not be assigned to a Federal award as a direct cost if any other cost incurred for the same
purpose in like circumstances has been allocated to the Federal award as an indirect cost and be
adequately documented. 2 CFR section 200.405, Allowable costs, states this standard is met if the cost is incurred
specifically for the Federal award and can be distributed in proportions that may be approximated
using reasonable methods. Further, if costs benefit two or more projects or activities in proportions
that can be determined without undue effort or cost, the cost must be allocated to the projects based
on the proportional benefit. If a cost benefits two or more projects or activities in proportions that
cannot be determined, the costs must be allocated on any reasonable documented basis.
2 CFR section 200.430(i) Standards for Documentation of Personnel Expenses states charges to
Federal awards for salaries must be based on records that accurately reflect the work performed
and these records must be supported by a system of internal control which provides reasonable
assurance that the charges are accurate, allowable, and properly allocated, 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 and non-Federal award and charges for the salaries and
wages of nonexempt employees must be supported by records indicating the total number of hours
worked each day.
Condition: The Organization did not maintain an effective control environment to ensure costs
incurred for expenditures charged to the program were in accordance with contract requirements
and applicable cost principles. The method for allocation of non-payroll expenditures between federally funded programs and other programs was based on percentages that had not been to reflect current funding sources.
Payroll expenditures were allocated based on budget estimates and not upon the actual work
performed on various Federal awards and non-federal activities.
Cause: The Organization received new funding subject to Uniform Guidance and did not have
written internal control policies as required by Uniform Guidance. Processes and procedures were not updated to be in accordance with Uniform Guidance.
Effect or Potential Effect: Potential for unallowable activities and unallowable costs.
Questioned Costs: Related questioned costs are unknown.
Context: During the year under audit, the issues represent a systemic problem.
Recommendation: We recommend the Organization document all methods used to allocate
expenditures and ensure adequate support is maintained to substantiate allocation calculations.
Management should design and implement policies and procedures to ensure payroll expenditures
are based on actual time spent on the federal funded programs.
View of Responsible Officials: In response to finding number 2023-001, there is no disagreement
with the audit finding. As this is our first audit requiring Internal Controls over Compliance,
management will draft new policies and procedures to ensure payroll expenditures are based on
actual time spent of the federal funded programs.
Managers will allocate employees’ time based on tasks performed and the amount of time worked
on federal award activities. The allocation of non-payroll expenses will be based on percentages
of current funding sources.
These new policies and procedures will be in full effect throughout fiscal year 2025 and beyond.
Criteria or Specific Requirement: CFR section 200.403, Factors affecting allowability of costs,
states costs must: conform to limitations or exclusions, be accorded consistent treatment, a cost
may not be assigned to a Federal award as a direct cost if any other cost incurred for the same
purpose in like circumstances has been allocated to the Federal award as an indirect cost and be
adequately documented. 2 CFR section 200.405, Allowable costs, states this standard is met if the cost is incurred
specifically for the Federal award and can be distributed in proportions that may be approximated
using reasonable methods. Further, if costs benefit two or more projects or activities in proportions
that can be determined without undue effort or cost, the cost must be allocated to the projects based
on the proportional benefit. If a cost benefits two or more projects or activities in proportions that
cannot be determined, the costs must be allocated on any reasonable documented basis.
2 CFR section 200.430(i) Standards for Documentation of Personnel Expenses states charges to
Federal awards for salaries must be based on records that accurately reflect the work performed
and these records must be supported by a system of internal control which provides reasonable
assurance that the charges are accurate, allowable, and properly allocated, 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 and non-Federal award and charges for the salaries and
wages of nonexempt employees must be supported by records indicating the total number of hours
worked each day.
Condition: The Organization did not maintain an effective control environment to ensure costs
incurred for expenditures charged to the program were in accordance with contract requirements
and applicable cost principles. The method for allocation of non-payroll expenditures between federally funded programs and other programs was based on percentages that had not been to reflect current funding sources.
Payroll expenditures were allocated based on budget estimates and not upon the actual work
performed on various Federal awards and non-federal activities.
Cause: The Organization received new funding subject to Uniform Guidance and did not have
written internal control policies as required by Uniform Guidance. Processes and procedures were not updated to be in accordance with Uniform Guidance.
Effect or Potential Effect: Potential for unallowable activities and unallowable costs.
Questioned Costs: Related questioned costs are unknown.
Context: During the year under audit, the issues represent a systemic problem.
Recommendation: We recommend the Organization document all methods used to allocate
expenditures and ensure adequate support is maintained to substantiate allocation calculations.
Management should design and implement policies and procedures to ensure payroll expenditures
are based on actual time spent on the federal funded programs.
View of Responsible Officials: In response to finding number 2023-001, there is no disagreement
with the audit finding. As this is our first audit requiring Internal Controls over Compliance,
management will draft new policies and procedures to ensure payroll expenditures are based on
actual time spent of the federal funded programs.
Managers will allocate employees’ time based on tasks performed and the amount of time worked
on federal award activities. The allocation of non-payroll expenses will be based on percentages
of current funding sources.
These new policies and procedures will be in full effect throughout fiscal year 2025 and beyond.
Criteria or Specific Requirement: CFR section 200.403, Factors affecting allowability of costs,
states costs must: conform to limitations or exclusions, be accorded consistent treatment, a cost
may not be assigned to a Federal award as a direct cost if any other cost incurred for the same
purpose in like circumstances has been allocated to the Federal award as an indirect cost and be
adequately documented. 2 CFR section 200.405, Allowable costs, states this standard is met if the cost is incurred
specifically for the Federal award and can be distributed in proportions that may be approximated
using reasonable methods. Further, if costs benefit two or more projects or activities in proportions
that can be determined without undue effort or cost, the cost must be allocated to the projects based
on the proportional benefit. If a cost benefits two or more projects or activities in proportions that
cannot be determined, the costs must be allocated on any reasonable documented basis.
2 CFR section 200.430(i) Standards for Documentation of Personnel Expenses states charges to
Federal awards for salaries must be based on records that accurately reflect the work performed
and these records must be supported by a system of internal control which provides reasonable
assurance that the charges are accurate, allowable, and properly allocated, 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 and non-Federal award and charges for the salaries and
wages of nonexempt employees must be supported by records indicating the total number of hours
worked each day.
Condition: The Organization did not maintain an effective control environment to ensure costs
incurred for expenditures charged to the program were in accordance with contract requirements
and applicable cost principles. The method for allocation of non-payroll expenditures between federally funded programs and other programs was based on percentages that had not been to reflect current funding sources.
Payroll expenditures were allocated based on budget estimates and not upon the actual work
performed on various Federal awards and non-federal activities.
Cause: The Organization received new funding subject to Uniform Guidance and did not have
written internal control policies as required by Uniform Guidance. Processes and procedures were not updated to be in accordance with Uniform Guidance.
Effect or Potential Effect: Potential for unallowable activities and unallowable costs.
Questioned Costs: Related questioned costs are unknown.
Context: During the year under audit, the issues represent a systemic problem.
Recommendation: We recommend the Organization document all methods used to allocate
expenditures and ensure adequate support is maintained to substantiate allocation calculations.
Management should design and implement policies and procedures to ensure payroll expenditures
are based on actual time spent on the federal funded programs.
View of Responsible Officials: In response to finding number 2023-001, there is no disagreement
with the audit finding. As this is our first audit requiring Internal Controls over Compliance,
management will draft new policies and procedures to ensure payroll expenditures are based on
actual time spent of the federal funded programs.
Managers will allocate employees’ time based on tasks performed and the amount of time worked
on federal award activities. The allocation of non-payroll expenses will be based on percentages
of current funding sources.
These new policies and procedures will be in full effect throughout fiscal year 2025 and beyond.
Criteria or Specific Requirement: CFR section 200.403, Factors affecting allowability of costs,
states costs must: conform to limitations or exclusions, be accorded consistent treatment, a cost
may not be assigned to a Federal award as a direct cost if any other cost incurred for the same
purpose in like circumstances has been allocated to the Federal award as an indirect cost and be
adequately documented. 2 CFR section 200.405, Allowable costs, states this standard is met if the cost is incurred
specifically for the Federal award and can be distributed in proportions that may be approximated
using reasonable methods. Further, if costs benefit two or more projects or activities in proportions
that can be determined without undue effort or cost, the cost must be allocated to the projects based
on the proportional benefit. If a cost benefits two or more projects or activities in proportions that
cannot be determined, the costs must be allocated on any reasonable documented basis.
2 CFR section 200.430(i) Standards for Documentation of Personnel Expenses states charges to
Federal awards for salaries must be based on records that accurately reflect the work performed
and these records must be supported by a system of internal control which provides reasonable
assurance that the charges are accurate, allowable, and properly allocated, 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 and non-Federal award and charges for the salaries and
wages of nonexempt employees must be supported by records indicating the total number of hours
worked each day.
Condition: The Organization did not maintain an effective control environment to ensure costs
incurred for expenditures charged to the program were in accordance with contract requirements
and applicable cost principles. The method for allocation of non-payroll expenditures between federally funded programs and other programs was based on percentages that had not been to reflect current funding sources.
Payroll expenditures were allocated based on budget estimates and not upon the actual work
performed on various Federal awards and non-federal activities.
Cause: The Organization received new funding subject to Uniform Guidance and did not have
written internal control policies as required by Uniform Guidance. Processes and procedures were not updated to be in accordance with Uniform Guidance.
Effect or Potential Effect: Potential for unallowable activities and unallowable costs.
Questioned Costs: Related questioned costs are unknown.
Context: During the year under audit, the issues represent a systemic problem.
Recommendation: We recommend the Organization document all methods used to allocate
expenditures and ensure adequate support is maintained to substantiate allocation calculations.
Management should design and implement policies and procedures to ensure payroll expenditures
are based on actual time spent on the federal funded programs.
View of Responsible Officials: In response to finding number 2023-001, there is no disagreement
with the audit finding. As this is our first audit requiring Internal Controls over Compliance,
management will draft new policies and procedures to ensure payroll expenditures are based on
actual time spent of the federal funded programs.
Managers will allocate employees’ time based on tasks performed and the amount of time worked
on federal award activities. The allocation of non-payroll expenses will be based on percentages
of current funding sources.
These new policies and procedures will be in full effect throughout fiscal year 2025 and beyond.
Criteria or Specific Requirement: CFR section 200.403, Factors affecting allowability of costs,
states costs must: conform to limitations or exclusions, be accorded consistent treatment, a cost
may not be assigned to a Federal award as a direct cost if any other cost incurred for the same
purpose in like circumstances has been allocated to the Federal award as an indirect cost and be
adequately documented. 2 CFR section 200.405, Allowable costs, states this standard is met if the cost is incurred
specifically for the Federal award and can be distributed in proportions that may be approximated
using reasonable methods. Further, if costs benefit two or more projects or activities in proportions
that can be determined without undue effort or cost, the cost must be allocated to the projects based
on the proportional benefit. If a cost benefits two or more projects or activities in proportions that
cannot be determined, the costs must be allocated on any reasonable documented basis.
2 CFR section 200.430(i) Standards for Documentation of Personnel Expenses states charges to
Federal awards for salaries must be based on records that accurately reflect the work performed
and these records must be supported by a system of internal control which provides reasonable
assurance that the charges are accurate, allowable, and properly allocated, 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 and non-Federal award and charges for the salaries and
wages of nonexempt employees must be supported by records indicating the total number of hours
worked each day.
Condition: The Organization did not maintain an effective control environment to ensure costs
incurred for expenditures charged to the program were in accordance with contract requirements
and applicable cost principles. The method for allocation of non-payroll expenditures between federally funded programs and other programs was based on percentages that had not been to reflect current funding sources.
Payroll expenditures were allocated based on budget estimates and not upon the actual work
performed on various Federal awards and non-federal activities.
Cause: The Organization received new funding subject to Uniform Guidance and did not have
written internal control policies as required by Uniform Guidance. Processes and procedures were not updated to be in accordance with Uniform Guidance.
Effect or Potential Effect: Potential for unallowable activities and unallowable costs.
Questioned Costs: Related questioned costs are unknown.
Context: During the year under audit, the issues represent a systemic problem.
Recommendation: We recommend the Organization document all methods used to allocate
expenditures and ensure adequate support is maintained to substantiate allocation calculations.
Management should design and implement policies and procedures to ensure payroll expenditures
are based on actual time spent on the federal funded programs.
View of Responsible Officials: In response to finding number 2023-001, there is no disagreement
with the audit finding. As this is our first audit requiring Internal Controls over Compliance,
management will draft new policies and procedures to ensure payroll expenditures are based on
actual time spent of the federal funded programs.
Managers will allocate employees’ time based on tasks performed and the amount of time worked
on federal award activities. The allocation of non-payroll expenses will be based on percentages
of current funding sources.
These new policies and procedures will be in full effect throughout fiscal year 2025 and beyond.
Criteria or Specific Requirement: CFR section 200.403, Factors affecting allowability of costs,
states costs must: conform to limitations or exclusions, be accorded consistent treatment, a cost
may not be assigned to a Federal award as a direct cost if any other cost incurred for the same
purpose in like circumstances has been allocated to the Federal award as an indirect cost and be
adequately documented. 2 CFR section 200.405, Allowable costs, states this standard is met if the cost is incurred
specifically for the Federal award and can be distributed in proportions that may be approximated
using reasonable methods. Further, if costs benefit two or more projects or activities in proportions
that can be determined without undue effort or cost, the cost must be allocated to the projects based
on the proportional benefit. If a cost benefits two or more projects or activities in proportions that
cannot be determined, the costs must be allocated on any reasonable documented basis.
2 CFR section 200.430(i) Standards for Documentation of Personnel Expenses states charges to
Federal awards for salaries must be based on records that accurately reflect the work performed
and these records must be supported by a system of internal control which provides reasonable
assurance that the charges are accurate, allowable, and properly allocated, 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 and non-Federal award and charges for the salaries and
wages of nonexempt employees must be supported by records indicating the total number of hours
worked each day.
Condition: The Organization did not maintain an effective control environment to ensure costs
incurred for expenditures charged to the program were in accordance with contract requirements
and applicable cost principles. The method for allocation of non-payroll expenditures between federally funded programs and other programs was based on percentages that had not been to reflect current funding sources.
Payroll expenditures were allocated based on budget estimates and not upon the actual work
performed on various Federal awards and non-federal activities.
Cause: The Organization received new funding subject to Uniform Guidance and did not have
written internal control policies as required by Uniform Guidance. Processes and procedures were not updated to be in accordance with Uniform Guidance.
Effect or Potential Effect: Potential for unallowable activities and unallowable costs.
Questioned Costs: Related questioned costs are unknown.
Context: During the year under audit, the issues represent a systemic problem.
Recommendation: We recommend the Organization document all methods used to allocate
expenditures and ensure adequate support is maintained to substantiate allocation calculations.
Management should design and implement policies and procedures to ensure payroll expenditures
are based on actual time spent on the federal funded programs.
View of Responsible Officials: In response to finding number 2023-001, there is no disagreement
with the audit finding. As this is our first audit requiring Internal Controls over Compliance,
management will draft new policies and procedures to ensure payroll expenditures are based on
actual time spent of the federal funded programs.
Managers will allocate employees’ time based on tasks performed and the amount of time worked
on federal award activities. The allocation of non-payroll expenses will be based on percentages
of current funding sources.
These new policies and procedures will be in full effect throughout fiscal year 2025 and beyond.
Criteria or Specific Requirement: CFR section 200.403, Factors affecting allowability of costs,
states costs must: conform to limitations or exclusions, be accorded consistent treatment, a cost
may not be assigned to a Federal award as a direct cost if any other cost incurred for the same
purpose in like circumstances has been allocated to the Federal award as an indirect cost and be
adequately documented. 2 CFR section 200.405, Allowable costs, states this standard is met if the cost is incurred
specifically for the Federal award and can be distributed in proportions that may be approximated
using reasonable methods. Further, if costs benefit two or more projects or activities in proportions
that can be determined without undue effort or cost, the cost must be allocated to the projects based
on the proportional benefit. If a cost benefits two or more projects or activities in proportions that
cannot be determined, the costs must be allocated on any reasonable documented basis.
2 CFR section 200.430(i) Standards for Documentation of Personnel Expenses states charges to
Federal awards for salaries must be based on records that accurately reflect the work performed
and these records must be supported by a system of internal control which provides reasonable
assurance that the charges are accurate, allowable, and properly allocated, 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 and non-Federal award and charges for the salaries and
wages of nonexempt employees must be supported by records indicating the total number of hours
worked each day.
Condition: The Organization did not maintain an effective control environment to ensure costs
incurred for expenditures charged to the program were in accordance with contract requirements
and applicable cost principles. The method for allocation of non-payroll expenditures between federally funded programs and other programs was based on percentages that had not been to reflect current funding sources.
Payroll expenditures were allocated based on budget estimates and not upon the actual work
performed on various Federal awards and non-federal activities.
Cause: The Organization received new funding subject to Uniform Guidance and did not have
written internal control policies as required by Uniform Guidance. Processes and procedures were not updated to be in accordance with Uniform Guidance.
Effect or Potential Effect: Potential for unallowable activities and unallowable costs.
Questioned Costs: Related questioned costs are unknown.
Context: During the year under audit, the issues represent a systemic problem.
Recommendation: We recommend the Organization document all methods used to allocate
expenditures and ensure adequate support is maintained to substantiate allocation calculations.
Management should design and implement policies and procedures to ensure payroll expenditures
are based on actual time spent on the federal funded programs.
View of Responsible Officials: In response to finding number 2023-001, there is no disagreement
with the audit finding. As this is our first audit requiring Internal Controls over Compliance,
management will draft new policies and procedures to ensure payroll expenditures are based on
actual time spent of the federal funded programs.
Managers will allocate employees’ time based on tasks performed and the amount of time worked
on federal award activities. The allocation of non-payroll expenses will be based on percentages
of current funding sources.
These new policies and procedures will be in full effect throughout fiscal year 2025 and beyond.
Criteria or Specific Requirement: CFR section 200.403, Factors affecting allowability of costs,
states costs must: conform to limitations or exclusions, be accorded consistent treatment, a cost
may not be assigned to a Federal award as a direct cost if any other cost incurred for the same
purpose in like circumstances has been allocated to the Federal award as an indirect cost and be
adequately documented. 2 CFR section 200.405, Allowable costs, states this standard is met if the cost is incurred
specifically for the Federal award and can be distributed in proportions that may be approximated
using reasonable methods. Further, if costs benefit two or more projects or activities in proportions
that can be determined without undue effort or cost, the cost must be allocated to the projects based
on the proportional benefit. If a cost benefits two or more projects or activities in proportions that
cannot be determined, the costs must be allocated on any reasonable documented basis.
2 CFR section 200.430(i) Standards for Documentation of Personnel Expenses states charges to
Federal awards for salaries must be based on records that accurately reflect the work performed
and these records must be supported by a system of internal control which provides reasonable
assurance that the charges are accurate, allowable, and properly allocated, 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 and non-Federal award and charges for the salaries and
wages of nonexempt employees must be supported by records indicating the total number of hours
worked each day.
Condition: The Organization did not maintain an effective control environment to ensure costs
incurred for expenditures charged to the program were in accordance with contract requirements
and applicable cost principles. The method for allocation of non-payroll expenditures between federally funded programs and other programs was based on percentages that had not been to reflect current funding sources.
Payroll expenditures were allocated based on budget estimates and not upon the actual work
performed on various Federal awards and non-federal activities.
Cause: The Organization received new funding subject to Uniform Guidance and did not have
written internal control policies as required by Uniform Guidance. Processes and procedures were not updated to be in accordance with Uniform Guidance.
Effect or Potential Effect: Potential for unallowable activities and unallowable costs.
Questioned Costs: Related questioned costs are unknown.
Context: During the year under audit, the issues represent a systemic problem.
Recommendation: We recommend the Organization document all methods used to allocate
expenditures and ensure adequate support is maintained to substantiate allocation calculations.
Management should design and implement policies and procedures to ensure payroll expenditures
are based on actual time spent on the federal funded programs.
View of Responsible Officials: In response to finding number 2023-001, there is no disagreement
with the audit finding. As this is our first audit requiring Internal Controls over Compliance,
management will draft new policies and procedures to ensure payroll expenditures are based on
actual time spent of the federal funded programs.
Managers will allocate employees’ time based on tasks performed and the amount of time worked
on federal award activities. The allocation of non-payroll expenses will be based on percentages
of current funding sources.
These new policies and procedures will be in full effect throughout fiscal year 2025 and beyond.
Criteria or Specific Requirement: CFR section 200.403, Factors affecting allowability of costs,
states costs must: conform to limitations or exclusions, be accorded consistent treatment, a cost
may not be assigned to a Federal award as a direct cost if any other cost incurred for the same
purpose in like circumstances has been allocated to the Federal award as an indirect cost and be
adequately documented. 2 CFR section 200.405, Allowable costs, states this standard is met if the cost is incurred
specifically for the Federal award and can be distributed in proportions that may be approximated
using reasonable methods. Further, if costs benefit two or more projects or activities in proportions
that can be determined without undue effort or cost, the cost must be allocated to the projects based
on the proportional benefit. If a cost benefits two or more projects or activities in proportions that
cannot be determined, the costs must be allocated on any reasonable documented basis.
2 CFR section 200.430(i) Standards for Documentation of Personnel Expenses states charges to
Federal awards for salaries must be based on records that accurately reflect the work performed
and these records must be supported by a system of internal control which provides reasonable
assurance that the charges are accurate, allowable, and properly allocated, 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 and non-Federal award and charges for the salaries and
wages of nonexempt employees must be supported by records indicating the total number of hours
worked each day.
Condition: The Organization did not maintain an effective control environment to ensure costs
incurred for expenditures charged to the program were in accordance with contract requirements
and applicable cost principles. The method for allocation of non-payroll expenditures between federally funded programs and other programs was based on percentages that had not been to reflect current funding sources.
Payroll expenditures were allocated based on budget estimates and not upon the actual work
performed on various Federal awards and non-federal activities.
Cause: The Organization received new funding subject to Uniform Guidance and did not have
written internal control policies as required by Uniform Guidance. Processes and procedures were not updated to be in accordance with Uniform Guidance.
Effect or Potential Effect: Potential for unallowable activities and unallowable costs.
Questioned Costs: Related questioned costs are unknown.
Context: During the year under audit, the issues represent a systemic problem.
Recommendation: We recommend the Organization document all methods used to allocate
expenditures and ensure adequate support is maintained to substantiate allocation calculations.
Management should design and implement policies and procedures to ensure payroll expenditures
are based on actual time spent on the federal funded programs.
View of Responsible Officials: In response to finding number 2023-001, there is no disagreement
with the audit finding. As this is our first audit requiring Internal Controls over Compliance,
management will draft new policies and procedures to ensure payroll expenditures are based on
actual time spent of the federal funded programs.
Managers will allocate employees’ time based on tasks performed and the amount of time worked
on federal award activities. The allocation of non-payroll expenses will be based on percentages
of current funding sources.
These new policies and procedures will be in full effect throughout fiscal year 2025 and beyond.
Criteria or Specific Requirement: CFR section 200.403, Factors affecting allowability of costs,
states costs must: conform to limitations or exclusions, be accorded consistent treatment, a cost
may not be assigned to a Federal award as a direct cost if any other cost incurred for the same
purpose in like circumstances has been allocated to the Federal award as an indirect cost and be
adequately documented. 2 CFR section 200.405, Allowable costs, states this standard is met if the cost is incurred
specifically for the Federal award and can be distributed in proportions that may be approximated
using reasonable methods. Further, if costs benefit two or more projects or activities in proportions
that can be determined without undue effort or cost, the cost must be allocated to the projects based
on the proportional benefit. If a cost benefits two or more projects or activities in proportions that
cannot be determined, the costs must be allocated on any reasonable documented basis.
2 CFR section 200.430(i) Standards for Documentation of Personnel Expenses states charges to
Federal awards for salaries must be based on records that accurately reflect the work performed
and these records must be supported by a system of internal control which provides reasonable
assurance that the charges are accurate, allowable, and properly allocated, 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 and non-Federal award and charges for the salaries and
wages of nonexempt employees must be supported by records indicating the total number of hours
worked each day.
Condition: The Organization did not maintain an effective control environment to ensure costs
incurred for expenditures charged to the program were in accordance with contract requirements
and applicable cost principles. The method for allocation of non-payroll expenditures between federally funded programs and other programs was based on percentages that had not been to reflect current funding sources.
Payroll expenditures were allocated based on budget estimates and not upon the actual work
performed on various Federal awards and non-federal activities.
Cause: The Organization received new funding subject to Uniform Guidance and did not have
written internal control policies as required by Uniform Guidance. Processes and procedures were not updated to be in accordance with Uniform Guidance.
Effect or Potential Effect: Potential for unallowable activities and unallowable costs.
Questioned Costs: Related questioned costs are unknown.
Context: During the year under audit, the issues represent a systemic problem.
Recommendation: We recommend the Organization document all methods used to allocate
expenditures and ensure adequate support is maintained to substantiate allocation calculations.
Management should design and implement policies and procedures to ensure payroll expenditures
are based on actual time spent on the federal funded programs.
View of Responsible Officials: In response to finding number 2023-001, there is no disagreement
with the audit finding. As this is our first audit requiring Internal Controls over Compliance,
management will draft new policies and procedures to ensure payroll expenditures are based on
actual time spent of the federal funded programs.
Managers will allocate employees’ time based on tasks performed and the amount of time worked
on federal award activities. The allocation of non-payroll expenses will be based on percentages
of current funding sources.
These new policies and procedures will be in full effect throughout fiscal year 2025 and beyond.
Criteria or Specific Requirement: CFR section 200.403, Factors affecting allowability of costs,
states costs must: conform to limitations or exclusions, be accorded consistent treatment, a cost
may not be assigned to a Federal award as a direct cost if any other cost incurred for the same
purpose in like circumstances has been allocated to the Federal award as an indirect cost and be
adequately documented. 2 CFR section 200.405, Allowable costs, states this standard is met if the cost is incurred
specifically for the Federal award and can be distributed in proportions that may be approximated
using reasonable methods. Further, if costs benefit two or more projects or activities in proportions
that can be determined without undue effort or cost, the cost must be allocated to the projects based
on the proportional benefit. If a cost benefits two or more projects or activities in proportions that
cannot be determined, the costs must be allocated on any reasonable documented basis.
2 CFR section 200.430(i) Standards for Documentation of Personnel Expenses states charges to
Federal awards for salaries must be based on records that accurately reflect the work performed
and these records must be supported by a system of internal control which provides reasonable
assurance that the charges are accurate, allowable, and properly allocated, 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 and non-Federal award and charges for the salaries and
wages of nonexempt employees must be supported by records indicating the total number of hours
worked each day.
Condition: The Organization did not maintain an effective control environment to ensure costs
incurred for expenditures charged to the program were in accordance with contract requirements
and applicable cost principles. The method for allocation of non-payroll expenditures between federally funded programs and other programs was based on percentages that had not been to reflect current funding sources.
Payroll expenditures were allocated based on budget estimates and not upon the actual work
performed on various Federal awards and non-federal activities.
Cause: The Organization received new funding subject to Uniform Guidance and did not have
written internal control policies as required by Uniform Guidance. Processes and procedures were not updated to be in accordance with Uniform Guidance.
Effect or Potential Effect: Potential for unallowable activities and unallowable costs.
Questioned Costs: Related questioned costs are unknown.
Context: During the year under audit, the issues represent a systemic problem.
Recommendation: We recommend the Organization document all methods used to allocate
expenditures and ensure adequate support is maintained to substantiate allocation calculations.
Management should design and implement policies and procedures to ensure payroll expenditures
are based on actual time spent on the federal funded programs.
View of Responsible Officials: In response to finding number 2023-001, there is no disagreement
with the audit finding. As this is our first audit requiring Internal Controls over Compliance,
management will draft new policies and procedures to ensure payroll expenditures are based on
actual time spent of the federal funded programs.
Managers will allocate employees’ time based on tasks performed and the amount of time worked
on federal award activities. The allocation of non-payroll expenses will be based on percentages
of current funding sources.
These new policies and procedures will be in full effect throughout fiscal year 2025 and beyond.