2023-002. Allowable Costs/Cost Principles United States Department of Justice, Passed through New York State, Office of Victims Services Crime Victim Assistance ALN: 16.575 United States Department of Housing and Urban Development Continuum of Care Program ALN: 14.267 Criteria: Uniform Guidance 2 CFR 200.430, covers standards for documentation of compensationpersonal services. Charges to federal awards for salaries and wages must be based on records that accurately reflect the work performed and time spent. These records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Furthermore, these records should 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: The Organization charged costs for staff time without source documentation that complied with Uniform Guidance. Cause: The Organization used time records which did not clearly differentiate between the activities conducted and the hours worked to support compensation supported by each federal award and nonfederal awards. Potential Effect: Reimbursement for compensation under federal awards without time records, such as personnel activity equivalent reports, might result in the incorrect payment amount of payroll expenses. Questioned Costs: None reported. Identification of a Repeat Finding: This is a repeat finding related to the 2021 audit, finding #2021-002, related to the Crime Victim Assistance grant. Recommendation: The Organization should maintain Personnel Activity Reports (PAR) or equivalent documentation. This reporting of time will allow each employee to accurately reflect the time work is performed, for compensation which is funded by a federal award. Views of Responsible Officials of Auditee: The Organization agrees with the finding and will modify procedures to reflect actual time worked by employee on PAR equivalent documentation, which will serve as support for personnel expenses funded by a federal award.
Finding 2023-001: Failure to Maintain Proper Documentation of Time and Effort Reporting Condition Found: Carle did not have proper documentation of time and effort relating to personnel costs charged to the program. In testing of 40 selected payroll costs, Carle was unable to provide physical documentation of timesheets or other effort tracking for 16 samples to support the amounts allocated by percentage to the Illinois SOR2 award. Though Carle was able to provide rationale for the amounts allocated, including estimated time spent on the award, allocations do not meet standards for documentation of personnel expenses. Criteria or Requirement: 2 CFR 200.430(i) requires 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. Budget estimates alone do not qualify as support for charges to Federal awards. 2 CFR 200.303 requires non-Federal entities receiving Federal awards to establish and maintain internal controls designed to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements. Effective internal controls should include procedures to ensure time charged to federal grants is appropriately tracked and certified. Cause: In discussion with Carle management, internal controls were not effectively implemented at the organizational level or cascaded to department leadership. This was the first grant for the department and while internal controls were in place, it is clear they were not sufficient. Possible Asserted Effect: Failure to maintain appropriate documentation of personnel costs may lead to questioned costs or inaccurate reporting of federal expenditures. Repeat Finding: A similar finding was reported in the prior year audit (2022-001). Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendation: We recommend Carle evaluate its process for preparing and reviewing time tracking for federal awards and implement the procedures necessary to ensure documentation of personnel costs are complete and accurate. Views of Carle management: There is an understanding of this repeated finding, and a need for corrective action. Actions were taken in September 2023 when the finding was initially noted to improve internal controls and ensure compliance in maintaining proper documentation for time and effort reporting under federal awards.
Finding 2023-001: Failure to Maintain Proper Documentation of Time and Effort Reporting Condition Found: Carle did not have proper documentation of time and effort relating to personnel costs charged to the program. In testing of 40 selected payroll costs, Carle was unable to provide physical documentation of timesheets or other effort tracking for 16 samples to support the amounts allocated by percentage to the Illinois SOR2 award. Though Carle was able to provide rationale for the amounts allocated, including estimated time spent on the award, allocations do not meet standards for documentation of personnel expenses. Criteria or Requirement: 2 CFR 200.430(i) requires 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. Budget estimates alone do not qualify as support for charges to Federal awards. 2 CFR 200.303 requires non-Federal entities receiving Federal awards to establish and maintain internal controls designed to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements. Effective internal controls should include procedures to ensure time charged to federal grants is appropriately tracked and certified. Cause: In discussion with Carle management, internal controls were not effectively implemented at the organizational level or cascaded to department leadership. This was the first grant for the department and while internal controls were in place, it is clear they were not sufficient. Possible Asserted Effect: Failure to maintain appropriate documentation of personnel costs may lead to questioned costs or inaccurate reporting of federal expenditures. Repeat Finding: A similar finding was reported in the prior year audit (2022-001). Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendation: We recommend Carle evaluate its process for preparing and reviewing time tracking for federal awards and implement the procedures necessary to ensure documentation of personnel costs are complete and accurate. Views of Carle management: There is an understanding of this repeated finding, and a need for corrective action. Actions were taken in September 2023 when the finding was initially noted to improve internal controls and ensure compliance in maintaining proper documentation for time and effort reporting under federal awards.
Finding 2023-001: Failure to Maintain Proper Documentation of Time and Effort Reporting Condition Found: Carle did not have proper documentation of time and effort relating to personnel costs charged to the program. In testing of 40 selected payroll costs, Carle was unable to provide physical documentation of timesheets or other effort tracking for 16 samples to support the amounts allocated by percentage to the Illinois SOR2 award. Though Carle was able to provide rationale for the amounts allocated, including estimated time spent on the award, allocations do not meet standards for documentation of personnel expenses. Criteria or Requirement: 2 CFR 200.430(i) requires 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. Budget estimates alone do not qualify as support for charges to Federal awards. 2 CFR 200.303 requires non-Federal entities receiving Federal awards to establish and maintain internal controls designed to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements. Effective internal controls should include procedures to ensure time charged to federal grants is appropriately tracked and certified. Cause: In discussion with Carle management, internal controls were not effectively implemented at the organizational level or cascaded to department leadership. This was the first grant for the department and while internal controls were in place, it is clear they were not sufficient. Possible Asserted Effect: Failure to maintain appropriate documentation of personnel costs may lead to questioned costs or inaccurate reporting of federal expenditures. Repeat Finding: A similar finding was reported in the prior year audit (2022-001). Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendation: We recommend Carle evaluate its process for preparing and reviewing time tracking for federal awards and implement the procedures necessary to ensure documentation of personnel costs are complete and accurate. Views of Carle management: There is an understanding of this repeated finding, and a need for corrective action. Actions were taken in September 2023 when the finding was initially noted to improve internal controls and ensure compliance in maintaining proper documentation for time and effort reporting under federal awards.
Finding 2023-001: Failure to Maintain Proper Documentation of Time and Effort Reporting Condition Found: Carle did not have proper documentation of time and effort relating to personnel costs charged to the program. In testing of 40 selected payroll costs, Carle was unable to provide physical documentation of timesheets or other effort tracking for 16 samples to support the amounts allocated by percentage to the Illinois SOR2 award. Though Carle was able to provide rationale for the amounts allocated, including estimated time spent on the award, allocations do not meet standards for documentation of personnel expenses. Criteria or Requirement: 2 CFR 200.430(i) requires 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. Budget estimates alone do not qualify as support for charges to Federal awards. 2 CFR 200.303 requires non-Federal entities receiving Federal awards to establish and maintain internal controls designed to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements. Effective internal controls should include procedures to ensure time charged to federal grants is appropriately tracked and certified. Cause: In discussion with Carle management, internal controls were not effectively implemented at the organizational level or cascaded to department leadership. This was the first grant for the department and while internal controls were in place, it is clear they were not sufficient. Possible Asserted Effect: Failure to maintain appropriate documentation of personnel costs may lead to questioned costs or inaccurate reporting of federal expenditures. Repeat Finding: A similar finding was reported in the prior year audit (2022-001). Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendation: We recommend Carle evaluate its process for preparing and reviewing time tracking for federal awards and implement the procedures necessary to ensure documentation of personnel costs are complete and accurate. Views of Carle management: There is an understanding of this repeated finding, and a need for corrective action. Actions were taken in September 2023 when the finding was initially noted to improve internal controls and ensure compliance in maintaining proper documentation for time and effort reporting under federal awards.
Criteria: The Organization 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 200.303(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. 2 CFR 200.430(i) establishes the standards for documentation of personnel expenses including charges to Federal awards for salaries and wages. Charges must be based on records that accurately reflect the work performed with the records meeting the following standards: a) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. b) Be incorporated into the official records of the non-Federal entity. c) Reasonably reflect the total activity for which the employee is compensated by the non-Federal entity, not exceeding 100% of compensated activities. d) Encompass both 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. e) Comply with the established accounting policies and practices of the non-Federal entity. f) Support the distribution of the employee’s salary or wages among specific activities or cost objectives. g) Budget estimates alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes. Condition: Through testing over payroll expenditures management could not provide support to substantiate the rate of pay paid to one employee was approved by the President or Board of Directors. Additionally, six instances identified in which the employee’s wages that were billed to the federal award were billed at a higher hourly rate than the employee’s hourly rate with the Organization. Cause: There was a lapse in oversight of the internal control process ensuring management retained support of President or Board of Directors approval of employee’s salary. Effect: The Organization’s controls did not detect or correct the errors identified, which results in a reasonable possibility that the Organization could submit disallowed costs under the federal awards. Questioned Costs: No questioned costs over $25,000. Context/Sampling: A nonstatistical sample of 29 payroll transactions out of approximately 144 total payroll transactions, accounting for approximately $36,400 of $140,200 total payroll costs charged to federal program. Repeat Finding from Prior Year: No. Recommendation: We recommend management to review payroll policies and procedures over retaining approvals over employee’s salary. Views of Responsible Officials: Management is in agreement.
Item: 2023-002 Assistance Listing Number: 21.027 Programs: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Federal Agency: U.S. Department of the Treasury Pass-Through Agencies: Arizona State Office of the Governor; Maricopa County Pass-Through Grantor Identifying Number: Unknown Award Year: January 1, 2022 to December 31, 2024; January 28, 2022 to June 30, 2023 Compliance Requirement: Allowable Activities and Costs Criteria: In accordance with 2 CFR § 200.430 – Compensation – the entity’s system of internal controls should include a process to review after-the-fact interim charges made to federal awards based upon budget or allocation estimates. Condition: The entity’s system of internal controls did not include a process to review after-the-fact interim payroll charges made to federal awards based upon budget or allocation estimates. Questioned Costs: n/a Context: In a population of 232 payroll costs charged to the program, we conducted a non-statistical sample of 24 payroll costs charged to the program. In our sample of 24, we noted that all selections were charged to the program based on budget estimates. Payroll records and the nature of the Organization's programs evidenced that allowable cost and activities occurred such that costs charged to the program were supported. However, recordkeeping regarding the measurement of actual effort compared to budgeted or allocated effort was inadequate. As such, this is deemed to be a material weakness in internal control over compliance. Effect: The system of internal controls was not properly designed to detect potential adjustments needed to the amounts that were billed based upon budget or allocation estimates. Cause: Special Olympics Arizona, Inc. did not design processes and controls to perform the after-the-fact review. Identification as a Repeat Finding: Repeat finding of 2022-02 Recommendation: The entity should design processes and controls to perform the after-the-fact review or implement a process that will allow for billing of actual expenses rather than budgeted expenses. Views of Responsible Officials: Management of the Organization concurs with the finding. See Corrective Action Plan.
Item: 2023-002 Assistance Listing Number: 21.027 Programs: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Federal Agency: U.S. Department of the Treasury Pass-Through Agencies: Arizona State Office of the Governor; Maricopa County Pass-Through Grantor Identifying Number: Unknown Award Year: January 1, 2022 to December 31, 2024; January 28, 2022 to June 30, 2023 Compliance Requirement: Allowable Activities and Costs Criteria: In accordance with 2 CFR § 200.430 – Compensation – the entity’s system of internal controls should include a process to review after-the-fact interim charges made to federal awards based upon budget or allocation estimates. Condition: The entity’s system of internal controls did not include a process to review after-the-fact interim payroll charges made to federal awards based upon budget or allocation estimates. Questioned Costs: n/a Context: In a population of 232 payroll costs charged to the program, we conducted a non-statistical sample of 24 payroll costs charged to the program. In our sample of 24, we noted that all selections were charged to the program based on budget estimates. Payroll records and the nature of the Organization's programs evidenced that allowable cost and activities occurred such that costs charged to the program were supported. However, recordkeeping regarding the measurement of actual effort compared to budgeted or allocated effort was inadequate. As such, this is deemed to be a material weakness in internal control over compliance. Effect: The system of internal controls was not properly designed to detect potential adjustments needed to the amounts that were billed based upon budget or allocation estimates. Cause: Special Olympics Arizona, Inc. did not design processes and controls to perform the after-the-fact review. Identification as a Repeat Finding: Repeat finding of 2022-02 Recommendation: The entity should design processes and controls to perform the after-the-fact review or implement a process that will allow for billing of actual expenses rather than budgeted expenses. Views of Responsible Officials: Management of the Organization concurs with the finding. See Corrective Action Plan.
Item: 2023-003 Assistance Listing Number: 84.425U Programs: COVID-19 - American Rescue Plan – Elementary and Secondary School Emergency Relief (ARP ESSER) Federal Agency: U.S. Department of Education Pass-Through Agencies: Arizona Department of Education Pass-Through Grantor Identifying Number: Unknown Award Year: April 19, 2022 to September 30, 2024 Compliance Requirement: Allowable Activities and Costs Criteria: In accordance with 2 CFR § 200.430 – Compensation – the entity’s system of internal controls should include a process to review after-the-fact interim charges made to federal awards based upon budget or allocation estimates. Condition: The entity’s system of internal controls did not include a process to review after-the-fact interim payroll charges made to federal awards based upon budget or allocation estimates. Questioned Costs: n/a Context: In a population of 225 payroll costs charged to the program, we conducted a non-statistical sample of 23 payroll costs charged to the program. In our sample of 23, we noted that all selections were charged to the program based on estimated allocations determined in advance based on job descriptions and duties. We noted that actual time incurred was not used to charge expenditures to the program. Payroll records and the nature of the Organization's programs evidenced that allowable cost and activities occurred such that costs charged to the program were supported. However, recordkeeping regarding the measurement of actual effort compared to budgeted or allocated effort was inadequate. As such, this is deemed to be a material weakness in internal control over compliance. Effect: The system of internal controls was not properly designed to detect potential adjustments needed to the amounts that were billed based upon budget or allocation estimates. Cause: Special Olympics Arizona, Inc. did not design processes and controls to perform the after-the-fact review. Identification as a Repeat Finding: Repeat finding of 2022-03 Recommendation: The entity should design processes and controls to perform the after-the-fact review or implement a process that will allow for billing of actual expenses rather than budgeted expenses. Views of Responsible Officials: Management of the Organization concurs with the finding. See Corrective Action Plan.
Criteria: 2 CFR 200.430 established that all salaries and wages charged to Federal awards must be supported by a system of internal controls that provides reasonable assurance that the personnel costs incurred are accurate, allowable, and properly allocated. This includes a system to demonstrate that total compensation paid to individual employees is reasonable according to the work performed. Condition: During audit procedures, we tested 40 payroll costs charged to the ALN 93.224 Health Center Program Cluster. Time and effort reporting could not be located for any of the charges which documented the distribution of the employee’s salary and wages among specific grants by work performed. Cause: The Organization changed payroll systems during the year and did not implement procedures to properly track time and effort under the new system. Effect: The federal award may be overcharged or undercharged if actual effort differs from time charged to the award. Questioned Costs: $2,208,169 Context/Sampling: A sample of 40 payroll transactions were selected for testing representing $111,753 in payroll charges. A timecard was obtained for all selected transactions which verified that the employees worked the hours to support the charges to the grant. While the timecards reflected total hours worked, none of the timecards tested included detail that reflected the time spent working on the specific federal award. The sample was not, and was not intended to be, a statistically valid sample. Repeat Finding: No Recommendation: Management should establish policies and procedures that are consistent with the Uniform Guidance administrative requirements with regards to compensation and allowable costs which includes ensuring time and effort charges are based on records that accurately reflect the work performed. Views of Responsible Officials and Planned Corrective Action: There is no disagreement with the audit finding.
Criteria: 2 CFR 200.430 established that all salaries and wages charged to Federal awards must be supported by a system of internal controls that provides reasonable assurance that the personnel costs incurred are accurate, allowable, and properly allocated. This includes a system to demonstrate that total compensation paid to individual employees is reasonable according to the work performed. Condition: During audit procedures, we tested 40 payroll costs charged to the ALN 93.224 Health Center Program Cluster. Time and effort reporting could not be located for any of the charges which documented the distribution of the employee’s salary and wages among specific grants by work performed. Cause: The Organization changed payroll systems during the year and did not implement procedures to properly track time and effort under the new system. Effect: The federal award may be overcharged or undercharged if actual effort differs from time charged to the award. Questioned Costs: $2,208,169 Context/Sampling: A sample of 40 payroll transactions were selected for testing representing $111,753 in payroll charges. A timecard was obtained for all selected transactions which verified that the employees worked the hours to support the charges to the grant. While the timecards reflected total hours worked, none of the timecards tested included detail that reflected the time spent working on the specific federal award. The sample was not, and was not intended to be, a statistically valid sample. Repeat Finding: No Recommendation: Management should establish policies and procedures that are consistent with the Uniform Guidance administrative requirements with regards to compensation and allowable costs which includes ensuring time and effort charges are based on records that accurately reflect the work performed. Views of Responsible Officials and Planned Corrective Action: There is no disagreement with the audit finding.
2023-003 Twenty-First Century Community Learning Centers – Assistance Listing No. 84.287 Material Weakness in Internal Control Over Compliance and Noncompliance – A. Activities Allowed or Unallowed and B. Allowable Costs/Cost Principles Criteria: 2 CFR 200.430(i) indicates costs must be based on records that accurately reflect the work performed to be considered allowable. These records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Condition and Context: We selected a sample of 25 instances of time allocated to the grant. We noted 20 instances where time allocated to the grant which lacked formal review of the time allocated. We noted 1 instance of time allocated which lacked adequate documentation resulting in questioned costs of $689. We identified likely questioned costs of $20,367 based on applying an error rate of 4.71% from our sample. Our sample was not statistically valid. Cause and Effect: Policies and procedures were inconsistently applied to personnel costs, resulting in questioned costs. Recommendation: We recommend that the Organization establish a formal documentation process to ensure personnel costs are adequately documented, reviewed, and allocated to the federal award. Views of Responsible Officials and Planned Corrective Action: We agree with the recommendation and plan to have corrective action implemented by December 31, 2024. An updated timesheet policy with the correct wording will be created by the Finance Board Subcommitee at the October meeting, presented to the full Board of Directors at the November Board meeting and voted on at the December 2024 Board meeting.
Noncompliance and material weakness in internal control over compliance with allowable costs/cost principles requirements. Federal Agency: United States Department of Treasury Assistance Listing Number: 21.027 Assistance Listing Name: Coronavirus State and Local Fiscal Recovery Award Number: DA-202212-01096 Award Year: January 1, 2023 through December 31, 2023 Name of Pass-Through Entity: King County Regional Homelessness Authority Criteria Nonfederal entities must follow the standards for documentation of personnel expenses set out at 2 CFR section 200.430(i). Under those standards, charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. Additionally, those standards require that the records a) reasonably reflect the total activity for which the employee is compensated by the nonfederal entity, not exceeding 100% of compensated activities; b) 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 nonfederal 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; and c) budget estimates (i.e., estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards. Condition During our testing of the payroll costs charged to the major program, we noted that ACLT is allocating payroll costs for individual employees using budget estimates of time and effort on different activities. ACLT does not maintain after-the-fact documentation of time spent for each employee to support the allocations. Additionally, during our testing of wage rates we noted that ACLT did not maintain adequate documentation of approved wage rates for each employee charged to the Federal program in that the wage rates were not supported by the personnel/employee status change form as required by ACLT’s system of internal control. Cause ACLT’s system of internal control is not designed appropriately as it does not include capturing and documenting an after-the-fact determination of time and effort for each employee on different activities. A ACLT’s system of internal control was not operating effectively as ACLT did not retain a fully completed and approved personnel/employee status change form to support the current wage rate for each employee. Effect The effect is that ACLT is not in compliance with the requirements of 2 CFR section 200.430(i). Payroll costs charged to the major program are not supported by documentation evidencing that those costs reasonably reflect the work performed on the activity. Questioned Costs The total expenditures of $2,200,000 charged to the major program in 2023 are for payroll costs and related fringe benefits. Context ACLT maintains a timekeeping and payroll system for charges to federal awards that documents approved wage and salary rates, hours, and actual amounts paid to employees. However, the system does not include the documentation required in 2 CFR section 200.430(i) specifically related to documenting actual time and effort performed on different activities. The payroll charged to the major program includes a mix of employees that work 100% of their time on the major program activity and other employees that allocate their total hours to the major program activity and other activities. Of the $1,833,304 of gross payroll cost charged to the major program in 2023, 75.8% of that cost relates to employees that work 100% of their time on the major program activity; the remaining 24.2% of the cost relates to employees that allocate their total hours to the major program activity and other activities. Additionally, ACLT’s system of internal control is designed to have a personnel/employee status change form completed and approved to evidence the current wage rate for each employee. During our audit we noted that this form was not consistently completed for each employee with wages charged to the Federal program. Repeat Finding This is not a repeat finding. Recommendation We recommend management update its payroll system to add procedures to capture and document an after-thefact determination of work effort for each employee to support the percentage of payroll cost allocated to federal programs. Examples of such documentation that management consider include: a) monthly time sheets signed by the employee and employee’s supervisor documenting actual time and effort spent on different activities, or b) the procedures outlined in 2 CFR section 200.430(i)(1)(viii) to support the use of budgeted estimates. Additionally, we recommend management review its procedures to ensure that the personnel/employee status change form is completed and approved for each employee upon hire as well as when each employee’s salary or wage rate is adjusted. Views of Responsible Officials and Corrective Action Plan Management agrees with the finding and has provided the accompanying corrective action plan.
Federal Agency: U.S. Department of Treasury Federal Program: CDFI Equitable Recovery Program (ERP) Assistance Listing Numbers: 21.033 Federal Award Identification Number and Year: 22ERP061482 – 2023 Award Period: January 1, 2023 – December 31, 2023 Type of Finding: Material weakness in Internal Control over Compliance Compliance - Other Matter Criteria or Specific Requirement: Standards for documentation of personnel expenses are defined in the federal regulations under 2 CFR section 200.430(i) which state “charges to federal awards for salaries and wages must be based on records that accurately reflect the work performed”. This requires federal grant recipients to have “a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated”. Condition: Lack of documented time and effort reporting for employee time/ wages charged to the federal grant. Questioned Costs: None Context: Of the twenty-six payroll transactions tested, all lacked after-the-fact time and effort documentation to adequately support management’s allocation of wages to the federal grant. We noted all employees tested were full-time salaried employees and a portion of those wages were charged to the ERP award. Additionally, loan records indicated these employees were involved in underwriting, originating, or providing ongoing technical assistance for ERP funded loans as well as other ERP qualifying loans. Cause: Management did not have a system in place to track time and effort in order to demonstrate the allocation of wages and benefits by grant. Management believed their payroll register alone adequately supported the wages charged given the employees position and role within the organization. Effect: Without after-the-fact documentation People Trust is not meeting the federal regulations around time and effort. Therefore, it’s possible the allocation of the employees time is not accurate. Repeat Finding: No Recommendation: We recommend management develop procedures requiring employees to track their time and effort by grant. Another individual should periodically review and approve these time and effort records before the reimbursement request is sent to the funding agency. Views of Responsible Officials: There is no disagreement with the audit finding.
Finding 2023-004, Material Weakness, Allowable Costs Identification of federal program : U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES 93.224 and 93.527 Health Center Program Cluster Criteria: 2 CFR 200.430(i) requires the auditee to establish and maintain effective internal control over the allocation of personnel expenses whereby charges to Federal awards for personnel-related expenditures are supported by official records of 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. Budget estimates alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that: 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: Payroll expenses were charged to the award based on budget estimates. Cause: The Organization uses a spreadsheet, prepared annually, to document the allocation of personnel costs charged across federal and other awards and indirect cost centers. Time and effort reports were not maintained or reviewed to support the allocation of personnel costs. Effect: The Organization was unable to provide documentation of time and effort for personnel who were not 100% charged to the federal award. Questioned costs: None. Context: Total compensation charged to federal awards was tested for 9 out of 88 total employees charged to federal awards. 7 of the 9 employees tested were charged to more than one federal award, non-federal awards or other indirect cost centers. Total personnel costs allocated to the Health Center Cluster were $3,800,769. Recommendation: We recommend that the Organization implement periodic time and effort reports to track employee allocations among federal awards, non-federal awards and indirect cost centers. We recommend that time and effort reports be reviewed by employee supervisors to ensure employee allocations are reflective of actual work performed and payroll allocation changes are made timely to reflect changes in employee duties. All necessary adjustments should be made to financial records to reflect the final amount charged to the Federal award reflects actual work performed. Views of responsible officials and planned corrective actions: See attached corrective action plan.
Finding 2023-004, Material Weakness, Allowable Costs Identification of federal program : U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES 93.224 and 93.527 Health Center Program Cluster Criteria: 2 CFR 200.430(i) requires the auditee to establish and maintain effective internal control over the allocation of personnel expenses whereby charges to Federal awards for personnel-related expenditures are supported by official records of 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. Budget estimates alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that: 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: Payroll expenses were charged to the award based on budget estimates. Cause: The Organization uses a spreadsheet, prepared annually, to document the allocation of personnel costs charged across federal and other awards and indirect cost centers. Time and effort reports were not maintained or reviewed to support the allocation of personnel costs. Effect: The Organization was unable to provide documentation of time and effort for personnel who were not 100% charged to the federal award. Questioned costs: None. Context: Total compensation charged to federal awards was tested for 9 out of 88 total employees charged to federal awards. 7 of the 9 employees tested were charged to more than one federal award, non-federal awards or other indirect cost centers. Total personnel costs allocated to the Health Center Cluster were $3,800,769. Recommendation: We recommend that the Organization implement periodic time and effort reports to track employee allocations among federal awards, non-federal awards and indirect cost centers. We recommend that time and effort reports be reviewed by employee supervisors to ensure employee allocations are reflective of actual work performed and payroll allocation changes are made timely to reflect changes in employee duties. All necessary adjustments should be made to financial records to reflect the final amount charged to the Federal award reflects actual work performed. Views of responsible officials and planned corrective actions: See attached corrective action plan.
Finding 2023-004, Material Weakness, Allowable Costs Identification of federal program : U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES 93.224 and 93.527 Health Center Program Cluster Criteria: 2 CFR 200.430(i) requires the auditee to establish and maintain effective internal control over the allocation of personnel expenses whereby charges to Federal awards for personnel-related expenditures are supported by official records of 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. Budget estimates alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that: 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: Payroll expenses were charged to the award based on budget estimates. Cause: The Organization uses a spreadsheet, prepared annually, to document the allocation of personnel costs charged across federal and other awards and indirect cost centers. Time and effort reports were not maintained or reviewed to support the allocation of personnel costs. Effect: The Organization was unable to provide documentation of time and effort for personnel who were not 100% charged to the federal award. Questioned costs: None. Context: Total compensation charged to federal awards was tested for 9 out of 88 total employees charged to federal awards. 7 of the 9 employees tested were charged to more than one federal award, non-federal awards or other indirect cost centers. Total personnel costs allocated to the Health Center Cluster were $3,800,769. Recommendation: We recommend that the Organization implement periodic time and effort reports to track employee allocations among federal awards, non-federal awards and indirect cost centers. We recommend that time and effort reports be reviewed by employee supervisors to ensure employee allocations are reflective of actual work performed and payroll allocation changes are made timely to reflect changes in employee duties. All necessary adjustments should be made to financial records to reflect the final amount charged to the Federal award reflects actual work performed. Views of responsible officials and planned corrective actions: See attached corrective action plan.
Finding 2023-004, Material Weakness, Allowable Costs Identification of federal program : U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES 93.224 and 93.527 Health Center Program Cluster Criteria: 2 CFR 200.430(i) requires the auditee to establish and maintain effective internal control over the allocation of personnel expenses whereby charges to Federal awards for personnel-related expenditures are supported by official records of 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. Budget estimates alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that: 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: Payroll expenses were charged to the award based on budget estimates. Cause: The Organization uses a spreadsheet, prepared annually, to document the allocation of personnel costs charged across federal and other awards and indirect cost centers. Time and effort reports were not maintained or reviewed to support the allocation of personnel costs. Effect: The Organization was unable to provide documentation of time and effort for personnel who were not 100% charged to the federal award. Questioned costs: None. Context: Total compensation charged to federal awards was tested for 9 out of 88 total employees charged to federal awards. 7 of the 9 employees tested were charged to more than one federal award, non-federal awards or other indirect cost centers. Total personnel costs allocated to the Health Center Cluster were $3,800,769. Recommendation: We recommend that the Organization implement periodic time and effort reports to track employee allocations among federal awards, non-federal awards and indirect cost centers. We recommend that time and effort reports be reviewed by employee supervisors to ensure employee allocations are reflective of actual work performed and payroll allocation changes are made timely to reflect changes in employee duties. All necessary adjustments should be made to financial records to reflect the final amount charged to the Federal award reflects actual work performed. Views of responsible officials and planned corrective actions: See attached corrective action plan.
Finding 2023-004, Material Weakness, Allowable Costs Identification of federal program : U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES 93.224 and 93.527 Health Center Program Cluster Criteria: 2 CFR 200.430(i) requires the auditee to establish and maintain effective internal control over the allocation of personnel expenses whereby charges to Federal awards for personnel-related expenditures are supported by official records of 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. Budget estimates alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that: 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: Payroll expenses were charged to the award based on budget estimates. Cause: The Organization uses a spreadsheet, prepared annually, to document the allocation of personnel costs charged across federal and other awards and indirect cost centers. Time and effort reports were not maintained or reviewed to support the allocation of personnel costs. Effect: The Organization was unable to provide documentation of time and effort for personnel who were not 100% charged to the federal award. Questioned costs: None. Context: Total compensation charged to federal awards was tested for 9 out of 88 total employees charged to federal awards. 7 of the 9 employees tested were charged to more than one federal award, non-federal awards or other indirect cost centers. Total personnel costs allocated to the Health Center Cluster were $3,800,769. Recommendation: We recommend that the Organization implement periodic time and effort reports to track employee allocations among federal awards, non-federal awards and indirect cost centers. We recommend that time and effort reports be reviewed by employee supervisors to ensure employee allocations are reflective of actual work performed and payroll allocation changes are made timely to reflect changes in employee duties. All necessary adjustments should be made to financial records to reflect the final amount charged to the Federal award reflects actual work performed. Views of responsible officials and planned corrective actions: See attached corrective action plan.
Criteria: In accordance with 2 CFR Section 200.430.8(i), charges to Federal awards for salaries and wages must be based on records that reflect the actual work performed. The charges must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated, and must be incorporated into the official records of the non-Federal entity. In addition, 2 CFR Section 200.430.8(i)(viii) states that budget estimates alone do not qualify as support for charges to Federal awards, but may be used for interim accounting, provided certain additional internal controls are implemented. Condition: During our testing of salaries and wages, we noted that all 174 sampled transactions did not have adequate supporting documentation. Charges to Federal awards for salaries and wages were based on estimated allocations, rather than use of a system of internal controls that accounts for actual time and effort allocations. Cause: While there is a time keeping system implemented to track daily hours worked by employees, the Corporation’s current internal control system does not allow for specific coding for time actually spent on each federally funded program that would support the amount charged to the Federal award. Effect or Potential Effect: We were unable to determine whether charges to Federal awards for salaries and wages reflect specific time worked or amounts allocated by employee to specific Federal programs. Allowable costs incurred by the Corporation exceeded the amount of approved grant funding, therefore no questioned costs are reported. Questioned costs: Unknown Context: We selected 174 salary transactions charged to the Federal programs to test controls over allowable costs. All transactions charged to the Federal programs were based on budgeted Full Time Equivalents (FTE), and not actual hours employees worked for each Federal program. No analysis or true-up was performed to determine the accuracy of employee titles or amounts charged versus actual time and effort incurred. This is a condition identified per review of the Corporation’s compliance with specified requirements using a statistically valid sample. Repeat finding: This is a repeat finding from prior year. This was reported as finding 2022-005 in the 2022 report. Recommendation: We recommend the Corporation develop and incorporate internal controls in order to track specific time spent on each Federal program. This can include, time and effort reports completed on a routine basis, such as monthly, and adjust program expenditures as needed to properly reflect actual work performed. Completed time and effort reports should be reviewed and verified by management for accuracy. View of Responsible Officials: Due to turnover of several key financial executives and personnel, the Corporation did not maintain evidence of approval of salary and wage allocations.
Criteria: In accordance with 2 CFR Section 200.430.8(i), charges to Federal awards for salaries and wages must be based on records that reflect the actual work performed. The charges must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated, and must be incorporated into the official records of the non-Federal entity. In addition, 2 CFR Section 200.430.8(i)(viii) states that budget estimates alone do not qualify as support for charges to Federal awards, but may be used for interim accounting, provided certain additional internal controls are implemented. Condition: During our testing of salaries and wages, we noted that all 174 sampled transactions did not have adequate supporting documentation. Charges to Federal awards for salaries and wages were based on estimated allocations, rather than use of a system of internal controls that accounts for actual time and effort allocations. Cause: While there is a time keeping system implemented to track daily hours worked by employees, the Corporation’s current internal control system does not allow for specific coding for time actually spent on each federally funded program that would support the amount charged to the Federal award. Effect or Potential Effect: We were unable to determine whether charges to Federal awards for salaries and wages reflect specific time worked or amounts allocated by employee to specific Federal programs. Allowable costs incurred by the Corporation exceeded the amount of approved grant funding, therefore no questioned costs are reported. Questioned costs: Unknown Context: We selected 174 salary transactions charged to the Federal programs to test controls over allowable costs. All transactions charged to the Federal programs were based on budgeted Full Time Equivalents (FTE), and not actual hours employees worked for each Federal program. No analysis or true-up was performed to determine the accuracy of employee titles or amounts charged versus actual time and effort incurred. This is a condition identified per review of the Corporation’s compliance with specified requirements using a statistically valid sample. Repeat finding: This is a repeat finding from prior year. This was reported as finding 2022-005 in the 2022 report. Recommendation: We recommend the Corporation develop and incorporate internal controls in order to track specific time spent on each Federal program. This can include, time and effort reports completed on a routine basis, such as monthly, and adjust program expenditures as needed to properly reflect actual work performed. Completed time and effort reports should be reviewed and verified by management for accuracy. View of Responsible Officials: Due to turnover of several key financial executives and personnel, the Corporation did not maintain evidence of approval of salary and wage allocations.
Criteria: In accordance with 2 CFR Section 200.430.8(i), charges to Federal awards for salaries and wages must be based on records that reflect the actual work performed. The charges must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated, and must be incorporated into the official records of the non-Federal entity. In addition, 2 CFR Section 200.430.8(i)(viii) states that budget estimates alone do not qualify as support for charges to Federal awards, but may be used for interim accounting, provided certain additional internal controls are implemented. Condition: During our testing of salaries and wages, we noted that all 174 sampled transactions did not have adequate supporting documentation. Charges to Federal awards for salaries and wages were based on estimated allocations, rather than use of a system of internal controls that accounts for actual time and effort allocations. Cause: While there is a time keeping system implemented to track daily hours worked by employees, the Corporation’s current internal control system does not allow for specific coding for time actually spent on each federally funded program that would support the amount charged to the Federal award. Effect or Potential Effect: We were unable to determine whether charges to Federal awards for salaries and wages reflect specific time worked or amounts allocated by employee to specific Federal programs. Allowable costs incurred by the Corporation exceeded the amount of approved grant funding, therefore no questioned costs are reported. Questioned costs: Unknown Context: We selected 174 salary transactions charged to the Federal programs to test controls over allowable costs. All transactions charged to the Federal programs were based on budgeted Full Time Equivalents (FTE), and not actual hours employees worked for each Federal program. No analysis or true-up was performed to determine the accuracy of employee titles or amounts charged versus actual time and effort incurred. This is a condition identified per review of the Corporation’s compliance with specified requirements using a statistically valid sample. Repeat finding: This is a repeat finding from prior year. This was reported as finding 2022-005 in the 2022 report. Recommendation: We recommend the Corporation develop and incorporate internal controls in order to track specific time spent on each Federal program. This can include, time and effort reports completed on a routine basis, such as monthly, and adjust program expenditures as needed to properly reflect actual work performed. Completed time and effort reports should be reviewed and verified by management for accuracy. View of Responsible Officials: Due to turnover of several key financial executives and personnel, the Corporation did not maintain evidence of approval of salary and wage allocations.
Criteria: In accordance with 2 CFR Section 200.430.8(i), charges to Federal awards for salaries and wages must be based on records that reflect the actual work performed. The charges must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated, and must be incorporated into the official records of the non-Federal entity. In addition, 2 CFR Section 200.430.8(i)(viii) states that budget estimates alone do not qualify as support for charges to Federal awards, but may be used for interim accounting, provided certain additional internal controls are implemented. Condition: During our testing of salaries and wages, we noted that all 174 sampled transactions did not have adequate supporting documentation. Charges to Federal awards for salaries and wages were based on estimated allocations, rather than use of a system of internal controls that accounts for actual time and effort allocations. Cause: While there is a time keeping system implemented to track daily hours worked by employees, the Corporation’s current internal control system does not allow for specific coding for time actually spent on each federally funded program that would support the amount charged to the Federal award. Effect or Potential Effect: We were unable to determine whether charges to Federal awards for salaries and wages reflect specific time worked or amounts allocated by employee to specific Federal programs. Allowable costs incurred by the Corporation exceeded the amount of approved grant funding, therefore no questioned costs are reported. Questioned costs: Unknown Context: We selected 174 salary transactions charged to the Federal programs to test controls over allowable costs. All transactions charged to the Federal programs were based on budgeted Full Time Equivalents (FTE), and not actual hours employees worked for each Federal program. No analysis or true-up was performed to determine the accuracy of employee titles or amounts charged versus actual time and effort incurred. This is a condition identified per review of the Corporation’s compliance with specified requirements using a statistically valid sample. Repeat finding: This is a repeat finding from prior year. This was reported as finding 2022-005 in the 2022 report. Recommendation: We recommend the Corporation develop and incorporate internal controls in order to track specific time spent on each Federal program. This can include, time and effort reports completed on a routine basis, such as monthly, and adjust program expenditures as needed to properly reflect actual work performed. Completed time and effort reports should be reviewed and verified by management for accuracy. View of Responsible Officials: Due to turnover of several key financial executives and personnel, the Corporation did not maintain evidence of approval of salary and wage allocations.
Criteria: In accordance with 2 CFR Section 200.430.8(i), charges to Federal awards for salaries and wages must be based on records that reflect the actual work performed. The charges must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated, and must be incorporated into the official records of the non-Federal entity. In addition, 2 CFR Section 200.430.8(i)(viii) states that budget estimates alone do not qualify as support for charges to Federal awards, but may be used for interim accounting, provided certain additional internal controls are implemented. Condition: During our testing of salaries and wages, we noted that all 174 sampled transactions did not have adequate supporting documentation. Charges to Federal awards for salaries and wages were based on estimated allocations, rather than use of a system of internal controls that accounts for actual time and effort allocations. Cause: While there is a time keeping system implemented to track daily hours worked by employees, the Corporation’s current internal control system does not allow for specific coding for time actually spent on each federally funded program that would support the amount charged to the Federal award. Effect or Potential Effect: We were unable to determine whether charges to Federal awards for salaries and wages reflect specific time worked or amounts allocated by employee to specific Federal programs. Allowable costs incurred by the Corporation exceeded the amount of approved grant funding, therefore no questioned costs are reported. Questioned costs: Unknown Context: We selected 174 salary transactions charged to the Federal programs to test controls over allowable costs. All transactions charged to the Federal programs were based on budgeted Full Time Equivalents (FTE), and not actual hours employees worked for each Federal program. No analysis or true-up was performed to determine the accuracy of employee titles or amounts charged versus actual time and effort incurred. This is a condition identified per review of the Corporation’s compliance with specified requirements using a statistically valid sample. Repeat finding: This is a repeat finding from prior year. This was reported as finding 2022-005 in the 2022 report. Recommendation: We recommend the Corporation develop and incorporate internal controls in order to track specific time spent on each Federal program. This can include, time and effort reports completed on a routine basis, such as monthly, and adjust program expenditures as needed to properly reflect actual work performed. Completed time and effort reports should be reviewed and verified by management for accuracy. View of Responsible Officials: Due to turnover of several key financial executives and personnel, the Corporation did not maintain evidence of approval of salary and wage allocations.
Criteria: In accordance with 2 CFR Section 200.430.8(i), charges to Federal awards for salaries and wages must be based on records that reflect the actual work performed. The charges must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated, and must be incorporated into the official records of the non-Federal entity. In addition, 2 CFR Section 200.430.8(i)(viii) states that budget estimates alone do not qualify as support for charges to Federal awards, but may be used for interim accounting, provided certain additional internal controls are implemented. Condition: During our testing of salaries and wages, we noted that all 174 sampled transactions did not have adequate supporting documentation. Charges to Federal awards for salaries and wages were based on estimated allocations, rather than use of a system of internal controls that accounts for actual time and effort allocations. Cause: While there is a time keeping system implemented to track daily hours worked by employees, the Corporation’s current internal control system does not allow for specific coding for time actually spent on each federally funded program that would support the amount charged to the Federal award. Effect or Potential Effect: We were unable to determine whether charges to Federal awards for salaries and wages reflect specific time worked or amounts allocated by employee to specific Federal programs. Allowable costs incurred by the Corporation exceeded the amount of approved grant funding, therefore no questioned costs are reported. Questioned costs: Unknown Context: We selected 174 salary transactions charged to the Federal programs to test controls over allowable costs. All transactions charged to the Federal programs were based on budgeted Full Time Equivalents (FTE), and not actual hours employees worked for each Federal program. No analysis or true-up was performed to determine the accuracy of employee titles or amounts charged versus actual time and effort incurred. This is a condition identified per review of the Corporation’s compliance with specified requirements using a statistically valid sample. Repeat finding: This is a repeat finding from prior year. This was reported as finding 2022-005 in the 2022 report. Recommendation: We recommend the Corporation develop and incorporate internal controls in order to track specific time spent on each Federal program. This can include, time and effort reports completed on a routine basis, such as monthly, and adjust program expenditures as needed to properly reflect actual work performed. Completed time and effort reports should be reviewed and verified by management for accuracy. View of Responsible Officials: Due to turnover of several key financial executives and personnel, the Corporation did not maintain evidence of approval of salary and wage allocations.
Finding The County charges 49.5 percent of salaries for certain full-time employees to the Aging Cluster program. Even though this is less than the actual percentage of time that could be charged to the grant, there is no time and effort reporting to substantiate the amount of time the individuals actually work on grant related activity. Additionally, the County charged salaries for part-time employees to the Aging Cluster program , but did not maintain time and effort reports or other required documentation to substantiate the work performed on grant-related activities. According to OMB Uniform Guidance (2 CFR Part 200) §200.430(i), salary and wage charges to federal grants must be supported by records that accurately reflect the time and effort expended on grant-related activities. This applies to all employees whose salaries are charged in whole or in part to the grant, including part-time employees. Recommendation The County should establish and implement a policy requiring documentation to support all salary charges to grants. This should include time and effort reporting or equivalent justifications of payroll charges to ensure compliance with federal requirements.
Finding The County charges 49.5 percent of salaries for certain full-time employees to the Aging Cluster program. Even though this is less than the actual percentage of time that could be charged to the grant, there is no time and effort reporting to substantiate the amount of time the individuals actually work on grant related activity. Additionally, the County charged salaries for part-time employees to the Aging Cluster program , but did not maintain time and effort reports or other required documentation to substantiate the work performed on grant-related activities. According to OMB Uniform Guidance (2 CFR Part 200) §200.430(i), salary and wage charges to federal grants must be supported by records that accurately reflect the time and effort expended on grant-related activities. This applies to all employees whose salaries are charged in whole or in part to the grant, including part-time employees. Recommendation The County should establish and implement a policy requiring documentation to support all salary charges to grants. This should include time and effort reporting or equivalent justifications of payroll charges to ensure compliance with federal requirements.
Finding The County charges 49.5 percent of salaries for certain full-time employees to the Aging Cluster program. Even though this is less than the actual percentage of time that could be charged to the grant, there is no time and effort reporting to substantiate the amount of time the individuals actually work on grant related activity. Additionally, the County charged salaries for part-time employees to the Aging Cluster program , but did not maintain time and effort reports or other required documentation to substantiate the work performed on grant-related activities. According to OMB Uniform Guidance (2 CFR Part 200) §200.430(i), salary and wage charges to federal grants must be supported by records that accurately reflect the time and effort expended on grant-related activities. This applies to all employees whose salaries are charged in whole or in part to the grant, including part-time employees. Recommendation The County should establish and implement a policy requiring documentation to support all salary charges to grants. This should include time and effort reporting or equivalent justifications of payroll charges to ensure compliance with federal requirements.
Finding The County charges 49.5 percent of salaries for certain full-time employees to the Aging Cluster program. Even though this is less than the actual percentage of time that could be charged to the grant, there is no time and effort reporting to substantiate the amount of time the individuals actually work on grant related activity. Additionally, the County charged salaries for part-time employees to the Aging Cluster program , but did not maintain time and effort reports or other required documentation to substantiate the work performed on grant-related activities. According to OMB Uniform Guidance (2 CFR Part 200) §200.430(i), salary and wage charges to federal grants must be supported by records that accurately reflect the time and effort expended on grant-related activities. This applies to all employees whose salaries are charged in whole or in part to the grant, including part-time employees. Recommendation The County should establish and implement a policy requiring documentation to support all salary charges to grants. This should include time and effort reporting or equivalent justifications of payroll charges to ensure compliance with federal requirements.
Finding The County charges 49.5 percent of salaries for certain full-time employees to the Aging Cluster program. Even though this is less than the actual percentage of time that could be charged to the grant, there is no time and effort reporting to substantiate the amount of time the individuals actually work on grant related activity. Additionally, the County charged salaries for part-time employees to the Aging Cluster program , but did not maintain time and effort reports or other required documentation to substantiate the work performed on grant-related activities. According to OMB Uniform Guidance (2 CFR Part 200) §200.430(i), salary and wage charges to federal grants must be supported by records that accurately reflect the time and effort expended on grant-related activities. This applies to all employees whose salaries are charged in whole or in part to the grant, including part-time employees. Recommendation The County should establish and implement a policy requiring documentation to support all salary charges to grants. This should include time and effort reporting or equivalent justifications of payroll charges to ensure compliance with federal requirements.
Finding The County charges 49.5 percent of salaries for certain full-time employees to the Aging Cluster program. Even though this is less than the actual percentage of time that could be charged to the grant, there is no time and effort reporting to substantiate the amount of time the individuals actually work on grant related activity. Additionally, the County charged salaries for part-time employees to the Aging Cluster program , but did not maintain time and effort reports or other required documentation to substantiate the work performed on grant-related activities. According to OMB Uniform Guidance (2 CFR Part 200) §200.430(i), salary and wage charges to federal grants must be supported by records that accurately reflect the time and effort expended on grant-related activities. This applies to all employees whose salaries are charged in whole or in part to the grant, including part-time employees. Recommendation The County should establish and implement a policy requiring documentation to support all salary charges to grants. This should include time and effort reporting or equivalent justifications of payroll charges to ensure compliance with federal requirements.
Finding The County charges 49.5 percent of salaries for certain full-time employees to the Aging Cluster program. Even though this is less than the actual percentage of time that could be charged to the grant, there is no time and effort reporting to substantiate the amount of time the individuals actually work on grant related activity. Additionally, the County charged salaries for part-time employees to the Aging Cluster program , but did not maintain time and effort reports or other required documentation to substantiate the work performed on grant-related activities. According to OMB Uniform Guidance (2 CFR Part 200) §200.430(i), salary and wage charges to federal grants must be supported by records that accurately reflect the time and effort expended on grant-related activities. This applies to all employees whose salaries are charged in whole or in part to the grant, including part-time employees. Recommendation The County should establish and implement a policy requiring documentation to support all salary charges to grants. This should include time and effort reporting or equivalent justifications of payroll charges to ensure compliance with federal requirements.
Finding The County charges 49.5 percent of salaries for certain full-time employees to the Aging Cluster program. Even though this is less than the actual percentage of time that could be charged to the grant, there is no time and effort reporting to substantiate the amount of time the individuals actually work on grant related activity. Additionally, the County charged salaries for part-time employees to the Aging Cluster program , but did not maintain time and effort reports or other required documentation to substantiate the work performed on grant-related activities. According to OMB Uniform Guidance (2 CFR Part 200) §200.430(i), salary and wage charges to federal grants must be supported by records that accurately reflect the time and effort expended on grant-related activities. This applies to all employees whose salaries are charged in whole or in part to the grant, including part-time employees. Recommendation The County should establish and implement a policy requiring documentation to support all salary charges to grants. This should include time and effort reporting or equivalent justifications of payroll charges to ensure compliance with federal requirements.
Finding The County charges 49.5 percent of salaries for certain full-time employees to the Aging Cluster program. Even though this is less than the actual percentage of time that could be charged to the grant, there is no time and effort reporting to substantiate the amount of time the individuals actually work on grant related activity. Additionally, the County charged salaries for part-time employees to the Aging Cluster program , but did not maintain time and effort reports or other required documentation to substantiate the work performed on grant-related activities. According to OMB Uniform Guidance (2 CFR Part 200) §200.430(i), salary and wage charges to federal grants must be supported by records that accurately reflect the time and effort expended on grant-related activities. This applies to all employees whose salaries are charged in whole or in part to the grant, including part-time employees. Recommendation The County should establish and implement a policy requiring documentation to support all salary charges to grants. This should include time and effort reporting or equivalent justifications of payroll charges to ensure compliance with federal requirements.
Finding The County charges 49.5 percent of salaries for certain full-time employees to the Aging Cluster program. Even though this is less than the actual percentage of time that could be charged to the grant, there is no time and effort reporting to substantiate the amount of time the individuals actually work on grant related activity. Additionally, the County charged salaries for part-time employees to the Aging Cluster program , but did not maintain time and effort reports or other required documentation to substantiate the work performed on grant-related activities. According to OMB Uniform Guidance (2 CFR Part 200) §200.430(i), salary and wage charges to federal grants must be supported by records that accurately reflect the time and effort expended on grant-related activities. This applies to all employees whose salaries are charged in whole or in part to the grant, including part-time employees. Recommendation The County should establish and implement a policy requiring documentation to support all salary charges to grants. This should include time and effort reporting or equivalent justifications of payroll charges to ensure compliance with federal requirements.
Finding The County charges 49.5 percent of salaries for certain full-time employees to the Aging Cluster program. Even though this is less than the actual percentage of time that could be charged to the grant, there is no time and effort reporting to substantiate the amount of time the individuals actually work on grant related activity. Additionally, the County charged salaries for part-time employees to the Aging Cluster program , but did not maintain time and effort reports or other required documentation to substantiate the work performed on grant-related activities. According to OMB Uniform Guidance (2 CFR Part 200) §200.430(i), salary and wage charges to federal grants must be supported by records that accurately reflect the time and effort expended on grant-related activities. This applies to all employees whose salaries are charged in whole or in part to the grant, including part-time employees. Recommendation The County should establish and implement a policy requiring documentation to support all salary charges to grants. This should include time and effort reporting or equivalent justifications of payroll charges to ensure compliance with federal requirements.
Finding The County charges 49.5 percent of salaries for certain full-time employees to the Aging Cluster program. Even though this is less than the actual percentage of time that could be charged to the grant, there is no time and effort reporting to substantiate the amount of time the individuals actually work on grant related activity. Additionally, the County charged salaries for part-time employees to the Aging Cluster program , but did not maintain time and effort reports or other required documentation to substantiate the work performed on grant-related activities. According to OMB Uniform Guidance (2 CFR Part 200) §200.430(i), salary and wage charges to federal grants must be supported by records that accurately reflect the time and effort expended on grant-related activities. This applies to all employees whose salaries are charged in whole or in part to the grant, including part-time employees. Recommendation The County should establish and implement a policy requiring documentation to support all salary charges to grants. This should include time and effort reporting or equivalent justifications of payroll charges to ensure compliance with federal requirements.
ALN Title and Number COVID-19 Coronavirus State and Local Fiscal Recovery Funds, AL #21.027 Federal Award Number and Year 2023 Federal Agency United States Department of the Treasury Pass-Through Entity Ohio Department of Public Safety Repeat Finding from Prior Audit? No Finding Number (if repeat) N/A Finding 2023-004 – Material Weakness/Noncompliance – Allowable Costs/Cost Principals and Suspension and Debarment 2 CFR 200 outlines the following policies required for a County spending Coronavirus State and Local Fiscal Recovery Funds: • 2 CFR 200.302(b)(7) for determining the allowability of costs in accordance with Subpart E-Cost Principles; • 2 CFR 200.430 for allowability of compensation costs; 2 CFR 200.464(a)(2) for reimbursement of relocation costs; • 2 CFR 200.318(c)(1) for employee conflicts of interest; • 2 CFR 200.318(c)(2) for organizational conflicts of interest; • 2 CFR 200.320(b)(2) for selection and awarding of contracts for competitive proposals; • 2 CFR 200.319(d) for minimum evaluation criteria for bids and proposals. During testing we noted that the County did not have sufficient written policies addressing the above requirements. Failure to adopt and implement policies could lead to noncompliance with federal requirements. We recommend the County approve and implement the above policies to ensure compliance with federal requirements.
ALN Title and Number COVID-19 Coronavirus State and Local Fiscal Recovery Funds, AL #21.027 Federal Award Number and Year 2023 Federal Agency United States Department of the Treasury Pass-Through Entity Ohio Department of Public Safety Repeat Finding from Prior Audit? No Finding Number (if repeat) N/A Finding 2023-004 – Material Weakness/Noncompliance – Allowable Costs/Cost Principals and Suspension and Debarment 2 CFR 200 outlines the following policies required for a County spending Coronavirus State and Local Fiscal Recovery Funds: • 2 CFR 200.302(b)(7) for determining the allowability of costs in accordance with Subpart E-Cost Principles; • 2 CFR 200.430 for allowability of compensation costs; 2 CFR 200.464(a)(2) for reimbursement of relocation costs; • 2 CFR 200.318(c)(1) for employee conflicts of interest; • 2 CFR 200.318(c)(2) for organizational conflicts of interest; • 2 CFR 200.320(b)(2) for selection and awarding of contracts for competitive proposals; • 2 CFR 200.319(d) for minimum evaluation criteria for bids and proposals. During testing we noted that the County did not have sufficient written policies addressing the above requirements. Failure to adopt and implement policies could lead to noncompliance with federal requirements. We recommend the County approve and implement the above policies to ensure compliance with federal requirements.
ALN Title and Number COVID-19 Coronavirus State and Local Fiscal Recovery Funds, AL #21.027 Federal Award Number and Year 2023 Federal Agency United States Department of the Treasury Pass-Through Entity Ohio Department of Public Safety Repeat Finding from Prior Audit? No Finding Number (if repeat) N/A Finding 2023-004 – Material Weakness/Noncompliance – Allowable Costs/Cost Principals and Suspension and Debarment 2 CFR 200 outlines the following policies required for a County spending Coronavirus State and Local Fiscal Recovery Funds: • 2 CFR 200.302(b)(7) for determining the allowability of costs in accordance with Subpart E-Cost Principles; • 2 CFR 200.430 for allowability of compensation costs; 2 CFR 200.464(a)(2) for reimbursement of relocation costs; • 2 CFR 200.318(c)(1) for employee conflicts of interest; • 2 CFR 200.318(c)(2) for organizational conflicts of interest; • 2 CFR 200.320(b)(2) for selection and awarding of contracts for competitive proposals; • 2 CFR 200.319(d) for minimum evaluation criteria for bids and proposals. During testing we noted that the County did not have sufficient written policies addressing the above requirements. Failure to adopt and implement policies could lead to noncompliance with federal requirements. We recommend the County approve and implement the above policies to ensure compliance with federal requirements.
ALN Title and Number COVID-19 Coronavirus State and Local Fiscal Recovery Funds, AL #21.027 Federal Award Number and Year 2023 Federal Agency United States Department of the Treasury Pass-Through Entity Ohio Department of Public Safety Repeat Finding from Prior Audit? No Finding Number (if repeat) N/A Finding 2023-004 – Material Weakness/Noncompliance – Allowable Costs/Cost Principals and Suspension and Debarment 2 CFR 200 outlines the following policies required for a County spending Coronavirus State and Local Fiscal Recovery Funds: • 2 CFR 200.302(b)(7) for determining the allowability of costs in accordance with Subpart E-Cost Principles; • 2 CFR 200.430 for allowability of compensation costs; 2 CFR 200.464(a)(2) for reimbursement of relocation costs; • 2 CFR 200.318(c)(1) for employee conflicts of interest; • 2 CFR 200.318(c)(2) for organizational conflicts of interest; • 2 CFR 200.320(b)(2) for selection and awarding of contracts for competitive proposals; • 2 CFR 200.319(d) for minimum evaluation criteria for bids and proposals. During testing we noted that the County did not have sufficient written policies addressing the above requirements. Failure to adopt and implement policies could lead to noncompliance with federal requirements. We recommend the County approve and implement the above policies to ensure compliance with federal requirements.
U.S. Department of Health and Human Services, passed through Kansas Department of Aging Aging Cluster - ALN 93.045 - Special Programs for the Aging _Title III, Part C_Nutrition Services - 2301KSOAHD Criteria or Specific Requirement – Allowable Costs/Cost Principles and Material Weakness Federal regulations state that “charges to federal awards for salaries and wages, must be based on records that accurately reflect the work performed.” The regulations also state that “the records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and property allocated” and “budget estimates alone do not qualify as support for charges to federal awards” (2 CFR 200.430(i)). Per 2 CFR 200.303, the non-Federal entities receiving federal awards (i.e., auditee management) establish and maintain internal control design to reasonably ensure compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition: During our test work over the ALN 93.045 grant, we noted the Unified Government did not have time and activity records with sufficient detail per federal regulations document to support its compensation and fringe benefit expenses. Questioned Costs: Total questioned costs of $200,949 were identified as a result of lack of proper documentation to support the charge and allocation to the grant. Context: We selected a sample of 60 charges totaling $16,075 to the Aging Cluster grants related to salaries and benefits expenditures. Within our sample, none of the 60 selections had proper documentation to support allocation to the grant. Per discussions with management and further review, the amounts charged to the grant were based on the approved budget for the position and the internal allocation performed each payroll period. Salaries and benefits charged to the entire cluster in the audit period totaled $200,949 and represented 14% of the total grant expenditures for the period. The sample was not intended to be, and was not, a statistically valid sample. Identification of Prior Year Finding: 2022-019 Effect: Based on testing completed, the Unified Government did not have sufficient procedures to allocate salaries and fringe benefits activity related to Aging Cluster throughout fiscal year 2023. Cause: Management indicated that this was attributed to a misunderstanding of the requirements and the inability to rely on budgeted estimates alone. Recommendation: We recommend that management utilize a time and activity method which meets the requirements of federal regulations. We also recommend employees and their supervisors are provided training on the requirements. Views of Responsible Official and Planned Corrective Actions: The reason for recurrence is the finding was communicated late in the prior year and due to transition and turnover within the department's staff. Management agrees with the stated finding and has implemented a corrective action plan.
Finding 2023-006 Unallowable and Improperly Documented Payroll Expenditures Type of Finding: Noncompliance and Material Weakness in Internal Control over Compliance Condition and Context: The Organization failed to establish critical processes and internal controls over payroll expenditures to ensure compliance with Uniform Guidance requirements and several compliance issues were identified. As part of audit procedures, 44 transactions were selected in a testing sample from a population of 243 direct payroll transactions. Of the transactions tested, the auditors noted 8 instances of payroll costs overclaimed by way of claiming the same work effort for the same period on multiple grants. The auditors noted 18 instances of failure to properly calculate and allocate the work effort completed by employees that worked on multiple grants and programs. The auditors noted 9 instances of the Organization failing to have approved pay rates on file that matched the amounts paid to the employees. The auditors also noted a significant lack of supervisory approval on timesheets or other time allocation support. Criteria: According to Uniform Guidance 2 CFR §200.430, charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records should be adequately documented, authorized, and supported by timesheets or other documentation approved by appropriate officials. These records should also reasonably reflect the total activity for which the employee is compensated, not exceeding 100 percent of compensated activities. The records should also 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. Further, proper internal controls should be in place to ensure compliance with federal requirements. Cause: The Organization failed to implement appropriate policies, procedures, and internal controls that would allow management to properly record, track, and claim payroll expenditures compliant with Uniform Guidance requirements. The root cause of these matters appears to be due to a lack of sufficient skills, knowledge, and experience in the grant administrators and leadership roles. Effect: The impact of failing to establish a robust system of processes and internal controls to specifically allocate the work performed for employees among specific grants, there is a significant risk that the Organization would charge work efforts against the wrong grants. Failure to have an appropriate system in place also increases the risk that the Organization would make duplicate claims for the same work effort. Failure to have supervisory approval over work effort could lead to claims of employee work that cannot be substantiated. Failure to have approved pay rates could lead to employees being paid more or less than owed, and federal programs being under or over claimed. Overall, the failure to establish sufficient internal controls in these areas greatly increases the risks that federal funds would be spent outside of the Uniform Guidance requirements. Questioned Costs: Known questioned costs of $32,393 were identified. Repeat Finding: This is not a repeat finding. Recommendation: It is recommended that the Organization implement more robust processes and internal controls over their accounting for payroll. All employees should complete timesheets or have up to date work effort allocations that clearly document their work efforts. These forms should be updated regularly and approved by appropriate supervisors. Employee pay rates should be documented and approved through offer letters and pay rate change forms. The Organization should evaluate the personnel involved with the payroll cycle and ensure that appropriate segregation of duties are in place, or other internal controls are implemented to ensure Organizational funds are properly safeguarded. The Organization should also better utilize its accounting database to ensure payroll costs are properly tracked and categorized against its grant activities to prevent duplicate claims. Views of Responsible Officials: The Organization retained a licensed CPA firm with significant expertise in financial reporting and single audit compliance. The Organization will conduct mandatory training for all supervisors to reinforce the importance of accurate timesheet approval processes, proper time allocation for employees working on multiple grants or programs, and ensuring timely and consistent documentation of payroll expenditures. The Organization will ensure all approved pay rates are documented, signed, and filed for each employee. The Organization will configure QuickBooks to ensure payroll costs and grant allocations are clearly identifiable and traceable and linked to corresponding grants and federal claims.
Finding 2023-006 Unallowable and Improperly Documented Payroll Expenditures Type of Finding: Noncompliance and Material Weakness in Internal Control over Compliance Condition and Context: The Organization failed to establish critical processes and internal controls over payroll expenditures to ensure compliance with Uniform Guidance requirements and several compliance issues were identified. As part of audit procedures, 44 transactions were selected in a testing sample from a population of 243 direct payroll transactions. Of the transactions tested, the auditors noted 8 instances of payroll costs overclaimed by way of claiming the same work effort for the same period on multiple grants. The auditors noted 18 instances of failure to properly calculate and allocate the work effort completed by employees that worked on multiple grants and programs. The auditors noted 9 instances of the Organization failing to have approved pay rates on file that matched the amounts paid to the employees. The auditors also noted a significant lack of supervisory approval on timesheets or other time allocation support. Criteria: According to Uniform Guidance 2 CFR §200.430, charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records should be adequately documented, authorized, and supported by timesheets or other documentation approved by appropriate officials. These records should also reasonably reflect the total activity for which the employee is compensated, not exceeding 100 percent of compensated activities. The records should also 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. Further, proper internal controls should be in place to ensure compliance with federal requirements. Cause: The Organization failed to implement appropriate policies, procedures, and internal controls that would allow management to properly record, track, and claim payroll expenditures compliant with Uniform Guidance requirements. The root cause of these matters appears to be due to a lack of sufficient skills, knowledge, and experience in the grant administrators and leadership roles. Effect: The impact of failing to establish a robust system of processes and internal controls to specifically allocate the work performed for employees among specific grants, there is a significant risk that the Organization would charge work efforts against the wrong grants. Failure to have an appropriate system in place also increases the risk that the Organization would make duplicate claims for the same work effort. Failure to have supervisory approval over work effort could lead to claims of employee work that cannot be substantiated. Failure to have approved pay rates could lead to employees being paid more or less than owed, and federal programs being under or over claimed. Overall, the failure to establish sufficient internal controls in these areas greatly increases the risks that federal funds would be spent outside of the Uniform Guidance requirements. Questioned Costs: Known questioned costs of $32,393 were identified. Repeat Finding: This is not a repeat finding. Recommendation: It is recommended that the Organization implement more robust processes and internal controls over their accounting for payroll. All employees should complete timesheets or have up to date work effort allocations that clearly document their work efforts. These forms should be updated regularly and approved by appropriate supervisors. Employee pay rates should be documented and approved through offer letters and pay rate change forms. The Organization should evaluate the personnel involved with the payroll cycle and ensure that appropriate segregation of duties are in place, or other internal controls are implemented to ensure Organizational funds are properly safeguarded. The Organization should also better utilize its accounting database to ensure payroll costs are properly tracked and categorized against its grant activities to prevent duplicate claims. Views of Responsible Officials: The Organization retained a licensed CPA firm with significant expertise in financial reporting and single audit compliance. The Organization will conduct mandatory training for all supervisors to reinforce the importance of accurate timesheet approval processes, proper time allocation for employees working on multiple grants or programs, and ensuring timely and consistent documentation of payroll expenditures. The Organization will ensure all approved pay rates are documented, signed, and filed for each employee. The Organization will configure QuickBooks to ensure payroll costs and grant allocations are clearly identifiable and traceable and linked to corresponding grants and federal claims.
Finding 2023-006 Unallowable and Improperly Documented Payroll Expenditures Type of Finding: Noncompliance and Material Weakness in Internal Control over Compliance Condition and Context: The Organization failed to establish critical processes and internal controls over payroll expenditures to ensure compliance with Uniform Guidance requirements and several compliance issues were identified. As part of audit procedures, 44 transactions were selected in a testing sample from a population of 243 direct payroll transactions. Of the transactions tested, the auditors noted 8 instances of payroll costs overclaimed by way of claiming the same work effort for the same period on multiple grants. The auditors noted 18 instances of failure to properly calculate and allocate the work effort completed by employees that worked on multiple grants and programs. The auditors noted 9 instances of the Organization failing to have approved pay rates on file that matched the amounts paid to the employees. The auditors also noted a significant lack of supervisory approval on timesheets or other time allocation support. Criteria: According to Uniform Guidance 2 CFR §200.430, charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records should be adequately documented, authorized, and supported by timesheets or other documentation approved by appropriate officials. These records should also reasonably reflect the total activity for which the employee is compensated, not exceeding 100 percent of compensated activities. The records should also 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. Further, proper internal controls should be in place to ensure compliance with federal requirements. Cause: The Organization failed to implement appropriate policies, procedures, and internal controls that would allow management to properly record, track, and claim payroll expenditures compliant with Uniform Guidance requirements. The root cause of these matters appears to be due to a lack of sufficient skills, knowledge, and experience in the grant administrators and leadership roles. Effect: The impact of failing to establish a robust system of processes and internal controls to specifically allocate the work performed for employees among specific grants, there is a significant risk that the Organization would charge work efforts against the wrong grants. Failure to have an appropriate system in place also increases the risk that the Organization would make duplicate claims for the same work effort. Failure to have supervisory approval over work effort could lead to claims of employee work that cannot be substantiated. Failure to have approved pay rates could lead to employees being paid more or less than owed, and federal programs being under or over claimed. Overall, the failure to establish sufficient internal controls in these areas greatly increases the risks that federal funds would be spent outside of the Uniform Guidance requirements. Questioned Costs: Known questioned costs of $32,393 were identified. Repeat Finding: This is not a repeat finding. Recommendation: It is recommended that the Organization implement more robust processes and internal controls over their accounting for payroll. All employees should complete timesheets or have up to date work effort allocations that clearly document their work efforts. These forms should be updated regularly and approved by appropriate supervisors. Employee pay rates should be documented and approved through offer letters and pay rate change forms. The Organization should evaluate the personnel involved with the payroll cycle and ensure that appropriate segregation of duties are in place, or other internal controls are implemented to ensure Organizational funds are properly safeguarded. The Organization should also better utilize its accounting database to ensure payroll costs are properly tracked and categorized against its grant activities to prevent duplicate claims. Views of Responsible Officials: The Organization retained a licensed CPA firm with significant expertise in financial reporting and single audit compliance. The Organization will conduct mandatory training for all supervisors to reinforce the importance of accurate timesheet approval processes, proper time allocation for employees working on multiple grants or programs, and ensuring timely and consistent documentation of payroll expenditures. The Organization will ensure all approved pay rates are documented, signed, and filed for each employee. The Organization will configure QuickBooks to ensure payroll costs and grant allocations are clearly identifiable and traceable and linked to corresponding grants and federal claims.
Finding 2023-006 Unallowable and Improperly Documented Payroll Expenditures Type of Finding: Noncompliance and Material Weakness in Internal Control over Compliance Condition and Context: The Organization failed to establish critical processes and internal controls over payroll expenditures to ensure compliance with Uniform Guidance requirements and several compliance issues were identified. As part of audit procedures, 44 transactions were selected in a testing sample from a population of 243 direct payroll transactions. Of the transactions tested, the auditors noted 8 instances of payroll costs overclaimed by way of claiming the same work effort for the same period on multiple grants. The auditors noted 18 instances of failure to properly calculate and allocate the work effort completed by employees that worked on multiple grants and programs. The auditors noted 9 instances of the Organization failing to have approved pay rates on file that matched the amounts paid to the employees. The auditors also noted a significant lack of supervisory approval on timesheets or other time allocation support. Criteria: According to Uniform Guidance 2 CFR §200.430, charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records should be adequately documented, authorized, and supported by timesheets or other documentation approved by appropriate officials. These records should also reasonably reflect the total activity for which the employee is compensated, not exceeding 100 percent of compensated activities. The records should also 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. Further, proper internal controls should be in place to ensure compliance with federal requirements. Cause: The Organization failed to implement appropriate policies, procedures, and internal controls that would allow management to properly record, track, and claim payroll expenditures compliant with Uniform Guidance requirements. The root cause of these matters appears to be due to a lack of sufficient skills, knowledge, and experience in the grant administrators and leadership roles. Effect: The impact of failing to establish a robust system of processes and internal controls to specifically allocate the work performed for employees among specific grants, there is a significant risk that the Organization would charge work efforts against the wrong grants. Failure to have an appropriate system in place also increases the risk that the Organization would make duplicate claims for the same work effort. Failure to have supervisory approval over work effort could lead to claims of employee work that cannot be substantiated. Failure to have approved pay rates could lead to employees being paid more or less than owed, and federal programs being under or over claimed. Overall, the failure to establish sufficient internal controls in these areas greatly increases the risks that federal funds would be spent outside of the Uniform Guidance requirements. Questioned Costs: Known questioned costs of $32,393 were identified. Repeat Finding: This is not a repeat finding. Recommendation: It is recommended that the Organization implement more robust processes and internal controls over their accounting for payroll. All employees should complete timesheets or have up to date work effort allocations that clearly document their work efforts. These forms should be updated regularly and approved by appropriate supervisors. Employee pay rates should be documented and approved through offer letters and pay rate change forms. The Organization should evaluate the personnel involved with the payroll cycle and ensure that appropriate segregation of duties are in place, or other internal controls are implemented to ensure Organizational funds are properly safeguarded. The Organization should also better utilize its accounting database to ensure payroll costs are properly tracked and categorized against its grant activities to prevent duplicate claims. Views of Responsible Officials: The Organization retained a licensed CPA firm with significant expertise in financial reporting and single audit compliance. The Organization will conduct mandatory training for all supervisors to reinforce the importance of accurate timesheet approval processes, proper time allocation for employees working on multiple grants or programs, and ensuring timely and consistent documentation of payroll expenditures. The Organization will ensure all approved pay rates are documented, signed, and filed for each employee. The Organization will configure QuickBooks to ensure payroll costs and grant allocations are clearly identifiable and traceable and linked to corresponding grants and federal claims.
Finding 2023-006 Unallowable and Improperly Documented Payroll Expenditures Type of Finding: Noncompliance and Material Weakness in Internal Control over Compliance Condition and Context: The Organization failed to establish critical processes and internal controls over payroll expenditures to ensure compliance with Uniform Guidance requirements and several compliance issues were identified. As part of audit procedures, 44 transactions were selected in a testing sample from a population of 243 direct payroll transactions. Of the transactions tested, the auditors noted 8 instances of payroll costs overclaimed by way of claiming the same work effort for the same period on multiple grants. The auditors noted 18 instances of failure to properly calculate and allocate the work effort completed by employees that worked on multiple grants and programs. The auditors noted 9 instances of the Organization failing to have approved pay rates on file that matched the amounts paid to the employees. The auditors also noted a significant lack of supervisory approval on timesheets or other time allocation support. Criteria: According to Uniform Guidance 2 CFR §200.430, charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records should be adequately documented, authorized, and supported by timesheets or other documentation approved by appropriate officials. These records should also reasonably reflect the total activity for which the employee is compensated, not exceeding 100 percent of compensated activities. The records should also 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. Further, proper internal controls should be in place to ensure compliance with federal requirements. Cause: The Organization failed to implement appropriate policies, procedures, and internal controls that would allow management to properly record, track, and claim payroll expenditures compliant with Uniform Guidance requirements. The root cause of these matters appears to be due to a lack of sufficient skills, knowledge, and experience in the grant administrators and leadership roles. Effect: The impact of failing to establish a robust system of processes and internal controls to specifically allocate the work performed for employees among specific grants, there is a significant risk that the Organization would charge work efforts against the wrong grants. Failure to have an appropriate system in place also increases the risk that the Organization would make duplicate claims for the same work effort. Failure to have supervisory approval over work effort could lead to claims of employee work that cannot be substantiated. Failure to have approved pay rates could lead to employees being paid more or less than owed, and federal programs being under or over claimed. Overall, the failure to establish sufficient internal controls in these areas greatly increases the risks that federal funds would be spent outside of the Uniform Guidance requirements. Questioned Costs: Known questioned costs of $32,393 were identified. Repeat Finding: This is not a repeat finding. Recommendation: It is recommended that the Organization implement more robust processes and internal controls over their accounting for payroll. All employees should complete timesheets or have up to date work effort allocations that clearly document their work efforts. These forms should be updated regularly and approved by appropriate supervisors. Employee pay rates should be documented and approved through offer letters and pay rate change forms. The Organization should evaluate the personnel involved with the payroll cycle and ensure that appropriate segregation of duties are in place, or other internal controls are implemented to ensure Organizational funds are properly safeguarded. The Organization should also better utilize its accounting database to ensure payroll costs are properly tracked and categorized against its grant activities to prevent duplicate claims. Views of Responsible Officials: The Organization retained a licensed CPA firm with significant expertise in financial reporting and single audit compliance. The Organization will conduct mandatory training for all supervisors to reinforce the importance of accurate timesheet approval processes, proper time allocation for employees working on multiple grants or programs, and ensuring timely and consistent documentation of payroll expenditures. The Organization will ensure all approved pay rates are documented, signed, and filed for each employee. The Organization will configure QuickBooks to ensure payroll costs and grant allocations are clearly identifiable and traceable and linked to corresponding grants and federal claims.
Item: 2023-004 Assistance Listing Number: 93.940 Programs: HIV Prevention Activities Health Department Based Federal Agency: U.S. Department of Health and Human Services Pass-Through Agencies: Arizona Department of Health Services Pass-Through Grantor Identifying Number: CTR069364, CTR067201, CTR045489, ADHS19-207305 Award Year: April 1, 2022 to March 31, 2023; August 1, 2022 to July 31, 2023; January 1, 2023 to December 31, 2023; April 1, 2023 to March 31, 2024; August 1, 2023 to July 31, 2024 Compliance Requirement: Allowable Activities and Costs Criteria: In accordance with 2 CFR § 200.430 – Compensation – charges to federal programs for salaries and wages should be supported by a system of internal controls which provides reasonable assurance the amounts charged are accurate, allowable and properly allocated. Condition: Incorrect allocation of employee hours were charged to the federal program. Questioned Costs: n/a Context: In a population of over 250 payroll costs charged to the program, we conducted a non-statistical sample of 40 payroll costs charged to the program. In our sample of 40, we noted that 1 selection in which the employee was paid at an outdated pay rate and paid overtime that was not supported by the employee timesheet. The variances between the amount charged and the amount supported, as well as the projected impact to the entire population, was trivial in nature. This is deemed to be a significant deficiency in internal control over compliance. Effect: The system of internal controls was not properly implemented. Cause: The entity’s system of internal controls did detect, or document the rationale for, instances in which the amounts charged to a federal program did not agree to the underlying supporting documentation maintained by the Organization. Identification as a Repeat Finding: Repeat finding – prior year 2022-004 Recommendation: The Organization should enhance its processes and controls to ensure that expenses are appropriately reviewed before submission of billing. Views of Responsible Officials: Management of the Organization concurs with the finding. See Corrective Action Plan.
2023-007 Lack of Documentation for Employee Rate of Pay (Material Weakness) Federal Agency: Department of Homeland Security Pass-through Agency: New Hampshire Department of Safety Cluster/Program: COVID-19 – Disaster Grants – Public Assistance (Presidentially Declared Disasters) Assistance Listing Number: 97.036 Passed-through Identification: 23DR4516PA Compliance Requirement: Activities Allowed or Unallowed and Allowable Costs/Cost Principles Type of Finding: Internal Control over Compliance – Material Weakness Material Noncompliance Criteria or Specific Requirement: Federal regulations 2 CFR 200.303 states, the Town, as a recipient of Federal funds, must establish and maintain effective internal controls 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. In addition, under 2 CFR 200.430, it states that charges to federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must (1) be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated, (2) be incorporated into the official records of the non-Federal entity, (3) reasonably reflect the total activity for which the employee is compensated by the non-Federal entity, not exceeding 100% of compensated activities, and (4) 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 or a federal award and non-Federal award. Entities must maintain adequate documentation to support payroll charges, including specific details on employee pay rates used for calculating reimbursements. This documentation is necessary to ensure that payroll costs charged to federal programs are reasonable, accurate, and in compliance with applicable laws and regulations. Condition: During our audit we noted that the Town was reimbursed for overtime hours performed by police and fire personnel who responded to the COVID-19 pandemic during 2020 and 2021. The rate of pay used was reflective of the employee’s overtime rate inclusive of fringe benefits. The Town was unable to provide documentation verifying the employee’s rate of pay used to calculate reimbursement for payroll charges. Specifically, records reflecting the employee’s overtime rate inclusive of fringe benefits, were not available for review. In addition, the Town acknowledged that they attempted to recalculate the rate of pay for each employee selected for testing, but it yielded figures that could not be matched to the original source worksheet submitted to the federal agency. Cause: The Town lacks a standardized process for recording and maintaining documentation for payroll rates, including the breakdown of overtime and fringe benefit components used for federal reimbursement. This is due to inadequate internal controls and oversight in the payroll and accounting processes, as well as limited staff training on federal documentation requirements. Effect: The inability to verify the overtime rate with fringe benefits used in reimbursement calculations creates a risk of non-compliance with federal requirements, which could lead to questioned costs and potential disallowance of the submitted payroll charges as it may not reflect actual, allowable costs. Additionally, the lack of supporting documentation undermines the Town’s ability to substantiate its payroll expenditures and comply with federal grant accounting requirements. Failure to provide adequate documentation could affect future funding eligibility. Consequently, essential payroll records were not retained, resulting in noncompliance with federal grant documentation standards and a disclaimer of opinion on the major program. Questioned Costs: $1,947,729 Identification as Repeat Finding: This is not a repeat finding. Recommendation: We recommend that the Town implement enhanced record-keeping procedures to ensure that all payroll charges, especially complex rates involving overtime and fringe benefits, are documented and verifiable. Specifically, the Town should establish a process to document and track each component of the rate of pay used in reimbursement calculations. This process should involve establishing a systematic approach to linking payroll records with source documents and include clear guidelines for calculating and recording overtime rates inclusive of fringe benefits. Additionally, we advise the Town to establish periodic internal reviews and staff training to ensure payroll charges are fully supported, align with federal requirements, and comply with documentation requirements. Views of Responsible Officials: Management’s views and corrective action plan is included at the end of this report.
Federal Agency: U.S. Department of the Treasury Federal Program Name: Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027 Federal Award Identification Number and Year: SLFRP0002 – 2021, SLFRP1045 – 2021, SLFRP0194 - 2021 Pass-Through Agency: Washington State Department of Commerce, City of Seattle, Snohomish County Pass-Through Number(s): (DOC) 23-F21400119-017, DC222308, CLFR-042 Award Period: Various Type of Finding: • Significant Deficiency in Internal Control Over Compliance Criteria or specific requirement: 2 CFR 200.430 states: Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. In addition, 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 or a Federal award and non-Federal award. Further, budget estimates (i.e., estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards. Condition: For some paychecks tested, it was noted the percentage of hours worked on the Federal program as indicated on the timesheet did not always tie to the allocation spreadsheet which determined the payroll costs that was ultimately charged to the major program. In addition, for one employee paycheck tested that was partially allocated to the major program, it was found that there was an error in the calculation of a salary increase, which resulted in an incorrect amount being charged to the program. Questioned costs: $2,339 Context: Of the 40 paychecks tested, 10 paychecks showed a potential over allocation of payroll costs to the Federal program. These over allocations varied from paycheck to paycheck and ranged from $5 to $1,648. One of the paychecks tested also included the miscalculation of salary amount. Cause: The person responsible for allocating payroll is no longer employed with Ventures. Therefore, specific cause cannot be identified. It was noted, however, there were two allocation spreadsheet templates being used during this fiscal year causing both a redundancy of information and a lack of synchronized information in some areas. This was likely the main reason for the allocation related issues encountered during the audit. In addition, the miscalculation of the payrate that occurred was not detected by the organization’s internal controls. Effect: Potential outcome is an overallocation to the Federal program leading to requests for reimbursement of funds (in the payroll expense category). Repeat finding: No Recommendation: We recommend the Organization utilize one spreadsheet for allocating payroll costs and implement additional controls to ensure the allocations to Federal grants accurately reflect the actual hours worked. Views of responsible officials: There is no disagreement with the audit finding.