Audit 322414

Criteria: Title 2, Subpart E – Cost Principles Section 200.430 contains the rules for compensation- personal services relative to the allowable cost requirement of the Organization’s major grant. The standards for documentation of personnel expenses require a process for reviewing after-the-fact interim charges made to a federal award based on budget estimates. Condition: The Organization claimed approximately $150,000 in payroll charges for reimbursement under its major program using an estimate of grant time developed when the grant was applied for. The Organization has deemed this budget estimate to be reasonable with how the employees working on the grant spent their time, however there is no formal documentation of the actual time and effort of these employees. The Organization does review this and no employee charges more than 100% of their time to any federal grant. Cause: The Organization does not prepare personnel activity reports or any other form of time and effort documentation; it uses budget estimates considered by those within the Organization who write the grants. Effect: The Organization is using budget estimates to charge time for employees to its federal grants. If the Organization were to track actual time or conduct a time study, the actual amount charged may be different than the amounts currently charged. Since actual time is not tracked, it is not possible to quantify this amount. The Organization believes that the allocation percentages in the budget approximate actual time spent, and the allocations are reviewed and updated by management periodically. Recommendation: The Organization should track actual time spent on grants and consider preparing personnel activity reports for all employees that charge time to federal grants. This documentation serves as evidence of actual time spent by employees on federally funded grant projects. Management response: The Organization will conduct quarterly time studies by position and make adjustments to allocations as time spent deviates from the most recent time study or original budget.

Criteria: Title 2, Subpart E – Cost Principles Section 200.430 contains the rules for compensation- personal services relative to the allowable cost requirement of the Organization’s major grant. The standards for documentation of personnel expenses require a process for reviewing after-the-fact interim charges made to a federal award based on budget estimates. Condition: The Organization claimed approximately $150,000 in payroll charges for reimbursement under its major program using an estimate of grant time developed when the grant was applied for. The Organization has deemed this budget estimate to be reasonable with how the employees working on the grant spent their time, however there is no formal documentation of the actual time and effort of these employees. The Organization does review this and no employee charges more than 100% of their time to any federal grant. Cause: The Organization does not prepare personnel activity reports or any other form of time and effort documentation; it uses budget estimates considered by those within the Organization who write the grants. Effect: The Organization is using budget estimates to charge time for employees to its federal grants. If the Organization were to track actual time or conduct a time study, the actual amount charged may be different than the amounts currently charged. Since actual time is not tracked, it is not possible to quantify this amount. The Organization believes that the allocation percentages in the budget approximate actual time spent, and the allocations are reviewed and updated by management periodically. Recommendation: The Organization should track actual time spent on grants and consider preparing personnel activity reports for all employees that charge time to federal grants. This documentation serves as evidence of actual time spent by employees on federally funded grant projects. Management response: The Organization will conduct quarterly time studies by position and make adjustments to allocations as time spent deviates from the most recent time study or original budget.