Audit 315302

Criteria: Uniform Guidance requires that salaries charged to Federal awards are subject to its Standards of Documentation which state that salaries and wages must be based on records that accurately reflect the work performed. CDFI award states fringe benefits such as annual leave and holiday are allowable as long as they are made under formally established and consistently applied policies and subject to Uniform Guidance requirements. . UG states leave such as holidays and paid time off are allowable under specific circumstances, one of which is that they are equally allocated to all activities and Federal awards. The award also prohibits indirect costs. Condition: During our audit we tested a sample of salary charges and cash disbursements to the award during the period ended September 30, 2023. One charge to salaries was a journal entry posted at year end and the other a journal entry to expenditures for the respective fringe benefits. The timesheets provided to support these charges did not have time directly charged to the CDFI FA award. In addition, the PAR report provided to support the entries included time that would be in normal circumstances classified as indirect activities based on definitions in the Uniform Guidance section 200.413 and not allowable under the award. Cause: An analysis was performed by Management at year end to review salaries charged to funding sources. General journal entries were then posted to salaries and fringe to reallocate time and fringe charged to unrestricted awards to the CDFI award but not to any other award. The methodology used to charge and time and fringe in the analysis was not consistent with the methodology used throughout the year. In addition, there was confusion as to the requirements of the award and the requirements imposed by the Uniform Guidance and how the two interact. For instance, some items such as leave and holiday were considered allowable in the analysis, but Uniform Guidance puts specific criteria that must be met for it to be allowable. There was also confusion on what is considered a direct administrative cost (costs identified with a specific award) and indirect costs which apply to multiple awards. Effect: This process overrode the bi-weekly internal controls and created errors in the reclassification. The reclassification included indirect costs charged as direct costs and benefits such as annual leave and holidays not charged appropriately or consistently across the multiple awards as required by Uniform Guidance. Question Costs None. The Organization had met the terms of the award through the deployment of loan products.

Criteria: Uniform Guidance requires that salaries charged to Federal awards are subject to its Standards of Documentation which state that salaries and wages must be based on records that accurately reflect the work performed. CDFI award states fringe benefits such as annual leave and holiday are allowable as long as they are made under formally established and consistently applied policies and subject to Uniform Guidance requirements. . UG states leave such as holidays and paid time off are allowable under specific circumstances, one of which is that they are equally allocated to all activities and Federal awards. The award also prohibits indirect costs. Condition: During our audit we tested a sample of salary charges and cash disbursements to the award during the period ended September 30, 2023. One charge to salaries was a journal entry posted at year end and the other a journal entry to expenditures for the respective fringe benefits. The timesheets provided to support these charges did not have time directly charged to the CDFI FA award. In addition, the PAR report provided to support the entries included time that would be in normal circumstances classified as indirect activities based on definitions in the Uniform Guidance section 200.413 and not allowable under the award. Cause: An analysis was performed by Management at year end to review salaries charged to funding sources. General journal entries were then posted to salaries and fringe to reallocate time and fringe charged to unrestricted awards to the CDFI award but not to any other award. The methodology used to charge and time and fringe in the analysis was not consistent with the methodology used throughout the year. In addition, there was confusion as to the requirements of the award and the requirements imposed by the Uniform Guidance and how the two interact. For instance, some items such as leave and holiday were considered allowable in the analysis, but Uniform Guidance puts specific criteria that must be met for it to be allowable. There was also confusion on what is considered a direct administrative cost (costs identified with a specific award) and indirect costs which apply to multiple awards. Effect: This process overrode the bi-weekly internal controls and created errors in the reclassification. The reclassification included indirect costs charged as direct costs and benefits such as annual leave and holidays not charged appropriately or consistently across the multiple awards as required by Uniform Guidance. Question Costs None. The Organization had met the terms of the award through the deployment of loan products.