Audit 370062

2024-001 Cost Allocation of Payroll to Grants Condition: Certain Agency employees may spend time on more than one grant program administered by the SC Office of Economic Opportunity (“OEO”), including CSDG and LIHEAP programs. The Agency allocates payroll and benefit costs for such employees based on the proportionate share of total OEO grant revenue represented by each specific program. Criteria: Compliance requirement – OEO guidance requires that payroll and benefit costs be charged to each program based upon the actual time expended by an employee on that program. The Agency should utilize a cost allocation process that accurately and timely tracks employee efforts by program, to allow proper allocation of related costs. Effect: The OEO may question the CSBG and LIHEAP program spending. The Agency may face impacts for its non-compliance with cost allocation requirements. The Agency notes that the number of individuals involved in both the CSBG and LIHEAP programs is limited; therefore, the relative impact of the current allocation process is also limited. Questioned Costs: None. Recommendation: The Agency should institute a cost allocation process to accurately and timely track employee time by program. This allocation plan may include the use of separate timesheets for each program to which employee devotes time. This information should be used to properly allocate payroll and benefit costs to each program. Response: The Agency has developed a cost allocation process to address the concerns with proper payroll and benefit costs allocations.