Audit 346487

(2023-002) Allowable Costs Federal Agency: U.S. Department of Treasury CFDA No.: 21.027 Federal Program: Coronavirus State and Local Fiscal Recovery Funds Federal Award Year: 2023 Control Category: Allowable Costs Questioned Costs: $371,621 Condition The Center billed $852,359 to the State Bar of California for the above mentioned grant during the year ended December 31, 2023. Of the total costs charged, $694,940 was for payroll and benefit costs. The Center provided a detail of quarterly expenses by employee that totaled $603,238, leaving $91,702 of questioned costs. From the $603,238 of employee costs, we selected a sample of 20 individual payroll expenses covering both grants and two quarters. We then obtained the employee’s personnel action form and timesheet to determine if the time billed to the grant was supported by the timesheet. In situations where the employee completed a timesheet, we identified differences between what was allocated to the grant and what was reported on the timesheet. For other employees, we noted that no timesheet was retained to support the allocation. Criteria 2 CFR 200.430(i), Standards for Documentation of Personnel Expenses, states, in part: “Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed…” Charges must “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 “budget estimates (i.e., estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards.” Cause The Center's calculation of payroll allocated to the grant is not reconciled to the actual hours reported by the employee on their individual timesheet, and in many cases no timesheet is maintained by the employee. Effect Payroll costs allocated to the program are not supported by the Center’s accounting records. Questioned Costs We identified $52,780 of unsupported allocations to the grant from the sample selected, which extrapolates to a possible error of $279,919. Additionally, as previously reported, $91,702 of costs allocated to the grant were not supported by the accounting records. The total questioned costs are $371,621. Per discussion with Center staff, the State Bar of California does not require the payroll allocation to be supported by evidence of actual time spent on the grant. Recommendation We recommend that the Center allocate time to the grants based on actual hours worked per the employees' timesheets to comply with the federal guidelines. Management Response Beginning in March of 2024, when the Center received the 2022 Single Audit findings, the Center has been charging personnel costs to the federal program based on actual time recorded in the organization’s case management software. On a quarterly basis, the Unit Heads, CFO, CEO/ED, and Chief Legal Program Officer review the hours to ensure accuracy and completeness. Management notes that this finding involved the period of time before the Center had submitted its Corrective Action Plan (which was on March 28, 2024).

(2023-002) Allowable Costs Federal Agency: U.S. Department of Treasury CFDA No.: 21.027 Federal Program: Coronavirus State and Local Fiscal Recovery Funds Federal Award Year: 2023 Control Category: Allowable Costs Questioned Costs: $371,621 Condition The Center billed $852,359 to the State Bar of California for the above mentioned grant during the year ended December 31, 2023. Of the total costs charged, $694,940 was for payroll and benefit costs. The Center provided a detail of quarterly expenses by employee that totaled $603,238, leaving $91,702 of questioned costs. From the $603,238 of employee costs, we selected a sample of 20 individual payroll expenses covering both grants and two quarters. We then obtained the employee’s personnel action form and timesheet to determine if the time billed to the grant was supported by the timesheet. In situations where the employee completed a timesheet, we identified differences between what was allocated to the grant and what was reported on the timesheet. For other employees, we noted that no timesheet was retained to support the allocation. Criteria 2 CFR 200.430(i), Standards for Documentation of Personnel Expenses, states, in part: “Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed…” Charges must “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 “budget estimates (i.e., estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards.” Cause The Center's calculation of payroll allocated to the grant is not reconciled to the actual hours reported by the employee on their individual timesheet, and in many cases no timesheet is maintained by the employee. Effect Payroll costs allocated to the program are not supported by the Center’s accounting records. Questioned Costs We identified $52,780 of unsupported allocations to the grant from the sample selected, which extrapolates to a possible error of $279,919. Additionally, as previously reported, $91,702 of costs allocated to the grant were not supported by the accounting records. The total questioned costs are $371,621. Per discussion with Center staff, the State Bar of California does not require the payroll allocation to be supported by evidence of actual time spent on the grant. Recommendation We recommend that the Center allocate time to the grants based on actual hours worked per the employees' timesheets to comply with the federal guidelines. Management Response Beginning in March of 2024, when the Center received the 2022 Single Audit findings, the Center has been charging personnel costs to the federal program based on actual time recorded in the organization’s case management software. On a quarterly basis, the Unit Heads, CFO, CEO/ED, and Chief Legal Program Officer review the hours to ensure accuracy and completeness. Management notes that this finding involved the period of time before the Center had submitted its Corrective Action Plan (which was on March 28, 2024).