Audit 414730

Finding 2025-001: Allowable Costs/Cost Principles - Time and Effort Reporting (Material Weakness) Federal Agency: U.S. Department of Labor Program Name (ALN): WIOA Cluster (17.258, 17.259, 17.278) Federal Award Identification Number and Year: Contract# 906006 for FY2025, Contract# 2025WDC005 for FY2025 Pass-through entities: New York City Department of Youth and Community Development, Workforce Development Corporation Criteria: According to 2 CFR, Part 200.430(i)(1) of the Office of Management and Budget's Uniform Guidance, charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed, which must, among other things: (i) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (ii) Be incorporated into the official records of the non-Federal entity; (iii) Reasonably reflect the total activity for which the employee is compensated by the non-Federal entity. Condition: We noted that personnel attestations were not timely prepared by staff members and not timely reviewed by a supervisory official for 6 out of the 7 selected samples. Cause: Procedures and controls to ensure compliance with the requirements of the Uniform Guidance were not effective. Effect or Potential Effect: Personnel expenses may not accurately reflect the work performed and/or unallowable expenses may be charged to the federal program. Questioned Costs: N/A Context: From a population of 9, we selected 7 salary transactions charged to the federal program to test controls over compliance for allowable costs/activities allowed. Out of the 7 transactions tested, we noted 6 instances where the personnel attestations were not timely prepared by staff member and not timely reviewed by a supervisory official. Identification as a Repeat Finding: This finding is not a repeat finding. Recommendation: We recommend that management implement policies, controls, and procedures to ensure that time and effort is recorded based on actual effort and approval by appropriate individuals is documented at least monthly to comply with applicable cost principles. Responsible Official's Response: Management agrees with the finding and has implemented policies and procedures to ensure that employee time and effort charged to federally funded and other restricted programs is supported by contemporaneous documentation reflecting the actual effort performed. Employee time is recorded through the organization’s established timekeeping process and is reviewed and approved by the employee’s immediate supervisor on a payroll-period basis. This control is performed every pay period and therefore occurs more frequently than the minimum monthly review and approval standard referenced in the finding. Supervisory approval is intended to provide reasonable assurance that recorded time and effort is accurate, supported, and consistent with the employee’s actual work performed and the applicable funding requirements. Management will continue to monitor compliance with these procedures and will reinforce the requirement that time and effort records be accurately maintained and appropriately approved in accordance with organizational policies and applicable federal cost principles. The New Jewish Home will also retain the applicable timekeeping and approval documentation as evidence of the control’s operation.