Type of Finding: Material Weakness in Internal Control over Compliance and Material Noncompliance
Federal Agency: U.S. Department of Health and Human Services
Federal Program Name: Substance Abuse and Mental Health Services Projects of Regional and National Significance
Assistance Listing Number: 9...
Type of Finding: Material Weakness in Internal Control over Compliance and Material Noncompliance
Federal Agency: U.S. Department of Health and Human Services
Federal Program Name: Substance Abuse and Mental Health Services Projects of Regional and National Significance
Assistance Listing Number: 93.243
Federal Award Identification Number and Year: H79TI081935 – 2022, H79TI080298 – 2022, H79TI085517 – 2022
Pass-Through Agency: Pierce County
Pass-Through Number(s): SC-107323, SC-105454, SC-110121
Award Period: May 31, 2019 through May 30, 2024, September 30, 2017 through September 29, 2022, September 30, 2022 through September 30, 2027
Criteria or specific requirement: 2 CFR 200.430(i)(1)(viii) states that “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: (A) The system for establishing the estimates produces reasonable approximations of the activity actually performed; (B) Significant changes in the corresponding work activity (as defined by the non-Federal entity's written policies) are identified and entered into the records in a timely manner. Short term (such as one or two months) fluctuation between workload categories need not be considered as long as the distribution of salaries and wages is reasonable over the longer term; and (C) The non-Federal entity's system of internal controls includes processes to review after-the-fact interim changes made to a Federal award based on budget estimates. All necessary adjustments must be made such that the final amount charged to the Federal award is accurate, allowable, and properly allocated.”
Condition: Grant hours are not consistently tracked on the employee monthly timesheet. Wages charged to the program are based on budgeted estimates. Per 2 CFR 200.430(i)(1)(viii), this is not allowed without additional steps to ensure accuracy, allowability and proper allocation. Insufficient evidence was presented to support a reasonable reflection of employee federal and non-federal activity. The alliance does not have a written policy nor system of internal controls to review and true-up grant wages to actual.
Questioned costs: $447,634
Context: A sample of 40 was made from a population of 504 transactions charged to the major program for salaries and benefit expenses. Of the 40 sampled costs, all were found to be out of compliance with the provisions for 2 CFR 200.430 Compensation - personal services of Uniform Guidance. Sampled wages totaled $137,021.54. Total salaries and wages totaled $971,744 of the $1,599,883 tracked to the major program. Extrapolating the error to the actual costs reported on the SEFA results in a likely questioned cost amount of $447,634.
Cause: Management was aware that estimated budgeted costs alone are not sufficient to support personnel costs charged to Federal awards.
Effect: Charging grant wages based on estimates rather than actual hours worked on the program may raise compliance concerns. Estimating grant wages without adequate support for time and effort documentation may result in noncompliance with grant regulations. This can also lead to overcharging or undercharging the federal grant, which may result in penalties or repayment obligations.
Repeat Finding: No.
Recommendation: We recommend that the Alliance incorporate a system of internal controls that clearly documents the time and effort that each individual employee spends on each grant per month. This can be done by adjusting the format of the monthly timesheet to include a column that specifies how many hours per day were spent on which federal and nonfederal activities. PCA can further enhance clarity, accountability, and transparency by moving from a "day" format to an "hour" format on their timesheets.
View of Responsible Official: Pierce County Alliance has enjoyed the decades long relationship with our prior audit firm. We had been advised to record staff time on an hourly basis. We were then redirected to
record time on a daily basis. However, with this recommendation, we are being redirected to record on an hourly basis. At no time has a finding been previously issued on how staff time is recorded, on timesheets
or on the back end of our third-party payroll software.
Corrective Action: Pierce County Alliance will reinstitute an hourly timesheet format in order to account for positions with multiple funding sources.