Federal Award Findings and Questioned Costs Finding No. 2023-001: Allowable Cost (Time and effort) Federal Program Title: U.S. Department of Health and Human Services Awards: ALN 93.224 Health Center Program Cluster ALN 93.354 Public Health Emergency Response: Cooperative Agreement for Emergency Response: Public Health Crisis Response 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 and 40 payroll costs charged to ALN 93.354 Public Health Emergency Response: Cooperative agreement for Emergency Response: Public Health Crisis Response. 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: Unknown 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.
Federal Award Findings and Questioned Costs Finding No. 2023-001: Allowable Cost (Time and effort) Federal Program Title: U.S. Department of Health and Human Services Awards: ALN 93.224 Health Center Program Cluster ALN 93.354 Public Health Emergency Response: Cooperative Agreement for Emergency Response: Public Health Crisis Response 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 and 40 payroll costs charged to ALN 93.354 Public Health Emergency Response: Cooperative agreement for Emergency Response: Public Health Crisis Response. 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: Unknown 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.
Finding 2023-001 Material Weakness: Allowable Costs/Costs Principles – Compliance and Control Finding ALN 84.287 – Twenty-First Century Community Learning Centers Federal Agency: U.S. Department of Education Pass-Through Entity: Missouri Department of Education Fiscal Year: For the year ended December 31, 2023 Criteria or Specific Requirement: 2 CFR section 200.430(i)(1) requires charges to federal awards for salaries and wages be based on records that accurately reflect the work performed. Condition: We noted through procedures performed that allocated salaries and wages as well as related employee benefits and payroll taxes were based on an estimated percentage of time to be devoted to the grant-funded programs as opposed to actual hours worked, resulting in a potential over-allocation or under-allocation of expenditures. Cause: Internal controls over compliance put in place by management were not designed effectively to ensure a review of allocated versus actual hours work by the federal grant was performed and that proof of such reviews was documented and retained. Effect: The possibility exists that noncompliance with federal requirements related to allowable costs and allowable activities could go undetected as there is no review or true up process for actual hours worked related to the program. Questioned Costs: In a sample of 40 expenditures, total known question costs found totaled $46,571. Likely questioned costs exceed $25,000. Context: Of the sample of 40 individual costs charged to the grant, 12 were allocated salary costs and related employee benefits and payroll taxes of full-time, salaried employees. For these 12 payroll related items, allocated costs were based on the estimated percentage of time expected to be devoted by each employee to the grant-funded program. Unleashing Potential did not maintain documentation to support the actual time and effort of each employee charged to the grant. Identification as a Repeat Finding: 2022-001 Recommendation: For employees working on grant-funded programs, management should develop a time-keeping process to track and verify that the amount of time charged to the grant is accurate and based on the employee’s time spent working on the grant. Documented review and approval of this time allocation by the employee’s supervisor should be maintained. Views of Responsible Officials: Management will implement procedures to assure that all costs charged to the 21st Century program are reviewed by a competent individual, and those reviews will be documented.
Finding 2023-003 - Noncompliance and Significant Deficiency over Allowable Activities and Costs Criteria In accordance with 2 CFR 200.430(i)(1), the Organization is required to maintain documentation of personnel expenses that are “based on records that accurately reflect the work performed. These records must: i) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; ii) Be incorporated into the official records of the non-Federal entity; iii) Reasonably reflect the total activity for which the employee is compensated by the non-Federal entity, not exceeding 100% of compensated activities.” Condition During testing of payroll transactions, we were unable to agree direct costs charged to the grant to the detail backup documentation retained. In addition, one individual, who was 100% funded by the grant, had costs in excess of 100% of compensated activities charged to the grant. Internal controls were not present or functioning to prevent excess costs from being allocated to the grant. Cause The Organization did not have appropriate internal controls in place over allowable costs and allowable activities which allowed for inaccuracies in payroll amounts claimed for reimbursement. Effect Payroll charges to the grant were unsupported. Questioned Costs Projected questioned costs were $5,073. Recommendations We recommend the Organization implement internal controls to ensure direct costs reported and reimbursed under the grant are accurate and allowable. Views of Responsible Officials We have increased personnel and have the support needed to implement our accounting policies.
Significant Deficiency and Noncompliance over Allowable Costs/Costs Principles Repeat Finding: No Condition: Management did not review and approve the time and effort allocation of employees working under Federal grants. Criteria: In accordance with 2 CFR §200.430, the non-Federal entity may compensate for personal services including all remuneration, paid currently or accrued, for services of employees rendered during the period of performance under the Federal award, including but not necessarily limited to wages and salaries. The costs of compensation are allowable to the extent that they satisfy the specific requirements of this part. Additionally, as defined in 2 CFR Ch. II (1-1-18 Edition) §200.430(g), for compensation to members of nonprofit organizations, trustees, directors, associates, officers, or the immediate families thereof, determination must be made that such compensation is reasonable for the actual personal services rendered rather than a distribution of earnings in excess of costs. This may include director’s and executive committee member’s fees, incentive awards, allowances for offsite pay, incentive pay, location allowances, hardship pay, and cost-of-living differentials. Cause: Management did not review and approve the time and effort allocation of employees working under federal grants. Effect: If the time and allocation efforts of employees working under federal grants were not reviewed and approved in compliance with Uniform Guidance, the Foundation would not identify the compensation allocation and billing to the federal grants for a reasonable amount. Questioned Costs: Unknown. Recommendation: We recommend that the Foundation review and approve the time and effort allocation of employees working under federal grants to ensure proper tracking and billing for compensation amount allowed per the federal award. Auditee Response and Corrective Action Plan: Refer to management’s corrective action plans. Auditor’s Conclusion: Finding remains as stated.
Significant Deficiency and Noncompliance over Allowable Costs/Costs Principles Repeat Finding: No Condition: Management did not review and approve the time and effort allocation of employees working under Federal grants. Criteria: In accordance with 2 CFR §200.430, the non-Federal entity may compensate for personal services including all remuneration, paid currently or accrued, for services of employees rendered during the period of performance under the Federal award, including but not necessarily limited to wages and salaries. The costs of compensation are allowable to the extent that they satisfy the specific requirements of this part. Additionally, as defined in 2 CFR Ch. II (1-1-18 Edition) §200.430(g), for compensation to members of nonprofit organizations, trustees, directors, associates, officers, or the immediate families thereof, determination must be made that such compensation is reasonable for the actual personal services rendered rather than a distribution of earnings in excess of costs. This may include director’s and executive committee member’s fees, incentive awards, allowances for offsite pay, incentive pay, location allowances, hardship pay, and cost-of-living differentials. Cause: Management did not review and approve the time and effort allocation of employees working under federal grants. Effect: If the time and allocation efforts of employees working under federal grants were not reviewed and approved in compliance with Uniform Guidance, the Foundation would not identify the compensation allocation and billing to the federal grants for a reasonable amount. Questioned Costs: Unknown. Recommendation: We recommend that the Foundation review and approve the time and effort allocation of employees working under federal grants to ensure proper tracking and billing for compensation amount allowed per the federal award. Auditee Response and Corrective Action Plan: Refer to management’s corrective action plans. Auditor’s Conclusion: Finding remains as stated.
Significant Deficiency and Noncompliance over Allowable Costs/Costs Principles Repeat Finding: No Condition: Management did not review and approve the time and effort allocation of employees working under Federal grants. Criteria: In accordance with 2 CFR §200.430, the non-Federal entity may compensate for personal services including all remuneration, paid currently or accrued, for services of employees rendered during the period of performance under the Federal award, including but not necessarily limited to wages and salaries. The costs of compensation are allowable to the extent that they satisfy the specific requirements of this part. Additionally, as defined in 2 CFR Ch. II (1-1-18 Edition) §200.430(g), for compensation to members of nonprofit organizations, trustees, directors, associates, officers, or the immediate families thereof, determination must be made that such compensation is reasonable for the actual personal services rendered rather than a distribution of earnings in excess of costs. This may include director’s and executive committee member’s fees, incentive awards, allowances for offsite pay, incentive pay, location allowances, hardship pay, and cost-of-living differentials. Cause: Management did not review and approve the time and effort allocation of employees working under federal grants. Effect: If the time and allocation efforts of employees working under federal grants were not reviewed and approved in compliance with Uniform Guidance, the Foundation would not identify the compensation allocation and billing to the federal grants for a reasonable amount. Questioned Costs: Unknown. Recommendation: We recommend that the Foundation review and approve the time and effort allocation of employees working under federal grants to ensure proper tracking and billing for compensation amount allowed per the federal award. Auditee Response and Corrective Action Plan: Refer to management’s corrective action plans. Auditor’s Conclusion: Finding remains as stated.
Significant Deficiency and Noncompliance over Allowable Costs/Costs Principles Repeat Finding: No Condition: Management did not review and approve the time and effort allocation of employees working under Federal grants. Criteria: In accordance with 2 CFR §200.430, the non-Federal entity may compensate for personal services including all remuneration, paid currently or accrued, for services of employees rendered during the period of performance under the Federal award, including but not necessarily limited to wages and salaries. The costs of compensation are allowable to the extent that they satisfy the specific requirements of this part. Additionally, as defined in 2 CFR Ch. II (1-1-18 Edition) §200.430(g), for compensation to members of nonprofit organizations, trustees, directors, associates, officers, or the immediate families thereof, determination must be made that such compensation is reasonable for the actual personal services rendered rather than a distribution of earnings in excess of costs. This may include director’s and executive committee member’s fees, incentive awards, allowances for offsite pay, incentive pay, location allowances, hardship pay, and cost-of-living differentials. Cause: Management did not review and approve the time and effort allocation of employees working under federal grants. Effect: If the time and allocation efforts of employees working under federal grants were not reviewed and approved in compliance with Uniform Guidance, the Foundation would not identify the compensation allocation and billing to the federal grants for a reasonable amount. Questioned Costs: Unknown. Recommendation: We recommend that the Foundation review and approve the time and effort allocation of employees working under federal grants to ensure proper tracking and billing for compensation amount allowed per the federal award. Auditee Response and Corrective Action Plan: Refer to management’s corrective action plans. Auditor’s Conclusion: Finding remains as stated.
Significant Deficiency and Noncompliance over Allowable Costs/Costs Principles Repeat Finding: No Condition: Management did not review and approve the time and effort allocation of employees working under Federal grants. Criteria: In accordance with 2 CFR §200.430, the non-Federal entity may compensate for personal services including all remuneration, paid currently or accrued, for services of employees rendered during the period of performance under the Federal award, including but not necessarily limited to wages and salaries. The costs of compensation are allowable to the extent that they satisfy the specific requirements of this part. Additionally, as defined in 2 CFR Ch. II (1-1-18 Edition) §200.430(g), for compensation to members of nonprofit organizations, trustees, directors, associates, officers, or the immediate families thereof, determination must be made that such compensation is reasonable for the actual personal services rendered rather than a distribution of earnings in excess of costs. This may include director’s and executive committee member’s fees, incentive awards, allowances for offsite pay, incentive pay, location allowances, hardship pay, and cost-of-living differentials. Cause: Management did not review and approve the time and effort allocation of employees working under federal grants. Effect: If the time and allocation efforts of employees working under federal grants were not reviewed and approved in compliance with Uniform Guidance, the Foundation would not identify the compensation allocation and billing to the federal grants for a reasonable amount. Questioned Costs: Unknown. Recommendation: We recommend that the Foundation review and approve the time and effort allocation of employees working under federal grants to ensure proper tracking and billing for compensation amount allowed per the federal award. Auditee Response and Corrective Action Plan: Refer to management’s corrective action plans. Auditor’s Conclusion: Finding remains as stated.
Significant Deficiency and Noncompliance over Allowable Costs/Costs Principles Repeat Finding: No Condition: Management did not review and approve the time and effort allocation of employees working under Federal grants. Criteria: In accordance with 2 CFR §200.430, the non-Federal entity may compensate for personal services including all remuneration, paid currently or accrued, for services of employees rendered during the period of performance under the Federal award, including but not necessarily limited to wages and salaries. The costs of compensation are allowable to the extent that they satisfy the specific requirements of this part. Additionally, as defined in 2 CFR Ch. II (1-1-18 Edition) §200.430(g), for compensation to members of nonprofit organizations, trustees, directors, associates, officers, or the immediate families thereof, determination must be made that such compensation is reasonable for the actual personal services rendered rather than a distribution of earnings in excess of costs. This may include director’s and executive committee member’s fees, incentive awards, allowances for offsite pay, incentive pay, location allowances, hardship pay, and cost-of-living differentials. Cause: Management did not review and approve the time and effort allocation of employees working under federal grants. Effect: If the time and allocation efforts of employees working under federal grants were not reviewed and approved in compliance with Uniform Guidance, the Foundation would not identify the compensation allocation and billing to the federal grants for a reasonable amount. Questioned Costs: Unknown. Recommendation: We recommend that the Foundation review and approve the time and effort allocation of employees working under federal grants to ensure proper tracking and billing for compensation amount allowed per the federal award. Auditee Response and Corrective Action Plan: Refer to management’s corrective action plans. Auditor’s Conclusion: Finding remains as stated.
Significant Deficiency and Noncompliance over Allowable Costs/Costs Principles Repeat Finding: No Condition: Management did not review and approve the time and effort allocation of employees working under Federal grants. Criteria: In accordance with 2 CFR §200.430, the non-Federal entity may compensate for personal services including all remuneration, paid currently or accrued, for services of employees rendered during the period of performance under the Federal award, including but not necessarily limited to wages and salaries. The costs of compensation are allowable to the extent that they satisfy the specific requirements of this part. Additionally, as defined in 2 CFR Ch. II (1-1-18 Edition) §200.430(g), for compensation to members of nonprofit organizations, trustees, directors, associates, officers, or the immediate families thereof, determination must be made that such compensation is reasonable for the actual personal services rendered rather than a distribution of earnings in excess of costs. This may include director’s and executive committee member’s fees, incentive awards, allowances for offsite pay, incentive pay, location allowances, hardship pay, and cost-of-living differentials. Cause: Management did not review and approve the time and effort allocation of employees working under federal grants. Effect: If the time and allocation efforts of employees working under federal grants were not reviewed and approved in compliance with Uniform Guidance, the Foundation would not identify the compensation allocation and billing to the federal grants for a reasonable amount. Questioned Costs: Unknown. Recommendation: We recommend that the Foundation review and approve the time and effort allocation of employees working under federal grants to ensure proper tracking and billing for compensation amount allowed per the federal award. Auditee Response and Corrective Action Plan: Refer to management’s corrective action plans. Auditor’s Conclusion: Finding remains as stated.
Significant Deficiency and Noncompliance over Allowable Costs/Costs Principles Repeat Finding: No Condition: Management did not review and approve the time and effort allocation of employees working under Federal grants. Criteria: In accordance with 2 CFR §200.430, the non-Federal entity may compensate for personal services including all remuneration, paid currently or accrued, for services of employees rendered during the period of performance under the Federal award, including but not necessarily limited to wages and salaries. The costs of compensation are allowable to the extent that they satisfy the specific requirements of this part. Additionally, as defined in 2 CFR Ch. II (1-1-18 Edition) §200.430(g), for compensation to members of nonprofit organizations, trustees, directors, associates, officers, or the immediate families thereof, determination must be made that such compensation is reasonable for the actual personal services rendered rather than a distribution of earnings in excess of costs. This may include director’s and executive committee member’s fees, incentive awards, allowances for offsite pay, incentive pay, location allowances, hardship pay, and cost-of-living differentials. Cause: Management did not review and approve the time and effort allocation of employees working under federal grants. Effect: If the time and allocation efforts of employees working under federal grants were not reviewed and approved in compliance with Uniform Guidance, the Foundation would not identify the compensation allocation and billing to the federal grants for a reasonable amount. Questioned Costs: Unknown. Recommendation: We recommend that the Foundation review and approve the time and effort allocation of employees working under federal grants to ensure proper tracking and billing for compensation amount allowed per the federal award. Auditee Response and Corrective Action Plan: Refer to management’s corrective action plans. Auditor’s Conclusion: Finding remains as stated.
Significant Deficiency and Noncompliance over Allowable Costs/Costs Principles Repeat Finding: No Condition: Management did not review and approve the time and effort allocation of employees working under Federal grants. Criteria: In accordance with 2 CFR §200.430, the non-Federal entity may compensate for personal services including all remuneration, paid currently or accrued, for services of employees rendered during the period of performance under the Federal award, including but not necessarily limited to wages and salaries. The costs of compensation are allowable to the extent that they satisfy the specific requirements of this part. Additionally, as defined in 2 CFR Ch. II (1-1-18 Edition) §200.430(g), for compensation to members of nonprofit organizations, trustees, directors, associates, officers, or the immediate families thereof, determination must be made that such compensation is reasonable for the actual personal services rendered rather than a distribution of earnings in excess of costs. This may include director’s and executive committee member’s fees, incentive awards, allowances for offsite pay, incentive pay, location allowances, hardship pay, and cost-of-living differentials. Cause: Management did not review and approve the time and effort allocation of employees working under federal grants. Effect: If the time and allocation efforts of employees working under federal grants were not reviewed and approved in compliance with Uniform Guidance, the Foundation would not identify the compensation allocation and billing to the federal grants for a reasonable amount. Questioned Costs: Unknown. Recommendation: We recommend that the Foundation review and approve the time and effort allocation of employees working under federal grants to ensure proper tracking and billing for compensation amount allowed per the federal award. Auditee Response and Corrective Action Plan: Refer to management’s corrective action plans. Auditor’s Conclusion: Finding remains as stated.
Compliance Requirement: Activities Allowed or Unallowed and Allowable Costs/Cost Principles Information on the Major Federal Program: Federal agency: U.S. Department of Health and Human Services Pass-through entity: Council of Medical Specialty Societies Assistance listing number: 93.083 Assistance listing name: COVID-19 Prevention of Disease, Disability, and Death through Immunization and Control of Respiratory and Related Diseases Award number: 1NH231P922656-01-00 Award name: Improving adult immunization rates for COVID-19, influenza and routine adult vaccination through partnerships with medical subspecialty societies Award year: 9/30/2021 – 9/30/2026 Criteria – The Uniform Guidance in 2 CFR 200.430 states that 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 controls which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Such charges should reasonably reflect the total activity for which the employee is compensated by the non-federal entity, not exceeding 100% of compensated activities. Condition – Payroll costs amounting to approximately $97,000 were over-allocated to the federal award for the year ended December 31, 2023 resulting from allocation of some payroll costs for hours not worked on the federal award. The federal award is a cost reimbursement grant and the over-allocation resulted in the federal award being charged more than the actual hours spent on the award. Reimbursement requests to the federal agency in 2024 were reduced by these over-allocated and unallowable costs of 2023. Cause – The non-compliance was due to inadequate internal controls over the allocation of payroll costs to federal awards. Specifically, the College did not have sufficient review processes in place to ensure that payroll costs were accurately allocated according to the work performed on the federal award. This discrepancy was identified by the College’s own controls during the year-end review of the Schedule, but after the costs had been over-allocated and billed to the cognizant agency. Corrective action was subsequently taken to adjust the amount charged and billed under the federal award in the following year by the over-allocated amount in 2023. Questioned Costs – There are approximately $97,000 of known questioned costs related to the items presented in the condition above. Context – The over-allocation of payroll costs was identified by the College during review of the Schedule after year end, which resulted in non-compliance with activities allowed or unallowed and allowable costs/cost principles. The prevalence of this finding is detailed in the condition section above. Effect – The over-allocation of payroll costs to federal awards may lead to improper use of federal funds. Repeat Finding – This is not a repeat finding. Recommendation – The College should strengthen its internal controls over the allocation of payroll costs to federal awards. This includes implementing a review process to ensure that payroll costs are accurately allocated based on the work performed and are supported by appropriate documentation. Additionally, the College should provide training to its personnel on the requirements of the Uniform Guidance related to allowable costs and cost principles. Views of Responsible Officials – Management acknowledges the finding and recommendation presented. Management will improve staff knowledge of Uniform Guidance through additional training on allowable costs and compliance. Payroll costs will be based on certified actual hours, verified by the Controller for accuracy. Quarterly reviews by the Technical and Internal Controls Accountant will ensure payroll costs match certified hours, maintaining compliance.
Federal program information: Funding agency: U.S. Department of Health and Human Services Title: Medical Assistance Program, COVID-19 Block Grants for Prevention and Treatment of Substance Abuse ALN: 93.778, 93.959 Award period: July 1, 2022 – June 30, 2024 Criteria: According to 2 CFR Part 200.403, to be allowable under federal awards, costs must be adequately documented. Additionally, the 2 CFR Part 200.430 requires that charges to Federal awards for salaries and wages must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Condition: Employee benefits expenditures charged to the programs do not agree to supporting documentation, such as employee benefit provider premiums invoices. Additionally, the pay rate paid to an employee was different from their approved pay rate. Lastly, an employee received eight hours of birthday pay (as allowed under ABHS’s personnel policies) in two different pay periods. Context: Nine of 25 employee benefit expenditures tested did not agree with employee benefit provider premium invoices. One of 25 employees tested was paid at a rate different from their approved pay rate. One of 25 employees tested received eight hours of birthday pay in two different pay periods. Questioned Costs: $358 for the Medical Assistance Program and $0 for the COVID-19 Block Grants for Prevention and Treatment of Substance Abuse program. Cause: The employer portion of employee benefit premiums are preloaded into the accounting system each year to be allocated to the different business units/programs at ABHS. ABHS does not have a process in place to subsequently reconcile these expenditures to the employer benefits provider premium invoices and/or employee benefit election forms. There was also a lack of review of approved pay rates and leave requests during 2023. Effect: ABHS may not be able to demonstrate that the costs charged to federal programs are allowable. Auditor’s Recommendations: ABHS should implement a reconciliation process to ensure that employee benefit expenditures charged to federal programs agree with employee benefit provider premiums invoices and/or employee benefit election forms.41 Management’s Response: ABHS acknowledges the finding related to employer benefits. As a corrective measure, we have initiated a comprehensive review of our current systems and identified key areas that require immediate upgrades. With the adoption of these upgrades, ABHS will perform an interim review of the expenditures recorded in the accounting system compared to the invoices.
Federal program information: Funding agency: U.S. Department of Health and Human Services Title: Medical Assistance Program, COVID-19 Block Grants for Prevention and Treatment of Substance Abuse ALN: 93.778, 93.959 Award period: July 1, 2022 – June 30, 2024 Criteria: According to 2 CFR Part 200.403, to be allowable under federal awards, costs must be adequately documented. Additionally, the 2 CFR Part 200.430 requires that charges to Federal awards for salaries and wages must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Condition: Employee benefits expenditures charged to the programs do not agree to supporting documentation, such as employee benefit provider premiums invoices. Additionally, the pay rate paid to an employee was different from their approved pay rate. Lastly, an employee received eight hours of birthday pay (as allowed under ABHS’s personnel policies) in two different pay periods. Context: Nine of 25 employee benefit expenditures tested did not agree with employee benefit provider premium invoices. One of 25 employees tested was paid at a rate different from their approved pay rate. One of 25 employees tested received eight hours of birthday pay in two different pay periods. Questioned Costs: $358 for the Medical Assistance Program and $0 for the COVID-19 Block Grants for Prevention and Treatment of Substance Abuse program. Cause: The employer portion of employee benefit premiums are preloaded into the accounting system each year to be allocated to the different business units/programs at ABHS. ABHS does not have a process in place to subsequently reconcile these expenditures to the employer benefits provider premium invoices and/or employee benefit election forms. There was also a lack of review of approved pay rates and leave requests during 2023. Effect: ABHS may not be able to demonstrate that the costs charged to federal programs are allowable. Auditor’s Recommendations: ABHS should implement a reconciliation process to ensure that employee benefit expenditures charged to federal programs agree with employee benefit provider premiums invoices and/or employee benefit election forms.41 Management’s Response: ABHS acknowledges the finding related to employer benefits. As a corrective measure, we have initiated a comprehensive review of our current systems and identified key areas that require immediate upgrades. With the adoption of these upgrades, ABHS will perform an interim review of the expenditures recorded in the accounting system compared to the invoices.
Finding 2023–002: Internal Controls over Allowable Activities and Costs Federal Department: U.S. Department of Treasury Pass-through Agencies: Cook County, Illinois and Women's Business Development Center COVID-19 - Coronavirus State and Local Fiscal Recovery Funds, Federal Assistance Listing Number 21.027 Criteria 2 CFR Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, Subpart D – Post-Federal Award Requirements Standards for Financial and Program Management Section 200.303, Internal controls states “The non-Federal” entity must: (1) establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and terms and conditions of the Federal award. Section 200.430 (i) Standards for Documentation of Personnel Expenses states (1) Charges to federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (ii) Be incorporated into the official records of the non-federal entity; (iii) Reasonably reflect the total activity for which the employee is compensated by the non-federal entity, not exceeding 100% of compensated activities…; (v) Comply with the established accounting policies and practices of the non-federal entity…; (viii) Budget estimates (i.e., estimates determined before the services are performed) alone do not qualify as support for charges to federal awards, but may be used for interim accounting purposes, provided that: (A) The system for establishing the estimates produces reasonable approximations of the activity actually performed; (B) Significant changes in the corresponding work activity (as defined by the non-federal entity's written policies) are identified and entered into the records in a timely manner. Short-term (such as one or two months) fluctuation between workload categories need not be considered as long as the distribution of salaries and wages is reasonable over the longer term; and (C) The non-federal entity's system of internal controls includes processes to review after-the-fact interim charges made to a federal award based on budget estimates. All necessary adjustments must be made such that the final amount charged to the federal award is accurate, allowable, and properly allocated. Per Exhibit A, Section D – Program Administration and Process Overview of the Subrecipient Agreement for the American Rescue Plan Act – State and Local Fiscal Recovery Funds dated July 20, 2022 with Cook County, Illinois, SDA was required to perform certain eligibility verification of program participant. The agreement notes that the subrecipient (SDA) has discretion on how to verify participants eligibility but should define and consistently apply an intake policy that includes maintaining documentation on each beneficiary that supports their eligibility, such as signed self-attestation forms from beneficiaries, financial documents that demonstrate economic hardship, geographic data showing that a program participant operates in a region that experienced disproportionate pandemic harm. SDA utilized an eligibility form (formerly panel review form) to document compliance with this requirement. Condition During the current audit period, SDA did not maintain adequate controls over allowable activities and costs related to its federally funded program. Cause SDA implemented the fiscal policy in 2023, which improved data retention and management for grant reporting of federal programs. Due to inconsistency in staffing during 2023, however, some historical gaps in data were found that were unable to be corrected prior to or during the 2023 audit. In addition, with the implementation of SDA’s customized Salesforce data management system, some data was deleted or lost during the transition, resulting in incomplete or missing records. Effect The failure to maintain adequate supporting documentation to ensure all expenditures, including personnel costs, are accurate, reasonable and allowable is a violation of federal regulations. Also, not maintaining support for actual time spent by employees on the program could result in unallowed payroll costs being charged to the federally funded program. Questioned Costs We noted total questioned costs of $36,170. Context During our review of 40 expenditures (from a 547 population) and related payroll activities (from a population of 58 totaling $231,798), we noted the following: For 18 expenditures reviewed, we were not provided with the cost allocation schedule to support the actual charges to the federal program. Following our review of the total invoice amount, we did not note any costs that were deemed to be unallowed per the grantor(s) requirements and federal regulations. During our review of 10 payroll expense items, we noted that payroll expenses charged to the program were based on estimates instead of the actual time and effort of reporting, which totaled $36,170. We were provided with a listing of 244 clients served who were required to undergo an eligibility/intake review as specified in the grant agreement. We were not provided documentation, such as a completed eligibility form, to verify that the eligibility/intake review was performed for 21 of 25 clients served that were tested. It appears data was lost during the Salesforce (electronic system utilized to store eligibility data) system migration. Identification of Repeated Findings Repeated (Prior Finding No. 2022-002). Recommendation We recommend that SDA implement procedures to ensure all expenditures, including personnel costs, are properly reviewed and supporting documentation maintained in accordance with federal regulations. Views of Responsible Officials and Planned Corrective Action SDA agrees with the finding and recommendation. See SDA’s Corrective Action Plan on pages 40 – 44.
Finding 2023–002: Internal Controls over Allowable Activities and Costs Federal Department: U.S. Department of Treasury Pass-through Agencies: Cook County, Illinois and Women's Business Development Center COVID-19 - Coronavirus State and Local Fiscal Recovery Funds, Federal Assistance Listing Number 21.027 Criteria 2 CFR Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, Subpart D – Post-Federal Award Requirements Standards for Financial and Program Management Section 200.303, Internal controls states “The non-Federal” entity must: (1) establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and terms and conditions of the Federal award. Section 200.430 (i) Standards for Documentation of Personnel Expenses states (1) Charges to federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (ii) Be incorporated into the official records of the non-federal entity; (iii) Reasonably reflect the total activity for which the employee is compensated by the non-federal entity, not exceeding 100% of compensated activities…; (v) Comply with the established accounting policies and practices of the non-federal entity…; (viii) Budget estimates (i.e., estimates determined before the services are performed) alone do not qualify as support for charges to federal awards, but may be used for interim accounting purposes, provided that: (A) The system for establishing the estimates produces reasonable approximations of the activity actually performed; (B) Significant changes in the corresponding work activity (as defined by the non-federal entity's written policies) are identified and entered into the records in a timely manner. Short-term (such as one or two months) fluctuation between workload categories need not be considered as long as the distribution of salaries and wages is reasonable over the longer term; and (C) The non-federal entity's system of internal controls includes processes to review after-the-fact interim charges made to a federal award based on budget estimates. All necessary adjustments must be made such that the final amount charged to the federal award is accurate, allowable, and properly allocated. Per Exhibit A, Section D – Program Administration and Process Overview of the Subrecipient Agreement for the American Rescue Plan Act – State and Local Fiscal Recovery Funds dated July 20, 2022 with Cook County, Illinois, SDA was required to perform certain eligibility verification of program participant. The agreement notes that the subrecipient (SDA) has discretion on how to verify participants eligibility but should define and consistently apply an intake policy that includes maintaining documentation on each beneficiary that supports their eligibility, such as signed self-attestation forms from beneficiaries, financial documents that demonstrate economic hardship, geographic data showing that a program participant operates in a region that experienced disproportionate pandemic harm. SDA utilized an eligibility form (formerly panel review form) to document compliance with this requirement. Condition During the current audit period, SDA did not maintain adequate controls over allowable activities and costs related to its federally funded program. Cause SDA implemented the fiscal policy in 2023, which improved data retention and management for grant reporting of federal programs. Due to inconsistency in staffing during 2023, however, some historical gaps in data were found that were unable to be corrected prior to or during the 2023 audit. In addition, with the implementation of SDA’s customized Salesforce data management system, some data was deleted or lost during the transition, resulting in incomplete or missing records. Effect The failure to maintain adequate supporting documentation to ensure all expenditures, including personnel costs, are accurate, reasonable and allowable is a violation of federal regulations. Also, not maintaining support for actual time spent by employees on the program could result in unallowed payroll costs being charged to the federally funded program. Questioned Costs We noted total questioned costs of $36,170. Context During our review of 40 expenditures (from a 547 population) and related payroll activities (from a population of 58 totaling $231,798), we noted the following: For 18 expenditures reviewed, we were not provided with the cost allocation schedule to support the actual charges to the federal program. Following our review of the total invoice amount, we did not note any costs that were deemed to be unallowed per the grantor(s) requirements and federal regulations. During our review of 10 payroll expense items, we noted that payroll expenses charged to the program were based on estimates instead of the actual time and effort of reporting, which totaled $36,170. We were provided with a listing of 244 clients served who were required to undergo an eligibility/intake review as specified in the grant agreement. We were not provided documentation, such as a completed eligibility form, to verify that the eligibility/intake review was performed for 21 of 25 clients served that were tested. It appears data was lost during the Salesforce (electronic system utilized to store eligibility data) system migration. Identification of Repeated Findings Repeated (Prior Finding No. 2022-002). Recommendation We recommend that SDA implement procedures to ensure all expenditures, including personnel costs, are properly reviewed and supporting documentation maintained in accordance with federal regulations. Views of Responsible Officials and Planned Corrective Action SDA agrees with the finding and recommendation. See SDA’s Corrective Action Plan on pages 40 – 44.
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 4 months of payroll expense charged to the grant for testing during the audit and noted that each month had at least one employee who did not have detailed time sheets or time studies to adequately support the hours charged to the grant. Our sample covered 7 employees over these 4 months and 3 of the employees tested did not have adequate support for the time charged. We tested a total of $33,351 of claimed payroll cost and identified known questioned costs of $3,770 which resulted in likely questioned costs of $5,308 using an error rate of 11% over total payroll claimed for 2023 of $46,955. Our sample was not considered to be a statistically valid sample. This finding is a repeat finding of 2022-002. Cause and Effect: The lack of adequate documentation to support time charged to the federal award combined with the finding 2023-003 resulted in material noncompliance to the referenced compliance requirements and to the program as a whole. Recommendation: We recommend the Association implement procedures for all employees who have payroll claimed under federal programs to prepare detailed timecards or time studies to support the distribution of each employee's compensation among specific activities, including the allocation of compensation to federal awards. These records should be reviewed by the employee's supervisor for accuracy. Views of Responsible Officials and Planned Corrective Actions: The Association agrees with the finding and plans to implement their corrective action during October 2024.
AL number and title: WIOA Cluster - 17.258, 17.259 and 17.278 Coronavirus State and Local Fiscal Recovery Funds - 21.027 VA Supportive Services for Veteran Families Program - 64.033 Refugee and Entrant Assistance State/Replacement Designee Administered Programs - 93.566 Federal award identification number and year: N/A Name of federal agency: U.S. Departments of Labor, Treasury, Veteran's Affairs and Health and Human Services Name of pass-through entity: State of California Employment Development Department; County of Los Angeles Workforce Development, Aging, and Community Services Department; City of Los Angeles Economic and Workforce Development Department; Catholic Charities of Los Angeles Repeat finding: No Criteria: Under the Uniform Guidance, specifically 2 CFR 200.430, organizations are permitted to use budgeted amounts to allocate time to Federal programs, as long as there is a process in place to true-up the costs on a regular basis. Condition: In general, JVS personnel prepare manual timesheets to record the actual time worked on the organization’s various programs. No process is currently in place to compare or revise the time if the budgeted time differs from the actual time. Cause: The organization lacked sufficient accounting resources to prepare these updates. Currently, the process would be very manual. Effect or potential effect: Hours charged to certain programs did not agree to the timesheets completed by employees and reviewed by their supervisors. Questioned cost: Estimated questioned costs related to variances in timesheets: Refugee Assistance programs - Known = $1,866, Projected = $24,944 WIOA programs - Known = $168, Projected = $58,485. Context: We tested a total of 114 timesheets and noted variances in 23. We also noted two instances where no timesheets were completed for administrative personnel. Recommendation: Management should institute a reconciliation and update process for the manual timecards. In addition, management should determine whether its electronic timekeeping systems can be reconfigured to allow employees to update their allocations as needed each pay period. View of Responsible Official: We agree with the finding. JVS has been evaluating how to fully address and resolve the issue. Remediation lies in modifying the current payroll platform (Paylocity) to facilitate employees ability to individually update their labor allocations electronically. JVS still does not have a sandbox testing environment to address system capabilities to achieve the objectives.
AL number and title: WIOA Cluster - 17.258, 17.259 and 17.278 Coronavirus State and Local Fiscal Recovery Funds - 21.027 VA Supportive Services for Veteran Families Program - 64.033 Refugee and Entrant Assistance State/Replacement Designee Administered Programs - 93.566 Federal award identification number and year: N/A Name of federal agency: U.S. Departments of Labor, Treasury, Veteran's Affairs and Health and Human Services Name of pass-through entity: State of California Employment Development Department; County of Los Angeles Workforce Development, Aging, and Community Services Department; City of Los Angeles Economic and Workforce Development Department; Catholic Charities of Los Angeles Repeat finding: No Criteria: Under the Uniform Guidance, specifically 2 CFR 200.430, organizations are permitted to use budgeted amounts to allocate time to Federal programs, as long as there is a process in place to true-up the costs on a regular basis. Condition: In general, JVS personnel prepare manual timesheets to record the actual time worked on the organization’s various programs. No process is currently in place to compare or revise the time if the budgeted time differs from the actual time. Cause: The organization lacked sufficient accounting resources to prepare these updates. Currently, the process would be very manual. Effect or potential effect: Hours charged to certain programs did not agree to the timesheets completed by employees and reviewed by their supervisors. Questioned cost: Estimated questioned costs related to variances in timesheets: Refugee Assistance programs - Known = $1,866, Projected = $24,944 WIOA programs - Known = $168, Projected = $58,485. Context: We tested a total of 114 timesheets and noted variances in 23. We also noted two instances where no timesheets were completed for administrative personnel. Recommendation: Management should institute a reconciliation and update process for the manual timecards. In addition, management should determine whether its electronic timekeeping systems can be reconfigured to allow employees to update their allocations as needed each pay period. View of Responsible Official: We agree with the finding. JVS has been evaluating how to fully address and resolve the issue. Remediation lies in modifying the current payroll platform (Paylocity) to facilitate employees ability to individually update their labor allocations electronically. JVS still does not have a sandbox testing environment to address system capabilities to achieve the objectives.
AL number and title: WIOA Cluster - 17.258, 17.259 and 17.278 Coronavirus State and Local Fiscal Recovery Funds - 21.027 VA Supportive Services for Veteran Families Program - 64.033 Refugee and Entrant Assistance State/Replacement Designee Administered Programs - 93.566 Federal award identification number and year: N/A Name of federal agency: U.S. Departments of Labor, Treasury, Veteran's Affairs and Health and Human Services Name of pass-through entity: State of California Employment Development Department; County of Los Angeles Workforce Development, Aging, and Community Services Department; City of Los Angeles Economic and Workforce Development Department; Catholic Charities of Los Angeles Repeat finding: No Criteria: Under the Uniform Guidance, specifically 2 CFR 200.430, organizations are permitted to use budgeted amounts to allocate time to Federal programs, as long as there is a process in place to true-up the costs on a regular basis. Condition: In general, JVS personnel prepare manual timesheets to record the actual time worked on the organization’s various programs. No process is currently in place to compare or revise the time if the budgeted time differs from the actual time. Cause: The organization lacked sufficient accounting resources to prepare these updates. Currently, the process would be very manual. Effect or potential effect: Hours charged to certain programs did not agree to the timesheets completed by employees and reviewed by their supervisors. Questioned cost: Estimated questioned costs related to variances in timesheets: Refugee Assistance programs - Known = $1,866, Projected = $24,944 WIOA programs - Known = $168, Projected = $58,485. Context: We tested a total of 114 timesheets and noted variances in 23. We also noted two instances where no timesheets were completed for administrative personnel. Recommendation: Management should institute a reconciliation and update process for the manual timecards. In addition, management should determine whether its electronic timekeeping systems can be reconfigured to allow employees to update their allocations as needed each pay period. View of Responsible Official: We agree with the finding. JVS has been evaluating how to fully address and resolve the issue. Remediation lies in modifying the current payroll platform (Paylocity) to facilitate employees ability to individually update their labor allocations electronically. JVS still does not have a sandbox testing environment to address system capabilities to achieve the objectives.
AL number and title: WIOA Cluster - 17.258, 17.259 and 17.278 Coronavirus State and Local Fiscal Recovery Funds - 21.027 VA Supportive Services for Veteran Families Program - 64.033 Refugee and Entrant Assistance State/Replacement Designee Administered Programs - 93.566 Federal award identification number and year: N/A Name of federal agency: U.S. Departments of Labor, Treasury, Veteran's Affairs and Health and Human Services Name of pass-through entity: State of California Employment Development Department; County of Los Angeles Workforce Development, Aging, and Community Services Department; City of Los Angeles Economic and Workforce Development Department; Catholic Charities of Los Angeles Repeat finding: No Criteria: Under the Uniform Guidance, specifically 2 CFR 200.430, organizations are permitted to use budgeted amounts to allocate time to Federal programs, as long as there is a process in place to true-up the costs on a regular basis. Condition: In general, JVS personnel prepare manual timesheets to record the actual time worked on the organization’s various programs. No process is currently in place to compare or revise the time if the budgeted time differs from the actual time. Cause: The organization lacked sufficient accounting resources to prepare these updates. Currently, the process would be very manual. Effect or potential effect: Hours charged to certain programs did not agree to the timesheets completed by employees and reviewed by their supervisors. Questioned cost: Estimated questioned costs related to variances in timesheets: Refugee Assistance programs - Known = $1,866, Projected = $24,944 WIOA programs - Known = $168, Projected = $58,485. Context: We tested a total of 114 timesheets and noted variances in 23. We also noted two instances where no timesheets were completed for administrative personnel. Recommendation: Management should institute a reconciliation and update process for the manual timecards. In addition, management should determine whether its electronic timekeeping systems can be reconfigured to allow employees to update their allocations as needed each pay period. View of Responsible Official: We agree with the finding. JVS has been evaluating how to fully address and resolve the issue. Remediation lies in modifying the current payroll platform (Paylocity) to facilitate employees ability to individually update their labor allocations electronically. JVS still does not have a sandbox testing environment to address system capabilities to achieve the objectives.
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.
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.