Audit 341763

Condition: During our testing of a sample of payroll transactions charged to the major programs, we noted one employee had a portion of time charged to the grant as a direct expense while the remainder of their time worked was charged to the indirect cost pool for allocation to other grants and departments, including the same major program the direct costs tested were charged to. Criteria: Under 2 CFR Part 200, Subpart E -Cost Principles, costs charged to a federal program must meet certain criteria to be allowable including those costs be accorded consistent treatment. A cost must 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. Cause: Policies and procedures are not designed effectively to ensure that payroll costs charged to federal programs adhere to the criteria listed above. Effect: As a result of the deficiency noted, certain payroll costs were charged within both the direct and indirect categories. Context: Out of a test of 40 payroll transactions, 2 transactions were identified for an employee who has a portion of time charged as direct and another portion charged through the indirect cost pool. Based on the employee’s job responsibilities, we determined that the amounts charged as direct represent the questioned costs. A statistical sample was not used. We believe this significant deficiency impacts the allowable costs/ cost principles compliance requirement. Questioned Costs: $1,167 Recommendation: Management should review procedures over allocation of payroll transactions and ensure that employees are identified as either direct or indirect and that their time be treated consistently.

Condition: During our testing of costs charged to the major program through the direct administrative cost recovery calculation (indirect costs), we identified certain invoices charged to the indirect pool that were unallowable under the cost principles. Criteria: Under 2 CFR Part 200, Subpart E -Cost Principles, costs charged to a federal program must meet certain criteria to be allowable including that they be necessary and reasonable for the performance of the federal award. In addition, the cost principles outline certain costs as unallowable in federal awards. Cause: The noted unallowable expenditures were identified during the invoice approval and coding process to be charged fully to non-federal programs however, were erroneously coded to administrative class within the accounting system and therefore, allocated to the major program. Effect: As a result of the deficiency noted, we identified 2 transactions allocated to the major program that are unallowable. Context: Out of a test of 40 charges made to the indirect cost pool, 2 transactions were identified as being unallowable under the cost principles. A statistical sample was not used. We believe this significant deficiency impacts the allowable costs/ cost principles compliance requirement. Questioned Costs: $248 Recommendations: We recommend internal control procedures be reviewed by management to ensure that the coding and approval of invoices ensures that costs are captured and recorded within the correct class within the accounting system and that any costs not allowable under the cost principles, be recorded in a separate P&L class that is not allocated to federal programs.

Condition: During our testing of a sample of payroll transactions charged to the major programs, we noted one employee had a portion of time charged to the grant as a direct expense while the remainder of their time worked was charged to the indirect cost pool for allocation to other grants and departments, including the same major program the direct costs tested were charged to. Criteria: Under 2 CFR Part 200, Subpart E -Cost Principles, costs charged to a federal program must meet certain criteria to be allowable including those costs be accorded consistent treatment. A cost must 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. Cause: Policies and procedures are not designed effectively to ensure that payroll costs charged to federal programs adhere to the criteria listed above. Effect: As a result of the deficiency noted, certain payroll costs were charged within both the direct and indirect categories. Context: Out of a test of 40 payroll transactions, 2 transactions were identified for an employee who has a portion of time charged as direct and another portion charged through the indirect cost pool. Based on the employee’s job responsibilities, we determined that the amounts charged as direct represent the questioned costs. A statistical sample was not used. We believe this significant deficiency impacts the allowable costs/ cost principles compliance requirement. Questioned Costs: $1,167 Recommendation: Management should review procedures over allocation of payroll transactions and ensure that employees are identified as either direct or indirect and that their time be treated consistently.

Condition: During our testing of a sample of payroll transactions charged to the major programs, we noted one employee had a portion of time charged to the grant as a direct expense while the remainder of their time worked was charged to the indirect cost pool for allocation to other grants and departments, including the same major program the direct costs tested were charged to. Criteria: Under 2 CFR Part 200, Subpart E -Cost Principles, costs charged to a federal program must meet certain criteria to be allowable including those costs be accorded consistent treatment. A cost must 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. Cause: Policies and procedures are not designed effectively to ensure that payroll costs charged to federal programs adhere to the criteria listed above. Effect: As a result of the deficiency noted, certain payroll costs were charged within both the direct and indirect categories. Context: Out of a test of 40 payroll transactions, 2 transactions were identified for an employee who has a portion of time charged as direct and another portion charged through the indirect cost pool. Based on the employee’s job responsibilities, we determined that the amounts charged as direct represent the questioned costs. A statistical sample was not used. We believe this significant deficiency impacts the allowable costs/ cost principles compliance requirement. Questioned Costs: $1,167 Recommendation: Management should review procedures over allocation of payroll transactions and ensure that employees are identified as either direct or indirect and that their time be treated consistently.

Condition: During our testing of costs charged to the major program through the direct administrative cost recovery calculation (indirect costs), we identified certain invoices charged to the indirect pool that were unallowable under the cost principles. Criteria: Under 2 CFR Part 200, Subpart E -Cost Principles, costs charged to a federal program must meet certain criteria to be allowable including that they be necessary and reasonable for the performance of the federal award. In addition, the cost principles outline certain costs as unallowable in federal awards. Cause: The noted unallowable expenditures were identified during the invoice approval and coding process to be charged fully to non-federal programs however, were erroneously coded to administrative class within the accounting system and therefore, allocated to the major program. Effect: As a result of the deficiency noted, we identified 2 transactions allocated to the major program that are unallowable. Context: Out of a test of 40 charges made to the indirect cost pool, 2 transactions were identified as being unallowable under the cost principles. A statistical sample was not used. We believe this significant deficiency impacts the allowable costs/ cost principles compliance requirement. Questioned Costs: $248 Recommendations: We recommend internal control procedures be reviewed by management to ensure that the coding and approval of invoices ensures that costs are captured and recorded within the correct class within the accounting system and that any costs not allowable under the cost principles, be recorded in a separate P&L class that is not allocated to federal programs.

Condition: During our testing of a sample of payroll transactions charged to the major programs, we noted one employee had a portion of time charged to the grant as a direct expense while the remainder of their time worked was charged to the indirect cost pool for allocation to other grants and departments, including the same major program the direct costs tested were charged to. Criteria: Under 2 CFR Part 200, Subpart E -Cost Principles, costs charged to a federal program must meet certain criteria to be allowable including those costs be accorded consistent treatment. A cost must 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. Cause: Policies and procedures are not designed effectively to ensure that payroll costs charged to federal programs adhere to the criteria listed above. Effect: As a result of the deficiency noted, certain payroll costs were charged within both the direct and indirect categories. Context: Out of a test of 40 payroll transactions, 2 transactions were identified for an employee who has a portion of time charged as direct and another portion charged through the indirect cost pool. Based on the employee’s job responsibilities, we determined that the amounts charged as direct represent the questioned costs. A statistical sample was not used. We believe this significant deficiency impacts the allowable costs/ cost principles compliance requirement. Questioned Costs: $1,167 Recommendation: Management should review procedures over allocation of payroll transactions and ensure that employees are identified as either direct or indirect and that their time be treated consistently.