Audit 358145

2022-007 Proper Allocation of Reimbursable Expenses – Significant Deficiency Condition: We obtained an understanding of how costs are allocated to the claims for reimbursement submitted to SETA for both 20222 and 2021. We noted that claims were supported with calculations of costs allocated to each program from federal funding in a worksheet separate from the accounting records. Allocated costs for the SETA program are based on budgeted participant placements approved by SETA at the beginning of the year, rather than a percentage of the actual participant placements for the period for which reimbursements are being submitted to SETA. Criteria: In accordance with SETA’s Cost Allocation Plan summary, costs which will be used to charge/allocate a Fair Share of Actual costs to budget items and to the costs categories within the Budget will be allocated based on actual costs. The costs allocated may be allocated based on “Direct Charge”, “Square Footage”, “Staff Time”, “Square Footage Combined with Time of Staff Using Space”, “Number Served”, or “Usage”. Cause: Management has not implemented a written Cost Allocation Plan documenting how costs should be allocated between multiple programs. Effect: Costs reported in the claims for reimbursement could be inaccurate as the costs are not allocated based on actual programs benefited but on beginning of the year budgets. Questioned costs: None identified Recommendation: If the Association continues to use “Number Served”, the Association should calculate percentage of costs by program based on the number of participants actually served, rather than the number of participants budgeted to be served. Management’s Response and Corrective Action Plan: Please see attached corrective action plan.

2022-008 Improving the payroll authorization processes – Significant Deficiency Condition: We selected a sample of payroll transactions for the month of October 2021 and November 2020 to determine whether the payroll transactions were properly approved. During our testing, we noted two transactions for the month of October 2021 and five transactions for November 2020 that either were not signed by management and/or by the employee. Criteria: Good internal control over payroll transactions paid require all payroll timesheets be reviewed and signed by both the employee and the employee’s manager. Cause: The Association’s payroll policies and procedures were not followed. Effect: By not verifying that dual signatures are on all timesheets, there is an increased risk that payroll hours will be reported inaccurately.Recommendation: We recommend that all timesheets be approved by both the employee and the employees’ manager. Management’s Response and Corrective Action Plan: Please see attached corrective action plan.

2022-009 Time Sheets for payroll cost allocations – Significant Weakness Condition: During testing of payroll transactions for 2022 and 2021, we noted that the timesheets are not set up to document the amount of time each employee spent on either program services or administrative tasks. Criteria: To ensure that time and effort by program is documented accurately, policies and procedures should be implemented requiring all employees complete their timesheets based on either the program services performed, time spent on non-program services, or administrative tasks. Cause: The Association’s policies and procedures do not require employees to account for their time spent on each program or task. Effect: When the employees do not document their time and effort by program or by task, external parties reviewing either financial reports or claims submitted for reimbursements cannot accurately determine the amount of time each employee spent on either a program or non-program activities. Also, expenses reported by program are not accurately reported. Recommendation: We recommend that the Association’s timesheets be updated to document time spent on either program activities or administrative activities. Management’s Response and Corrective Action Plan: Please see attached corrective action plan.

2022-007 Proper Allocation of Reimbursable Expenses – Significant Deficiency Condition: We obtained an understanding of how costs are allocated to the claims for reimbursement submitted to SETA for both 20222 and 2021. We noted that claims were supported with calculations of costs allocated to each program from federal funding in a worksheet separate from the accounting records. Allocated costs for the SETA program are based on budgeted participant placements approved by SETA at the beginning of the year, rather than a percentage of the actual participant placements for the period for which reimbursements are being submitted to SETA. Criteria: In accordance with SETA’s Cost Allocation Plan summary, costs which will be used to charge/allocate a Fair Share of Actual costs to budget items and to the costs categories within the Budget will be allocated based on actual costs. The costs allocated may be allocated based on “Direct Charge”, “Square Footage”, “Staff Time”, “Square Footage Combined with Time of Staff Using Space”, “Number Served”, or “Usage”. Cause: Management has not implemented a written Cost Allocation Plan documenting how costs should be allocated between multiple programs. Effect: Costs reported in the claims for reimbursement could be inaccurate as the costs are not allocated based on actual programs benefited but on beginning of the year budgets. Questioned costs: None identified Recommendation: If the Association continues to use “Number Served”, the Association should calculate percentage of costs by program based on the number of participants actually served, rather than the number of participants budgeted to be served. Management’s Response and Corrective Action Plan: Please see attached corrective action plan.

2022-008 Improving the payroll authorization processes – Significant Deficiency Condition: We selected a sample of payroll transactions for the month of October 2021 and November 2020 to determine whether the payroll transactions were properly approved. During our testing, we noted two transactions for the month of October 2021 and five transactions for November 2020 that either were not signed by management and/or by the employee. Criteria: Good internal control over payroll transactions paid require all payroll timesheets be reviewed and signed by both the employee and the employee’s manager. Cause: The Association’s payroll policies and procedures were not followed. Effect: By not verifying that dual signatures are on all timesheets, there is an increased risk that payroll hours will be reported inaccurately.Recommendation: We recommend that all timesheets be approved by both the employee and the employees’ manager. Management’s Response and Corrective Action Plan: Please see attached corrective action plan.

2022-009 Time Sheets for payroll cost allocations – Significant Weakness Condition: During testing of payroll transactions for 2022 and 2021, we noted that the timesheets are not set up to document the amount of time each employee spent on either program services or administrative tasks. Criteria: To ensure that time and effort by program is documented accurately, policies and procedures should be implemented requiring all employees complete their timesheets based on either the program services performed, time spent on non-program services, or administrative tasks. Cause: The Association’s policies and procedures do not require employees to account for their time spent on each program or task. Effect: When the employees do not document their time and effort by program or by task, external parties reviewing either financial reports or claims submitted for reimbursements cannot accurately determine the amount of time each employee spent on either a program or non-program activities. Also, expenses reported by program are not accurately reported. Recommendation: We recommend that the Association’s timesheets be updated to document time spent on either program activities or administrative activities. Management’s Response and Corrective Action Plan: Please see attached corrective action plan.