Audit 306402

Budgeted personnel costs charged to program instead actual costs (significant deficiency) Cluster: Not applicable Sponsoring Agency : U.S. Department of Housing and Urban Development Award Name: Community Development Block Grants/State's Program and Non-entitlement Grants in Hawaii Award Number: B-20-DW-25-0001 Assistance Listing Number: 14.228 Award Year: FY 2021 Pass-through entity: Massachusetts Department of Housing and Community Development Criteria: "According to 2 CFR 200.430, 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 (for IHE, this per the IHE's definition of IBS); (iv) Encompass 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; and (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." Condition: The Organization allocates payroll to grants based on budgeted time and effort. During our testing, we noted that 100% of the Director of Grants Management & Compliance's salary was allocated to the program without a timesheet or other equivalent documentation that support this allocation. Cause: The Organization does not have updated polices/procedures and sufficient internal controls in place over compliance of time and effort. Effect: Payroll charges allocated to grants based on budgeted time and effort can result in federal reimbursements that are not reflective of actual time and effort working on a grant. Payroll costs may be overcharged to the grant. Questioned Cost: Undetermined Recommendation: We recommend that policies and procedures be implemented to ensure payroll costs are charged to grants based on actual costs. We recommend the Organization start using timesheets or other equivalent documentation to ensure payroll costs charged to federal programs are based on records of actual work performed. Such records should be reviewed and certified by the employee and supervisor prior allocation of payroll costs. Management's Views and Corrective Action Plan: Management's response is included in "Management's View and Corrective Action Plan" at the end of this report after the schedule of findings and questioned cost

Budgeted personnel costs charged to program instead actual costs (significant deficiency) Cluster: Not applicable Sponsoring Agency : U.S. Department of Housing and Urban Development Award Name: Community Development Block Grants/State's Program and Non-entitlement Grants in Hawaii Award Number: B-20-DW-25-0001 Assistance Listing Number: 14.228 Award Year: FY 2021 Pass-through entity: Massachusetts Department of Housing and Community Development Criteria: "According to 2 CFR 200.430, 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 (for IHE, this per the IHE's definition of IBS); (iv) Encompass 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; and (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." Condition: The Organization allocates payroll to grants based on budgeted time and effort. During our testing, we noted that 100% of the Director of Grants Management & Compliance's salary was allocated to the program without a timesheet or other equivalent documentation that support this allocation. Cause: The Organization does not have updated polices/procedures and sufficient internal controls in place over compliance of time and effort. Effect: Payroll charges allocated to grants based on budgeted time and effort can result in federal reimbursements that are not reflective of actual time and effort working on a grant. Payroll costs may be overcharged to the grant. Questioned Cost: Undetermined Recommendation: We recommend that policies and procedures be implemented to ensure payroll costs are charged to grants based on actual costs. We recommend the Organization start using timesheets or other equivalent documentation to ensure payroll costs charged to federal programs are based on records of actual work performed. Such records should be reviewed and certified by the employee and supervisor prior allocation of payroll costs. Management's Views and Corrective Action Plan: Management's response is included in "Management's View and Corrective Action Plan" at the end of this report after the schedule of findings and questioned cost