Audit 39575

Finding 2022-001 Budget Based Salary Allocation (Compliance and Control Finding) Repeat Finding No Federal Program Title U.S. Department of Health and Human Services 93.566 Refugee and Entrant Assistance State / Replacement Designee Administered Programs Contract Number FCSAK05984 Award Year 2021 ? 2022 Finding The Jewish Federation of Metropolitan Chicago (the Federation) allocated staff salaries to the federal program based on budget estimates, which alone does not qualify as support for charges to federal awards. Criteria 2 CFR 200.430(i) Standards for Documentation of Personnel Expenses (1) Charges to federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Budget estimates (i.e., estimates determined before the services are performed) alone do not qualify as support for charges to federal awards, but may be used for interim accounting purposes, provided that the non-federal entity's system of internal controls includes processes to review after-the-fact interim charges made to a federal award based on budget estimates. All necessary adjustment must be made such that the final amount charged to the federal award is accurate, allowable, and properly allocated. Condition The Federation allocated one employees? salary to the program based on a budgeted rate. Out of the 13 payments made to employees tested (five employees), two payments were based on an allocation of less than 100% (related to one employee during the grant year) to the program. All other employees tested have 100% of their salaries allocated to the program. Cause Per the Federation, the refugee program staff are the only government grant-funded staff within the organization making it infeasible to change the electronic time and attendance system which does not have a provision that allows time to be tracked by funding source. Beginning in FY23, the Federation only charges salaries to the program for staff that work 100% on this grant. Effect Noncompliance with federal regulations could result in the loss of future federal funding. Context We tested five employees whose salaries were applied to the federal program. For each employee selected, selected payroll related samples as a portion of our testing during the fiscal year. This finding was found during the review of the supporting documentation provided. Section III. Federal Awards Findings and Questioned Costs (Continued) Questioned Costs Total questioned costs were approximately $10,000 (allocated portion of the selected employee?s salary). Recommendation As the Federation does not have processes and controls in place for federal program time tracking, we recommend that only staff that allocate 100% of their time to the program be charged to the program. Views of Responsible Officials Management is in agreement with this finding. See corrective action plan.

Finding 2022-001 Budget Based Salary Allocation (Compliance and Control Finding) Repeat Finding No Federal Program Title U.S. Department of Health and Human Services 93.566 Refugee and Entrant Assistance State / Replacement Designee Administered Programs Contract Number FCSAK05984 Award Year 2021 ? 2022 Finding The Jewish Federation of Metropolitan Chicago (the Federation) allocated staff salaries to the federal program based on budget estimates, which alone does not qualify as support for charges to federal awards. Criteria 2 CFR 200.430(i) Standards for Documentation of Personnel Expenses (1) Charges to federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Budget estimates (i.e., estimates determined before the services are performed) alone do not qualify as support for charges to federal awards, but may be used for interim accounting purposes, provided that the non-federal entity's system of internal controls includes processes to review after-the-fact interim charges made to a federal award based on budget estimates. All necessary adjustment must be made such that the final amount charged to the federal award is accurate, allowable, and properly allocated. Condition The Federation allocated one employees? salary to the program based on a budgeted rate. Out of the 13 payments made to employees tested (five employees), two payments were based on an allocation of less than 100% (related to one employee during the grant year) to the program. All other employees tested have 100% of their salaries allocated to the program. Cause Per the Federation, the refugee program staff are the only government grant-funded staff within the organization making it infeasible to change the electronic time and attendance system which does not have a provision that allows time to be tracked by funding source. Beginning in FY23, the Federation only charges salaries to the program for staff that work 100% on this grant. Effect Noncompliance with federal regulations could result in the loss of future federal funding. Context We tested five employees whose salaries were applied to the federal program. For each employee selected, selected payroll related samples as a portion of our testing during the fiscal year. This finding was found during the review of the supporting documentation provided. Section III. Federal Awards Findings and Questioned Costs (Continued) Questioned Costs Total questioned costs were approximately $10,000 (allocated portion of the selected employee?s salary). Recommendation As the Federation does not have processes and controls in place for federal program time tracking, we recommend that only staff that allocate 100% of their time to the program be charged to the program. Views of Responsible Officials Management is in agreement with this finding. See corrective action plan.