2024-001 - Allowable Costs/Cost Principles – Internal Control and Compliance over Payroll Expenditures (Significant Deficiency)
Condition:
Community Development Block Grants-Entitlement Grants Cluster
During the audit period, the City has required all Housing Department staff, including administ...
2024-001 - Allowable Costs/Cost Principles – Internal Control and Compliance over Payroll Expenditures (Significant Deficiency)
Condition:
Community Development Block Grants-Entitlement Grants Cluster
During the audit period, the City has required all Housing Department staff, including administrative support staff, to fill out project activity timesheets reflecting the actual hours worked on the program. The City performed reconciliation on the staff payroll charges to reflect actual hours worked. However, not all staff members have fully complied with this policy. Payroll costs for the fourteen (14) out of forty (40) payroll samples tested were allocated to programs based on percentages provided by management. These allocations were not supported by approved time samples or updated cost allocation plan, nor were they reconciled to actual time spent on the various programs. Employee timesheets did not record the actual labor efforts expended on the grant.
Housing Voucher Cluster
During the audit period, the City has required all Housing Department staff, including administrative support staff, to fill out project activity timesheets reflecting the actual hours worked on the program. The City performed reconciliation on the staff payroll charges to reflect actual hours worked. However, not all staff members have fully complied with this policy. Payroll costs for the thirteen (13) out of forty (40) payroll samples tested were allocated to programs based on percentages provided by management. These allocations were not supported by approved time samples or updated cost allocation plan, nor were they reconciled to actual time spent on the various programs. Employee timesheets did not record the actual labor efforts expended on the grant.
Management concurs.
Corrective Actions:
Management has enforced the existing policy, which mandates that employees funded by federal grants document the actual time they spend working on those grants. The staff responsible for reporting the actual time spent on federally funded programs dedicate a significant portion of their time to these programs. However, there are administrative staffs that provide support towards these programs, and tracking their time spent towards the time spent on the program would require more time and effort than the minimal allocation the City allocated for each administrative staff as appropriated in the Adopted Budget. The City is in the process of implementing an indirect cost allocation plan to allocate the administrative staff time and anticipates this will be in effect in fiscal year 2025-26. In the meantime, staff will make every effort to document the actual time spent working on the grants.
Name of Responsible Person:
Ron Garcia, Director of Community Development
Ryan Mulligan, Housing Manager
Rose Tam, Director of Finance
Albert Trinh, Accounting Manager