Audit 352373

Criteria: 45 CFR 1630(a)(3) provides that expenditures are allowable under a Legal Services Corporation (LSC) grant or contract only if the recipient can demonstrate that the cost was allocable to the grant or contract. Further, 45 CFR 1630.5(c)(3) requires that recipients maintain accounting systems sufficient to demonstrate the proper allocation of costs to each of their funding sources. Condition: During our audit, we noted that salaries and wages were incorrectly allocated and charged to the Legal Services Corporation grant. Of the twenty-five (25) payroll samples selected for testing, there was one instance in which the employee records in the Society’s time entry system did not match the employee records in the accounting system. This resulted in salaries and wages being allocated based on an outdated default calculation determined by the system. There were no questioned costs as the Society subsequently recorded correcting entries to revise the allocations. Cause: Data entered into the accounting system was not properly reviewed and validated prior to being imported. Effect: The lack of effective internal controls over the preparation of payroll data resulted in salaries and wages for time spent by employees on non-LSC grants or contracts being charged to the LSC grant.

Criteria: 45 CFR 1630(a)(3) provides that expenditures are allowable under a Legal Services Corporation (LSC) grant or contract only if the recipient can demonstrate that the cost was allocable to the grant or contract. Further, 45 CFR 1630.5(c)(3) requires that recipients maintain accounting systems sufficient to demonstrate the proper allocation of costs to each of their funding sources. Condition: During our audit, we noted that salaries and wages were incorrectly allocated and charged to the Legal Services Corporation grant. Of the twenty-five (25) payroll samples selected for testing, there was one instance in which the employee records in the Society’s time entry system did not match the employee records in the accounting system. This resulted in salaries and wages being allocated based on an outdated default calculation determined by the system. There were no questioned costs as the Society subsequently recorded correcting entries to revise the allocations. Cause: Data entered into the accounting system was not properly reviewed and validated prior to being imported. Effect: The lack of effective internal controls over the preparation of payroll data resulted in salaries and wages for time spent by employees on non-LSC grants or contracts being charged to the LSC grant.