Audit 402459

Condition: During our audit procedures over expenditures charged to the federal program, we tested a nonstatistical sample of 40 transactions. Audit procedures identified one expenditure that was not allowable, as the cost was incurred prior to the start date of the grant period, but was charged to the federal award. Criteria: Under 2 CFR §200.403, costs charged to federal awards must be allowable, allocable, reasonable, and incurred during the approved period of performance of the award. Cause: The cause of the finding was insufficient review procedures to ensure that expenditures charged to the federal award were incurred within the approved grant period. Transaction dates were not consistently verified against grant start dates prior to charging costs to the award. Effect: Charging costs incurred outside the grant period results in noncompliance with federal cost principles and increases the risk that additional unallowable costs could be charged to federal programs. This resulted in questioned costs of $455 related to the transaction tested. Questioned Costs: $455 Recommendation: We recommend that management enhance procedures over the review and approval of grant expenditures to ensure that costs are incurred within the approved grant period prior to being charged to the federal award. This may include verifying invoice or expenditure dates against grant start and end dates as part of the approval process.

Condition: During our review of controls over payroll processing and tracking of time charged to federal awards, we noted that not all employee timecards are approved by their direct supervisor before processing of the bi-weekly payroll. Criteria: Effective internal controls should be in place to review hours worked by all employees and to review hours charged to federal awards to ensure the related expenditure is allowable. Cause: While policies in place require supervisor approval of timecards, the payroll system is not set up to require the electronic supervisor approval before payroll is processed each period. Effect: While we noted no time charged that appeared improper, internal controls over payroll were not properly implemented and could result in errors in employee hours not being detected and corrected in a timely manner. Context: Out of a sample of 40 payroll expenditures, 5 timecards were not fully approved by the employee’s direct supervisor. A statistical sample was not used. There were no questioned costs associated with this finding. Recommendation: We recommend that management review current internal controls over approval of timecards and ensure internal policies are being followed to ensure approval of all timecards. Certain payroll applications allow for system settings that would require approval of hours before processing.

Condition: During our testing of program eligibility for the TANF program, we tested a nonstatistical sample of 40 participant files. For two participants, eligibility determinations could not be located. Additionally, for seven participants, eligibility determinations provided were either not dated or dated after fiscal year end (December 31, 2025). As a result, we were unable to determine whether eligibility had been properly documented prior to the participant beginning the program, as required. Criteria: Under 2 CFR §200.300(b), non Federal entities must comply with federal statutes, regulations, and the terms and conditions of federal awards. Eligibility is a compliance requirement identified in the Compliance Supplement for the TANF program. Additionally, 2 CFR §200.303 requires non Federal entities to establish and maintain effective internal control over federal awards to provide reasonable assurance that the entity is administering federal awards in compliance with program requirements. Adequate documentation supporting participant eligibility must be retained in accordance with 2 CFR §200.334. Cause: The finding resulted from a lack of formal controls over the review, documentation, and retention of TANF eligibility determinations. Specifically, there were no documented procedures to ensure eligibility determinations were completed, dated timely, and retained prior to participant enrollment. Effect: Because eligibility documentation was missing or not timely for nine participants, we were unable to verify compliance with TANF eligibility requirements. This resulted in questioned costs of $4,474 related to benefits provided to participants whose eligibility could not be substantiated. Questioned Costs: $4,474 Recommendation: We recommend that management establish formal procedures to ensure TANF eligibility determinations are completed, reviewed, and dated prior to participant enrollment and that all supporting documentation is retained in accordance with federal requirements. Additionally, management should consider implementing a documented review process to verify eligibility files are complete before benefits are provided.