Audit 371090

2024-001 – Coronavirus State and Local Fiscal Recovery Funds – ALN No. 21.027 - Distribution of Compensation – Internal Controls over Allowable Costs and Activities (Significant Deficiency) Grant No. X50-8-018 Passed through Office of the Governor, Criminal Justice Coordinating Council Grant Period: October 1, 2023-September 30, 2025 Criteria: Under 2 CFR Section 200.303(a), non‐federal entities must establish and maintain effective internal controls to provide reasonable assurance that the entity is managing the federal awards in compliance with statues, regulations, and the terms and conditions of the award. Additionally, under 2 CFR Section 200.430(i) compensation records must support the distribution of the employee’s compensation among specific activities or costs objectives if the employee works on more than one Federal award and compensation of employees used in meeting cost sharing or matching requirements on Federal awards must be supported in the same manner. Condition: For specific payroll costs selected, the compensation records supporting the distribution of employees’ compensation to the federal award did not equal the amounts charged to the federal grant. Effect: The lack of controls to ensure the correct amounts are charged to the federal program based on the time and effort of the personnel could result in charging unallowable costs to the federal program. Cause: The Foundation calculated the amounts charged to the federal grant based on the budgeted percentage of time for each employee rather than the actual hours per the compensation records. Known Questioned Costs: $273 Likely Questioned Costs: $3,122 Perspective: This finding represents a systematic problem. Of the twenty-five transactions tested, five had errors. The sample was not statistically valid. Repeat Finding: No Recommendation: We recommend the Association establish policies and procedures to ensure that compensation is properly documented and distributed between Federal awards and properly approved.