2023-003: Allowable costs/cost principles – Compensation Cluster: Research and Development Sponsoring Agency: U.S. Department of Justice, Department of Health and Human Services, and U.S. Department of Homeland Security Award Names: 2021 DOJ NIJ Heat Flux Through Walls, 2021 National Institute of Health Award, 2022 National Institute of Health Award, 2019 DHS Fire Prevention and Safety (FP&S), and 2018 DHS Assistance to Firefighters Grant (Subaward) Award Numbers: 15PNIJ-21-GG-04167-RESS, 7R56DE029950-02, 1R56DE031814-01, EMW-2019-FP-00770, and EMW-2018-FP-00482 Assistance Listing Titles: National Institute of Justice Research, Evaluation, and Development Project Grants, Oral Diseases and Disorders Research, Assistance to Firefighters Grant Assistance Listing Numbers: 16.560, 93.121, and 97.044 Pass-through entity: The Board of Trustees of the University of Illinois (for grant # EMW-2018-FP-00482) Criteria According to the Code of Federal Regulation Standard 2 CFR 200.430(i)(1)(viii), 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 charges made to a Federal award based on budget estimates. All necessary adjustment must be made such that the final amount charged to the Federal award is accurate, allowable, and properly allocated. Condition The Company charges compensation costs to federal awards based on actual hours incurred, however, for certain awards, the hourly rate used to charge the federal award is based on midpoint of the labor rate range by employee type (versus the actual compensation rate for a given employee). No formal review was performed over the budgeted labor rates used to determine if any adjustments to actual cost were needed for each award. Through our testing of 13 compensation selections totaling $47,724, we identified eight selections totaling $33,240 where the compensation rate used was based on budgeted labor rate. When assessing these further with management, the impact to the awards for our selections was the Company could have charged an additional $4,287 to the awards. Cause The Company was not aware that a control should have been in place to true up labor charges based on a budgeted rate to actual labor rates. Effect The lack of a formal process for review over the budgeted rate used in calculating the allowable compensation could result in amounts charged to federal awards that are not accurate. Questioned Costs Based on the audit results, there was a net amount of $4,287 of additional labor costs that could have been charged to certain federal awards. Recommendation We recommend the Company formalize the review required for the budget labor rates used in calculating charges to federal awards. Management's Views and Corrective Action Plan Management’s views and corrective action plan are included at the end of this report after the summary of status of prior audit finding.
#2023-001 – Significant Deficiency – Authorization and Approval Procedural Controls Victims of Crime Act (VOCA), ALN #16.575 Criteria 2 CFR 200.430 (i) Standards for Documentation of Personnel Expenses states, “Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (a) be supported by a system of internal control which provides reasonable assurance that the changes are accurate, allowable, and properly allocated; … (e) and comply with the established accounting policies and practices of the non-Federal entity.” Condition When selecting timesheets for testing, it was noted that the Executive Director was approving their own timesheet. Cause The cause is human error, as the normal internal control process is for the Executive Director to review all time allocated to the grants and approve all timesheets. Effect The potential effects of self-review and approval of payroll records could include an over or understatement of salary expenses charged to the grants. Questioned Costs None Perspective Information The finding noted related to all pay periods in calendar year 2023. Identification as a repeat finding There was no similar finding in the prior year. Recommendation We recommend delegating the approval of the Executive Director’s timesheet to another member of management involved in regular office procedures. View of Responsible Official Effective immediately, the Assistant Director signs the biweekly timesheets of the Executive Director.
#2023-001 – Significant Deficiency – Authorization and Approval Procedural Controls Victims of Crime Act (VOCA), ALN #16.575 Criteria 2 CFR 200.430 (i) Standards for Documentation of Personnel Expenses states, “Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (a) be supported by a system of internal control which provides reasonable assurance that the changes are accurate, allowable, and properly allocated; … (e) and comply with the established accounting policies and practices of the non-Federal entity.” Condition When selecting timesheets for testing, it was noted that the Executive Director was approving their own timesheet. Cause The cause is human error, as the normal internal control process is for the Executive Director to review all time allocated to the grants and approve all timesheets. Effect The potential effects of self-review and approval of payroll records could include an over or understatement of salary expenses charged to the grants. Questioned Costs None Perspective Information The finding noted related to all pay periods in calendar year 2023. Identification as a repeat finding There was no similar finding in the prior year. Recommendation We recommend delegating the approval of the Executive Director’s timesheet to another member of management involved in regular office procedures. View of Responsible Official Effective immediately, the Assistant Director signs the biweekly timesheets of the Executive Director.
#2023-001 – Significant Deficiency – Authorization and Approval Procedural Controls Victims of Crime Act (VOCA), ALN #16.575 Criteria 2 CFR 200.430 (i) Standards for Documentation of Personnel Expenses states, “Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (a) be supported by a system of internal control which provides reasonable assurance that the changes are accurate, allowable, and properly allocated; … (e) and comply with the established accounting policies and practices of the non-Federal entity.” Condition When selecting timesheets for testing, it was noted that the Executive Director was approving their own timesheet. Cause The cause is human error, as the normal internal control process is for the Executive Director to review all time allocated to the grants and approve all timesheets. Effect The potential effects of self-review and approval of payroll records could include an over or understatement of salary expenses charged to the grants. Questioned Costs None Perspective Information The finding noted related to all pay periods in calendar year 2023. Identification as a repeat finding There was no similar finding in the prior year. Recommendation We recommend delegating the approval of the Executive Director’s timesheet to another member of management involved in regular office procedures. View of Responsible Official Effective immediately, the Assistant Director signs the biweekly timesheets of the Executive Director.
Criteria: 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 tracked on the employee monthly timesheet. Wages charged to the program are based on estimated hours worked. The Alliance does not have procedures in place to convert estimated to actual hours. Cause: Management used to record actual hours worked by grant. Based on instructions from a prior auditor, the accounting function stopped tracking actual hours and used estimated hours to apply wages and related costs to its various grants. Effect: Management is not in compliance with requirements for federal awards. Any costs disallowed by a federal agency, or a pass-through entity, could require repayment of those costs to the funding source. Repeat finding of 2022-003 Questioned costs: Not determined – For program personnel that worked solely on the federal award, their time worked was charged 100% to the federal award and there is a written time record of this, so there is no question about these costs. In addition, the Alliance incurred more costs for the program than were reimbursed under the major program federal award or reimbursed under matching funds. Perspective: Management was following a prior auditor’s incorrect advice that such detail of actual time spent on each grant and other functions was not necessary. Due to the predecessor auditor firm’s schedule, the 2022 audit was not complete until March of 2024. This did not allow management to implement their corrective action plan until 2024. Recommendation: Management should ensure that their procedures for recording time worked, for both exempt and nonexempt employees, is a real-time written or electronic record of time worked for each program/grant. The total hours worked should agree with the total hours being paid. For employees that work on more than one program during a day, the time record should reflect all of the programs/grants on which the employee spent time as a program service, or on administrative or fundraising functions. Views of Responsible Officials: The Alliance has reinstituted an hourly timesheet format in order to account for positions with multiple funding sources.
Criteria: 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 tracked on the employee monthly timesheet. Wages charged to the program are based on estimated hours worked. The Alliance does not have procedures in place to convert estimated to actual hours. Cause: Management used to record actual hours worked by grant. Based on instructions from a prior auditor, the accounting function stopped tracking actual hours and used estimated hours to apply wages and related costs to its various grants. Effect: Management is not in compliance with requirements for federal awards. Any costs disallowed by a federal agency, or a pass-through entity, could require repayment of those costs to the funding source. Repeat finding of 2022-003 Questioned costs: Not determined – For program personnel that worked solely on the federal award, their time worked was charged 100% to the federal award and there is a written time record of this, so there is no question about these costs. In addition, the Alliance incurred more costs for the program than were reimbursed under the major program federal award or reimbursed under matching funds. Perspective: Management was following a prior auditor’s incorrect advice that such detail of actual time spent on each grant and other functions was not necessary. Due to the predecessor auditor firm’s schedule, the 2022 audit was not complete until March of 2024. This did not allow management to implement their corrective action plan until 2024. Recommendation: Management should ensure that their procedures for recording time worked, for both exempt and nonexempt employees, is a real-time written or electronic record of time worked for each program/grant. The total hours worked should agree with the total hours being paid. For employees that work on more than one program during a day, the time record should reflect all of the programs/grants on which the employee spent time as a program service, or on administrative or fundraising functions. Views of Responsible Officials: The Alliance has reinstituted an hourly timesheet format in order to account for positions with multiple funding sources.
Criteria: 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 tracked on the employee monthly timesheet. Wages charged to the program are based on estimated hours worked. The Alliance does not have procedures in place to convert estimated to actual hours. Cause: Management used to record actual hours worked by grant. Based on instructions from a prior auditor, the accounting function stopped tracking actual hours and used estimated hours to apply wages and related costs to its various grants. Effect: Management is not in compliance with requirements for federal awards. Any costs disallowed by a federal agency, or a pass-through entity, could require repayment of those costs to the funding source. Repeat finding of 2022-003 Questioned costs: Not determined – For program personnel that worked solely on the federal award, their time worked was charged 100% to the federal award and there is a written time record of this, so there is no question about these costs. In addition, the Alliance incurred more costs for the program than were reimbursed under the major program federal award or reimbursed under matching funds. Perspective: Management was following a prior auditor’s incorrect advice that such detail of actual time spent on each grant and other functions was not necessary. Due to the predecessor auditor firm’s schedule, the 2022 audit was not complete until March of 2024. This did not allow management to implement their corrective action plan until 2024. Recommendation: Management should ensure that their procedures for recording time worked, for both exempt and nonexempt employees, is a real-time written or electronic record of time worked for each program/grant. The total hours worked should agree with the total hours being paid. For employees that work on more than one program during a day, the time record should reflect all of the programs/grants on which the employee spent time as a program service, or on administrative or fundraising functions. Views of Responsible Officials: The Alliance has reinstituted an hourly timesheet format in order to account for positions with multiple funding sources.
Criteria: 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 tracked on the employee monthly timesheet. Wages charged to the program are based on estimated hours worked. The Alliance does not have procedures in place to convert estimated to actual hours. Cause: Management used to record actual hours worked by grant. Based on instructions from a prior auditor, the accounting function stopped tracking actual hours and used estimated hours to apply wages and related costs to its various grants. Effect: Management is not in compliance with requirements for federal awards. Any costs disallowed by a federal agency, or a pass-through entity, could require repayment of those costs to the funding source. Repeat finding of 2022-003 Questioned costs: Not determined – For program personnel that worked solely on the federal award, their time worked was charged 100% to the federal award and there is a written time record of this, so there is no question about these costs. In addition, the Alliance incurred more costs for the program than were reimbursed under the major program federal award or reimbursed under matching funds. Perspective: Management was following a prior auditor’s incorrect advice that such detail of actual time spent on each grant and other functions was not necessary. Due to the predecessor auditor firm’s schedule, the 2022 audit was not complete until March of 2024. This did not allow management to implement their corrective action plan until 2024. Recommendation: Management should ensure that their procedures for recording time worked, for both exempt and nonexempt employees, is a real-time written or electronic record of time worked for each program/grant. The total hours worked should agree with the total hours being paid. For employees that work on more than one program during a day, the time record should reflect all of the programs/grants on which the employee spent time as a program service, or on administrative or fundraising functions. Views of Responsible Officials: The Alliance has reinstituted an hourly timesheet format in order to account for positions with multiple funding sources.
Criteria: 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 tracked on the employee monthly timesheet. Wages charged to the program are based on estimated hours worked. The Alliance does not have procedures in place to convert estimated to actual hours. Cause: Management used to record actual hours worked by grant. Based on instructions from a prior auditor, the accounting function stopped tracking actual hours and used estimated hours to apply wages and related costs to its various grants. Effect: Management is not in compliance with requirements for federal awards. Any costs disallowed by a federal agency, or a pass-through entity, could require repayment of those costs to the funding source. Repeat finding of 2022-003 Questioned costs: Not determined – For program personnel that worked solely on the federal award, their time worked was charged 100% to the federal award and there is a written time record of this, so there is no question about these costs. In addition, the Alliance incurred more costs for the program than were reimbursed under the major program federal award or reimbursed under matching funds. Perspective: Management was following a prior auditor’s incorrect advice that such detail of actual time spent on each grant and other functions was not necessary. Due to the predecessor auditor firm’s schedule, the 2022 audit was not complete until March of 2024. This did not allow management to implement their corrective action plan until 2024. Recommendation: Management should ensure that their procedures for recording time worked, for both exempt and nonexempt employees, is a real-time written or electronic record of time worked for each program/grant. The total hours worked should agree with the total hours being paid. For employees that work on more than one program during a day, the time record should reflect all of the programs/grants on which the employee spent time as a program service, or on administrative or fundraising functions. Views of Responsible Officials: The Alliance has reinstituted an hourly timesheet format in order to account for positions with multiple funding sources.
2023 001 Activities Allowed or Unallowed and Allowable Costs/ Cost Principles U.S. Department of Homeland Security: Passed through the State of New Jersey, Department of Law and Public Safety: Disaster Grants – Public Assistance (Presidentially Declared Disasters) – ALN 97.036 Federal Grant Numbers and Years State of New Jersey pass-through number: UH1WX Project Worksheet #1822 – October 5, 2021 to March 5, 2022 (Application 553330) Statistically Valid Sample: The sample was not intended to be, and was not, a statistically valid sample. Prior Year Findings: None Criteria Compliance – Program Specific The Federal Emergency Management Agency (FEMA), as part of the U.S. Department of Homeland Security, evaluates the eligibility of all costs claimed by the applicant. Not all costs incurred as a result of the incident are eligible. (PAPPG v4) Chapter 4, page(s) 51-54; Chapter 6, page(s) 65 & 93-95. Cost must be: • Directly tied to the performance of eligible work; • Adequately documented (2 CFR section 200.403(g)); • Reduced by all applicable credits, such as insurance proceeds and salvage values (Stafford Act section 312, 42 USC section 5155, and 2 CFR section 200.406); • Authorized and not prohibited under federal, state, territorial, tribal, or local government laws or regulations; • Consistent with applicant’s internal policies, regulations, and procedures that apply uniformly to both federal awards and other activities of the applicant; and • Necessary and reasonable to accomplish the work properly and efficiently (2 CFR section 200.403). 1. Applicant (Force Account) Labor FEMA refers to the applicant’s personnel as “force account.” FEMA reimburses force account labor based on actual hourly rates plus the cost of the employee’s actual fringe benefits. FEMA calculates the fringe benefit cost based on a percentage of the hourly pay rate. Because certain items in a benefit package are not dependent on hours worked (e.g., health insurance), the percentage for overtime is usually different than the percentage for straight-time. Compliance – General Per 2 CFR Section 200.430, charges to federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (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, not exceeding 100% of compensated activities; (iv) Encompass federally assisted and all other activities compensated by the non-federal entity on an integrated basis, but may include the use of subsidiary records as defined in the non-federal entity's written policy; (v) Comply with the established accounting policies and practices of the non-federal entity. Internal Control Per 2 CFR section 200.303(a), a non-federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition and Context The New Jersey Turnpike Authority (the “Authority”), through the State of New Jersey, Department of Homeland Security (the State), administers the federal Disaster Grants – Public Assistance (Presidentially Declared Disasters) program and is reimbursed for eligible expenditures when a presidentially declared disaster occurs. For the Authority’s force account labor costs, the Authority utilizes manual Daily Worksheets (timesheets) as the official records for time and effort worked during an event by the Authority’s personnel. These timesheets are then entered into the Authority’s information system (PeopleSoft) for review and approval, reconciling back to the information entered on the respective timesheet. For two of forty timesheets selected for testwork, the Authority was unable to provide the timesheets as the official record for the time and effort charged to the federal program. However, the Authority successfully demonstrated through PeopleSoft system that the time and effort charged to the federal program was properly reviewed and approved and reconciled to the amounts of reimbursement requested from the State. Cause The Authority did not maintain and make readily available certain timesheets used as the official record for the time and effort charged to the federal program in accordance with the Uniform Guidance. Effect The Authority did not comply with 2 CFR Section 200.430 related to incorporating the physical timesheets into the official records of the Authority. Questioned Costs None as the time and effort amounts charged were determined to be allowable. Recommendation We recommend that the Authority strengthen its processes to ensure that all timesheets for disaster related events that are federally funded are maintained and are made readily available if subject to audit or other inspection in accordance with the Uniform Guidance. Views of Responsible Officials Management agrees with the finding. We are committed to strengthening our processes to ensure that all physical timesheets related to FEMA-declared disaster events are properly maintained and readily accessible. To achieve this, we will implement enhanced procedures and controls to ensure full compliance with the Uniform Guidance requirements.
2023-001- Internal Control over Compliance and Compliance with Activities Allowed or Unallowed and Allowable Costs and Cost Principles Information on the Major Federal Program U.S. Department of Health and Human Services Center for Disease Control and Prevention Assistance Listing Number: 93.988 Assistance Listing Name: Cooperative Agreements for State-Based Diabetes Control Programs and Evaluation of Surveillance Systems Grant Award Number(s): 1 NU58DP007372-01-00 Award Period: June 30, 2023 to June 29, 2028 Criteria or Specific Requirement – The Uniform Guidance 2 CFR Section 200.303 requires non-Federal entities receiving Federal awards establish and maintain internal control to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. In addition, per 2 CFR Section 200.403, “Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. c) Be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non-Federal entity. d) Be accorded consistent treatment. A cost may not be assigned to a Federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the Federal award as an indirect cost. e) Be determined in accordance with generally accepted accounting principles (GAAP), except, for state and local governments and Indian tribes only, as otherwise provided for in this part. f) Not be included as a cost or used to meet cost sharing or matching requirements of any other federally- financed program in either the current or a prior period. g) Be adequately documented. h) Cost must be incurred during the approved budget period. The Federal awarding agency is authorized, at its discretion, to waive prior written approvals to carry forward unobligated balances to subsequent budget periods pursuant to § 200.308(e)(3).” Furthermore, according to the Uniform Guidance (2 CFR Part 200), specifically §200.430(i), “charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated”. The records must also be supported by the approval of an individual with firsthand knowledge of the work performed. Condition - During our audit, within the tested sample of seven timesheets out of a population of twenty-six, three timesheets for employees charged to the federal program did not have proper approval in the system. The lack of signed approval indicates that the timesheets were not reviewed and approved by an individual with knowledge of the work performed, as required under the Uniform Guidance. ADA has documented expenditure policies and procedures. However, the review and approval process did not operate as designed. Cause – ADA did not adhere to its internal policies and procedures to ensure timesheets were properly reviewed and approved. Effect or Potential Effect – Without adequate internal controls in place to ensure costs are properly verified and approved, ADA could unallowably and inaccurately charge salary and wages expenditures to the federal program. Questioned Costs – None Context - This is a condition based on testing of ADA’s compliance. Based on tested samples, we noted four out of seven sampled timesheets were not properly approved in the system. The samples were selected using a non-statistical method. Repeat Finding - This finding is not a repeat finding. Recommendation - BDO recommends that ADA adhere to its documented policies and procedures to ensure all timesheets are reviewed and approved by authorized personnel with knowledge of the work performed. ADA should also provide training to all employees involved in the timesheet preparation and approval process to ensure compliance with the Uniform Guidance requirements. Views of Responsible Officials: The findings were primarily related to a change that ADA made to the Human Resources Information System. Going forward, ADA will adhere to our documented policies and procedures to ensure all timesheets are reviewed and approved by authorized personnel with knowledge of the work performed. Additionally, we will provide training to all employees involved in the timesheet preparation and approval process to ensure compliance with the Uniform Guidance requirements.
Finding 2023-001: Salaries and Wages (Allowable Costs) Criteria: According to 2 CFR Section 200.430(i), charges to Federal grants for salaries and wages must be based on records that accurately reflect the work performed and the records must: 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, not exceeding 100% of compensated activities; iv. Encompass Federally-assisted and all other activities compensated by the non-Federal entity on an integrated basis, but may include the use of subsidiary records as defined in the non-Federal entity’s written policy; v. Comply with the established accounting policies and practices of the non-Federal entity; vi. [Reserved] vii. Support the distribution of the employee’s salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non- Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. viii. Budget estimates (i.e., estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards.” Condition: ASCB has a timekeeping system in place that provides for employees to record hours worked to specific cost objectives, including to US Government grants. However, we noted that in several cases the allocation amounts as per the timekeeping system were different from the amounts ultimately recorded within ASCB's general ledger. While the differences were not significant, these discrepancies indicate a deficiency in the internal controls around recording of salary expenditures to projects. Cause: The primary cause appears to be human error, and the result of manual recordkeeping. Effect or Potential Effect: Salary expenditures that are not charged in accordance with the standards referenced above may be questioned or disallowed by the donor. Questioned Costs: Undetermined Context: This is a condition identified per review of ASCB's compliance with the specified requirements using a statistically valid sample. Identification as a Repeat Finding: Not applicable. Recommendation: We recommend that management revisit its procedures for transferring data from the timekeeping system to the general ledger and implement proper internal controls to ensure that the amounts of salary expenditures charged to grants in the general ledger reconcile to the amounts calculated by the timekeeping system.
Finding 2023-001: Salaries and Wages (Allowable Costs) Criteria: According to 2 CFR Section 200.430(i), charges to Federal grants for salaries and wages must be based on records that accurately reflect the work performed and the records must: 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, not exceeding 100% of compensated activities; iv. Encompass Federally-assisted and all other activities compensated by the non-Federal entity on an integrated basis, but may include the use of subsidiary records as defined in the non-Federal entity’s written policy; v. Comply with the established accounting policies and practices of the non-Federal entity; vi. [Reserved] vii. Support the distribution of the employee’s salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non- Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. viii. Budget estimates (i.e., estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards.” Condition: ASCB has a timekeeping system in place that provides for employees to record hours worked to specific cost objectives, including to US Government grants. However, we noted that in several cases the allocation amounts as per the timekeeping system were different from the amounts ultimately recorded within ASCB's general ledger. While the differences were not significant, these discrepancies indicate a deficiency in the internal controls around recording of salary expenditures to projects. Cause: The primary cause appears to be human error, and the result of manual recordkeeping. Effect or Potential Effect: Salary expenditures that are not charged in accordance with the standards referenced above may be questioned or disallowed by the donor. Questioned Costs: Undetermined Context: This is a condition identified per review of ASCB's compliance with the specified requirements using a statistically valid sample. Identification as a Repeat Finding: Not applicable. Recommendation: We recommend that management revisit its procedures for transferring data from the timekeeping system to the general ledger and implement proper internal controls to ensure that the amounts of salary expenditures charged to grants in the general ledger reconcile to the amounts calculated by the timekeeping system.
Department of Education and Passed through State of South Dakota Department of Education FFAL #84.287C, S287C220042 Twenty-First Century Community Learning Centers Activities Allowed or Unallowed and Allowable Costs/Cost Principles Significant Deficiency in Internal Control over Compliance Criteria: The Club is required to have procedures in place to ensure that federal awards are expended only for allowable costs in accordance with Subpart E – Cost Principles of the Uniform Guidance. Allowable costs are supported by appropriate documentation and correctly charged as to account, amount, and period. 2 CFR 200.430(i) establishes requirements for documentation of personnel expenses. 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition: Our testing over expenditures noted the following items: - Two instances where timesheets or bi-weekly activity reports were unable to be provided. - Three instances where the employee’s paid time off and holiday pay was not allocated nor submitted for reimbursement under the federal program, which was inconsistent with other pay periods. - One instance where support did not agree to the amount and time allocated. Cause: Tracking of grant-related payroll is a manual process which increases the likelihood of error. Effect: The Club’s controls did not detect or correct the errors identified, which results in a reasonable possibility that the Club could submit disallowed costs under the federal awards. Questioned Costs: No questioned costs over $25,000. Context/Sampling: A nonstatistical sample of 60 transactions out of approximately 830 total transactions were selected testing, of which 51 of those transactions were payroll transactions and accounted for $45,055 out of $272,463 of total payroll transactions. Repeat Finding from Prior Year: No Recommendation: We recommend management continue to review the process over tracking payroll related to federal programs and consider incorporating a secondary review of any manual spreadsheets or consider if the payroll can be allocated directly within the payroll system. Views of Responsible Officials: Management is in agreement.
Criteria or specific requirement: According to §200.303 Internal controls of 2 CFR Part 200, the non-Federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-Federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. According to §200.430(i) Standards for Documentation of Personnel Expenses of 2 CFR Part 200, (1) Charges to federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: 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, not exceeding 100% of compensated activities; iv. Encompass federally assisted and all other activities compensated by the non-Federal entity on an integrated basis, but may include the use of subsidiary records as defined in the non-Federal entity's written policy; v. Comply with the established accounting policies and practices of the non-Federal entity; and vi. Support the distribution of the employee's salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. According to the Authority’s policies and procedures, for employees working in a single indirect cost function, such as overhead, a Budget Analyst compares the salary budgets with actual salary allocations and investigates unusual variances. This review is performed on the first pay run of the fiscal year and at the end of every quarter. If the investigation determines that the salary allocation is no longer valid, the Department can request a change in allocation rates. Allocation changes can only be changed in the Enterprise One (E1) system by the payroll manager, or the budget analyst assigned to the overhead account. Employees engaged in multiple direct cost business units and projects, and indirect overhead activity, may have their labor distribution entered in E1 as a predetermined (budgeted) allocation of their wages. A monthly certification (Federal Hours Certification Report) is sent to exempt and non-exempt staff working on federal projects to ensure their time is charged out appropriately. All employees who work on federal projects verify the allocations of their timesheets, thereby satisfying the effort reporting requirement. All exempt employees (who do not punch in on Kronos) who work on federal projects verify the allocations of their timesheets, thereby satisfying the effort reporting requirement. Condition: During our testing of 40 MTW employee pays selected for payroll disbursement testing, we noted 4 of the 40 pay did not have adequate time and effort documentation. Questioned costs: $9,187 Context: We noted that 4 of the 40 pays did not have adequate time and effort documentation. The Authority was unable to provide the Federal Hours Certification Report for these 4 employees. Cause: Procedures in place regarding quarterly reviews of allocations were not followed. Effect: The auditor noted instances of noncompliance. Noncompliance results in possible under or over charges to the grant. Recommendation: We recommend the Authority implements an adequate review process to ensure costs charged to the grant are reasonable, accurate, and properly allocated. We recommend the Authority perform and document this review quarterly at minimum. Views of responsible officials: There is no disagreement with the audit finding.
Criteria or specific requirement: According to §200.303 Internal controls of 2 CFR Part 200, the non-Federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-Federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. According to §200.430(i) Standards for Documentation of Personnel Expenses of 2 CFR Part 200, (1) Charges to federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: 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, not exceeding 100% of compensated activities; iv. Encompass federally assisted and all other activities compensated by the non-Federal entity on an integrated basis, but may include the use of subsidiary records as defined in the non-Federal entity's written policy; v. Comply with the established accounting policies and practices of the non-Federal entity; and vi. Support the distribution of the employee's salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. According to the Authority’s policies and procedures, for employees working in a single indirect cost function, such as overhead, a Budget Analyst compares the salary budgets with actual salary allocations and investigates unusual variances. This review is performed on the first pay run of the fiscal year and at the end of every quarter. If the investigation determines that the salary allocation is no longer valid, the Department can request a change in allocation rates. Allocation changes can only be changed in the Enterprise One (E1) system by the payroll manager, or the budget analyst assigned to the overhead account. Employees engaged in multiple direct cost business units and projects, and indirect overhead activity, may have their labor distribution entered in E1 as a predetermined (budgeted) allocation of their wages. A monthly certification (Federal Hours Certification Report) is sent to exempt and non-exempt staff working on federal projects to ensure their time is charged out appropriately. All employees who work on federal projects verify the allocations of their timesheets, thereby satisfying the effort reporting requirement. All exempt employees (who do not punch in on Kronos) who work on federal projects verify the allocations of their timesheets, thereby satisfying the effort reporting requirement. Condition: During our testing of 40 MTW employee pays selected for payroll disbursement testing, we noted 4 of the 40 pay did not have adequate time and effort documentation. Questioned costs: $9,187 Context: We noted that 4 of the 40 pays did not have adequate time and effort documentation. The Authority was unable to provide the Federal Hours Certification Report for these 4 employees. Cause: Procedures in place regarding quarterly reviews of allocations were not followed. Effect: The auditor noted instances of noncompliance. Noncompliance results in possible under or over charges to the grant. Recommendation: We recommend the Authority implements an adequate review process to ensure costs charged to the grant are reasonable, accurate, and properly allocated. We recommend the Authority perform and document this review quarterly at minimum. Views of responsible officials: There is no disagreement with the audit finding.
Criteria or specific requirement: According to §200.303 Internal controls of 2 CFR Part 200, the non-Federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-Federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. According to §200.430(i) Standards for Documentation of Personnel Expenses of 2 CFR Part 200, (1) Charges to federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: 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, not exceeding 100% of compensated activities; iv. Encompass federally assisted and all other activities compensated by the non-Federal entity on an integrated basis, but may include the use of subsidiary records as defined in the non-Federal entity's written policy; v. Comply with the established accounting policies and practices of the non-Federal entity; and vi. Support the distribution of the employee's salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. According to the Authority’s policies and procedures, for employees working in a single indirect cost function, such as overhead, a Budget Analyst compares the salary budgets with actual salary allocations and investigates unusual variances. This review is performed on the first pay run of the fiscal year and at the end of every quarter. If the investigation determines that the salary allocation is no longer valid, the Department can request a change in allocation rates. Allocation changes can only be changed in the Enterprise One (E1) system by the payroll manager, or the budget analyst assigned to the overhead account. Employees engaged in multiple direct cost business units and projects, and indirect overhead activity, may have their labor distribution entered in E1 as a predetermined (budgeted) allocation of their wages. A monthly certification (Federal Hours Certification Report) is sent to exempt and non-exempt staff working on federal projects to ensure their time is charged out appropriately. All employees who work on federal projects verify the allocations of their timesheets, thereby satisfying the effort reporting requirement. All exempt employees (who do not punch in on Kronos) who work on federal projects verify the allocations of their timesheets, thereby satisfying the effort reporting requirement. Condition: During our testing of 40 MTW employee pays selected for payroll disbursement testing, we noted 4 of the 40 pay did not have adequate time and effort documentation. Questioned costs: $9,187 Context: We noted that 4 of the 40 pays did not have adequate time and effort documentation. The Authority was unable to provide the Federal Hours Certification Report for these 4 employees. Cause: Procedures in place regarding quarterly reviews of allocations were not followed. Effect: The auditor noted instances of noncompliance. Noncompliance results in possible under or over charges to the grant. Recommendation: We recommend the Authority implements an adequate review process to ensure costs charged to the grant are reasonable, accurate, and properly allocated. We recommend the Authority perform and document this review quarterly at minimum. Views of responsible officials: There is no disagreement with the audit finding.
Criteria or specific requirement: According to §200.303 Internal controls of 2 CFR Part 200, the non-Federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-Federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. According to §200.430(i) Standards for Documentation of Personnel Expenses of 2 CFR Part 200, (1) Charges to federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: 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, not exceeding 100% of compensated activities; iv. Encompass federally assisted and all other activities compensated by the non-Federal entity on an integrated basis, but may include the use of subsidiary records as defined in the non-Federal entity's written policy; v. Comply with the established accounting policies and practices of the non-Federal entity; and vi. Support the distribution of the employee's salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. According to the Authority’s policies and procedures, for employees working in a single indirect cost function, such as overhead, a Budget Analyst compares the salary budgets with actual salary allocations and investigates unusual variances. This review is performed on the first pay run of the fiscal year and at the end of every quarter. If the investigation determines that the salary allocation is no longer valid, the Department can request a change in allocation rates. Allocation changes can only be changed in the Enterprise One (E1) system by the payroll manager, or the budget analyst assigned to the overhead account. Employees engaged in multiple direct cost business units and projects, and indirect overhead activity, may have their labor distribution entered in E1 as a predetermined (budgeted) allocation of their wages. A monthly certification (Federal Hours Certification Report) is sent to exempt and non-exempt staff working on federal projects to ensure their time is charged out appropriately. All employees who work on federal projects verify the allocations of their timesheets, thereby satisfying the effort reporting requirement. All exempt employees (who do not punch in on Kronos) who work on federal projects verify the allocations of their timesheets, thereby satisfying the effort reporting requirement. Condition: During our testing of 40 MTW employee pays selected for payroll disbursement testing, we noted 4 of the 40 pay did not have adequate time and effort documentation. Questioned costs: $9,187 Context: We noted that 4 of the 40 pays did not have adequate time and effort documentation. The Authority was unable to provide the Federal Hours Certification Report for these 4 employees. Cause: Procedures in place regarding quarterly reviews of allocations were not followed. Effect: The auditor noted instances of noncompliance. Noncompliance results in possible under or over charges to the grant. Recommendation: We recommend the Authority implements an adequate review process to ensure costs charged to the grant are reasonable, accurate, and properly allocated. We recommend the Authority perform and document this review quarterly at minimum. Views of responsible officials: There is no disagreement with the audit finding.
Criteria or specific requirement: According to §200.303 Internal controls of 2 CFR Part 200, the non-Federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-Federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. According to §200.430(i) Standards for Documentation of Personnel Expenses of 2 CFR Part 200, (1) Charges to federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: 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, not exceeding 100% of compensated activities; iv. Encompass federally assisted and all other activities compensated by the non-Federal entity on an integrated basis, but may include the use of subsidiary records as defined in the non-Federal entity's written policy; v. Comply with the established accounting policies and practices of the non-Federal entity; and vi. Support the distribution of the employee's salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. According to the Authority’s policies and procedures, for employees working in a single indirect cost function, such as overhead, a Budget Analyst compares the salary budgets with actual salary allocations and investigates unusual variances. This review is performed on the first pay run of the fiscal year and at the end of every quarter. If the investigation determines that the salary allocation is no longer valid, the Department can request a change in allocation rates. Allocation changes can only be changed in the Enterprise One (E1) system by the payroll manager, or the budget analyst assigned to the overhead account. Employees engaged in multiple direct cost business units and projects, and indirect overhead activity, may have their labor distribution entered in E1 as a predetermined (budgeted) allocation of their wages. A monthly certification (Federal Hours Certification Report) is sent to exempt and non-exempt staff working on federal projects to ensure their time is charged out appropriately. All employees who work on federal projects verify the allocations of their timesheets, thereby satisfying the effort reporting requirement. All exempt employees (who do not punch in on Kronos) who work on federal projects verify the allocations of their timesheets, thereby satisfying the effort reporting requirement. Condition: During our testing of 40 MTW employee pays selected for payroll disbursement testing, we noted 4 of the 40 pay did not have adequate time and effort documentation. Questioned costs: $9,187 Context: We noted that 4 of the 40 pays did not have adequate time and effort documentation. The Authority was unable to provide the Federal Hours Certification Report for these 4 employees. Cause: Procedures in place regarding quarterly reviews of allocations were not followed. Effect: The auditor noted instances of noncompliance. Noncompliance results in possible under or over charges to the grant. Recommendation: We recommend the Authority implements an adequate review process to ensure costs charged to the grant are reasonable, accurate, and properly allocated. We recommend the Authority perform and document this review quarterly at minimum. Views of responsible officials: There is no disagreement with the audit finding.
Criteria or specific requirement: According to §200.303 Internal controls of 2 CFR Part 200, the non-Federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-Federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. According to §200.430(i) Standards for Documentation of Personnel Expenses of 2 CFR Part 200, (1) Charges to federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: 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, not exceeding 100% of compensated activities; iv. Encompass federally assisted and all other activities compensated by the non-Federal entity on an integrated basis, but may include the use of subsidiary records as defined in the non-Federal entity's written policy; v. Comply with the established accounting policies and practices of the non-Federal entity; and vi. Support the distribution of the employee's salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. According to the Authority’s policies and procedures, for employees working in a single indirect cost function, such as overhead, a Budget Analyst compares the salary budgets with actual salary allocations and investigates unusual variances. This review is performed on the first pay run of the fiscal year and at the end of every quarter. If the investigation determines that the salary allocation is no longer valid, the Department can request a change in allocation rates. Allocation changes can only be changed in the Enterprise One (E1) system by the payroll manager, or the budget analyst assigned to the overhead account. Employees engaged in multiple direct cost business units and projects, and indirect overhead activity, may have their labor distribution entered in E1 as a predetermined (budgeted) allocation of their wages. A monthly certification (Federal Hours Certification Report) is sent to exempt and non-exempt staff working on federal projects to ensure their time is charged out appropriately. All employees who work on federal projects verify the allocations of their timesheets, thereby satisfying the effort reporting requirement. All exempt employees (who do not punch in on Kronos) who work on federal projects verify the allocations of their timesheets, thereby satisfying the effort reporting requirement. Condition: During our testing of 40 MTW employee pays selected for payroll disbursement testing, we noted 4 of the 40 pay did not have adequate time and effort documentation. Questioned costs: $9,187 Context: We noted that 4 of the 40 pays did not have adequate time and effort documentation. The Authority was unable to provide the Federal Hours Certification Report for these 4 employees. Cause: Procedures in place regarding quarterly reviews of allocations were not followed. Effect: The auditor noted instances of noncompliance. Noncompliance results in possible under or over charges to the grant. Recommendation: We recommend the Authority implements an adequate review process to ensure costs charged to the grant are reasonable, accurate, and properly allocated. We recommend the Authority perform and document this review quarterly at minimum. Views of responsible officials: There is no disagreement with the audit finding.
Criteria or specific requirement: According to §200.303 Internal controls of 2 CFR Part 200, the non-Federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-Federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. According to §200.430(i) Standards for Documentation of Personnel Expenses of 2 CFR Part 200, (1) Charges to federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: 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, not exceeding 100% of compensated activities; iv. Encompass federally assisted and all other activities compensated by the non-Federal entity on an integrated basis, but may include the use of subsidiary records as defined in the non-Federal entity's written policy; v. Comply with the established accounting policies and practices of the non-Federal entity; and vi. Support the distribution of the employee's salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. According to the Authority’s policies and procedures, for employees working in a single indirect cost function, such as overhead, a Budget Analyst compares the salary budgets with actual salary allocations and investigates unusual variances. This review is performed on the first pay run of the fiscal year and at the end of every quarter. If the investigation determines that the salary allocation is no longer valid, the Department can request a change in allocation rates. Allocation changes can only be changed in the Enterprise One (E1) system by the payroll manager, or the budget analyst assigned to the overhead account. Employees engaged in multiple direct cost business units and projects, and indirect overhead activity, may have their labor distribution entered in E1 as a predetermined (budgeted) allocation of their wages. A monthly certification (Federal Hours Certification Report) is sent to exempt and non-exempt staff working on federal projects to ensure their time is charged out appropriately. All employees who work on federal projects verify the allocations of their timesheets, thereby satisfying the effort reporting requirement. All exempt employees (who do not punch in on Kronos) who work on federal projects verify the allocations of their timesheets, thereby satisfying the effort reporting requirement. Condition: During our testing of 40 MTW employee pays selected for payroll disbursement testing, we noted 4 of the 40 pay did not have adequate time and effort documentation. Questioned costs: $9,187 Context: We noted that 4 of the 40 pays did not have adequate time and effort documentation. The Authority was unable to provide the Federal Hours Certification Report for these 4 employees. Cause: Procedures in place regarding quarterly reviews of allocations were not followed. Effect: The auditor noted instances of noncompliance. Noncompliance results in possible under or over charges to the grant. Recommendation: We recommend the Authority implements an adequate review process to ensure costs charged to the grant are reasonable, accurate, and properly allocated. We recommend the Authority perform and document this review quarterly at minimum. Views of responsible officials: There is no disagreement with the audit finding.
Criteria or specific requirement: According to §200.303 Internal controls of 2 CFR Part 200, the non-Federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-Federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. According to §200.430(i) Standards for Documentation of Personnel Expenses of 2 CFR Part 200, (1) Charges to federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: 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, not exceeding 100% of compensated activities; iv. Encompass federally assisted and all other activities compensated by the non-Federal entity on an integrated basis, but may include the use of subsidiary records as defined in the non-Federal entity's written policy; v. Comply with the established accounting policies and practices of the non-Federal entity; and vi. Support the distribution of the employee's salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. According to the Authority’s policies and procedures, for employees working in a single indirect cost function, such as overhead, a Budget Analyst compares the salary budgets with actual salary allocations and investigates unusual variances. This review is performed on the first pay run of the fiscal year and at the end of every quarter. If the investigation determines that the salary allocation is no longer valid, the Department can request a change in allocation rates. Allocation changes can only be changed in the Enterprise One (E1) system by the payroll manager, or the budget analyst assigned to the overhead account. Employees engaged in multiple direct cost business units and projects, and indirect overhead activity, may have their labor distribution entered in E1 as a predetermined (budgeted) allocation of their wages. A monthly certification (Federal Hours Certification Report) is sent to exempt and non-exempt staff working on federal projects to ensure their time is charged out appropriately. All employees who work on federal projects verify the allocations of their timesheets, thereby satisfying the effort reporting requirement. All exempt employees (who do not punch in on Kronos) who work on federal projects verify the allocations of their timesheets, thereby satisfying the effort reporting requirement. Condition: During our testing of 40 MTW employee pays selected for payroll disbursement testing, we noted 4 of the 40 pay did not have adequate time and effort documentation. Questioned costs: $9,187 Context: We noted that 4 of the 40 pays did not have adequate time and effort documentation. The Authority was unable to provide the Federal Hours Certification Report for these 4 employees. Cause: Procedures in place regarding quarterly reviews of allocations were not followed. Effect: The auditor noted instances of noncompliance. Noncompliance results in possible under or over charges to the grant. Recommendation: We recommend the Authority implements an adequate review process to ensure costs charged to the grant are reasonable, accurate, and properly allocated. We recommend the Authority perform and document this review quarterly at minimum. Views of responsible officials: There is no disagreement with the audit finding.
Criteria or specific requirement: According to §200.303 Internal controls of 2 CFR Part 200, the non-Federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-Federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. According to §200.430(i) Standards for Documentation of Personnel Expenses of 2 CFR Part 200, (1) Charges to federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: 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, not exceeding 100% of compensated activities; iv. Encompass federally assisted and all other activities compensated by the non-Federal entity on an integrated basis, but may include the use of subsidiary records as defined in the non-Federal entity's written policy; v. Comply with the established accounting policies and practices of the non-Federal entity; and vi. Support the distribution of the employee's salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. According to the Authority’s policies and procedures, for employees working in a single indirect cost function, such as overhead, a Budget Analyst compares the salary budgets with actual salary allocations and investigates unusual variances. This review is performed on the first pay run of the fiscal year and at the end of every quarter. If the investigation determines that the salary allocation is no longer valid, the Department can request a change in allocation rates. Allocation changes can only be changed in the Enterprise One (E1) system by the payroll manager, or the budget analyst assigned to the overhead account. Employees engaged in multiple direct cost business units and projects, and indirect overhead activity, may have their labor distribution entered in E1 as a predetermined (budgeted) allocation of their wages. A monthly certification (Federal Hours Certification Report) is sent to exempt and non-exempt staff working on federal projects to ensure their time is charged out appropriately. All employees who work on federal projects verify the allocations of their timesheets, thereby satisfying the effort reporting requirement. All exempt employees (who do not punch in on Kronos) who work on federal projects verify the allocations of their timesheets, thereby satisfying the effort reporting requirement. Condition: During our testing of 40 MTW employee pays selected for payroll disbursement testing, we noted 4 of the 40 pay did not have adequate time and effort documentation. Questioned costs: $9,187 Context: We noted that 4 of the 40 pays did not have adequate time and effort documentation. The Authority was unable to provide the Federal Hours Certification Report for these 4 employees. Cause: Procedures in place regarding quarterly reviews of allocations were not followed. Effect: The auditor noted instances of noncompliance. Noncompliance results in possible under or over charges to the grant. Recommendation: We recommend the Authority implements an adequate review process to ensure costs charged to the grant are reasonable, accurate, and properly allocated. We recommend the Authority perform and document this review quarterly at minimum. Views of responsible officials: There is no disagreement with the audit finding.
2023 – 003: Cost Allocation of Salaries and Wages to LSC Grants Federal Agency: Legal Services Corporation (LSC) Federal Program Name: LSC Grants Assistance Listing Number: 09.706060 Federal Award Identification Number and Year: 09-706060 - 2023 Award Period: January 1, 2023 – December 31, 2023 Type of Finding: Material Weakness in Internal Control over Compliance Other Matters Criteria or specific requirement: Federal regulations (45 CFR 1635.4(a) and 2 CFR 200.430), state that federal award recipients must base allocations of salaries and wages costs to grants on records that accurately reflect the work performed. Condition: During our testing we noted: Two instances of employees’ pay period salaries totaling $1,742 being allocated to a grant using a flat percentage of 10%, and One instance of an employee’s pay period salary of $147 being allocated to two grants using a combination of their time an effort on those grants while the remaining portion of the employee’s salary was allocated to LSC and two other private grants using a base of total grant hours for the period divided by total hours coded to the Organization’s general fund. As such, the salary costs mentioned above were allocated in an inconsistent manner to other grant payroll costs and were not fully representative of the employees’ time and effort. Questioned costs: $1,742 of allocated salary expense described above, which is related to Assistance Listing Number 09.706060. Context: These three instances were noting during testing of 26 payroll and payroll-related disbursements. Cause: The Organization’s salaries and wages cost allocation methodology is primarily based on time and effort records, but it often includes manual adjustments based on review of individual time records and expense data. Therefore, the methodology is challenging to apply consistently, document contemporaneously, and apply in accordance with federal regulations. Effect: The inclusion of frequent manual adjustments in the Organization’s salaries and wages cost allocation methodology could cause costs to be allocated to grants that are not reflective of the time and effort spent on grant activities. Repeat Finding: This is not a repeat finding. Recommendation: We recommend that the Organization consider updating its salaries and wages cost allocation methodology and process to reduce the frequency of manual adjustments based on review of individual time records and expense data and maximize the use of automated allocations based on employees’ time and effort records. Views of responsible officials: There is no disagreement with the audit finding
2023 – 003: Cost Allocation of Salaries and Wages to LSC Grants Federal Agency: Legal Services Corporation (LSC) Federal Program Name: LSC Grants Assistance Listing Number: 09.706060 Federal Award Identification Number and Year: 09-706060 - 2023 Award Period: January 1, 2023 – December 31, 2023 Type of Finding: Material Weakness in Internal Control over Compliance Other Matters Criteria or specific requirement: Federal regulations (45 CFR 1635.4(a) and 2 CFR 200.430), state that federal award recipients must base allocations of salaries and wages costs to grants on records that accurately reflect the work performed. Condition: During our testing we noted: Two instances of employees’ pay period salaries totaling $1,742 being allocated to a grant using a flat percentage of 10%, and One instance of an employee’s pay period salary of $147 being allocated to two grants using a combination of their time an effort on those grants while the remaining portion of the employee’s salary was allocated to LSC and two other private grants using a base of total grant hours for the period divided by total hours coded to the Organization’s general fund. As such, the salary costs mentioned above were allocated in an inconsistent manner to other grant payroll costs and were not fully representative of the employees’ time and effort. Questioned costs: $1,742 of allocated salary expense described above, which is related to Assistance Listing Number 09.706060. Context: These three instances were noting during testing of 26 payroll and payroll-related disbursements. Cause: The Organization’s salaries and wages cost allocation methodology is primarily based on time and effort records, but it often includes manual adjustments based on review of individual time records and expense data. Therefore, the methodology is challenging to apply consistently, document contemporaneously, and apply in accordance with federal regulations. Effect: The inclusion of frequent manual adjustments in the Organization’s salaries and wages cost allocation methodology could cause costs to be allocated to grants that are not reflective of the time and effort spent on grant activities. Repeat Finding: This is not a repeat finding. Recommendation: We recommend that the Organization consider updating its salaries and wages cost allocation methodology and process to reduce the frequency of manual adjustments based on review of individual time records and expense data and maximize the use of automated allocations based on employees’ time and effort records. Views of responsible officials: There is no disagreement with the audit finding
2023 – 003: Cost Allocation of Salaries and Wages to LSC Grants Federal Agency: Legal Services Corporation (LSC) Federal Program Name: LSC Grants Assistance Listing Number: 09.706060 Federal Award Identification Number and Year: 09-706060 - 2023 Award Period: January 1, 2023 – December 31, 2023 Type of Finding: Material Weakness in Internal Control over Compliance Other Matters Criteria or specific requirement: Federal regulations (45 CFR 1635.4(a) and 2 CFR 200.430), state that federal award recipients must base allocations of salaries and wages costs to grants on records that accurately reflect the work performed. Condition: During our testing we noted: Two instances of employees’ pay period salaries totaling $1,742 being allocated to a grant using a flat percentage of 10%, and One instance of an employee’s pay period salary of $147 being allocated to two grants using a combination of their time an effort on those grants while the remaining portion of the employee’s salary was allocated to LSC and two other private grants using a base of total grant hours for the period divided by total hours coded to the Organization’s general fund. As such, the salary costs mentioned above were allocated in an inconsistent manner to other grant payroll costs and were not fully representative of the employees’ time and effort. Questioned costs: $1,742 of allocated salary expense described above, which is related to Assistance Listing Number 09.706060. Context: These three instances were noting during testing of 26 payroll and payroll-related disbursements. Cause: The Organization’s salaries and wages cost allocation methodology is primarily based on time and effort records, but it often includes manual adjustments based on review of individual time records and expense data. Therefore, the methodology is challenging to apply consistently, document contemporaneously, and apply in accordance with federal regulations. Effect: The inclusion of frequent manual adjustments in the Organization’s salaries and wages cost allocation methodology could cause costs to be allocated to grants that are not reflective of the time and effort spent on grant activities. Repeat Finding: This is not a repeat finding. Recommendation: We recommend that the Organization consider updating its salaries and wages cost allocation methodology and process to reduce the frequency of manual adjustments based on review of individual time records and expense data and maximize the use of automated allocations based on employees’ time and effort records. Views of responsible officials: There is no disagreement with the audit finding
2023 – 003: Cost Allocation of Salaries and Wages to LSC Grants Federal Agency: Legal Services Corporation (LSC) Federal Program Name: LSC Grants Assistance Listing Number: 09.706060 Federal Award Identification Number and Year: 09-706060 - 2023 Award Period: January 1, 2023 – December 31, 2023 Type of Finding: Material Weakness in Internal Control over Compliance Other Matters Criteria or specific requirement: Federal regulations (45 CFR 1635.4(a) and 2 CFR 200.430), state that federal award recipients must base allocations of salaries and wages costs to grants on records that accurately reflect the work performed. Condition: During our testing we noted: Two instances of employees’ pay period salaries totaling $1,742 being allocated to a grant using a flat percentage of 10%, and One instance of an employee’s pay period salary of $147 being allocated to two grants using a combination of their time an effort on those grants while the remaining portion of the employee’s salary was allocated to LSC and two other private grants using a base of total grant hours for the period divided by total hours coded to the Organization’s general fund. As such, the salary costs mentioned above were allocated in an inconsistent manner to other grant payroll costs and were not fully representative of the employees’ time and effort. Questioned costs: $1,742 of allocated salary expense described above, which is related to Assistance Listing Number 09.706060. Context: These three instances were noting during testing of 26 payroll and payroll-related disbursements. Cause: The Organization’s salaries and wages cost allocation methodology is primarily based on time and effort records, but it often includes manual adjustments based on review of individual time records and expense data. Therefore, the methodology is challenging to apply consistently, document contemporaneously, and apply in accordance with federal regulations. Effect: The inclusion of frequent manual adjustments in the Organization’s salaries and wages cost allocation methodology could cause costs to be allocated to grants that are not reflective of the time and effort spent on grant activities. Repeat Finding: This is not a repeat finding. Recommendation: We recommend that the Organization consider updating its salaries and wages cost allocation methodology and process to reduce the frequency of manual adjustments based on review of individual time records and expense data and maximize the use of automated allocations based on employees’ time and effort records. Views of responsible officials: There is no disagreement with the audit finding
Finding 2023-002 Salaries and Wages (Allowable Costs) Criteria or Specific Requirement: According to 2 CFR Section 200.430(i), charges to Federal grants for salaries and wages must be based on records that accurately reflect the work performed and the records must: 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, not exceeding 100% of compensated activities; iv. Encompass Federally-assisted and all other activities compensated by the non-Federal entity on an integrated basis, but may include the use of subsidiary records as defined in the non-Federal entity’s written policy; v. Comply with the established accounting policies and practices of the non-Federal entity; vi. [Reserved] vii. Support the distribution of the employee’s salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. viii. Budget estimates (i.e., estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards.” Condition: NRGI has a timekeeping system in place that provides for employees to record hours worked to specific cost objectives, including to U.S. Government grants. However, we noted that in several cases, the allocation amounts as per the timekeeping system were different from the amounts ultimately recorded within NRGI's general ledger. While the differences were not significant, these discrepancies indicate a deficiency in the internal controls around recording of salary expenditures to projects. Cause: The primary cause appears to be human error, and the result of manual recordkeeping. Effect or Potential Effect: Salary expenditures that are not charged in accordance with the standards referenced above may be questioned or disallowed by the donor. Questioned Costs: Undetermined. Context: This is a condition identified per review of NRGI's compliance with the specified requirements using a statistically valid sample. Identification as a Repeat Finding: Not applicable. Recommendation: We recommend that management revisit its procedures for transferring data from the timekeeping system to the general ledger and implement proper internal controls to ensure that the amounts of salary expenditures charged to grants in the general ledger reconcile to the amounts calculated by the timekeeping system.
U.S. Department of Justice 16.726 Juvenile Mentoring Program Grant Period: 10/1/2020-9/30/2024 Contract Number: 2020-JU-FX-0009 Criteria: Under 2 CFR Section 200.303(a) a non-Federal entity is required to establish and maintain internal controls over compliance with Federal statutes, regulations, and the terms and conditions of the Federal grant. In addition, under 2 CFR Section 200.430 Compensation – personal services, charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. Budget estimates may be used for interim accounting purposes but budget estimates alone do not qualify as support for charges to Federal awards. The entity’s system of internal controls must include a process to review after-the-fact interim charges made to a Federal award to budget estimates and make any necessary adjustments such that the final amount charged to the Federal award is accurate, allowable and properly allocated. Condition: The Academy’s internal control processes do not include a comparison of actual time charged on the employee’s time slip to the budget allocation charged the grant to determine if the budget estimates reflect reasonable approximations of the activities actually performed. Effect: Without internal controls operating effectively, it is possible that the Academy could be at risk to be out of compliance with the applicable compliance requirements. Cause: Additional federal and other restricted grants resulted in employee’s time being allocated across additional funding sources. In addition, the Academy was working with the grantor on a budget adjustment. Questioned Costs: Known questioned costs: $5,573; likely questioned costs $29,683. Perspective: There is no observable evidence of the Academy’s review and reconciliation of time slips to budget estimates which affects both the allowable activities and allowable costs requirements. Repeat Finding: No Auditor’s Recommendation: We recommend the Academy establish policies and procedures to reconcile the percentage of hours charged on time slips to the budget estimates used to bill the Federal grantor. This should be done in conjunction with quarterly billings (or other determined regular interval), at fiscal year end, and at the end of the grant year (if different from the Academy’s fiscal year). Views of Responsible Officials: See Corrective Action Plan
Finding 2023-003: Salaries and Wages (Allowable Costs) Federal Programs: All programs Criteria: According to 2 CFR Section 200.430(i), charges to Federal grants for salaries and wages must be based on records that accurately reflect the work performed and the records must: 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, not exceeding 100% of compensated activities; iv. Encompass Federally-assisted and all other activities compensated by the non-Federal entity on an integrated basis, but may include the use of subsidiary records as defined in the non-Federal entity’s written policy; v. Comply with the established accounting policies and practices of the non-Federal entity; vi. [Reserved] vii. Support the distribution of the employee’s salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. viii. Budget estimates (i.e., estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards.” Condition: The Center has a timekeeping system in place that provides for employees to record hours worked to specific cost objectives, including to US Government grants. However, we noted one instance the allocation amount as per the timekeeping system with the applicable compensation amount paid to the employee was different from the amounts ultimately recorded within the Center's general ledger. While the difference was not significant, this discrepancy indicate a deficiency in the internal controls around recording of salary expenditures to projects. We also noted the Center changed the payroll allocation methodology during the year under audit but this change was not documented in the policies and procedures. We also did not obtain evidence for review and approval of several payroll registers. Cause: During 2023, the Center's finance department turned over significantly, resulting in oversight of some the salary and wages procedures. Effect or Potential Effect: Salary expenditures that are not charged in accordance with the standards referenced above may be questioned or disallowed by the donor. Questioned Costs: Undetermined Context: This is a condition identified per review of the Center's compliance with the specified requirements using a statistically valid sample. Identification as a Repeat Finding: Not applicable. Recommendation: We recommend that management revisit its procedures for transferring data from the timekeeping system to the general ledger and implement proper internal controls to ensure that the amounts of salary expenditures charged to projects in the general ledger reconcile to the amounts calculated by the timekeeping system and current wages and salaries.We also recommend the payroll registers be reviewed and approved by management immediately upon receipt; any discrepancies or issues must be addressed with the accounting department within a timely period following the close of the payroll period. We also recommend that any change in the payroll allocation methodology be formalized in writing and incorporated into the accounting policies and procedures manual.
Finding 2023-003: Salaries and Wages (Allowable Costs) Federal Programs: All programs Criteria: According to 2 CFR Section 200.430(i), charges to Federal grants for salaries and wages must be based on records that accurately reflect the work performed and the records must: 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, not exceeding 100% of compensated activities; iv. Encompass Federally-assisted and all other activities compensated by the non-Federal entity on an integrated basis, but may include the use of subsidiary records as defined in the non-Federal entity’s written policy; v. Comply with the established accounting policies and practices of the non-Federal entity; vi. [Reserved] vii. Support the distribution of the employee’s salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. viii. Budget estimates (i.e., estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards.” Condition: The Center has a timekeeping system in place that provides for employees to record hours worked to specific cost objectives, including to US Government grants. However, we noted one instance the allocation amount as per the timekeeping system with the applicable compensation amount paid to the employee was different from the amounts ultimately recorded within the Center's general ledger. While the difference was not significant, this discrepancy indicate a deficiency in the internal controls around recording of salary expenditures to projects. We also noted the Center changed the payroll allocation methodology during the year under audit but this change was not documented in the policies and procedures. We also did not obtain evidence for review and approval of several payroll registers. Cause: During 2023, the Center's finance department turned over significantly, resulting in oversight of some the salary and wages procedures. Effect or Potential Effect: Salary expenditures that are not charged in accordance with the standards referenced above may be questioned or disallowed by the donor. Questioned Costs: Undetermined Context: This is a condition identified per review of the Center's compliance with the specified requirements using a statistically valid sample. Identification as a Repeat Finding: Not applicable. Recommendation: We recommend that management revisit its procedures for transferring data from the timekeeping system to the general ledger and implement proper internal controls to ensure that the amounts of salary expenditures charged to projects in the general ledger reconcile to the amounts calculated by the timekeeping system and current wages and salaries.We also recommend the payroll registers be reviewed and approved by management immediately upon receipt; any discrepancies or issues must be addressed with the accounting department within a timely period following the close of the payroll period. We also recommend that any change in the payroll allocation methodology be formalized in writing and incorporated into the accounting policies and procedures manual.
Finding 2023-003: Salaries and Wages (Allowable Costs) Federal Programs: All programs Criteria: According to 2 CFR Section 200.430(i), charges to Federal grants for salaries and wages must be based on records that accurately reflect the work performed and the records must: 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, not exceeding 100% of compensated activities; iv. Encompass Federally-assisted and all other activities compensated by the non-Federal entity on an integrated basis, but may include the use of subsidiary records as defined in the non-Federal entity’s written policy; v. Comply with the established accounting policies and practices of the non-Federal entity; vi. [Reserved] vii. Support the distribution of the employee’s salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. viii. Budget estimates (i.e., estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards.” Condition: The Center has a timekeeping system in place that provides for employees to record hours worked to specific cost objectives, including to US Government grants. However, we noted one instance the allocation amount as per the timekeeping system with the applicable compensation amount paid to the employee was different from the amounts ultimately recorded within the Center's general ledger. While the difference was not significant, this discrepancy indicate a deficiency in the internal controls around recording of salary expenditures to projects. We also noted the Center changed the payroll allocation methodology during the year under audit but this change was not documented in the policies and procedures. We also did not obtain evidence for review and approval of several payroll registers. Cause: During 2023, the Center's finance department turned over significantly, resulting in oversight of some the salary and wages procedures. Effect or Potential Effect: Salary expenditures that are not charged in accordance with the standards referenced above may be questioned or disallowed by the donor. Questioned Costs: Undetermined Context: This is a condition identified per review of the Center's compliance with the specified requirements using a statistically valid sample. Identification as a Repeat Finding: Not applicable. Recommendation: We recommend that management revisit its procedures for transferring data from the timekeeping system to the general ledger and implement proper internal controls to ensure that the amounts of salary expenditures charged to projects in the general ledger reconcile to the amounts calculated by the timekeeping system and current wages and salaries.We also recommend the payroll registers be reviewed and approved by management immediately upon receipt; any discrepancies or issues must be addressed with the accounting department within a timely period following the close of the payroll period. We also recommend that any change in the payroll allocation methodology be formalized in writing and incorporated into the accounting policies and procedures manual.
Finding 2023-003: Salaries and Wages (Allowable Costs) Federal Programs: All programs Criteria: According to 2 CFR Section 200.430(i), charges to Federal grants for salaries and wages must be based on records that accurately reflect the work performed and the records must: 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, not exceeding 100% of compensated activities; iv. Encompass Federally-assisted and all other activities compensated by the non-Federal entity on an integrated basis, but may include the use of subsidiary records as defined in the non-Federal entity’s written policy; v. Comply with the established accounting policies and practices of the non-Federal entity; vi. [Reserved] vii. Support the distribution of the employee’s salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. viii. Budget estimates (i.e., estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards.” Condition: The Center has a timekeeping system in place that provides for employees to record hours worked to specific cost objectives, including to US Government grants. However, we noted one instance the allocation amount as per the timekeeping system with the applicable compensation amount paid to the employee was different from the amounts ultimately recorded within the Center's general ledger. While the difference was not significant, this discrepancy indicate a deficiency in the internal controls around recording of salary expenditures to projects. We also noted the Center changed the payroll allocation methodology during the year under audit but this change was not documented in the policies and procedures. We also did not obtain evidence for review and approval of several payroll registers. Cause: During 2023, the Center's finance department turned over significantly, resulting in oversight of some the salary and wages procedures. Effect or Potential Effect: Salary expenditures that are not charged in accordance with the standards referenced above may be questioned or disallowed by the donor. Questioned Costs: Undetermined Context: This is a condition identified per review of the Center's compliance with the specified requirements using a statistically valid sample. Identification as a Repeat Finding: Not applicable. Recommendation: We recommend that management revisit its procedures for transferring data from the timekeeping system to the general ledger and implement proper internal controls to ensure that the amounts of salary expenditures charged to projects in the general ledger reconcile to the amounts calculated by the timekeeping system and current wages and salaries.We also recommend the payroll registers be reviewed and approved by management immediately upon receipt; any discrepancies or issues must be addressed with the accounting department within a timely period following the close of the payroll period. We also recommend that any change in the payroll allocation methodology be formalized in writing and incorporated into the accounting policies and procedures manual.
Finding 2023-003: Salaries and Wages (Allowable Costs) Federal Programs: All programs Criteria: According to 2 CFR Section 200.430(i), charges to Federal grants for salaries and wages must be based on records that accurately reflect the work performed and the records must: 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, not exceeding 100% of compensated activities; iv. Encompass Federally-assisted and all other activities compensated by the non-Federal entity on an integrated basis, but may include the use of subsidiary records as defined in the non-Federal entity’s written policy; v. Comply with the established accounting policies and practices of the non-Federal entity; vi. [Reserved] vii. Support the distribution of the employee’s salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. viii. Budget estimates (i.e., estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards.” Condition: The Center has a timekeeping system in place that provides for employees to record hours worked to specific cost objectives, including to US Government grants. However, we noted one instance the allocation amount as per the timekeeping system with the applicable compensation amount paid to the employee was different from the amounts ultimately recorded within the Center's general ledger. While the difference was not significant, this discrepancy indicate a deficiency in the internal controls around recording of salary expenditures to projects. We also noted the Center changed the payroll allocation methodology during the year under audit but this change was not documented in the policies and procedures. We also did not obtain evidence for review and approval of several payroll registers. Cause: During 2023, the Center's finance department turned over significantly, resulting in oversight of some the salary and wages procedures. Effect or Potential Effect: Salary expenditures that are not charged in accordance with the standards referenced above may be questioned or disallowed by the donor. Questioned Costs: Undetermined Context: This is a condition identified per review of the Center's compliance with the specified requirements using a statistically valid sample. Identification as a Repeat Finding: Not applicable. Recommendation: We recommend that management revisit its procedures for transferring data from the timekeeping system to the general ledger and implement proper internal controls to ensure that the amounts of salary expenditures charged to projects in the general ledger reconcile to the amounts calculated by the timekeeping system and current wages and salaries.We also recommend the payroll registers be reviewed and approved by management immediately upon receipt; any discrepancies or issues must be addressed with the accounting department within a timely period following the close of the payroll period. We also recommend that any change in the payroll allocation methodology be formalized in writing and incorporated into the accounting policies and procedures manual.
Finding 2023-003: Salaries and Wages (Allowable Costs) Federal Programs: All programs Criteria: According to 2 CFR Section 200.430(i), charges to Federal grants for salaries and wages must be based on records that accurately reflect the work performed and the records must: 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, not exceeding 100% of compensated activities; iv. Encompass Federally-assisted and all other activities compensated by the non-Federal entity on an integrated basis, but may include the use of subsidiary records as defined in the non-Federal entity’s written policy; v. Comply with the established accounting policies and practices of the non-Federal entity; vi. [Reserved] vii. Support the distribution of the employee’s salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. viii. Budget estimates (i.e., estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards.” Condition: The Center has a timekeeping system in place that provides for employees to record hours worked to specific cost objectives, including to US Government grants. However, we noted one instance the allocation amount as per the timekeeping system with the applicable compensation amount paid to the employee was different from the amounts ultimately recorded within the Center's general ledger. While the difference was not significant, this discrepancy indicate a deficiency in the internal controls around recording of salary expenditures to projects. We also noted the Center changed the payroll allocation methodology during the year under audit but this change was not documented in the policies and procedures. We also did not obtain evidence for review and approval of several payroll registers. Cause: During 2023, the Center's finance department turned over significantly, resulting in oversight of some the salary and wages procedures. Effect or Potential Effect: Salary expenditures that are not charged in accordance with the standards referenced above may be questioned or disallowed by the donor. Questioned Costs: Undetermined Context: This is a condition identified per review of the Center's compliance with the specified requirements using a statistically valid sample. Identification as a Repeat Finding: Not applicable. Recommendation: We recommend that management revisit its procedures for transferring data from the timekeeping system to the general ledger and implement proper internal controls to ensure that the amounts of salary expenditures charged to projects in the general ledger reconcile to the amounts calculated by the timekeeping system and current wages and salaries.We also recommend the payroll registers be reviewed and approved by management immediately upon receipt; any discrepancies or issues must be addressed with the accounting department within a timely period following the close of the payroll period. We also recommend that any change in the payroll allocation methodology be formalized in writing and incorporated into the accounting policies and procedures manual.
Finding 2023-003: Salaries and Wages (Allowable Costs) Federal Programs: All programs Criteria: According to 2 CFR Section 200.430(i), charges to Federal grants for salaries and wages must be based on records that accurately reflect the work performed and the records must: 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, not exceeding 100% of compensated activities; iv. Encompass Federally-assisted and all other activities compensated by the non-Federal entity on an integrated basis, but may include the use of subsidiary records as defined in the non-Federal entity’s written policy; v. Comply with the established accounting policies and practices of the non-Federal entity; vi. [Reserved] vii. Support the distribution of the employee’s salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. viii. Budget estimates (i.e., estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards.” Condition: The Center has a timekeeping system in place that provides for employees to record hours worked to specific cost objectives, including to US Government grants. However, we noted one instance the allocation amount as per the timekeeping system with the applicable compensation amount paid to the employee was different from the amounts ultimately recorded within the Center's general ledger. While the difference was not significant, this discrepancy indicate a deficiency in the internal controls around recording of salary expenditures to projects. We also noted the Center changed the payroll allocation methodology during the year under audit but this change was not documented in the policies and procedures. We also did not obtain evidence for review and approval of several payroll registers. Cause: During 2023, the Center's finance department turned over significantly, resulting in oversight of some the salary and wages procedures. Effect or Potential Effect: Salary expenditures that are not charged in accordance with the standards referenced above may be questioned or disallowed by the donor. Questioned Costs: Undetermined Context: This is a condition identified per review of the Center's compliance with the specified requirements using a statistically valid sample. Identification as a Repeat Finding: Not applicable. Recommendation: We recommend that management revisit its procedures for transferring data from the timekeeping system to the general ledger and implement proper internal controls to ensure that the amounts of salary expenditures charged to projects in the general ledger reconcile to the amounts calculated by the timekeeping system and current wages and salaries.We also recommend the payroll registers be reviewed and approved by management immediately upon receipt; any discrepancies or issues must be addressed with the accounting department within a timely period following the close of the payroll period. We also recommend that any change in the payroll allocation methodology be formalized in writing and incorporated into the accounting policies and procedures manual.
Section III – Federal Award Findings and Questioned Costs Finding: #2023-001 Program Title: Block Grants for Community Mental Health Services, Coronavirus State and Local Fiscal Recovery Funds Assistance Listing: 93.958, 21.027 Contract Grant Number: HHS000063200002 & HHS00477100002, 2023-02-02-0043 Federal Award Years: September 1, 2022 to August 31, 2024, March 1, 2023 to February 28, 2025 Federal Agency: U.S. Department of Health and Human Services, U.S. Department of Treasury Allowable Costs Type of Finding: Significant Deficiency and Other Noncompliance Criteria: 2 CFR part 200 establishes cost principles for determining costs applicable to Federal Awards and requires costs be adequately documented. In addition, 2 CFR section 200.430 establishes standards for documentation of personnel expenses with the terms and conditions of the federal award. These awards are subject to the requirements set forth in 45 CFR Part 75, which defines the standards for documentation of personnel expenses as charges to federal awards for salaries and wages must be based on records that accurately reflect the work performed. The records must support the distribution of the employee’s salary or wages among specific activities or cost objectives if the employee works on more than one federal award; a federal award and non-federal award, an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. Condition: Based on procedures performed, we identified payroll expenditures allocated among federal award programs that were not supported by the time and effort allocation certifications. As a result, verification documentation of payroll allocations across federal award programs was not obtained. Cause: Lack of documentation to support payroll allocations across federal award programs. Effect: Noncompliance with Allowable Costs compliance requirements of the Uniform Guidance and terms and conditions of the federal award. Repeat Finding: No Recommendation: We recommend Form Communities improve procedures for tracking and reporting of time allocations across federal award programs to ensure compliance with the compliance requirements and terms and conditions of federal awards. Views of Responsible Officials: Management agrees with the recommendations to improve tracking and reporting of time allocations across federal award programs to conform with the compliance requirements and terms and conditions of federal awards.
Section III – Federal Award Findings and Questioned Costs Finding: #2023-001 Program Title: Block Grants for Community Mental Health Services, Coronavirus State and Local Fiscal Recovery Funds Assistance Listing: 93.958, 21.027 Contract Grant Number: HHS000063200002 & HHS00477100002, 2023-02-02-0043 Federal Award Years: September 1, 2022 to August 31, 2024, March 1, 2023 to February 28, 2025 Federal Agency: U.S. Department of Health and Human Services, U.S. Department of Treasury Allowable Costs Type of Finding: Significant Deficiency and Other Noncompliance Criteria: 2 CFR part 200 establishes cost principles for determining costs applicable to Federal Awards and requires costs be adequately documented. In addition, 2 CFR section 200.430 establishes standards for documentation of personnel expenses with the terms and conditions of the federal award. These awards are subject to the requirements set forth in 45 CFR Part 75, which defines the standards for documentation of personnel expenses as charges to federal awards for salaries and wages must be based on records that accurately reflect the work performed. The records must support the distribution of the employee’s salary or wages among specific activities or cost objectives if the employee works on more than one federal award; a federal award and non-federal award, an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. Condition: Based on procedures performed, we identified payroll expenditures allocated among federal award programs that were not supported by the time and effort allocation certifications. As a result, verification documentation of payroll allocations across federal award programs was not obtained. Cause: Lack of documentation to support payroll allocations across federal award programs. Effect: Noncompliance with Allowable Costs compliance requirements of the Uniform Guidance and terms and conditions of the federal award. Repeat Finding: No Recommendation: We recommend Form Communities improve procedures for tracking and reporting of time allocations across federal award programs to ensure compliance with the compliance requirements and terms and conditions of federal awards. Views of Responsible Officials: Management agrees with the recommendations to improve tracking and reporting of time allocations across federal award programs to conform with the compliance requirements and terms and conditions of federal awards.
Federal Agencies: Department of Housing and Urban Development Federal Assistance Listing Numbers: 14.267 Program: Continuum of Care Program Award/Pass-Through Entity Identifying Numbers: 202212-01122, 202212-01115, DA-202212-01187, 202210-00966, DA-202212-01319 Criteria: The Uniform Guidance in 2 CFR §200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. Per 2 CFR §200.430 Compensation- Personal Services: “Standards for Documentation of Personnel Expenses (1) Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (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, not exceeding 100% of compensated activities; (iv) Encompass federally-assisted and all other activities compensated by the non-Federal entity on an integrated basis, but may include the use of subsidiary records as defined in the non- Federal entity’s written policy; (v) Comply with the established accounting policies and practices of the non-Federal entity; and (vi) [Reserved] (vii) Support the distribution of the employee’s salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. (viii) 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 charges made to a Federal award based on budget estimates. All necessary adjustment must be made such that the final amount charged to the Federal award is accurate, allowable, and properly allocated.” Condition: We noted that LifeWire allocated administrative payroll expenditures to Continuum of Care during 2023 based on budget allocation rates. There were no procedures in place to determine if a true-up was necessary from allocated costs. 27 timesheets were tested during the audit, of which five were charged based on budgets for the grant. Cause: LifeWire did not have policies and procedures in place to review and reconcile the estimated amounts of payroll expenditures charged to Continuum of Care to the actual expenditures incurred. Effect or Potential Effect: Without adequate controls in place to ensure costs based on budgeted allocations are reasonable and reconcile to the actual time spent on the program, LifeWire could incorrectly charge expenditures to the federal program, or not request appropriate reimbursement LifeWire is entitle to under the terms of the grant. Questioned Costs: Below reporting threshold. Context: This is a condition identified per review of LifeWire’s compliance with specified requirements not using a statistically valid sample. Payroll costs for administrative staff selected for testing totaled $1,185. Total payroll costs for the Continuum of Care grants in 2023 were $294,002. Any payroll costs not adequately supported by time and effort reports are considered questioned costs. Identification as a Repeat Finding: Not a repeat finding. Recommendation: We recommend that LifeWire implement policies and procedures to review for any necessary budget to actual adjustments, and we recommend that sufficient documentation be maintained to support any adjustments made as required by 2 CFR §200.430. Views of Responsible Officials: Management agrees with the finding. Management has modified policies and procedures to ensure staff time allocated to the grant is properly reviewed and approved.
Federal Agencies: Department of Housing and Urban Development Federal Assistance Listing Numbers: 14.267 Program: Continuum of Care Program Award/Pass-Through Entity Identifying Numbers: 202212-01122, 202212-01115, DA-202212-01187, 202210-00966, DA-202212-01319 Criteria: The Uniform Guidance in 2 CFR §200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. Per 2 CFR §200.430 Compensation- Personal Services: “Standards for Documentation of Personnel Expenses (1) Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (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, not exceeding 100% of compensated activities; (iv) Encompass federally-assisted and all other activities compensated by the non-Federal entity on an integrated basis, but may include the use of subsidiary records as defined in the non- Federal entity’s written policy; (v) Comply with the established accounting policies and practices of the non-Federal entity; and (vi) [Reserved] (vii) Support the distribution of the employee’s salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. (viii) 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 charges made to a Federal award based on budget estimates. All necessary adjustment must be made such that the final amount charged to the Federal award is accurate, allowable, and properly allocated.” Condition: We noted that LifeWire allocated administrative payroll expenditures to Continuum of Care during 2023 based on budget allocation rates. There were no procedures in place to determine if a true-up was necessary from allocated costs. 27 timesheets were tested during the audit, of which five were charged based on budgets for the grant. Cause: LifeWire did not have policies and procedures in place to review and reconcile the estimated amounts of payroll expenditures charged to Continuum of Care to the actual expenditures incurred. Effect or Potential Effect: Without adequate controls in place to ensure costs based on budgeted allocations are reasonable and reconcile to the actual time spent on the program, LifeWire could incorrectly charge expenditures to the federal program, or not request appropriate reimbursement LifeWire is entitle to under the terms of the grant. Questioned Costs: Below reporting threshold. Context: This is a condition identified per review of LifeWire’s compliance with specified requirements not using a statistically valid sample. Payroll costs for administrative staff selected for testing totaled $1,185. Total payroll costs for the Continuum of Care grants in 2023 were $294,002. Any payroll costs not adequately supported by time and effort reports are considered questioned costs. Identification as a Repeat Finding: Not a repeat finding. Recommendation: We recommend that LifeWire implement policies and procedures to review for any necessary budget to actual adjustments, and we recommend that sufficient documentation be maintained to support any adjustments made as required by 2 CFR §200.430. Views of Responsible Officials: Management agrees with the finding. Management has modified policies and procedures to ensure staff time allocated to the grant is properly reviewed and approved.
Federal Agencies: Department of Housing and Urban Development Federal Assistance Listing Numbers: 14.267 Program: Continuum of Care Program Award/Pass-Through Entity Identifying Numbers: 202212-01122, 202212-01115, DA-202212-01187, 202210-00966, DA-202212-01319 Criteria: The Uniform Guidance in 2 CFR §200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. Per 2 CFR §200.430 Compensation- Personal Services: “Standards for Documentation of Personnel Expenses (1) Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (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, not exceeding 100% of compensated activities; (iv) Encompass federally-assisted and all other activities compensated by the non-Federal entity on an integrated basis, but may include the use of subsidiary records as defined in the non- Federal entity’s written policy; (v) Comply with the established accounting policies and practices of the non-Federal entity; and (vi) [Reserved] (vii) Support the distribution of the employee’s salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. (viii) 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 charges made to a Federal award based on budget estimates. All necessary adjustment must be made such that the final amount charged to the Federal award is accurate, allowable, and properly allocated.” Condition: We noted that LifeWire allocated administrative payroll expenditures to Continuum of Care during 2023 based on budget allocation rates. There were no procedures in place to determine if a true-up was necessary from allocated costs. 27 timesheets were tested during the audit, of which five were charged based on budgets for the grant. Cause: LifeWire did not have policies and procedures in place to review and reconcile the estimated amounts of payroll expenditures charged to Continuum of Care to the actual expenditures incurred. Effect or Potential Effect: Without adequate controls in place to ensure costs based on budgeted allocations are reasonable and reconcile to the actual time spent on the program, LifeWire could incorrectly charge expenditures to the federal program, or not request appropriate reimbursement LifeWire is entitle to under the terms of the grant. Questioned Costs: Below reporting threshold. Context: This is a condition identified per review of LifeWire’s compliance with specified requirements not using a statistically valid sample. Payroll costs for administrative staff selected for testing totaled $1,185. Total payroll costs for the Continuum of Care grants in 2023 were $294,002. Any payroll costs not adequately supported by time and effort reports are considered questioned costs. Identification as a Repeat Finding: Not a repeat finding. Recommendation: We recommend that LifeWire implement policies and procedures to review for any necessary budget to actual adjustments, and we recommend that sufficient documentation be maintained to support any adjustments made as required by 2 CFR §200.430. Views of Responsible Officials: Management agrees with the finding. Management has modified policies and procedures to ensure staff time allocated to the grant is properly reviewed and approved.
Federal Agencies: Department of Housing and Urban Development Federal Assistance Listing Numbers: 14.267 Program: Continuum of Care Program Award/Pass-Through Entity Identifying Numbers: 202212-01122, 202212-01115, DA-202212-01187, 202210-00966, DA-202212-01319 Criteria: The Uniform Guidance in 2 CFR §200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. Per 2 CFR §200.430 Compensation- Personal Services: “Standards for Documentation of Personnel Expenses (1) Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (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, not exceeding 100% of compensated activities; (iv) Encompass federally-assisted and all other activities compensated by the non-Federal entity on an integrated basis, but may include the use of subsidiary records as defined in the non- Federal entity’s written policy; (v) Comply with the established accounting policies and practices of the non-Federal entity; and (vi) [Reserved] (vii) Support the distribution of the employee’s salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. (viii) 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 charges made to a Federal award based on budget estimates. All necessary adjustment must be made such that the final amount charged to the Federal award is accurate, allowable, and properly allocated.” Condition: We noted that LifeWire allocated administrative payroll expenditures to Continuum of Care during 2023 based on budget allocation rates. There were no procedures in place to determine if a true-up was necessary from allocated costs. 27 timesheets were tested during the audit, of which five were charged based on budgets for the grant. Cause: LifeWire did not have policies and procedures in place to review and reconcile the estimated amounts of payroll expenditures charged to Continuum of Care to the actual expenditures incurred. Effect or Potential Effect: Without adequate controls in place to ensure costs based on budgeted allocations are reasonable and reconcile to the actual time spent on the program, LifeWire could incorrectly charge expenditures to the federal program, or not request appropriate reimbursement LifeWire is entitle to under the terms of the grant. Questioned Costs: Below reporting threshold. Context: This is a condition identified per review of LifeWire’s compliance with specified requirements not using a statistically valid sample. Payroll costs for administrative staff selected for testing totaled $1,185. Total payroll costs for the Continuum of Care grants in 2023 were $294,002. Any payroll costs not adequately supported by time and effort reports are considered questioned costs. Identification as a Repeat Finding: Not a repeat finding. Recommendation: We recommend that LifeWire implement policies and procedures to review for any necessary budget to actual adjustments, and we recommend that sufficient documentation be maintained to support any adjustments made as required by 2 CFR §200.430. Views of Responsible Officials: Management agrees with the finding. Management has modified policies and procedures to ensure staff time allocated to the grant is properly reviewed and approved.
Federal Agencies: Department of Housing and Urban Development Federal Assistance Listing Numbers: 14.267 Program: Continuum of Care Program Award/Pass-Through Entity Identifying Numbers: 202212-01122, 202212-01115, DA-202212-01187, 202210-00966, DA-202212-01319 Criteria: The Uniform Guidance in 2 CFR §200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. Per 2 CFR §200.430 Compensation- Personal Services: “Standards for Documentation of Personnel Expenses (1) Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (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, not exceeding 100% of compensated activities; (iv) Encompass federally-assisted and all other activities compensated by the non-Federal entity on an integrated basis, but may include the use of subsidiary records as defined in the non- Federal entity’s written policy; (v) Comply with the established accounting policies and practices of the non-Federal entity; and (vi) [Reserved] (vii) Support the distribution of the employee’s salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. (viii) 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 charges made to a Federal award based on budget estimates. All necessary adjustment must be made such that the final amount charged to the Federal award is accurate, allowable, and properly allocated.” Condition: We noted that LifeWire allocated administrative payroll expenditures to Continuum of Care during 2023 based on budget allocation rates. There were no procedures in place to determine if a true-up was necessary from allocated costs. 27 timesheets were tested during the audit, of which five were charged based on budgets for the grant. Cause: LifeWire did not have policies and procedures in place to review and reconcile the estimated amounts of payroll expenditures charged to Continuum of Care to the actual expenditures incurred. Effect or Potential Effect: Without adequate controls in place to ensure costs based on budgeted allocations are reasonable and reconcile to the actual time spent on the program, LifeWire could incorrectly charge expenditures to the federal program, or not request appropriate reimbursement LifeWire is entitle to under the terms of the grant. Questioned Costs: Below reporting threshold. Context: This is a condition identified per review of LifeWire’s compliance with specified requirements not using a statistically valid sample. Payroll costs for administrative staff selected for testing totaled $1,185. Total payroll costs for the Continuum of Care grants in 2023 were $294,002. Any payroll costs not adequately supported by time and effort reports are considered questioned costs. Identification as a Repeat Finding: Not a repeat finding. Recommendation: We recommend that LifeWire implement policies and procedures to review for any necessary budget to actual adjustments, and we recommend that sufficient documentation be maintained to support any adjustments made as required by 2 CFR §200.430. Views of Responsible Officials: Management agrees with the finding. Management has modified policies and procedures to ensure staff time allocated to the grant is properly reviewed and approved.
Criteria Part 2, CFR Part 200.430 notes “Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed”. The document continues to state that documentation must “Support the distribution of the employee’s salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity.” Condition While performing tests of the Garden’s internal controls over payroll transactions, we noted the Garden had incorrectly allocated time of 8 of the 40 selections. Cause of Condition The Garden has not implemented proper internal control policies to adhere to the requirements of the Uniform Guidance. Effect of Condition Noncompliance may impact future funding from Federal awards. Recommendation We recommend the Garden implement proper internal control procedures to document hours worked, by employee, by grant; and maintain the documentation to support charges allocated to each Federal award.
Criteria Part 2, CFR Part 200.430 notes “Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed”. The document continues to state that documentation must “Support the distribution of the employee’s salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity.” Condition While performing tests of the Garden’s internal controls over payroll transactions, we noted the Garden had incorrectly allocated time of 8 of the 40 selections. Cause of Condition The Garden has not implemented proper internal control policies to adhere to the requirements of the Uniform Guidance. Effect of Condition Noncompliance may impact future funding from Federal awards. Recommendation We recommend the Garden implement proper internal control procedures to document hours worked, by employee, by grant; and maintain the documentation to support charges allocated to each Federal award.
Criteria Part 2, CFR Part 200.430 notes “Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed”. The document continues to state that documentation must “Support the distribution of the employee’s salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity.” Condition While performing tests of the Garden’s internal controls over payroll transactions, we noted the Garden had incorrectly allocated time of 8 of the 40 selections. Cause of Condition The Garden has not implemented proper internal control policies to adhere to the requirements of the Uniform Guidance. Effect of Condition Noncompliance may impact future funding from Federal awards. Recommendation We recommend the Garden implement proper internal control procedures to document hours worked, by employee, by grant; and maintain the documentation to support charges allocated to each Federal award.
Criteria Part 2, CFR Part 200.430 notes “Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed”. The document continues to state that documentation must “Support the distribution of the employee’s salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity.” Condition While performing tests of the Garden’s internal controls over payroll transactions, we noted the Garden had incorrectly allocated time of 8 of the 40 selections. Cause of Condition The Garden has not implemented proper internal control policies to adhere to the requirements of the Uniform Guidance. Effect of Condition Noncompliance may impact future funding from Federal awards. Recommendation We recommend the Garden implement proper internal control procedures to document hours worked, by employee, by grant; and maintain the documentation to support charges allocated to each Federal award.
Criteria Part 2, CFR Part 200.430 notes “Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed”. The document continues to state that documentation must “Support the distribution of the employee’s salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity.” Condition While performing tests of the Garden’s internal controls over payroll transactions, we noted the Garden had incorrectly allocated time of 8 of the 40 selections. Cause of Condition The Garden has not implemented proper internal control policies to adhere to the requirements of the Uniform Guidance. Effect of Condition Noncompliance may impact future funding from Federal awards. Recommendation We recommend the Garden implement proper internal control procedures to document hours worked, by employee, by grant; and maintain the documentation to support charges allocated to each Federal award.
Criteria Part 2, CFR Part 200.430 notes “Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed”. The document continues to state that documentation must “Support the distribution of the employee’s salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity.” Condition While performing tests of the Garden’s internal controls over payroll transactions, we noted the Garden had incorrectly allocated time of 8 of the 40 selections. Cause of Condition The Garden has not implemented proper internal control policies to adhere to the requirements of the Uniform Guidance. Effect of Condition Noncompliance may impact future funding from Federal awards. Recommendation We recommend the Garden implement proper internal control procedures to document hours worked, by employee, by grant; and maintain the documentation to support charges allocated to each Federal award.
Criteria Part 2, CFR Part 200.430 notes “Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed”. The document continues to state that documentation must “Support the distribution of the employee’s salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity.” Condition While performing tests of the Garden’s internal controls over payroll transactions, we noted the Garden had incorrectly allocated time of 8 of the 40 selections. Cause of Condition The Garden has not implemented proper internal control policies to adhere to the requirements of the Uniform Guidance. Effect of Condition Noncompliance may impact future funding from Federal awards. Recommendation We recommend the Garden implement proper internal control procedures to document hours worked, by employee, by grant; and maintain the documentation to support charges allocated to each Federal award.