Audit 370915

Criteria: The County did not maintain adequate time and effort reporting documentation to validate the proper allocation of payroll charges to the Aging Cluster, Temporary Assistance for Needy Families and WorkFirst New Jersey grants. Additionally, it was noted that journal entries were made to allocate payroll costs to grants lacked sufficient detail to verify the accuracy of the amounts allocated to individual employees. Specifically, the journal entries did not include supporting documentation, such as employee payroll registers, time and effort certifications, or other records necessary to substantiate the allocation of payroll expenses to the respective grants. The total amount of payroll charged under the jurisdiction of the Mercer County Workforce Development Board for all grants however was in agreement with the total payroll charged. Condition: The County maintains a cost allocation plan that includes a distribution of payroll from a cost pool that is determined by the estimated time spent working on specific grant related activities. The County could not corroborate the correct allocation of payroll was charged for certain employee's salaries that were charged to the Aging Cluster, Temporary Assistance for Needy Families and WorkFirst New Jersey grants. Cause: The County did not maintain adequate documentation to support the proper percentage of salaries that were allocated to the Aging Cluster, Temporary Assistance for Needy Families and WorkFirst New Jersey grants. Furthermore, the County does not have a formalized process to ensure that payroll journal entries made to allocate grant costs are supported by detailed employee level documentation. The current procedure relies on summary journal entries without requiring the inclusion of supporting records to validate the allocation. Effect: Although the total salaries charged to all of the grants under the jurisdiction of the Aging Cluster and Mercer County Workforce Development Board in total appear accurate, an improper allocation to the Aging Cluster, Temporary Assistance to Needy Families and WorkFirst New Jersey grants could contribute to noncompliance with allowable costs requirements. Recommendation: The County should implement procedures to ensure they are in compliance with time and effort reporting requirements and can evidence the proper allocation of payroll charges amongst all of the grants.

Criteria: In accordance with the Federal Uniform Guidance and New Jersey Circular Letter 15-08, the County is required to submit certain financial and performance reports to granting agencies on either a quarterly or annual basis that should coincide with the County's internal financial accounting records. Condition: The County's reported grant expenditures contained variances when compared to the system-generated reports. These variances could not be reconciled or fully substantiated. However, the differences may have been attributable to timing of expenditures and the treatment of encumbrances. Accordingly, while the inconsistencies warrant attention and correction, they do not indicate material misstatements, misuse of grant funds, or rise to the level of questioned costs. Cause: The County did not reconcile the quarterly and annual expenditures reported to the accounting records. Effect: Certain reports submitted were not in agreement with the County's financial accounting records and/or had clerical errors attributing to noncompliance with reporting requirements. Recommendation: We recommend the County implement procedures to ensure the reports filed are in agreement with the County's financial accounting records and be clerically accurate.

Finding: The County charges rental costs for the Mercer County One Stop Career Center to several grants including the Temporary Assistance for Needy Families and WorkFirst New Jersey grants, but did not provide adequate documentation to support the percentage of rent attributable to grant activities. As a result, the accuracy and appropriateness of the rent allocation to the grant cannot be validated. Per federal grant management guidelines (e.g., 2 CFR Part 200, Uniform Guidance), costs charged to grants must be necessary, reasonable, and adequately documented. Allocations of shared costs, such as rent, must be based on a documented and justifiable methodology. Recommendation: The County should develop and implement a robust methodology for allocating shared costs like rent and ensure it is documented and consistent with grant requirements. Additionally, the County should retain all supporting documentation to validate grant charges.

Finding: The County did complete a corrective action plan for the 2023 single audit but it was not within the required timeframe. Recommendation: We recommend the County complete a corrective action plan within 60 days of the report.