Audit 408460

Criteria: In accordance with 2 CFR 200.302(b)(7) and 2 CFR 200.403, charges to federal awards must be supported, allowable, reasonable, and allocable to the applicable federal program. Payroll and benefit costs charged to federal awards should be calculated using accurate payroll information and reviewed to ensure amounts charged to federal awards are supported by underlying records and properly allocated. Condition: During testing of allowable costs for Major Program 93.912, we identified one instance in which payroll benefit costs charged to the federal award were overstated by $383 due to an error in the calculation of payroll-related benefits associated with an individual employee. Cause: Controls over the preparation and review of payroll benefit allocations charged to federal awards were not operating effectively, as the review process did not identify the calculation error. Effect or Potential Effect: As a result of the exception identified during audit testing, management performed additional procedures over the affected population and determined that an incorrect payroll benefit base had been used in calculating benefit allocations charged to federal awards for certain employees for which payroll and benefits are allocated to federal programs. Management identified unsupported payroll benefit costs and indirect costs charged to the following federal programs: Program 93.912 - $15,046; Program 93.387 - $1,901; and Program 93.889 - $29,718, for total questioned costs of $46,665. Management has indicated its intent to return these funds to the grantor agencies. Accordingly, the $46,665 of unsupported costs was removed from expenditures reported on the Schedule of Expenditures of Federal Awards, and no known questioned costs are reported in the Schedule of Findings and Questioned Costs. Questioned costs: $46,665 Repeat finding: No Recommendation: We recommend management strengthen controls over the preparation and review of payroll benefit allocations charged to federal awards. Review procedures should include verification of the payroll and benefit amounts used in the allocation calculations and reconciliation of allocated costs to supporting payroll records prior to charging amounts to federal awards. Management should also implement procedures to periodically monitor and validate allocation methodologies to prevent similar errors from occurring in future periods. View of responsible officials and planned corrective actions: Management agrees with the finding and recommendation. See the accompanying corrective action plan for management’s planned corrective actions.