Assistance Listing, Federal Agency, and Program Name - Research and Development Cluster (R&D), Small Business Development Centers (SBDC), Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) Federal Award Identification Number and Year - R&D - All ALN's SBDC - SBAHQ21B0057, SBAHQ22B0059, SBAOEDSB230049, SBAHQ20C0031 ELC - NU50CK000510 Pass through Entity - R&D - Various SBDC - None ELC - Michigan Department of Health and Human Services and Kent County Health Department Finding Type - Material weakness and material noncompliance with laws and regulations Repeat Finding - No Criteria - As outlined in 2 CFR 200.430(i), salaries and wages must be based on records that accurately reflect the work performed including complying with established accounting policies and practices of the University. Per the University's policy, effort reports are to be certified by an individual or a person with suitable means of verification (the principal investigator, department chair or Dean) of the work performed approximately 30 days after each reporting period. Condition - Of the 10 employees included within the hourly payroll expenditure sample selected for testing in the Research and Development Cluster, the University did not complete a full, executed review of the effort certifications within the time period as outlined in the policy for all 10 employees. Of the 14 employees included within the hourly payroll expenditure sample selected for testing in the Small Business Development grants, the University did not complete a full, executed review of the effort certifications within the time period as outlined in the policy for 7 employees. Of the 8 employees included within the hourly payroll expenditure sample selected for testing in the Epidemiology and Laboratory Capacity for Infectious Diseases grants, the University did not complete a full, executed review of the effort certifications within the time period as outlined in the policy for all 8 employees. Questioned Costs - None Identification of How Questioned Costs Were Computed - N/A Context - In the samples mentioned above, the University ultimately completed review of the effort certifications to support salaries and wages were allowable, however, 25 of the total 32 employees tested in these three programs were not reviewed timely. Cause and Effect - The University did not follow its policy to ensure that time and efforts were being reviewed and approved in a timely manner. Recommendation - We recommend the University maintain a procedure and control in place to ensure that, upon each reporting period, the University reviews and approves effort certifications as outlined in its policy. Views of Responsible Officials and Corrective Action Plan - Management agrees. The University implemented a new grant management software that will provide greater functionality to complete the effort certification process within the time requirements as identified in the University's Time and Effort Reporting policy.
Assistance Listing, Federal Agency, and Program Name - Research and Development Cluster (R&D), Small Business Development Centers (SBDC), Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) Federal Award Identification Number and Year - R&D - All ALN's SBDC - SBAHQ21B0057, SBAHQ22B0059, SBAOEDSB230049, SBAHQ20C0031 ELC - NU50CK000510 Pass through Entity - R&D - Various SBDC - None ELC - Michigan Department of Health and Human Services and Kent County Health Department Finding Type - Material weakness and material noncompliance with laws and regulations Repeat Finding - No Criteria - As outlined in 2 CFR 200.430(i), salaries and wages must be based on records that accurately reflect the work performed including complying with established accounting policies and practices of the University. Per the University's policy, effort reports are to be certified by an individual or a person with suitable means of verification (the principal investigator, department chair or Dean) of the work performed approximately 30 days after each reporting period. Condition - Of the 10 employees included within the hourly payroll expenditure sample selected for testing in the Research and Development Cluster, the University did not complete a full, executed review of the effort certifications within the time period as outlined in the policy for all 10 employees. Of the 14 employees included within the hourly payroll expenditure sample selected for testing in the Small Business Development grants, the University did not complete a full, executed review of the effort certifications within the time period as outlined in the policy for 7 employees. Of the 8 employees included within the hourly payroll expenditure sample selected for testing in the Epidemiology and Laboratory Capacity for Infectious Diseases grants, the University did not complete a full, executed review of the effort certifications within the time period as outlined in the policy for all 8 employees. Questioned Costs - None Identification of How Questioned Costs Were Computed - N/A Context - In the samples mentioned above, the University ultimately completed review of the effort certifications to support salaries and wages were allowable, however, 25 of the total 32 employees tested in these three programs were not reviewed timely. Cause and Effect - The University did not follow its policy to ensure that time and efforts were being reviewed and approved in a timely manner. Recommendation - We recommend the University maintain a procedure and control in place to ensure that, upon each reporting period, the University reviews and approves effort certifications as outlined in its policy. Views of Responsible Officials and Corrective Action Plan - Management agrees. The University implemented a new grant management software that will provide greater functionality to complete the effort certification process within the time requirements as identified in the University's Time and Effort Reporting policy.
Assistance Listing, Federal Agency, and Program Name - Research and Development Cluster (R&D), Small Business Development Centers (SBDC), Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) Federal Award Identification Number and Year - R&D - All ALN's SBDC - SBAHQ21B0057, SBAHQ22B0059, SBAOEDSB230049, SBAHQ20C0031 ELC - NU50CK000510 Pass through Entity - R&D - Various SBDC - None ELC - Michigan Department of Health and Human Services and Kent County Health Department Finding Type - Material weakness and material noncompliance with laws and regulations Repeat Finding - No Criteria - As outlined in 2 CFR 200.430(i), salaries and wages must be based on records that accurately reflect the work performed including complying with established accounting policies and practices of the University. Per the University's policy, effort reports are to be certified by an individual or a person with suitable means of verification (the principal investigator, department chair or Dean) of the work performed approximately 30 days after each reporting period. Condition - Of the 10 employees included within the hourly payroll expenditure sample selected for testing in the Research and Development Cluster, the University did not complete a full, executed review of the effort certifications within the time period as outlined in the policy for all 10 employees. Of the 14 employees included within the hourly payroll expenditure sample selected for testing in the Small Business Development grants, the University did not complete a full, executed review of the effort certifications within the time period as outlined in the policy for 7 employees. Of the 8 employees included within the hourly payroll expenditure sample selected for testing in the Epidemiology and Laboratory Capacity for Infectious Diseases grants, the University did not complete a full, executed review of the effort certifications within the time period as outlined in the policy for all 8 employees. Questioned Costs - None Identification of How Questioned Costs Were Computed - N/A Context - In the samples mentioned above, the University ultimately completed review of the effort certifications to support salaries and wages were allowable, however, 25 of the total 32 employees tested in these three programs were not reviewed timely. Cause and Effect - The University did not follow its policy to ensure that time and efforts were being reviewed and approved in a timely manner. Recommendation - We recommend the University maintain a procedure and control in place to ensure that, upon each reporting period, the University reviews and approves effort certifications as outlined in its policy. Views of Responsible Officials and Corrective Action Plan - Management agrees. The University implemented a new grant management software that will provide greater functionality to complete the effort certification process within the time requirements as identified in the University's Time and Effort Reporting policy.
Assistance Listing, Federal Agency, and Program Name - Research and Development Cluster (R&D), Small Business Development Centers (SBDC), Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) Federal Award Identification Number and Year - R&D - All ALN's SBDC - SBAHQ21B0057, SBAHQ22B0059, SBAOEDSB230049, SBAHQ20C0031 ELC - NU50CK000510 Pass through Entity - R&D - Various SBDC - None ELC - Michigan Department of Health and Human Services and Kent County Health Department Finding Type - Material weakness and material noncompliance with laws and regulations Repeat Finding - No Criteria - As outlined in 2 CFR 200.430(i), salaries and wages must be based on records that accurately reflect the work performed including complying with established accounting policies and practices of the University. Per the University's policy, effort reports are to be certified by an individual or a person with suitable means of verification (the principal investigator, department chair or Dean) of the work performed approximately 30 days after each reporting period. Condition - Of the 10 employees included within the hourly payroll expenditure sample selected for testing in the Research and Development Cluster, the University did not complete a full, executed review of the effort certifications within the time period as outlined in the policy for all 10 employees. Of the 14 employees included within the hourly payroll expenditure sample selected for testing in the Small Business Development grants, the University did not complete a full, executed review of the effort certifications within the time period as outlined in the policy for 7 employees. Of the 8 employees included within the hourly payroll expenditure sample selected for testing in the Epidemiology and Laboratory Capacity for Infectious Diseases grants, the University did not complete a full, executed review of the effort certifications within the time period as outlined in the policy for all 8 employees. Questioned Costs - None Identification of How Questioned Costs Were Computed - N/A Context - In the samples mentioned above, the University ultimately completed review of the effort certifications to support salaries and wages were allowable, however, 25 of the total 32 employees tested in these three programs were not reviewed timely. Cause and Effect - The University did not follow its policy to ensure that time and efforts were being reviewed and approved in a timely manner. Recommendation - We recommend the University maintain a procedure and control in place to ensure that, upon each reporting period, the University reviews and approves effort certifications as outlined in its policy. Views of Responsible Officials and Corrective Action Plan - Management agrees. The University implemented a new grant management software that will provide greater functionality to complete the effort certification process within the time requirements as identified in the University's Time and Effort Reporting policy.
Assistance Listing, Federal Agency, and Program Name - Research and Development Cluster (R&D), Small Business Development Centers (SBDC), Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) Federal Award Identification Number and Year - R&D - All ALN's SBDC - SBAHQ21B0057, SBAHQ22B0059, SBAOEDSB230049, SBAHQ20C0031 ELC - NU50CK000510 Pass through Entity - R&D - Various SBDC - None ELC - Michigan Department of Health and Human Services and Kent County Health Department Finding Type - Material weakness and material noncompliance with laws and regulations Repeat Finding - No Criteria - As outlined in 2 CFR 200.430(i), salaries and wages must be based on records that accurately reflect the work performed including complying with established accounting policies and practices of the University. Per the University's policy, effort reports are to be certified by an individual or a person with suitable means of verification (the principal investigator, department chair or Dean) of the work performed approximately 30 days after each reporting period. Condition - Of the 10 employees included within the hourly payroll expenditure sample selected for testing in the Research and Development Cluster, the University did not complete a full, executed review of the effort certifications within the time period as outlined in the policy for all 10 employees. Of the 14 employees included within the hourly payroll expenditure sample selected for testing in the Small Business Development grants, the University did not complete a full, executed review of the effort certifications within the time period as outlined in the policy for 7 employees. Of the 8 employees included within the hourly payroll expenditure sample selected for testing in the Epidemiology and Laboratory Capacity for Infectious Diseases grants, the University did not complete a full, executed review of the effort certifications within the time period as outlined in the policy for all 8 employees. Questioned Costs - None Identification of How Questioned Costs Were Computed - N/A Context - In the samples mentioned above, the University ultimately completed review of the effort certifications to support salaries and wages were allowable, however, 25 of the total 32 employees tested in these three programs were not reviewed timely. Cause and Effect - The University did not follow its policy to ensure that time and efforts were being reviewed and approved in a timely manner. Recommendation - We recommend the University maintain a procedure and control in place to ensure that, upon each reporting period, the University reviews and approves effort certifications as outlined in its policy. Views of Responsible Officials and Corrective Action Plan - Management agrees. The University implemented a new grant management software that will provide greater functionality to complete the effort certification process within the time requirements as identified in the University's Time and Effort Reporting policy.
Assistance Listing, Federal Agency, and Program Name - Research and Development Cluster (R&D), Small Business Development Centers (SBDC), Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) Federal Award Identification Number and Year - R&D - All ALN's SBDC - SBAHQ21B0057, SBAHQ22B0059, SBAOEDSB230049, SBAHQ20C0031 ELC - NU50CK000510 Pass through Entity - R&D - Various SBDC - None ELC - Michigan Department of Health and Human Services and Kent County Health Department Finding Type - Material weakness and material noncompliance with laws and regulations Repeat Finding - No Criteria - As outlined in 2 CFR 200.430(i), salaries and wages must be based on records that accurately reflect the work performed including complying with established accounting policies and practices of the University. Per the University's policy, effort reports are to be certified by an individual or a person with suitable means of verification (the principal investigator, department chair or Dean) of the work performed approximately 30 days after each reporting period. Condition - Of the 10 employees included within the hourly payroll expenditure sample selected for testing in the Research and Development Cluster, the University did not complete a full, executed review of the effort certifications within the time period as outlined in the policy for all 10 employees. Of the 14 employees included within the hourly payroll expenditure sample selected for testing in the Small Business Development grants, the University did not complete a full, executed review of the effort certifications within the time period as outlined in the policy for 7 employees. Of the 8 employees included within the hourly payroll expenditure sample selected for testing in the Epidemiology and Laboratory Capacity for Infectious Diseases grants, the University did not complete a full, executed review of the effort certifications within the time period as outlined in the policy for all 8 employees. Questioned Costs - None Identification of How Questioned Costs Were Computed - N/A Context - In the samples mentioned above, the University ultimately completed review of the effort certifications to support salaries and wages were allowable, however, 25 of the total 32 employees tested in these three programs were not reviewed timely. Cause and Effect - The University did not follow its policy to ensure that time and efforts were being reviewed and approved in a timely manner. Recommendation - We recommend the University maintain a procedure and control in place to ensure that, upon each reporting period, the University reviews and approves effort certifications as outlined in its policy. Views of Responsible Officials and Corrective Action Plan - Management agrees. The University implemented a new grant management software that will provide greater functionality to complete the effort certification process within the time requirements as identified in the University's Time and Effort Reporting policy.
Assistance Listing, Federal Agency, and Program Name - Research and Development Cluster (R&D), Small Business Development Centers (SBDC), Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) Federal Award Identification Number and Year - R&D - All ALN's SBDC - SBAHQ21B0057, SBAHQ22B0059, SBAOEDSB230049, SBAHQ20C0031 ELC - NU50CK000510 Pass through Entity - R&D - Various SBDC - None ELC - Michigan Department of Health and Human Services and Kent County Health Department Finding Type - Material weakness and material noncompliance with laws and regulations Repeat Finding - No Criteria - As outlined in 2 CFR 200.430(i), salaries and wages must be based on records that accurately reflect the work performed including complying with established accounting policies and practices of the University. Per the University's policy, effort reports are to be certified by an individual or a person with suitable means of verification (the principal investigator, department chair or Dean) of the work performed approximately 30 days after each reporting period. Condition - Of the 10 employees included within the hourly payroll expenditure sample selected for testing in the Research and Development Cluster, the University did not complete a full, executed review of the effort certifications within the time period as outlined in the policy for all 10 employees. Of the 14 employees included within the hourly payroll expenditure sample selected for testing in the Small Business Development grants, the University did not complete a full, executed review of the effort certifications within the time period as outlined in the policy for 7 employees. Of the 8 employees included within the hourly payroll expenditure sample selected for testing in the Epidemiology and Laboratory Capacity for Infectious Diseases grants, the University did not complete a full, executed review of the effort certifications within the time period as outlined in the policy for all 8 employees. Questioned Costs - None Identification of How Questioned Costs Were Computed - N/A Context - In the samples mentioned above, the University ultimately completed review of the effort certifications to support salaries and wages were allowable, however, 25 of the total 32 employees tested in these three programs were not reviewed timely. Cause and Effect - The University did not follow its policy to ensure that time and efforts were being reviewed and approved in a timely manner. Recommendation - We recommend the University maintain a procedure and control in place to ensure that, upon each reporting period, the University reviews and approves effort certifications as outlined in its policy. Views of Responsible Officials and Corrective Action Plan - Management agrees. The University implemented a new grant management software that will provide greater functionality to complete the effort certification process within the time requirements as identified in the University's Time and Effort Reporting policy.
Assistance Listing, Federal Agency, and Program Name - Research and Development Cluster (R&D), Small Business Development Centers (SBDC), Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) Federal Award Identification Number and Year - R&D - All ALN's SBDC - SBAHQ21B0057, SBAHQ22B0059, SBAOEDSB230049, SBAHQ20C0031 ELC - NU50CK000510 Pass through Entity - R&D - Various SBDC - None ELC - Michigan Department of Health and Human Services and Kent County Health Department Finding Type - Material weakness and material noncompliance with laws and regulations Repeat Finding - No Criteria - As outlined in 2 CFR 200.430(i), salaries and wages must be based on records that accurately reflect the work performed including complying with established accounting policies and practices of the University. Per the University's policy, effort reports are to be certified by an individual or a person with suitable means of verification (the principal investigator, department chair or Dean) of the work performed approximately 30 days after each reporting period. Condition - Of the 10 employees included within the hourly payroll expenditure sample selected for testing in the Research and Development Cluster, the University did not complete a full, executed review of the effort certifications within the time period as outlined in the policy for all 10 employees. Of the 14 employees included within the hourly payroll expenditure sample selected for testing in the Small Business Development grants, the University did not complete a full, executed review of the effort certifications within the time period as outlined in the policy for 7 employees. Of the 8 employees included within the hourly payroll expenditure sample selected for testing in the Epidemiology and Laboratory Capacity for Infectious Diseases grants, the University did not complete a full, executed review of the effort certifications within the time period as outlined in the policy for all 8 employees. Questioned Costs - None Identification of How Questioned Costs Were Computed - N/A Context - In the samples mentioned above, the University ultimately completed review of the effort certifications to support salaries and wages were allowable, however, 25 of the total 32 employees tested in these three programs were not reviewed timely. Cause and Effect - The University did not follow its policy to ensure that time and efforts were being reviewed and approved in a timely manner. Recommendation - We recommend the University maintain a procedure and control in place to ensure that, upon each reporting period, the University reviews and approves effort certifications as outlined in its policy. Views of Responsible Officials and Corrective Action Plan - Management agrees. The University implemented a new grant management software that will provide greater functionality to complete the effort certification process within the time requirements as identified in the University's Time and Effort Reporting policy.
Assistance Listing, Federal Agency, and Program Name - Research and Development Cluster (R&D), Small Business Development Centers (SBDC), Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) Federal Award Identification Number and Year - R&D - All ALN's SBDC - SBAHQ21B0057, SBAHQ22B0059, SBAOEDSB230049, SBAHQ20C0031 ELC - NU50CK000510 Pass through Entity - R&D - Various SBDC - None ELC - Michigan Department of Health and Human Services and Kent County Health Department Finding Type - Material weakness and material noncompliance with laws and regulations Repeat Finding - No Criteria - As outlined in 2 CFR 200.430(i), salaries and wages must be based on records that accurately reflect the work performed including complying with established accounting policies and practices of the University. Per the University's policy, effort reports are to be certified by an individual or a person with suitable means of verification (the principal investigator, department chair or Dean) of the work performed approximately 30 days after each reporting period. Condition - Of the 10 employees included within the hourly payroll expenditure sample selected for testing in the Research and Development Cluster, the University did not complete a full, executed review of the effort certifications within the time period as outlined in the policy for all 10 employees. Of the 14 employees included within the hourly payroll expenditure sample selected for testing in the Small Business Development grants, the University did not complete a full, executed review of the effort certifications within the time period as outlined in the policy for 7 employees. Of the 8 employees included within the hourly payroll expenditure sample selected for testing in the Epidemiology and Laboratory Capacity for Infectious Diseases grants, the University did not complete a full, executed review of the effort certifications within the time period as outlined in the policy for all 8 employees. Questioned Costs - None Identification of How Questioned Costs Were Computed - N/A Context - In the samples mentioned above, the University ultimately completed review of the effort certifications to support salaries and wages were allowable, however, 25 of the total 32 employees tested in these three programs were not reviewed timely. Cause and Effect - The University did not follow its policy to ensure that time and efforts were being reviewed and approved in a timely manner. Recommendation - We recommend the University maintain a procedure and control in place to ensure that, upon each reporting period, the University reviews and approves effort certifications as outlined in its policy. Views of Responsible Officials and Corrective Action Plan - Management agrees. The University implemented a new grant management software that will provide greater functionality to complete the effort certification process within the time requirements as identified in the University's Time and Effort Reporting policy.
Assistance Listing, Federal Agency, and Program Name - Research and Development Cluster (R&D), Small Business Development Centers (SBDC), Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) Federal Award Identification Number and Year - R&D - All ALN's SBDC - SBAHQ21B0057, SBAHQ22B0059, SBAOEDSB230049, SBAHQ20C0031 ELC - NU50CK000510 Pass through Entity - R&D - Various SBDC - None ELC - Michigan Department of Health and Human Services and Kent County Health Department Finding Type - Material weakness and material noncompliance with laws and regulations Repeat Finding - No Criteria - As outlined in 2 CFR 200.430(i), salaries and wages must be based on records that accurately reflect the work performed including complying with established accounting policies and practices of the University. Per the University's policy, effort reports are to be certified by an individual or a person with suitable means of verification (the principal investigator, department chair or Dean) of the work performed approximately 30 days after each reporting period. Condition - Of the 10 employees included within the hourly payroll expenditure sample selected for testing in the Research and Development Cluster, the University did not complete a full, executed review of the effort certifications within the time period as outlined in the policy for all 10 employees. Of the 14 employees included within the hourly payroll expenditure sample selected for testing in the Small Business Development grants, the University did not complete a full, executed review of the effort certifications within the time period as outlined in the policy for 7 employees. Of the 8 employees included within the hourly payroll expenditure sample selected for testing in the Epidemiology and Laboratory Capacity for Infectious Diseases grants, the University did not complete a full, executed review of the effort certifications within the time period as outlined in the policy for all 8 employees. Questioned Costs - None Identification of How Questioned Costs Were Computed - N/A Context - In the samples mentioned above, the University ultimately completed review of the effort certifications to support salaries and wages were allowable, however, 25 of the total 32 employees tested in these three programs were not reviewed timely. Cause and Effect - The University did not follow its policy to ensure that time and efforts were being reviewed and approved in a timely manner. Recommendation - We recommend the University maintain a procedure and control in place to ensure that, upon each reporting period, the University reviews and approves effort certifications as outlined in its policy. Views of Responsible Officials and Corrective Action Plan - Management agrees. The University implemented a new grant management software that will provide greater functionality to complete the effort certification process within the time requirements as identified in the University's Time and Effort Reporting policy.
Noncompliance and Material Weakness 2 CFR § 3474.1 gives regulatory effect to the Department of Education for 2 CFR § 200.430(a), which provides that costs of compensation are allowable to the extent that they satisfy the specific requirements of this part, and that the total compensation for individual employees: • Is reasonable for the services rendered and conforms to the established written policy of the non-Federal entity consistently applied to both Federal and non-Federal activities; • Follows an appointment made in accordance with a non-Federal entity’s laws and/or rules or written policies and meets the requirements of Federal statute, where applicable; and • Is determined and supported as provided in paragraph (i) of this section, Standard for Documentation of Personnel Expenses, when applicable. Furthermore, Ohio Department of Education Grants Management Guidance 2014-002, revised on June 16, 2016 and August 29, 2019, further clarifies these requirements. The type of documentation required is based on the funding source and/or cost objective: • Semi-annual certifications are allowed when an employee's compensation is funded by only one Federal grant. An employee funded by a federal grant and the General fund would fall under this category. • Time and effort documentation is used when an employee's compensation is funded by more than one federal grant. • The substitute system of collecting time and effort is used when an employee’s compensation is funded by more than one grant. Due to a deficiency in internal policies and procedures over compliance, the District employee paid from the Special Education Cluster funds did not complete time and effort documentation for payroll expenditures in fiscal year 2023. This resulted in Special Education Cluster actual and projected expenditures of $9,300 not being supported with time and effort documentation. Based on the above guidance, the employee should have completed semi-annual certifications or time and effort documentation as their compensation was funded by a single Federal grant and the General fund. The District should implement control procedures to verify that all District employees who perform work for federal cost objectives complete time and effort documentation. The documentation should be signed by each individual employee or a supervisor who has firsthand knowledge of the information contained in the documentation.
Significant Deficiency in Internal Control over Compliance 2023-002 Special Education Cluster, ALN. 84.027, 84.173 Award Period: July 1, 2022 – June 30, 2023 Compliance Requirement: Allowable Costs/Cost Principles Criteria or Specific Requirement: The Code of Federal Regulations (CFR) Title 2 Part 200.430 indicates 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. Such records must also reasonably reflect the total activity for which the employee is compensated by the non-Federal entity. Condition and Context: For all of the payroll disbursements in our sample, evidence of management review of time and effort was not provided. Questioned Costs: None. Cause: Procedures were not in place to document the management review of time and effort. Effect: Significant deficiency in internal controls. Repeat Finding: No. Recommendation: We recommend procedures be strengthened to document and maintain on file the management review of time and effort. Views of Responsible Officials: Management agrees with the finding.
Significant Deficiency in Internal Control over Compliance 2023-002 Special Education Cluster, ALN. 84.027, 84.173 Award Period: July 1, 2022 – June 30, 2023 Compliance Requirement: Allowable Costs/Cost Principles Criteria or Specific Requirement: The Code of Federal Regulations (CFR) Title 2 Part 200.430 indicates 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. Such records must also reasonably reflect the total activity for which the employee is compensated by the non-Federal entity. Condition and Context: For all of the payroll disbursements in our sample, evidence of management review of time and effort was not provided. Questioned Costs: None. Cause: Procedures were not in place to document the management review of time and effort. Effect: Significant deficiency in internal controls. Repeat Finding: No. Recommendation: We recommend procedures be strengthened to document and maintain on file the management review of time and effort. Views of Responsible Officials: Management agrees with the finding.
Significant Deficiency in Internal Control over Compliance 2023-002 Special Education Cluster, ALN. 84.027, 84.173 Award Period: July 1, 2022 – June 30, 2023 Compliance Requirement: Allowable Costs/Cost Principles Criteria or Specific Requirement: The Code of Federal Regulations (CFR) Title 2 Part 200.430 indicates 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. Such records must also reasonably reflect the total activity for which the employee is compensated by the non-Federal entity. Condition and Context: For all of the payroll disbursements in our sample, evidence of management review of time and effort was not provided. Questioned Costs: None. Cause: Procedures were not in place to document the management review of time and effort. Effect: Significant deficiency in internal controls. Repeat Finding: No. Recommendation: We recommend procedures be strengthened to document and maintain on file the management review of time and effort. Views of Responsible Officials: Management agrees with the finding.
Significant Deficiency in Internal Control over Compliance 2023-002 Special Education Cluster, ALN. 84.027, 84.173 Award Period: July 1, 2022 – June 30, 2023 Compliance Requirement: Allowable Costs/Cost Principles Criteria or Specific Requirement: The Code of Federal Regulations (CFR) Title 2 Part 200.430 indicates 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. Such records must also reasonably reflect the total activity for which the employee is compensated by the non-Federal entity. Condition and Context: For all of the payroll disbursements in our sample, evidence of management review of time and effort was not provided. Questioned Costs: None. Cause: Procedures were not in place to document the management review of time and effort. Effect: Significant deficiency in internal controls. Repeat Finding: No. Recommendation: We recommend procedures be strengthened to document and maintain on file the management review of time and effort. Views of Responsible Officials: Management agrees with the finding.
Criteria or Specific Requirement: CFR section 200.403, Factors affecting allowability of costs, states costs must: conform to limitations or exclusions, be accorded consistent treatment, a cost may not be assigned to a Federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the Federal award as an indirect cost and be adequately documented. 2 CFR section 200.405, Allowable costs, states this standard is met if the cost is incurred specifically for the Federal award and can be distributed in proportions that may be approximated using reasonable methods. Further, if costs benefit two or more projects or activities in proportions that can be determined without undue effort or cost, the cost must be allocated to the projects based on the proportional benefit. If a cost benefits two or more projects or activities in proportions that cannot be determined, the costs must be allocated on any reasonable documented basis. 2 CFR section 200.430(i) Standards for Documentation of Personnel Expenses states charges to Federal awards for salaries must be based on records that accurately reflect the work performed and these records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated, 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 and non-Federal award and charges for the salaries and wages of nonexempt employees must be supported by records indicating the total number of hours worked each day. Condition: The Organization did not maintain an effective control environment to ensure costs incurred for expenditures charged to the program were in accordance with contract requirements and applicable cost principles. The method for allocation of non-payroll expenditures between federally funded programs and other programs was based on percentages that had not been to reflect current funding sources. Payroll expenditures were allocated based on budget estimates and not upon the actual work performed on various Federal awards and non-federal activities. Cause: The Organization received new funding subject to Uniform Guidance and did not have written internal control policies as required by Uniform Guidance. Processes and procedures were not updated to be in accordance with Uniform Guidance. Effect or Potential Effect: Potential for unallowable activities and unallowable costs. Questioned Costs: Related questioned costs are unknown. Context: During the year under audit, the issues represent a systemic problem. Recommendation: We recommend the Organization document all methods used to allocate expenditures and ensure adequate support is maintained to substantiate allocation calculations. Management should design and implement policies and procedures to ensure payroll expenditures are based on actual time spent on the federal funded programs. View of Responsible Officials: In response to finding number 2023-001, there is no disagreement with the audit finding. As this is our first audit requiring Internal Controls over Compliance, management will draft new policies and procedures to ensure payroll expenditures are based on actual time spent of the federal funded programs. Managers will allocate employees’ time based on tasks performed and the amount of time worked on federal award activities. The allocation of non-payroll expenses will be based on percentages of current funding sources. These new policies and procedures will be in full effect throughout fiscal year 2025 and beyond.
Criteria or Specific Requirement: CFR section 200.403, Factors affecting allowability of costs, states costs must: conform to limitations or exclusions, be accorded consistent treatment, a cost may not be assigned to a Federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the Federal award as an indirect cost and be adequately documented. 2 CFR section 200.405, Allowable costs, states this standard is met if the cost is incurred specifically for the Federal award and can be distributed in proportions that may be approximated using reasonable methods. Further, if costs benefit two or more projects or activities in proportions that can be determined without undue effort or cost, the cost must be allocated to the projects based on the proportional benefit. If a cost benefits two or more projects or activities in proportions that cannot be determined, the costs must be allocated on any reasonable documented basis. 2 CFR section 200.430(i) Standards for Documentation of Personnel Expenses states charges to Federal awards for salaries must be based on records that accurately reflect the work performed and these records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated, 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 and non-Federal award and charges for the salaries and wages of nonexempt employees must be supported by records indicating the total number of hours worked each day. Condition: The Organization did not maintain an effective control environment to ensure costs incurred for expenditures charged to the program were in accordance with contract requirements and applicable cost principles. The method for allocation of non-payroll expenditures between federally funded programs and other programs was based on percentages that had not been to reflect current funding sources. Payroll expenditures were allocated based on budget estimates and not upon the actual work performed on various Federal awards and non-federal activities. Cause: The Organization received new funding subject to Uniform Guidance and did not have written internal control policies as required by Uniform Guidance. Processes and procedures were not updated to be in accordance with Uniform Guidance. Effect or Potential Effect: Potential for unallowable activities and unallowable costs. Questioned Costs: Related questioned costs are unknown. Context: During the year under audit, the issues represent a systemic problem. Recommendation: We recommend the Organization document all methods used to allocate expenditures and ensure adequate support is maintained to substantiate allocation calculations. Management should design and implement policies and procedures to ensure payroll expenditures are based on actual time spent on the federal funded programs. View of Responsible Officials: In response to finding number 2023-001, there is no disagreement with the audit finding. As this is our first audit requiring Internal Controls over Compliance, management will draft new policies and procedures to ensure payroll expenditures are based on actual time spent of the federal funded programs. Managers will allocate employees’ time based on tasks performed and the amount of time worked on federal award activities. The allocation of non-payroll expenses will be based on percentages of current funding sources. These new policies and procedures will be in full effect throughout fiscal year 2025 and beyond.
Criteria or Specific Requirement: CFR section 200.403, Factors affecting allowability of costs, states costs must: conform to limitations or exclusions, be accorded consistent treatment, a cost may not be assigned to a Federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the Federal award as an indirect cost and be adequately documented. 2 CFR section 200.405, Allowable costs, states this standard is met if the cost is incurred specifically for the Federal award and can be distributed in proportions that may be approximated using reasonable methods. Further, if costs benefit two or more projects or activities in proportions that can be determined without undue effort or cost, the cost must be allocated to the projects based on the proportional benefit. If a cost benefits two or more projects or activities in proportions that cannot be determined, the costs must be allocated on any reasonable documented basis. 2 CFR section 200.430(i) Standards for Documentation of Personnel Expenses states charges to Federal awards for salaries must be based on records that accurately reflect the work performed and these records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated, 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 and non-Federal award and charges for the salaries and wages of nonexempt employees must be supported by records indicating the total number of hours worked each day. Condition: The Organization did not maintain an effective control environment to ensure costs incurred for expenditures charged to the program were in accordance with contract requirements and applicable cost principles. The method for allocation of non-payroll expenditures between federally funded programs and other programs was based on percentages that had not been to reflect current funding sources. Payroll expenditures were allocated based on budget estimates and not upon the actual work performed on various Federal awards and non-federal activities. Cause: The Organization received new funding subject to Uniform Guidance and did not have written internal control policies as required by Uniform Guidance. Processes and procedures were not updated to be in accordance with Uniform Guidance. Effect or Potential Effect: Potential for unallowable activities and unallowable costs. Questioned Costs: Related questioned costs are unknown. Context: During the year under audit, the issues represent a systemic problem. Recommendation: We recommend the Organization document all methods used to allocate expenditures and ensure adequate support is maintained to substantiate allocation calculations. Management should design and implement policies and procedures to ensure payroll expenditures are based on actual time spent on the federal funded programs. View of Responsible Officials: In response to finding number 2023-001, there is no disagreement with the audit finding. As this is our first audit requiring Internal Controls over Compliance, management will draft new policies and procedures to ensure payroll expenditures are based on actual time spent of the federal funded programs. Managers will allocate employees’ time based on tasks performed and the amount of time worked on federal award activities. The allocation of non-payroll expenses will be based on percentages of current funding sources. These new policies and procedures will be in full effect throughout fiscal year 2025 and beyond.
Criteria or Specific Requirement: CFR section 200.403, Factors affecting allowability of costs, states costs must: conform to limitations or exclusions, be accorded consistent treatment, a cost may not be assigned to a Federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the Federal award as an indirect cost and be adequately documented. 2 CFR section 200.405, Allowable costs, states this standard is met if the cost is incurred specifically for the Federal award and can be distributed in proportions that may be approximated using reasonable methods. Further, if costs benefit two or more projects or activities in proportions that can be determined without undue effort or cost, the cost must be allocated to the projects based on the proportional benefit. If a cost benefits two or more projects or activities in proportions that cannot be determined, the costs must be allocated on any reasonable documented basis. 2 CFR section 200.430(i) Standards for Documentation of Personnel Expenses states charges to Federal awards for salaries must be based on records that accurately reflect the work performed and these records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated, 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 and non-Federal award and charges for the salaries and wages of nonexempt employees must be supported by records indicating the total number of hours worked each day. Condition: The Organization did not maintain an effective control environment to ensure costs incurred for expenditures charged to the program were in accordance with contract requirements and applicable cost principles. The method for allocation of non-payroll expenditures between federally funded programs and other programs was based on percentages that had not been to reflect current funding sources. Payroll expenditures were allocated based on budget estimates and not upon the actual work performed on various Federal awards and non-federal activities. Cause: The Organization received new funding subject to Uniform Guidance and did not have written internal control policies as required by Uniform Guidance. Processes and procedures were not updated to be in accordance with Uniform Guidance. Effect or Potential Effect: Potential for unallowable activities and unallowable costs. Questioned Costs: Related questioned costs are unknown. Context: During the year under audit, the issues represent a systemic problem. Recommendation: We recommend the Organization document all methods used to allocate expenditures and ensure adequate support is maintained to substantiate allocation calculations. Management should design and implement policies and procedures to ensure payroll expenditures are based on actual time spent on the federal funded programs. View of Responsible Officials: In response to finding number 2023-001, there is no disagreement with the audit finding. As this is our first audit requiring Internal Controls over Compliance, management will draft new policies and procedures to ensure payroll expenditures are based on actual time spent of the federal funded programs. Managers will allocate employees’ time based on tasks performed and the amount of time worked on federal award activities. The allocation of non-payroll expenses will be based on percentages of current funding sources. These new policies and procedures will be in full effect throughout fiscal year 2025 and beyond.
Criteria or Specific Requirement: CFR section 200.403, Factors affecting allowability of costs, states costs must: conform to limitations or exclusions, be accorded consistent treatment, a cost may not be assigned to a Federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the Federal award as an indirect cost and be adequately documented. 2 CFR section 200.405, Allowable costs, states this standard is met if the cost is incurred specifically for the Federal award and can be distributed in proportions that may be approximated using reasonable methods. Further, if costs benefit two or more projects or activities in proportions that can be determined without undue effort or cost, the cost must be allocated to the projects based on the proportional benefit. If a cost benefits two or more projects or activities in proportions that cannot be determined, the costs must be allocated on any reasonable documented basis. 2 CFR section 200.430(i) Standards for Documentation of Personnel Expenses states charges to Federal awards for salaries must be based on records that accurately reflect the work performed and these records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated, 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 and non-Federal award and charges for the salaries and wages of nonexempt employees must be supported by records indicating the total number of hours worked each day. Condition: The Organization did not maintain an effective control environment to ensure costs incurred for expenditures charged to the program were in accordance with contract requirements and applicable cost principles. The method for allocation of non-payroll expenditures between federally funded programs and other programs was based on percentages that had not been to reflect current funding sources. Payroll expenditures were allocated based on budget estimates and not upon the actual work performed on various Federal awards and non-federal activities. Cause: The Organization received new funding subject to Uniform Guidance and did not have written internal control policies as required by Uniform Guidance. Processes and procedures were not updated to be in accordance with Uniform Guidance. Effect or Potential Effect: Potential for unallowable activities and unallowable costs. Questioned Costs: Related questioned costs are unknown. Context: During the year under audit, the issues represent a systemic problem. Recommendation: We recommend the Organization document all methods used to allocate expenditures and ensure adequate support is maintained to substantiate allocation calculations. Management should design and implement policies and procedures to ensure payroll expenditures are based on actual time spent on the federal funded programs. View of Responsible Officials: In response to finding number 2023-001, there is no disagreement with the audit finding. As this is our first audit requiring Internal Controls over Compliance, management will draft new policies and procedures to ensure payroll expenditures are based on actual time spent of the federal funded programs. Managers will allocate employees’ time based on tasks performed and the amount of time worked on federal award activities. The allocation of non-payroll expenses will be based on percentages of current funding sources. These new policies and procedures will be in full effect throughout fiscal year 2025 and beyond.
Criteria or Specific Requirement: CFR section 200.403, Factors affecting allowability of costs, states costs must: conform to limitations or exclusions, be accorded consistent treatment, a cost may not be assigned to a Federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the Federal award as an indirect cost and be adequately documented. 2 CFR section 200.405, Allowable costs, states this standard is met if the cost is incurred specifically for the Federal award and can be distributed in proportions that may be approximated using reasonable methods. Further, if costs benefit two or more projects or activities in proportions that can be determined without undue effort or cost, the cost must be allocated to the projects based on the proportional benefit. If a cost benefits two or more projects or activities in proportions that cannot be determined, the costs must be allocated on any reasonable documented basis. 2 CFR section 200.430(i) Standards for Documentation of Personnel Expenses states charges to Federal awards for salaries must be based on records that accurately reflect the work performed and these records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated, 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 and non-Federal award and charges for the salaries and wages of nonexempt employees must be supported by records indicating the total number of hours worked each day. Condition: The Organization did not maintain an effective control environment to ensure costs incurred for expenditures charged to the program were in accordance with contract requirements and applicable cost principles. The method for allocation of non-payroll expenditures between federally funded programs and other programs was based on percentages that had not been to reflect current funding sources. Payroll expenditures were allocated based on budget estimates and not upon the actual work performed on various Federal awards and non-federal activities. Cause: The Organization received new funding subject to Uniform Guidance and did not have written internal control policies as required by Uniform Guidance. Processes and procedures were not updated to be in accordance with Uniform Guidance. Effect or Potential Effect: Potential for unallowable activities and unallowable costs. Questioned Costs: Related questioned costs are unknown. Context: During the year under audit, the issues represent a systemic problem. Recommendation: We recommend the Organization document all methods used to allocate expenditures and ensure adequate support is maintained to substantiate allocation calculations. Management should design and implement policies and procedures to ensure payroll expenditures are based on actual time spent on the federal funded programs. View of Responsible Officials: In response to finding number 2023-001, there is no disagreement with the audit finding. As this is our first audit requiring Internal Controls over Compliance, management will draft new policies and procedures to ensure payroll expenditures are based on actual time spent of the federal funded programs. Managers will allocate employees’ time based on tasks performed and the amount of time worked on federal award activities. The allocation of non-payroll expenses will be based on percentages of current funding sources. These new policies and procedures will be in full effect throughout fiscal year 2025 and beyond.
(2023-050) Title: Internal control over monitoring of employee classification and compensation needs improvement Prior Year Findings: See schedule of Findings and Questioned Costs for chart/table State Department: Administrative and Financial Services State Bureau: Human Resources Federal Agency: U.S. Department of Labor U.S. Department of Transportation U.S. Department of Education Assistance Listing Title: Unemployment Insurance (UI) (COVID-19) Highway Planning and Construction (Federal-Aid Highway Program) Special Education Cluster (IDEA) (COVID-19) Assistance Listing Number: 17.225; 20.205; 84.027, 84.173 Federal Award Identification Number: See E-93 to E-94 Compliance Area: Allowable costs/cost principles Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.430; 5 MRSA 7061 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. Costs of compensation are allowable to the extent that personal services are rendered during the period of performance under the Federal award, total compensation is reasonable for the services rendered and conforms to the established written policy of the non-Federal entity, and follows an appointment made in accordance with a non-Federal entity’s laws and/or rules or written policies. 5 MRSA 7061 states that the (Bureau of Human Resources (BHR)) director shall record the duties and responsibilities of all positions in State service and establish classes for these positions. The procedure shall provide for periodic updating of job descriptions at least every five years to accurately reflect current duties and responsibilities of each job classification. Condition: BHR maintains the job classification specifications and related compensation plan of State employees. A specific salary specification and grade is assigned based on the duties and responsibilities referenced in the job classification specification; this represents reasonable compensation for the services rendered for all positions that inhabit a given job classification specification. The assigned salary grade provides a basis for the allowability of compensation costs charged to Federal awards by documenting the reasonableness of compensation for services rendered by State employees, and that the position appointments under the job classification specification were made and maintained in accordance with State statute. While BHR relies on data collected from State agencies to implement procedures regarding the classification plan, BHR retains ultimate oversight responsibility. BHR is the only agency with the authority to modify the classification plan. According to 5 MRSA 7061, BHR shall provide for periodic updating of job descriptions at least every five years to accurately reflect current duties and responsibilities of each job classification. On BHR’s website, job classification specifications, along with the date the job class was last reviewed and updated, are published. The Office of the State Auditor (OSA) tested 24 job classification specifications and information reported on BHR’s website for compliance with 5 MRSA 7061. For 12 of the 24 job classification specifications tested, OSA identified that the date the job class was last updated was beyond five years. Prior to March 2023, BHR only updated the date on a job classification if a change was made. Although BHR began recording review dates regardless of whether a change was made in April 2023, there is no tracking mechanism in place to effectively identify the dates of the last review and next scheduled review, thus hindering compliance with the statutory five-year cycle. OSA selected a non-statistical random sample. Context: • During fiscal year 2023, $125 million of payroll expenditures were charged to Federal grants. This represents approximately 10 percent of fiscal year 2023 Statewide payroll expenditures, which totaled $1.2 billion. • BHR was responsible for managing approximately 1,200 job classification specifications in fiscal year 2023. Cause: • Competing priorities • Lack of resources • Lack of adequate policies and procedures Effect: State employee job classification and compensation may not accurately reflect the current duties and responsibilities of each position. Without documented evidence that review activities are occurring, BHR cannot ensure that the decisions involving the classification and compensation plan of all State employee positions are properly supported by documentation that accurately reflects the current duties and responsibilities of each position. As a result, this may lead to noncompliance with Federal and State regulations. Recommendation: We recommend that the Department: • allocate resources to ensure proper oversight and monitoring of agency-level activities related to the maintenance of the State classification and compensation plan in accordance with State statute; • continue implementation of policies and procedures to ensure updates or reviews of the State classification and compensation plan are adequately documented; and • implement a tracking mechanism to accurately monitor the dates of past reviews and schedule forthcoming reviews to aid in adherence to the statutory requirement. Corrective Action Plan: See F-24 Management’s Response: The Department partially agrees with this finding. The Department disagrees with the statement “The assigned salary grade provides a basis for the allowability of compensation costs charged to Federal awards by documenting the reasonableness of compensation for services rendered by State employees...”. The focus is on 5 MRSA 7061 Classification Plan which “records the duties and responsibilities of all positions” rather than on the statute for the Compensation Plan, 5 MRSA 7065, which relates to compensation in that it establishes “minimum and maximum salary rates and such intermediate rates as the director considers desirable.” Consistent with 5 MRSA 7065, salary schedules were established and remain in place, changing through bargained and legislatively approved adjustments. To determine the basis for appropriate compensation, one must review these salary schedules along with any recruitment and retention adjustments (permitted by 5 MRSA 7065; paid in addition to and outside of the salary schedule), any agreements for market pay adjustments, laws which provide for additional pay components, and all negotiated pay items contained in the associated collective bargaining agreements. The Compensation Plan has been reviewed and adjusted during the period of this audit (July 2022 through June 2023), as evidenced by the on-line publication of new salary schedules effective July 3, 2022. In the 5-year period of July 2018 through June 2023 (the period the audit looked at class specs), the published salary schedules have been adjusted eight (8) times. The Department also disagrees with the recommendation’s reference “classification and compensation plan” as a singular plan. These are two separate plans in statute, and the recommendations are directed toward the classification plan. The Department agrees with the recommendations in that they provide for improved processes. It is worth noting the new language now in place by statute under the Classification Plan states: “Beginning in 2024, the procedure must provide for a comprehensive review of the classification plan every 10 years to make modifications and improvements as determined necessary.” Contact: Breena Bissell, Director, Bureau of Human Resources, DAFS, 207-624-7368 Auditor’s Concluding Remarks: The classification plan (5 MRSA 7061) and the compensation plan (5 MRSA 7065) are inherently linked. A well-maintained classification plan that accurately reflects the current duties and responsibilities of each job classification is essential for determining the correct salary rates in the compensation plan. Without regular reviews of the duties and responsibilities of each job classification, the data used to establish salary rates may be outdated and inaccurate. This can lead to discrepancies between the work performed by employees and the compensation they receive. The procedural nature and link between the classification plan and the compensation plan is further evidenced in the portion of the statute that BHR omitted in Management’s Response. BHR references “minimum and maximum salary rates and such intermediate rates as the director considers desirable.” The full reference states, “The officer shall, as soon as practicable after the adoption of the classification plan, submit to the Legislature a proposed plan of compensation developed by the officer showing for each class or position in the classified service minimum and maximum salary rates and such intermediate rates as the officer considers desirable.” The italicized portion of the statute emphasizes the importance of the classification plan as the foundation for developing the compensation plan. Therefore, it is critical that the classification plan is regularly reviewed and updated, and documentation of the process is maintained, to ensure the integrity of the compensation plan. The finding remains as stated. (State Number: 23-0111-01)
(2023-050) Title: Internal control over monitoring of employee classification and compensation needs improvement Prior Year Findings: See schedule of Findings and Questioned Costs for chart/table State Department: Administrative and Financial Services State Bureau: Human Resources Federal Agency: U.S. Department of Labor U.S. Department of Transportation U.S. Department of Education Assistance Listing Title: Unemployment Insurance (UI) (COVID-19) Highway Planning and Construction (Federal-Aid Highway Program) Special Education Cluster (IDEA) (COVID-19) Assistance Listing Number: 17.225; 20.205; 84.027, 84.173 Federal Award Identification Number: See E-93 to E-94 Compliance Area: Allowable costs/cost principles Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.430; 5 MRSA 7061 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. Costs of compensation are allowable to the extent that personal services are rendered during the period of performance under the Federal award, total compensation is reasonable for the services rendered and conforms to the established written policy of the non-Federal entity, and follows an appointment made in accordance with a non-Federal entity’s laws and/or rules or written policies. 5 MRSA 7061 states that the (Bureau of Human Resources (BHR)) director shall record the duties and responsibilities of all positions in State service and establish classes for these positions. The procedure shall provide for periodic updating of job descriptions at least every five years to accurately reflect current duties and responsibilities of each job classification. Condition: BHR maintains the job classification specifications and related compensation plan of State employees. A specific salary specification and grade is assigned based on the duties and responsibilities referenced in the job classification specification; this represents reasonable compensation for the services rendered for all positions that inhabit a given job classification specification. The assigned salary grade provides a basis for the allowability of compensation costs charged to Federal awards by documenting the reasonableness of compensation for services rendered by State employees, and that the position appointments under the job classification specification were made and maintained in accordance with State statute. While BHR relies on data collected from State agencies to implement procedures regarding the classification plan, BHR retains ultimate oversight responsibility. BHR is the only agency with the authority to modify the classification plan. According to 5 MRSA 7061, BHR shall provide for periodic updating of job descriptions at least every five years to accurately reflect current duties and responsibilities of each job classification. On BHR’s website, job classification specifications, along with the date the job class was last reviewed and updated, are published. The Office of the State Auditor (OSA) tested 24 job classification specifications and information reported on BHR’s website for compliance with 5 MRSA 7061. For 12 of the 24 job classification specifications tested, OSA identified that the date the job class was last updated was beyond five years. Prior to March 2023, BHR only updated the date on a job classification if a change was made. Although BHR began recording review dates regardless of whether a change was made in April 2023, there is no tracking mechanism in place to effectively identify the dates of the last review and next scheduled review, thus hindering compliance with the statutory five-year cycle. OSA selected a non-statistical random sample. Context: • During fiscal year 2023, $125 million of payroll expenditures were charged to Federal grants. This represents approximately 10 percent of fiscal year 2023 Statewide payroll expenditures, which totaled $1.2 billion. • BHR was responsible for managing approximately 1,200 job classification specifications in fiscal year 2023. Cause: • Competing priorities • Lack of resources • Lack of adequate policies and procedures Effect: State employee job classification and compensation may not accurately reflect the current duties and responsibilities of each position. Without documented evidence that review activities are occurring, BHR cannot ensure that the decisions involving the classification and compensation plan of all State employee positions are properly supported by documentation that accurately reflects the current duties and responsibilities of each position. As a result, this may lead to noncompliance with Federal and State regulations. Recommendation: We recommend that the Department: • allocate resources to ensure proper oversight and monitoring of agency-level activities related to the maintenance of the State classification and compensation plan in accordance with State statute; • continue implementation of policies and procedures to ensure updates or reviews of the State classification and compensation plan are adequately documented; and • implement a tracking mechanism to accurately monitor the dates of past reviews and schedule forthcoming reviews to aid in adherence to the statutory requirement. Corrective Action Plan: See F-24 Management’s Response: The Department partially agrees with this finding. The Department disagrees with the statement “The assigned salary grade provides a basis for the allowability of compensation costs charged to Federal awards by documenting the reasonableness of compensation for services rendered by State employees...”. The focus is on 5 MRSA 7061 Classification Plan which “records the duties and responsibilities of all positions” rather than on the statute for the Compensation Plan, 5 MRSA 7065, which relates to compensation in that it establishes “minimum and maximum salary rates and such intermediate rates as the director considers desirable.” Consistent with 5 MRSA 7065, salary schedules were established and remain in place, changing through bargained and legislatively approved adjustments. To determine the basis for appropriate compensation, one must review these salary schedules along with any recruitment and retention adjustments (permitted by 5 MRSA 7065; paid in addition to and outside of the salary schedule), any agreements for market pay adjustments, laws which provide for additional pay components, and all negotiated pay items contained in the associated collective bargaining agreements. The Compensation Plan has been reviewed and adjusted during the period of this audit (July 2022 through June 2023), as evidenced by the on-line publication of new salary schedules effective July 3, 2022. In the 5-year period of July 2018 through June 2023 (the period the audit looked at class specs), the published salary schedules have been adjusted eight (8) times. The Department also disagrees with the recommendation’s reference “classification and compensation plan” as a singular plan. These are two separate plans in statute, and the recommendations are directed toward the classification plan. The Department agrees with the recommendations in that they provide for improved processes. It is worth noting the new language now in place by statute under the Classification Plan states: “Beginning in 2024, the procedure must provide for a comprehensive review of the classification plan every 10 years to make modifications and improvements as determined necessary.” Contact: Breena Bissell, Director, Bureau of Human Resources, DAFS, 207-624-7368 Auditor’s Concluding Remarks: The classification plan (5 MRSA 7061) and the compensation plan (5 MRSA 7065) are inherently linked. A well-maintained classification plan that accurately reflects the current duties and responsibilities of each job classification is essential for determining the correct salary rates in the compensation plan. Without regular reviews of the duties and responsibilities of each job classification, the data used to establish salary rates may be outdated and inaccurate. This can lead to discrepancies between the work performed by employees and the compensation they receive. The procedural nature and link between the classification plan and the compensation plan is further evidenced in the portion of the statute that BHR omitted in Management’s Response. BHR references “minimum and maximum salary rates and such intermediate rates as the director considers desirable.” The full reference states, “The officer shall, as soon as practicable after the adoption of the classification plan, submit to the Legislature a proposed plan of compensation developed by the officer showing for each class or position in the classified service minimum and maximum salary rates and such intermediate rates as the officer considers desirable.” The italicized portion of the statute emphasizes the importance of the classification plan as the foundation for developing the compensation plan. Therefore, it is critical that the classification plan is regularly reviewed and updated, and documentation of the process is maintained, to ensure the integrity of the compensation plan. The finding remains as stated. (State Number: 23-0111-01)
(2023-050) Title: Internal control over monitoring of employee classification and compensation needs improvement Prior Year Findings: See schedule of Findings and Questioned Costs for chart/table State Department: Administrative and Financial Services State Bureau: Human Resources Federal Agency: U.S. Department of Labor U.S. Department of Transportation U.S. Department of Education Assistance Listing Title: Unemployment Insurance (UI) (COVID-19) Highway Planning and Construction (Federal-Aid Highway Program) Special Education Cluster (IDEA) (COVID-19) Assistance Listing Number: 17.225; 20.205; 84.027, 84.173 Federal Award Identification Number: See E-93 to E-94 Compliance Area: Allowable costs/cost principles Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.430; 5 MRSA 7061 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. Costs of compensation are allowable to the extent that personal services are rendered during the period of performance under the Federal award, total compensation is reasonable for the services rendered and conforms to the established written policy of the non-Federal entity, and follows an appointment made in accordance with a non-Federal entity’s laws and/or rules or written policies. 5 MRSA 7061 states that the (Bureau of Human Resources (BHR)) director shall record the duties and responsibilities of all positions in State service and establish classes for these positions. The procedure shall provide for periodic updating of job descriptions at least every five years to accurately reflect current duties and responsibilities of each job classification. Condition: BHR maintains the job classification specifications and related compensation plan of State employees. A specific salary specification and grade is assigned based on the duties and responsibilities referenced in the job classification specification; this represents reasonable compensation for the services rendered for all positions that inhabit a given job classification specification. The assigned salary grade provides a basis for the allowability of compensation costs charged to Federal awards by documenting the reasonableness of compensation for services rendered by State employees, and that the position appointments under the job classification specification were made and maintained in accordance with State statute. While BHR relies on data collected from State agencies to implement procedures regarding the classification plan, BHR retains ultimate oversight responsibility. BHR is the only agency with the authority to modify the classification plan. According to 5 MRSA 7061, BHR shall provide for periodic updating of job descriptions at least every five years to accurately reflect current duties and responsibilities of each job classification. On BHR’s website, job classification specifications, along with the date the job class was last reviewed and updated, are published. The Office of the State Auditor (OSA) tested 24 job classification specifications and information reported on BHR’s website for compliance with 5 MRSA 7061. For 12 of the 24 job classification specifications tested, OSA identified that the date the job class was last updated was beyond five years. Prior to March 2023, BHR only updated the date on a job classification if a change was made. Although BHR began recording review dates regardless of whether a change was made in April 2023, there is no tracking mechanism in place to effectively identify the dates of the last review and next scheduled review, thus hindering compliance with the statutory five-year cycle. OSA selected a non-statistical random sample. Context: • During fiscal year 2023, $125 million of payroll expenditures were charged to Federal grants. This represents approximately 10 percent of fiscal year 2023 Statewide payroll expenditures, which totaled $1.2 billion. • BHR was responsible for managing approximately 1,200 job classification specifications in fiscal year 2023. Cause: • Competing priorities • Lack of resources • Lack of adequate policies and procedures Effect: State employee job classification and compensation may not accurately reflect the current duties and responsibilities of each position. Without documented evidence that review activities are occurring, BHR cannot ensure that the decisions involving the classification and compensation plan of all State employee positions are properly supported by documentation that accurately reflects the current duties and responsibilities of each position. As a result, this may lead to noncompliance with Federal and State regulations. Recommendation: We recommend that the Department: • allocate resources to ensure proper oversight and monitoring of agency-level activities related to the maintenance of the State classification and compensation plan in accordance with State statute; • continue implementation of policies and procedures to ensure updates or reviews of the State classification and compensation plan are adequately documented; and • implement a tracking mechanism to accurately monitor the dates of past reviews and schedule forthcoming reviews to aid in adherence to the statutory requirement. Corrective Action Plan: See F-24 Management’s Response: The Department partially agrees with this finding. The Department disagrees with the statement “The assigned salary grade provides a basis for the allowability of compensation costs charged to Federal awards by documenting the reasonableness of compensation for services rendered by State employees...”. The focus is on 5 MRSA 7061 Classification Plan which “records the duties and responsibilities of all positions” rather than on the statute for the Compensation Plan, 5 MRSA 7065, which relates to compensation in that it establishes “minimum and maximum salary rates and such intermediate rates as the director considers desirable.” Consistent with 5 MRSA 7065, salary schedules were established and remain in place, changing through bargained and legislatively approved adjustments. To determine the basis for appropriate compensation, one must review these salary schedules along with any recruitment and retention adjustments (permitted by 5 MRSA 7065; paid in addition to and outside of the salary schedule), any agreements for market pay adjustments, laws which provide for additional pay components, and all negotiated pay items contained in the associated collective bargaining agreements. The Compensation Plan has been reviewed and adjusted during the period of this audit (July 2022 through June 2023), as evidenced by the on-line publication of new salary schedules effective July 3, 2022. In the 5-year period of July 2018 through June 2023 (the period the audit looked at class specs), the published salary schedules have been adjusted eight (8) times. The Department also disagrees with the recommendation’s reference “classification and compensation plan” as a singular plan. These are two separate plans in statute, and the recommendations are directed toward the classification plan. The Department agrees with the recommendations in that they provide for improved processes. It is worth noting the new language now in place by statute under the Classification Plan states: “Beginning in 2024, the procedure must provide for a comprehensive review of the classification plan every 10 years to make modifications and improvements as determined necessary.” Contact: Breena Bissell, Director, Bureau of Human Resources, DAFS, 207-624-7368 Auditor’s Concluding Remarks: The classification plan (5 MRSA 7061) and the compensation plan (5 MRSA 7065) are inherently linked. A well-maintained classification plan that accurately reflects the current duties and responsibilities of each job classification is essential for determining the correct salary rates in the compensation plan. Without regular reviews of the duties and responsibilities of each job classification, the data used to establish salary rates may be outdated and inaccurate. This can lead to discrepancies between the work performed by employees and the compensation they receive. The procedural nature and link between the classification plan and the compensation plan is further evidenced in the portion of the statute that BHR omitted in Management’s Response. BHR references “minimum and maximum salary rates and such intermediate rates as the director considers desirable.” The full reference states, “The officer shall, as soon as practicable after the adoption of the classification plan, submit to the Legislature a proposed plan of compensation developed by the officer showing for each class or position in the classified service minimum and maximum salary rates and such intermediate rates as the officer considers desirable.” The italicized portion of the statute emphasizes the importance of the classification plan as the foundation for developing the compensation plan. Therefore, it is critical that the classification plan is regularly reviewed and updated, and documentation of the process is maintained, to ensure the integrity of the compensation plan. The finding remains as stated. (State Number: 23-0111-01)
(2023-050) Title: Internal control over monitoring of employee classification and compensation needs improvement Prior Year Findings: See schedule of Findings and Questioned Costs for chart/table State Department: Administrative and Financial Services State Bureau: Human Resources Federal Agency: U.S. Department of Labor U.S. Department of Transportation U.S. Department of Education Assistance Listing Title: Unemployment Insurance (UI) (COVID-19) Highway Planning and Construction (Federal-Aid Highway Program) Special Education Cluster (IDEA) (COVID-19) Assistance Listing Number: 17.225; 20.205; 84.027, 84.173 Federal Award Identification Number: See E-93 to E-94 Compliance Area: Allowable costs/cost principles Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.430; 5 MRSA 7061 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. Costs of compensation are allowable to the extent that personal services are rendered during the period of performance under the Federal award, total compensation is reasonable for the services rendered and conforms to the established written policy of the non-Federal entity, and follows an appointment made in accordance with a non-Federal entity’s laws and/or rules or written policies. 5 MRSA 7061 states that the (Bureau of Human Resources (BHR)) director shall record the duties and responsibilities of all positions in State service and establish classes for these positions. The procedure shall provide for periodic updating of job descriptions at least every five years to accurately reflect current duties and responsibilities of each job classification. Condition: BHR maintains the job classification specifications and related compensation plan of State employees. A specific salary specification and grade is assigned based on the duties and responsibilities referenced in the job classification specification; this represents reasonable compensation for the services rendered for all positions that inhabit a given job classification specification. The assigned salary grade provides a basis for the allowability of compensation costs charged to Federal awards by documenting the reasonableness of compensation for services rendered by State employees, and that the position appointments under the job classification specification were made and maintained in accordance with State statute. While BHR relies on data collected from State agencies to implement procedures regarding the classification plan, BHR retains ultimate oversight responsibility. BHR is the only agency with the authority to modify the classification plan. According to 5 MRSA 7061, BHR shall provide for periodic updating of job descriptions at least every five years to accurately reflect current duties and responsibilities of each job classification. On BHR’s website, job classification specifications, along with the date the job class was last reviewed and updated, are published. The Office of the State Auditor (OSA) tested 24 job classification specifications and information reported on BHR’s website for compliance with 5 MRSA 7061. For 12 of the 24 job classification specifications tested, OSA identified that the date the job class was last updated was beyond five years. Prior to March 2023, BHR only updated the date on a job classification if a change was made. Although BHR began recording review dates regardless of whether a change was made in April 2023, there is no tracking mechanism in place to effectively identify the dates of the last review and next scheduled review, thus hindering compliance with the statutory five-year cycle. OSA selected a non-statistical random sample. Context: • During fiscal year 2023, $125 million of payroll expenditures were charged to Federal grants. This represents approximately 10 percent of fiscal year 2023 Statewide payroll expenditures, which totaled $1.2 billion. • BHR was responsible for managing approximately 1,200 job classification specifications in fiscal year 2023. Cause: • Competing priorities • Lack of resources • Lack of adequate policies and procedures Effect: State employee job classification and compensation may not accurately reflect the current duties and responsibilities of each position. Without documented evidence that review activities are occurring, BHR cannot ensure that the decisions involving the classification and compensation plan of all State employee positions are properly supported by documentation that accurately reflects the current duties and responsibilities of each position. As a result, this may lead to noncompliance with Federal and State regulations. Recommendation: We recommend that the Department: • allocate resources to ensure proper oversight and monitoring of agency-level activities related to the maintenance of the State classification and compensation plan in accordance with State statute; • continue implementation of policies and procedures to ensure updates or reviews of the State classification and compensation plan are adequately documented; and • implement a tracking mechanism to accurately monitor the dates of past reviews and schedule forthcoming reviews to aid in adherence to the statutory requirement. Corrective Action Plan: See F-24 Management’s Response: The Department partially agrees with this finding. The Department disagrees with the statement “The assigned salary grade provides a basis for the allowability of compensation costs charged to Federal awards by documenting the reasonableness of compensation for services rendered by State employees...”. The focus is on 5 MRSA 7061 Classification Plan which “records the duties and responsibilities of all positions” rather than on the statute for the Compensation Plan, 5 MRSA 7065, which relates to compensation in that it establishes “minimum and maximum salary rates and such intermediate rates as the director considers desirable.” Consistent with 5 MRSA 7065, salary schedules were established and remain in place, changing through bargained and legislatively approved adjustments. To determine the basis for appropriate compensation, one must review these salary schedules along with any recruitment and retention adjustments (permitted by 5 MRSA 7065; paid in addition to and outside of the salary schedule), any agreements for market pay adjustments, laws which provide for additional pay components, and all negotiated pay items contained in the associated collective bargaining agreements. The Compensation Plan has been reviewed and adjusted during the period of this audit (July 2022 through June 2023), as evidenced by the on-line publication of new salary schedules effective July 3, 2022. In the 5-year period of July 2018 through June 2023 (the period the audit looked at class specs), the published salary schedules have been adjusted eight (8) times. The Department also disagrees with the recommendation’s reference “classification and compensation plan” as a singular plan. These are two separate plans in statute, and the recommendations are directed toward the classification plan. The Department agrees with the recommendations in that they provide for improved processes. It is worth noting the new language now in place by statute under the Classification Plan states: “Beginning in 2024, the procedure must provide for a comprehensive review of the classification plan every 10 years to make modifications and improvements as determined necessary.” Contact: Breena Bissell, Director, Bureau of Human Resources, DAFS, 207-624-7368 Auditor’s Concluding Remarks: The classification plan (5 MRSA 7061) and the compensation plan (5 MRSA 7065) are inherently linked. A well-maintained classification plan that accurately reflects the current duties and responsibilities of each job classification is essential for determining the correct salary rates in the compensation plan. Without regular reviews of the duties and responsibilities of each job classification, the data used to establish salary rates may be outdated and inaccurate. This can lead to discrepancies between the work performed by employees and the compensation they receive. The procedural nature and link between the classification plan and the compensation plan is further evidenced in the portion of the statute that BHR omitted in Management’s Response. BHR references “minimum and maximum salary rates and such intermediate rates as the director considers desirable.” The full reference states, “The officer shall, as soon as practicable after the adoption of the classification plan, submit to the Legislature a proposed plan of compensation developed by the officer showing for each class or position in the classified service minimum and maximum salary rates and such intermediate rates as the officer considers desirable.” The italicized portion of the statute emphasizes the importance of the classification plan as the foundation for developing the compensation plan. Therefore, it is critical that the classification plan is regularly reviewed and updated, and documentation of the process is maintained, to ensure the integrity of the compensation plan. The finding remains as stated. (State Number: 23-0111-01)
(2023-050) Title: Internal control over monitoring of employee classification and compensation needs improvement Prior Year Findings: See schedule of Findings and Questioned Costs for chart/table State Department: Administrative and Financial Services State Bureau: Human Resources Federal Agency: U.S. Department of Labor U.S. Department of Transportation U.S. Department of Education Assistance Listing Title: Unemployment Insurance (UI) (COVID-19) Highway Planning and Construction (Federal-Aid Highway Program) Special Education Cluster (IDEA) (COVID-19) Assistance Listing Number: 17.225; 20.205; 84.027, 84.173 Federal Award Identification Number: See E-93 to E-94 Compliance Area: Allowable costs/cost principles Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.430; 5 MRSA 7061 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. Costs of compensation are allowable to the extent that personal services are rendered during the period of performance under the Federal award, total compensation is reasonable for the services rendered and conforms to the established written policy of the non-Federal entity, and follows an appointment made in accordance with a non-Federal entity’s laws and/or rules or written policies. 5 MRSA 7061 states that the (Bureau of Human Resources (BHR)) director shall record the duties and responsibilities of all positions in State service and establish classes for these positions. The procedure shall provide for periodic updating of job descriptions at least every five years to accurately reflect current duties and responsibilities of each job classification. Condition: BHR maintains the job classification specifications and related compensation plan of State employees. A specific salary specification and grade is assigned based on the duties and responsibilities referenced in the job classification specification; this represents reasonable compensation for the services rendered for all positions that inhabit a given job classification specification. The assigned salary grade provides a basis for the allowability of compensation costs charged to Federal awards by documenting the reasonableness of compensation for services rendered by State employees, and that the position appointments under the job classification specification were made and maintained in accordance with State statute. While BHR relies on data collected from State agencies to implement procedures regarding the classification plan, BHR retains ultimate oversight responsibility. BHR is the only agency with the authority to modify the classification plan. According to 5 MRSA 7061, BHR shall provide for periodic updating of job descriptions at least every five years to accurately reflect current duties and responsibilities of each job classification. On BHR’s website, job classification specifications, along with the date the job class was last reviewed and updated, are published. The Office of the State Auditor (OSA) tested 24 job classification specifications and information reported on BHR’s website for compliance with 5 MRSA 7061. For 12 of the 24 job classification specifications tested, OSA identified that the date the job class was last updated was beyond five years. Prior to March 2023, BHR only updated the date on a job classification if a change was made. Although BHR began recording review dates regardless of whether a change was made in April 2023, there is no tracking mechanism in place to effectively identify the dates of the last review and next scheduled review, thus hindering compliance with the statutory five-year cycle. OSA selected a non-statistical random sample. Context: • During fiscal year 2023, $125 million of payroll expenditures were charged to Federal grants. This represents approximately 10 percent of fiscal year 2023 Statewide payroll expenditures, which totaled $1.2 billion. • BHR was responsible for managing approximately 1,200 job classification specifications in fiscal year 2023. Cause: • Competing priorities • Lack of resources • Lack of adequate policies and procedures Effect: State employee job classification and compensation may not accurately reflect the current duties and responsibilities of each position. Without documented evidence that review activities are occurring, BHR cannot ensure that the decisions involving the classification and compensation plan of all State employee positions are properly supported by documentation that accurately reflects the current duties and responsibilities of each position. As a result, this may lead to noncompliance with Federal and State regulations. Recommendation: We recommend that the Department: • allocate resources to ensure proper oversight and monitoring of agency-level activities related to the maintenance of the State classification and compensation plan in accordance with State statute; • continue implementation of policies and procedures to ensure updates or reviews of the State classification and compensation plan are adequately documented; and • implement a tracking mechanism to accurately monitor the dates of past reviews and schedule forthcoming reviews to aid in adherence to the statutory requirement. Corrective Action Plan: See F-24 Management’s Response: The Department partially agrees with this finding. The Department disagrees with the statement “The assigned salary grade provides a basis for the allowability of compensation costs charged to Federal awards by documenting the reasonableness of compensation for services rendered by State employees...”. The focus is on 5 MRSA 7061 Classification Plan which “records the duties and responsibilities of all positions” rather than on the statute for the Compensation Plan, 5 MRSA 7065, which relates to compensation in that it establishes “minimum and maximum salary rates and such intermediate rates as the director considers desirable.” Consistent with 5 MRSA 7065, salary schedules were established and remain in place, changing through bargained and legislatively approved adjustments. To determine the basis for appropriate compensation, one must review these salary schedules along with any recruitment and retention adjustments (permitted by 5 MRSA 7065; paid in addition to and outside of the salary schedule), any agreements for market pay adjustments, laws which provide for additional pay components, and all negotiated pay items contained in the associated collective bargaining agreements. The Compensation Plan has been reviewed and adjusted during the period of this audit (July 2022 through June 2023), as evidenced by the on-line publication of new salary schedules effective July 3, 2022. In the 5-year period of July 2018 through June 2023 (the period the audit looked at class specs), the published salary schedules have been adjusted eight (8) times. The Department also disagrees with the recommendation’s reference “classification and compensation plan” as a singular plan. These are two separate plans in statute, and the recommendations are directed toward the classification plan. The Department agrees with the recommendations in that they provide for improved processes. It is worth noting the new language now in place by statute under the Classification Plan states: “Beginning in 2024, the procedure must provide for a comprehensive review of the classification plan every 10 years to make modifications and improvements as determined necessary.” Contact: Breena Bissell, Director, Bureau of Human Resources, DAFS, 207-624-7368 Auditor’s Concluding Remarks: The classification plan (5 MRSA 7061) and the compensation plan (5 MRSA 7065) are inherently linked. A well-maintained classification plan that accurately reflects the current duties and responsibilities of each job classification is essential for determining the correct salary rates in the compensation plan. Without regular reviews of the duties and responsibilities of each job classification, the data used to establish salary rates may be outdated and inaccurate. This can lead to discrepancies between the work performed by employees and the compensation they receive. The procedural nature and link between the classification plan and the compensation plan is further evidenced in the portion of the statute that BHR omitted in Management’s Response. BHR references “minimum and maximum salary rates and such intermediate rates as the director considers desirable.” The full reference states, “The officer shall, as soon as practicable after the adoption of the classification plan, submit to the Legislature a proposed plan of compensation developed by the officer showing for each class or position in the classified service minimum and maximum salary rates and such intermediate rates as the officer considers desirable.” The italicized portion of the statute emphasizes the importance of the classification plan as the foundation for developing the compensation plan. Therefore, it is critical that the classification plan is regularly reviewed and updated, and documentation of the process is maintained, to ensure the integrity of the compensation plan. The finding remains as stated. (State Number: 23-0111-01)
(2023-050) Title: Internal control over monitoring of employee classification and compensation needs improvement Prior Year Findings: See schedule of Findings and Questioned Costs for chart/table State Department: Administrative and Financial Services State Bureau: Human Resources Federal Agency: U.S. Department of Labor U.S. Department of Transportation U.S. Department of Education Assistance Listing Title: Unemployment Insurance (UI) (COVID-19) Highway Planning and Construction (Federal-Aid Highway Program) Special Education Cluster (IDEA) (COVID-19) Assistance Listing Number: 17.225; 20.205; 84.027, 84.173 Federal Award Identification Number: See E-93 to E-94 Compliance Area: Allowable costs/cost principles Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.430; 5 MRSA 7061 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. Costs of compensation are allowable to the extent that personal services are rendered during the period of performance under the Federal award, total compensation is reasonable for the services rendered and conforms to the established written policy of the non-Federal entity, and follows an appointment made in accordance with a non-Federal entity’s laws and/or rules or written policies. 5 MRSA 7061 states that the (Bureau of Human Resources (BHR)) director shall record the duties and responsibilities of all positions in State service and establish classes for these positions. The procedure shall provide for periodic updating of job descriptions at least every five years to accurately reflect current duties and responsibilities of each job classification. Condition: BHR maintains the job classification specifications and related compensation plan of State employees. A specific salary specification and grade is assigned based on the duties and responsibilities referenced in the job classification specification; this represents reasonable compensation for the services rendered for all positions that inhabit a given job classification specification. The assigned salary grade provides a basis for the allowability of compensation costs charged to Federal awards by documenting the reasonableness of compensation for services rendered by State employees, and that the position appointments under the job classification specification were made and maintained in accordance with State statute. While BHR relies on data collected from State agencies to implement procedures regarding the classification plan, BHR retains ultimate oversight responsibility. BHR is the only agency with the authority to modify the classification plan. According to 5 MRSA 7061, BHR shall provide for periodic updating of job descriptions at least every five years to accurately reflect current duties and responsibilities of each job classification. On BHR’s website, job classification specifications, along with the date the job class was last reviewed and updated, are published. The Office of the State Auditor (OSA) tested 24 job classification specifications and information reported on BHR’s website for compliance with 5 MRSA 7061. For 12 of the 24 job classification specifications tested, OSA identified that the date the job class was last updated was beyond five years. Prior to March 2023, BHR only updated the date on a job classification if a change was made. Although BHR began recording review dates regardless of whether a change was made in April 2023, there is no tracking mechanism in place to effectively identify the dates of the last review and next scheduled review, thus hindering compliance with the statutory five-year cycle. OSA selected a non-statistical random sample. Context: • During fiscal year 2023, $125 million of payroll expenditures were charged to Federal grants. This represents approximately 10 percent of fiscal year 2023 Statewide payroll expenditures, which totaled $1.2 billion. • BHR was responsible for managing approximately 1,200 job classification specifications in fiscal year 2023. Cause: • Competing priorities • Lack of resources • Lack of adequate policies and procedures Effect: State employee job classification and compensation may not accurately reflect the current duties and responsibilities of each position. Without documented evidence that review activities are occurring, BHR cannot ensure that the decisions involving the classification and compensation plan of all State employee positions are properly supported by documentation that accurately reflects the current duties and responsibilities of each position. As a result, this may lead to noncompliance with Federal and State regulations. Recommendation: We recommend that the Department: • allocate resources to ensure proper oversight and monitoring of agency-level activities related to the maintenance of the State classification and compensation plan in accordance with State statute; • continue implementation of policies and procedures to ensure updates or reviews of the State classification and compensation plan are adequately documented; and • implement a tracking mechanism to accurately monitor the dates of past reviews and schedule forthcoming reviews to aid in adherence to the statutory requirement. Corrective Action Plan: See F-24 Management’s Response: The Department partially agrees with this finding. The Department disagrees with the statement “The assigned salary grade provides a basis for the allowability of compensation costs charged to Federal awards by documenting the reasonableness of compensation for services rendered by State employees...”. The focus is on 5 MRSA 7061 Classification Plan which “records the duties and responsibilities of all positions” rather than on the statute for the Compensation Plan, 5 MRSA 7065, which relates to compensation in that it establishes “minimum and maximum salary rates and such intermediate rates as the director considers desirable.” Consistent with 5 MRSA 7065, salary schedules were established and remain in place, changing through bargained and legislatively approved adjustments. To determine the basis for appropriate compensation, one must review these salary schedules along with any recruitment and retention adjustments (permitted by 5 MRSA 7065; paid in addition to and outside of the salary schedule), any agreements for market pay adjustments, laws which provide for additional pay components, and all negotiated pay items contained in the associated collective bargaining agreements. The Compensation Plan has been reviewed and adjusted during the period of this audit (July 2022 through June 2023), as evidenced by the on-line publication of new salary schedules effective July 3, 2022. In the 5-year period of July 2018 through June 2023 (the period the audit looked at class specs), the published salary schedules have been adjusted eight (8) times. The Department also disagrees with the recommendation’s reference “classification and compensation plan” as a singular plan. These are two separate plans in statute, and the recommendations are directed toward the classification plan. The Department agrees with the recommendations in that they provide for improved processes. It is worth noting the new language now in place by statute under the Classification Plan states: “Beginning in 2024, the procedure must provide for a comprehensive review of the classification plan every 10 years to make modifications and improvements as determined necessary.” Contact: Breena Bissell, Director, Bureau of Human Resources, DAFS, 207-624-7368 Auditor’s Concluding Remarks: The classification plan (5 MRSA 7061) and the compensation plan (5 MRSA 7065) are inherently linked. A well-maintained classification plan that accurately reflects the current duties and responsibilities of each job classification is essential for determining the correct salary rates in the compensation plan. Without regular reviews of the duties and responsibilities of each job classification, the data used to establish salary rates may be outdated and inaccurate. This can lead to discrepancies between the work performed by employees and the compensation they receive. The procedural nature and link between the classification plan and the compensation plan is further evidenced in the portion of the statute that BHR omitted in Management’s Response. BHR references “minimum and maximum salary rates and such intermediate rates as the director considers desirable.” The full reference states, “The officer shall, as soon as practicable after the adoption of the classification plan, submit to the Legislature a proposed plan of compensation developed by the officer showing for each class or position in the classified service minimum and maximum salary rates and such intermediate rates as the officer considers desirable.” The italicized portion of the statute emphasizes the importance of the classification plan as the foundation for developing the compensation plan. Therefore, it is critical that the classification plan is regularly reviewed and updated, and documentation of the process is maintained, to ensure the integrity of the compensation plan. The finding remains as stated. (State Number: 23-0111-01)
(2023-050) Title: Internal control over monitoring of employee classification and compensation needs improvement Prior Year Findings: See schedule of Findings and Questioned Costs for chart/table State Department: Administrative and Financial Services State Bureau: Human Resources Federal Agency: U.S. Department of Labor U.S. Department of Transportation U.S. Department of Education Assistance Listing Title: Unemployment Insurance (UI) (COVID-19) Highway Planning and Construction (Federal-Aid Highway Program) Special Education Cluster (IDEA) (COVID-19) Assistance Listing Number: 17.225; 20.205; 84.027, 84.173 Federal Award Identification Number: See E-93 to E-94 Compliance Area: Allowable costs/cost principles Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.430; 5 MRSA 7061 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. Costs of compensation are allowable to the extent that personal services are rendered during the period of performance under the Federal award, total compensation is reasonable for the services rendered and conforms to the established written policy of the non-Federal entity, and follows an appointment made in accordance with a non-Federal entity’s laws and/or rules or written policies. 5 MRSA 7061 states that the (Bureau of Human Resources (BHR)) director shall record the duties and responsibilities of all positions in State service and establish classes for these positions. The procedure shall provide for periodic updating of job descriptions at least every five years to accurately reflect current duties and responsibilities of each job classification. Condition: BHR maintains the job classification specifications and related compensation plan of State employees. A specific salary specification and grade is assigned based on the duties and responsibilities referenced in the job classification specification; this represents reasonable compensation for the services rendered for all positions that inhabit a given job classification specification. The assigned salary grade provides a basis for the allowability of compensation costs charged to Federal awards by documenting the reasonableness of compensation for services rendered by State employees, and that the position appointments under the job classification specification were made and maintained in accordance with State statute. While BHR relies on data collected from State agencies to implement procedures regarding the classification plan, BHR retains ultimate oversight responsibility. BHR is the only agency with the authority to modify the classification plan. According to 5 MRSA 7061, BHR shall provide for periodic updating of job descriptions at least every five years to accurately reflect current duties and responsibilities of each job classification. On BHR’s website, job classification specifications, along with the date the job class was last reviewed and updated, are published. The Office of the State Auditor (OSA) tested 24 job classification specifications and information reported on BHR’s website for compliance with 5 MRSA 7061. For 12 of the 24 job classification specifications tested, OSA identified that the date the job class was last updated was beyond five years. Prior to March 2023, BHR only updated the date on a job classification if a change was made. Although BHR began recording review dates regardless of whether a change was made in April 2023, there is no tracking mechanism in place to effectively identify the dates of the last review and next scheduled review, thus hindering compliance with the statutory five-year cycle. OSA selected a non-statistical random sample. Context: • During fiscal year 2023, $125 million of payroll expenditures were charged to Federal grants. This represents approximately 10 percent of fiscal year 2023 Statewide payroll expenditures, which totaled $1.2 billion. • BHR was responsible for managing approximately 1,200 job classification specifications in fiscal year 2023. Cause: • Competing priorities • Lack of resources • Lack of adequate policies and procedures Effect: State employee job classification and compensation may not accurately reflect the current duties and responsibilities of each position. Without documented evidence that review activities are occurring, BHR cannot ensure that the decisions involving the classification and compensation plan of all State employee positions are properly supported by documentation that accurately reflects the current duties and responsibilities of each position. As a result, this may lead to noncompliance with Federal and State regulations. Recommendation: We recommend that the Department: • allocate resources to ensure proper oversight and monitoring of agency-level activities related to the maintenance of the State classification and compensation plan in accordance with State statute; • continue implementation of policies and procedures to ensure updates or reviews of the State classification and compensation plan are adequately documented; and • implement a tracking mechanism to accurately monitor the dates of past reviews and schedule forthcoming reviews to aid in adherence to the statutory requirement. Corrective Action Plan: See F-24 Management’s Response: The Department partially agrees with this finding. The Department disagrees with the statement “The assigned salary grade provides a basis for the allowability of compensation costs charged to Federal awards by documenting the reasonableness of compensation for services rendered by State employees...”. The focus is on 5 MRSA 7061 Classification Plan which “records the duties and responsibilities of all positions” rather than on the statute for the Compensation Plan, 5 MRSA 7065, which relates to compensation in that it establishes “minimum and maximum salary rates and such intermediate rates as the director considers desirable.” Consistent with 5 MRSA 7065, salary schedules were established and remain in place, changing through bargained and legislatively approved adjustments. To determine the basis for appropriate compensation, one must review these salary schedules along with any recruitment and retention adjustments (permitted by 5 MRSA 7065; paid in addition to and outside of the salary schedule), any agreements for market pay adjustments, laws which provide for additional pay components, and all negotiated pay items contained in the associated collective bargaining agreements. The Compensation Plan has been reviewed and adjusted during the period of this audit (July 2022 through June 2023), as evidenced by the on-line publication of new salary schedules effective July 3, 2022. In the 5-year period of July 2018 through June 2023 (the period the audit looked at class specs), the published salary schedules have been adjusted eight (8) times. The Department also disagrees with the recommendation’s reference “classification and compensation plan” as a singular plan. These are two separate plans in statute, and the recommendations are directed toward the classification plan. The Department agrees with the recommendations in that they provide for improved processes. It is worth noting the new language now in place by statute under the Classification Plan states: “Beginning in 2024, the procedure must provide for a comprehensive review of the classification plan every 10 years to make modifications and improvements as determined necessary.” Contact: Breena Bissell, Director, Bureau of Human Resources, DAFS, 207-624-7368 Auditor’s Concluding Remarks: The classification plan (5 MRSA 7061) and the compensation plan (5 MRSA 7065) are inherently linked. A well-maintained classification plan that accurately reflects the current duties and responsibilities of each job classification is essential for determining the correct salary rates in the compensation plan. Without regular reviews of the duties and responsibilities of each job classification, the data used to establish salary rates may be outdated and inaccurate. This can lead to discrepancies between the work performed by employees and the compensation they receive. The procedural nature and link between the classification plan and the compensation plan is further evidenced in the portion of the statute that BHR omitted in Management’s Response. BHR references “minimum and maximum salary rates and such intermediate rates as the director considers desirable.” The full reference states, “The officer shall, as soon as practicable after the adoption of the classification plan, submit to the Legislature a proposed plan of compensation developed by the officer showing for each class or position in the classified service minimum and maximum salary rates and such intermediate rates as the officer considers desirable.” The italicized portion of the statute emphasizes the importance of the classification plan as the foundation for developing the compensation plan. Therefore, it is critical that the classification plan is regularly reviewed and updated, and documentation of the process is maintained, to ensure the integrity of the compensation plan. The finding remains as stated. (State Number: 23-0111-01)
2023-004. FINDING (Inadequate Controls over Payroll Expenditures and Noncompliance with Allowable Cost & Cost Principles Requirements Applicable to the Head Start Cluster) Federal Department: U.S. Department of Health and Human Services Assistance Listing Number: 93.600 Cluster Name: Head Start Cluster Program Name: Early Head Start Award Numbers: 05CH011351-03-02, 05CH011351-04-03 Questioned Cost: Known ($37,377) Program Expenditures: $985,732 Cluster Expenditures: $1,026,985 The Governors State University (University) did not have adequate controls over payroll expenditures and did not comply with the allowable cost and cost principles requirements applicable to the Head Start Cluster. During our testing of Head Start Cluster payroll expenditures amounting to $555,569, we noted the following: • There was no periodic reconciliation performed between the amount actually worked on the grant (i.e. certified time and effort reports) against payroll expenditures to ensure the amount charged to the grant was accurate. Payroll expenditures for five (5) of twelve (12) employees tested were charged to the Early Head Start program using incorrect time and effort rates. The actual amounts charged to the grant were less than computed payroll expenditures using the certified time and effort rates. These differences were not adjusted at year-end to ensure the accuracy of the accounting records and schedule of expenditures of federal awards. The questioned costs were ($37,377). The sample was not intended to be, and was not, a statistically valid sample. • Our testing of payroll expenditures identified 12 instances out of 12 employees tested who worked on multiple federal awards and/or nonfederal awards lacked appropriate supporting documentation to account for 100% actual time and effort certification of the employees for each reporting period to provide a basis to reconcile with payroll distribution used in charging these awards. The University’s time and effort certification shows only the percentage of effort for each employee on a specific grant. As a result, we were unable to ascertain the accuracy of the payroll expenditure charged as a whole. The sample was not intended to be, and was not, a statistically valid sample. The Code of Federal Regulations (Code) (2 CFR 200.303) requires the University establish and maintain effective internal control over the federal award that provides reasonable assurance the University is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Effective internal controls should include procedures to ensure that there is reconciliation between the compensation for personal services charged to the agreement and the amount actually worked on the agreement. The Code (2 CFR 200.430) states charges to federal awards for salaries and wages must be based on records that accurately reflect the work performed and must support the distribution of the employee's salary or wages among specific activities or cost objectives if the employee works on more than one federal award; a federal award and 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. These records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. The University’s effort reporting guidelines requires the University to have a periodic review of the salary distribution system to confirm the reasonableness of the charges to the federal projects. In addition, the University is required to review, update, and prepare salary reallocations, and if necessary, make appropriate changes to the effort reports and certify reports on a quarterly basis to ensure that the salaries charged to federally sponsored projects are reasonable and consistent with the portion of activity committed to projects. The effort report must represent, in percentages totaling 100%, a reasonable estimate of an employee’s University compensated effort for the period. University officials stated the reconciliation process for time and effort reports is in place; however, staffing constraints resulted in some delays in the reconciliation process. The Early Head Start program is a calendar year grant that runs from January through December. The necessary adjustments to correct the differences noted for 2023 were made by the University after fiscal year end, but within the grant’s budget period. University officials stated 100% of work is captured on Human Resource and workflow records but not on the certification forms. Failure to accurately charge sponsored agreements for the equitable distribution of employee compensation may result in federal expenditures being disallowed and could jeopardize future federal funding. (Finding Code No. 2023-004) RECOMMENDATION We recommend the University timely reconcile payroll and ensure employees certify 100% of time worked to allow for adequate application of allowable cost and cost principles requirements for the Head Start Cluster. UNIVERSITY RESPONSE The University agrees with this finding and accepts the recommendation. The University has updated its process to collect time and effort information on a semi-annual basis rather than quarterly, which relieves some burden from staff, but still complies with federal regulations. By collecting time and effort information on a semi-annual basis, staff will have more time to reconcile time and effort against actual payroll expenditures. The University has also redesigned the time and effort collection form to show the 100% distribution of work. Further, the University now has a full-time financial research administrator who will help ensure that payroll- related adjustments are done timely. The financial research administrator will work with the Early Head Start program management to ensure that the related payroll reports are reviewed and reconciled timely, in accordance with existing University procedures.
Department of Interior Federal Financial Assistance Listing 15.042 Indian School Equalization Allowable Costs/Activities Allowed or Unallowed Material Weakness in Internal Control Over Compliance and Immaterial Instance of Noncompliance Criteria – A good system of internal control includes an adequate system for ensuring all expenditures are properly recorded and allowable under the related federal grant in accordance with 2 CFR 200.430(i). Condition – In our testing of allowable costs and activities we noted five instances where payroll expenditures were not paid in accordance with the employment letter. Cause – Procedures are not in place to adequately identify unallowable costs or activities. Effect – A lack of internal controls over allowable costs and activities could result in improper use of federal funds and non-compliance with the provisions of applicable grant requirements. Questioned Costs – None reported Context/Sampling – A nonstatistical sample of 60 transactions out of 4,205 total transactions were selected for testing, which accounted for $98,689 of $1,818,900 of federal program expenditures. Repeat Finding from Prior Years – No. Recommendation – The School should review internal control procedures to ensure federal expenditures are being properly reviewed for unallowable costs and activities. Views of Responsible Officials – There is no disagreement with the audit finding
Department of the Interior Federal Financial Assistance Listing 15.046 Administrative Cost Grants for Indian Schools Allowable Costs/Activities Allowed or Unallowed Material Weakness in Internal Control Over Compliance and Immaterial Instance of Noncompliance Criteria – A good system of internal control includes an adequate system for ensuring all expenditures are properly recorded and allowable under the related federal grant in accordance with 2 CFR 200.430(i). Condition – In our testing of allowable costs and activities we noted four instances where payroll expenditures were not paid in accordance with the employment letter. Cause – Procedures are not in place to adequately identify unallowable costs or activities. Effect – A lack of internal controls over allowable costs and activities could result in the improper use of federal funds and non-compliance with the provisions of applicable grant requirements. Questioned Costs – None reported Context/Sampling – A nonstatistical sample of 60 transactions out of 821 total transactions were selected for testing, which accounted for $129,328 of $648,490 of federal program expenditures. Repeat Finding from Prior Years – Yes, 2022-007 Recommendation – The School should review internal control procedures to ensure federal expenditures are being properly reviewed for unallowable costs and activities. Views of Responsible Officials – There is no disagreement with the audit finding.
2023-001 - Allowable Costs/Cost Principles Federal Program Information: Department of Education: ALN - 84.425 - Elementary & Secondary School Emergency Relief Fund Criteria: The following CFR(s) apply to this finding: 2 CFR 200.430(i)(1(vii) Condition: During audit procedures, it was identified that some of the School Districts certifications for time and effort records did not have the correct ESSER program listed. Cause: The School District does not have the necessary internal controls over compliance. Effect: The School District is not reviewing the required employee certifications to ensure the correct identification of the ESSER program which could result in the employees being charged to the incorrect program. Identification of Questioned Costs: None identified. Context: The School District does not have the correct controls in place for the review of time certifications for employees paid with the federal funds. Repeat Finding: This is not a repeat finding. Recommendation: It is recommended that the School District implements internal control processes and procedures to ensure that time certifications are accurate and complete. Views of Responsible Officials and Corrective Action Plan: Please see the Corrective Action Plan issued by the School District.
2023-001 - Allowable Costs/Cost Principles Federal Program Information: Department of Education: ALN - 84.425 - Elementary & Secondary School Emergency Relief Fund Criteria: The following CFR(s) apply to this finding: 2 CFR 200.430(i)(1(vii) Condition: During audit procedures, it was identified that some of the School Districts certifications for time and effort records did not have the correct ESSER program listed. Cause: The School District does not have the necessary internal controls over compliance. Effect: The School District is not reviewing the required employee certifications to ensure the correct identification of the ESSER program which could result in the employees being charged to the incorrect program. Identification of Questioned Costs: None identified. Context: The School District does not have the correct controls in place for the review of time certifications for employees paid with the federal funds. Repeat Finding: This is not a repeat finding. Recommendation: It is recommended that the School District implements internal control processes and procedures to ensure that time certifications are accurate and complete. Views of Responsible Officials and Corrective Action Plan: Please see the Corrective Action Plan issued by the School District.
Condition: The costs charged to the Federal award were not adequately documented. As a result, there was a delay in completing the Uniform Grant Guidance audit. Additional time and analysis was required to accumulate the direct costs that were charged to the major Federal program. Although the Organization was able to provide sufficient support for the personnel cost charged to the program, it was not documented or maintained prior to the start of the audit. Criteria: In accordance with 2 CFR §200.303: The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. In accordance with 2 CFR 200.430: (i) Standards for Documentation of Personnel Expenses (1) Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (ii) Be incorporated into the official records of the non-Federal entity; (iii) Reasonably reflect the total activity for which the employee is compensated by the non-Federal entity, not exceeding 100% of compensated activities; (iv) Encompass 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; (v) Comply with the established accounting policies and practices of the non-Federal entity; and (vi) Support the distribution of the employee’s salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. Cause: The Organization did not have a system of internal control, to track the costs allocated to the Federal, which provides reasonable assurance that the charges are accurate, allowable, and properly allocated during the period the costs were incurred. Effect: Expenditures reported to the Federal government could be unallowable/disallowed and subject to return. Questioned Costs: Unknown. Recommendation: We recommend the Organization establish and implement controls to maintain compliance with reporting requirements in accordance with Uniform Grant Guidance and ensure personnel receive appropriate training for handling programs that are Federally funded. Auditee Response and Corrective Action Plan: Refer to the schedule of corrective action plans. Auditor’s Conclusion: Finding remains as stated.
Finding Number: 2023-001: Represents a material weakness in internal control over compliance with Maine Mathematics and Science Alliance’s major federal program. Repeat Finding: Yes Type of Finding: Material Weakness Description: Internal Control over Payroll Major Program: NATIONAL SCIENCE FOUNDATION Research Development Cluster (Direct) AL# 47.076 – Education and Human Resources AL# 47.070 – Computer and Information Science and Engineering Questioned Costs: None How the questioned costs were computed: N/A Compliance Requirements: Activities Allowed or Unallowed and Allowable Costs, Cost Principles NSF Award Numbers Effected: 1831427 (Grant term 10/1/18 - 6/30/23), 1933491 (Grant term 1/1/20 - 6/30/24), 2009613 (Grant term 5/15/20 - 4/30/24), 1657217 (Grant term 8/15/17 - 7/31/22), 2115229 (Grant term 9/1/21 - 8/31/25) and 2201674 (Grant term 8/1/22 - 7/31/26) Condition: The internal controls over compliance for allowable activities and allowable costs are substantially the same for AL #47.076 and #47.070. During our audit, we noted the following: Wages charged to the programs are inconsistently including or excluding taxable benefits Pay rates noted in personnel files for several employees did not agree to the rates being paid One employee's timesheet hours did not agree to the hours paid on the payroll register Several instances in which payroll expenditures were incorrectly allocated to the programs. The employee's full wage for the pay period is being allocated rather than directly charging the program for the hours indicated on the timesheet as spent in the program and only allocating the other administrative or vacation time. The allocations were not based on time and effort records. Criteria: 2 CFR 200.430(i) 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 control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated;”. Cause: During fiscal year 2023, there was turnover in the personnel handling payroll. Effect: Without ensuring the payroll allocation is supported by time and effort records, it is possible that grants could be overcharged, resulting in misstated financial statements and unallowable costs. Context: The situation noted in the audit did not result in reportable questioned costs. The sample was not intended, and was not, a statistically valid sample. Recommendation: We recommend that the database used in the allocation of payroll to the grants be compared to the time and effort records prior to posting into the general ledger and sending to Bangor Payroll for processing. We recommend that approved pay rates in personnel files be compared to what has been provided to Bangor Payroll and corrections be made as necessary, as soon as possible. This should be completed and documented by an appropriate individual. View of responsible officials: Management agrees with the finding and has committed to a corrective action plan.
Finding Number: 2023-001: Represents a material weakness in internal control over compliance with Maine Mathematics and Science Alliance’s major federal program. Repeat Finding: Yes Type of Finding: Material Weakness Description: Internal Control over Payroll Major Program: NATIONAL SCIENCE FOUNDATION Research Development Cluster (Direct) AL# 47.076 – Education and Human Resources AL# 47.070 – Computer and Information Science and Engineering Questioned Costs: None How the questioned costs were computed: N/A Compliance Requirements: Activities Allowed or Unallowed and Allowable Costs, Cost Principles NSF Award Numbers Effected: 1831427 (Grant term 10/1/18 - 6/30/23), 1933491 (Grant term 1/1/20 - 6/30/24), 2009613 (Grant term 5/15/20 - 4/30/24), 1657217 (Grant term 8/15/17 - 7/31/22), 2115229 (Grant term 9/1/21 - 8/31/25) and 2201674 (Grant term 8/1/22 - 7/31/26) Condition: The internal controls over compliance for allowable activities and allowable costs are substantially the same for AL #47.076 and #47.070. During our audit, we noted the following: Wages charged to the programs are inconsistently including or excluding taxable benefits Pay rates noted in personnel files for several employees did not agree to the rates being paid One employee's timesheet hours did not agree to the hours paid on the payroll register Several instances in which payroll expenditures were incorrectly allocated to the programs. The employee's full wage for the pay period is being allocated rather than directly charging the program for the hours indicated on the timesheet as spent in the program and only allocating the other administrative or vacation time. The allocations were not based on time and effort records. Criteria: 2 CFR 200.430(i) 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 control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated;”. Cause: During fiscal year 2023, there was turnover in the personnel handling payroll. Effect: Without ensuring the payroll allocation is supported by time and effort records, it is possible that grants could be overcharged, resulting in misstated financial statements and unallowable costs. Context: The situation noted in the audit did not result in reportable questioned costs. The sample was not intended, and was not, a statistically valid sample. Recommendation: We recommend that the database used in the allocation of payroll to the grants be compared to the time and effort records prior to posting into the general ledger and sending to Bangor Payroll for processing. We recommend that approved pay rates in personnel files be compared to what has been provided to Bangor Payroll and corrections be made as necessary, as soon as possible. This should be completed and documented by an appropriate individual. View of responsible officials: Management agrees with the finding and has committed to a corrective action plan.
Information on the Federal Program: Assistance Listing Number 93.600—Head Start Program, United States Department of Health and Human Services. Pass-Through Entity: the City and County of Denver and Mile High Early Learning. Award Number: MOEAI-202158316, MOEAI-202158627, 08HP000174-03. Compliance Requirements: Allowable Costs Type of Finding: Material Noncompliance and Significant Deficiency. Criteria: 2 CFR 200.430(i) Compensation – Personal Services, Standards for Documentation of Personnel Services. Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. Condition: For the year ended June 30, 2023, we reviewed a sample of employees charged to the Head Start grant. In multiple instances the support for the allocation of time charged to the grant was not adequately documented. Cause: The organization uses a manual allocation process for their time that is cumbersome for both the staff and the reviewing supervisor, as a result allocations weren’t consistently documented or reviewed. Effect or Potential Effect: The potential effect could be the misallocation of staff time between grants. Questioned Costs: Known error, $3,882 and likely error, $16,202. Context: Of the 60 time cards ($270,165 of time and effort charged to the grant) reviewed for testing, 4 time cards ($3,882 of time and effort) did not have adequate support for the portion of their time charged to the grant. Repeat finding: Repeat finding of 2022-001 Recommendation: We would recommend the Organization pursue an improved time tracking system that both automates the payroll and time tracking process, and allows for better monitoring of employee review and approval of allocation support. Views of Responsible Official: This was noted in last year's audit but was identified late in the fiscal year. The time required to do the due diligence and implementation was part of our timesheet review system was not fixed until after June 2023. As noted in last year's goal, Sewall administration completed a review of payroll companies and committed on a new system that began in October 2023. Along with that, we have organized a new internal system of tracking staff's time given the complexities of the many blended funding sources. We have also implemented a regular review and supervision of time sheet allocations.
2023 – 001 Allowable Costs Federal Agency: U.S. Department Education Federal Program Name: Charter School Program Assistance Listing Number: 84.282 Pass-Through Agency: Indiana Department of Education Pass-Through Number(s): 72229, S282D190002 Award Period: July 1, 2022 – June 30, 2023 Type of Finding: Material Weakness in Internal Control over Compliance Material Noncompliance Criteria or specific requirement: The Compliance Supplement requires that compensation for personal services be charged to the federal grant based upon approved actual time worked on the program and not based on an allocation or budget (2 CFR 200.430(i)). Condition: While performing audit procedures, it was noted that payroll expenses were charged to the grant program based upon an allocation from the budget and not on approved and/or certified time worked in the program. Questioned costs: $356,845 Context: During the process of obtaining an understanding of internal controls and processing of payroll expenditures, we noted payroll was not reviewed to ensure the expense charged to the grants was accurate based upon approved actual time spent in the program and accurate pay rates. Cause: Salary figures for salaried employees were charged to the federal grant based on unapproved work actually performed for the program and inaccurate pay rates were utilized for overtime and an employee transition to full time. Effect: The organization has not fully followed compliance attributes with the allowable costs principles set forth by the Compliance Supplement related to allocation of salaries being charged based on approved time worked for a program. Personnel need to reinforce policies to ensure control procedures are in place to ensure salaries charged to a grant are appropriately based on actual approved time worked in a program. Repeat Finding: No. Recommendation: We recommend the School ensure policies and procedures for payroll expenditures for grant programs be charged to the federal grant based on approved hours worked in the program. Views of responsible officials: There is no disagreement with the audit finding.
2023 – 001 Allowable Costs Federal Agency: U.S. Department Education Federal Program Name: Charter School Program Assistance Listing Number: 84.282 Pass-Through Agency: Indiana Department of Education Pass-Through Number(s): 72229, S282D190002 Award Period: July 1, 2022 – June 30, 2023 Type of Finding: Material Weakness in Internal Control over Compliance Material Noncompliance Criteria or specific requirement: The Compliance Supplement requires that compensation for personal services be charged to the federal grant based upon approved actual time worked on the program and not based on an allocation or budget (2 CFR 200.430(i)). Condition: While performing audit procedures, it was noted that payroll expenses were charged to the grant program based upon an allocation from the budget and not on approved and/or certified time worked in the program. Questioned costs: $356,845 Context: During the process of obtaining an understanding of internal controls and processing of payroll expenditures, we noted payroll was not reviewed to ensure the expense charged to the grants was accurate based upon approved actual time spent in the program and accurate pay rates. Cause: Salary figures for salaried employees were charged to the federal grant based on unapproved work actually performed for the program and inaccurate pay rates were utilized for overtime and an employee transition to full time. Effect: The organization has not fully followed compliance attributes with the allowable costs principles set forth by the Compliance Supplement related to allocation of salaries being charged based on approved time worked for a program. Personnel need to reinforce policies to ensure control procedures are in place to ensure salaries charged to a grant are appropriately based on actual approved time worked in a program. Repeat Finding: No. Recommendation: We recommend the School ensure policies and procedures for payroll expenditures for grant programs be charged to the federal grant based on approved hours worked in the program. Views of responsible officials: There is no disagreement with the audit finding.
Section III - Federal Award Findings and Questioned Costs Finding 2023-002 Significant Deficiency Assistance Listing: 84.351 C.A.R.E. Condition: Cleveland Play House does not have adequate documentation to support all charges to the federal program. Of the 40 payroll charges tested, 32 did not have adequate documentation. Of the 40 non-payroll charges tested, supporting documentation for 2 charges was unable to be located. In addition, management provided an Excel spreadsheet to support the charges that were made to the program rather than reporting from their financial management system that is compliant with Section 200.302. Criteria: 2 CFR 200.430(i) states that charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. 2 CFR 200.403(g) states that for costs to be allowed under Federal awards, they must be adequately documented. In addition, Section 200.302 requires that the financial management system must provide for an identification, in its accounts, of all federal awards received and expended and the federal programs under which they were received; an accurate, current and complete disclosure of the financial results of each federal award or program; and a comparison of expenditures with budget amounts for each federal award. Cause: Due to significant organizational turnover in fiscal years 2022 and 2023, individuals were not completing timesheets to document level of effort for federal programs. Although management was verbally communicating with these individuals during the year and tracking the time they spent on the program within a spreadsheet, this is not considered adequate documentation. In addition, and also a result of the turnover, certain documentation to support non-payroll expenditures was unable to be located. Effect: Cleveland Play House did not have adequate documentation to support all costs charged to the federal program. In addition, an ineffective financial management system could lead to incorrect identification of costs charged to a federal program and an inability to substantiate that doublecharging did not occur. Repeat finding: This is a repeat finding, refer to 2022-002. Section III - Federal Award Findings and Questioned Costs (Continued) Questioned costs: Non-payroll: $267 Payroll: $49,059 Recommendation: We recommend that Cleveland Play House develop a policy and procedure to ensure that all hours submitted for federal reimbursement are supported with timesheets that are approved by a supervisor. In addition, staff should be made aware of the policy and procedures to ensure retention of documentation for non-payroll expenditures. Views of responsible officials: Management concurs with this recommendation. See also corrective action plan.
Identification of the Federal Program: Assistance Listing Number 17.259 – WIOA Youth Activities Program – U.S. Department of Labor. Pass-through Entity: New York City Department of Youth and Community Development. Award Number: 90535A / 90536A / 90537A / 90538A. Compliance Requirement: Allowable Costs/Cost Principles Criteria: Requirements per section 2 CFR Part 200.430 of the Uniform Guidance state that charges to federal awards for salaries and wages must be based on records that accurately reflect the work performed and be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Condition: During our testing for the year ended June 30, 2023, we noted a lack of detail for employee’s actual hours spent on different programs. Time and effort are allocated based on budgeted amounts. Cause: Allocation to funding sources were entered into the payroll system based on budgeted estimates rather than actual time records. Effect or Potential Effect: The lack of contemporaneous documentation of employee hours worked by grant or federal program could allow the Organization to improperly allocate employee pay to federal grants. Questioned Costs: $65,379 Context: As most employees work specifically on a single program, there was only one employee that worked on multiple programs for which time spent on the program could not be substantiated. The total questioned cost allocated to the program for this person totaled $65,379. Recommendation: The Organization should implement a requirement for employees, both exempt and nonexempt, to maintain accurate records of hours worked by program. Repeat finding: Yes, 2022-003. View of Responsible Officials: The Organization concurs with the finding and the related recommendations. Management has begun to implement mandatory time and program effort records during the year ending June 30, 2024.
Identification of the Federal Program: Assistance Listing Number 17.259 – WIOA Youth Activities Program – U.S. Department of Labor. Pass-through Entity: New York City Department of Youth and Community Development. Award Number: 90535A / 90536A / 90537A / 90538A. Compliance Requirement: Allowable Costs/Cost Principles Criteria: Requirements per section 2 CFR Part 200.430 of the Uniform Guidance state that charges to federal awards for salaries and wages must be based on records that accurately reflect the work performed and be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Condition: During our testing for the year ended June 30, 2023, we noted a lack of detail for employee’s actual hours spent on different programs. Time and effort are allocated based on budgeted amounts. Cause: Allocation to funding sources were entered into the payroll system based on budgeted estimates rather than actual time records. Effect or Potential Effect: The lack of contemporaneous documentation of employee hours worked by grant or federal program could allow the Organization to improperly allocate employee pay to federal grants. Questioned Costs: $65,379 Context: As most employees work specifically on a single program, there was only one employee that worked on multiple programs for which time spent on the program could not be substantiated. The total questioned cost allocated to the program for this person totaled $65,379. Recommendation: The Organization should implement a requirement for employees, both exempt and nonexempt, to maintain accurate records of hours worked by program. Repeat finding: Yes, 2022-003. View of Responsible Officials: The Organization concurs with the finding and the related recommendations. Management has begun to implement mandatory time and program effort records during the year ending June 30, 2024.
Identification of the Federal Program: Assistance Listing Number 17.259 – WIOA Youth Activities Program – U.S. Department of Labor. Pass-through Entity: New York City Department of Youth and Community Development. Award Number: 90535A / 90536A / 90537A / 90538A. Compliance Requirement: Allowable Costs/Cost Principles Criteria: Requirements per section 2 CFR Part 200.430 of the Uniform Guidance state that charges to federal awards for salaries and wages must be based on records that accurately reflect the work performed and be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Condition: During our testing for the year ended June 30, 2023, we noted a lack of detail for employee’s actual hours spent on different programs. Time and effort are allocated based on budgeted amounts. Cause: Allocation to funding sources were entered into the payroll system based on budgeted estimates rather than actual time records. Effect or Potential Effect: The lack of contemporaneous documentation of employee hours worked by grant or federal program could allow the Organization to improperly allocate employee pay to federal grants. Questioned Costs: $65,379 Context: As most employees work specifically on a single program, there was only one employee that worked on multiple programs for which time spent on the program could not be substantiated. The total questioned cost allocated to the program for this person totaled $65,379. Recommendation: The Organization should implement a requirement for employees, both exempt and nonexempt, to maintain accurate records of hours worked by program. Repeat finding: Yes, 2022-003. View of Responsible Officials: The Organization concurs with the finding and the related recommendations. Management has begun to implement mandatory time and program effort records during the year ending June 30, 2024.
Identification of the Federal Program: Assistance Listing Number 17.259 – WIOA Youth Activities Program – U.S. Department of Labor. Pass-through Entity: New York City Department of Youth and Community Development. Award Number: 90535A / 90536A / 90537A / 90538A. Compliance Requirement: Allowable Costs/Cost Principles Criteria: Requirements per section 2 CFR Part 200.430 of the Uniform Guidance state that charges to federal awards for salaries and wages must be based on records that accurately reflect the work performed and be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Condition: During our testing for the year ended June 30, 2023, we noted a lack of detail for employee’s actual hours spent on different programs. Time and effort are allocated based on budgeted amounts. Cause: Allocation to funding sources were entered into the payroll system based on budgeted estimates rather than actual time records. Effect or Potential Effect: The lack of contemporaneous documentation of employee hours worked by grant or federal program could allow the Organization to improperly allocate employee pay to federal grants. Questioned Costs: $65,379 Context: As most employees work specifically on a single program, there was only one employee that worked on multiple programs for which time spent on the program could not be substantiated. The total questioned cost allocated to the program for this person totaled $65,379. Recommendation: The Organization should implement a requirement for employees, both exempt and nonexempt, to maintain accurate records of hours worked by program. Repeat finding: Yes, 2022-003. View of Responsible Officials: The Organization concurs with the finding and the related recommendations. Management has begun to implement mandatory time and program effort records during the year ending June 30, 2024.
Finding 2023-002 – Internal Controls over Payroll Tracking & Recording Assistance Listing #: ALL Federal Awards: All Criteria: In accordance with the Uniform Guidance’s compensation requirements (2 CFR 200.430), payroll systems must be based on records that accurately reflect the work performed and supported by a system of internal controls that provides reasonable assurances that charges are accurate; allowable and reasonable; and properly allocated amongst programs. Condition: During our testing of 40 payroll transactions, we noted five instances where the time charged on the employee’s timesheet by program did not agree to the programs actually charged in the general ledger, and ultimately billed to the applicable grant award. Cause: The Organization summarizes employee timesheet data amongst programs on a reclass spreadsheet, which serves as the basis for entry into the general ledger. It appears there were errors when entering time from the timesheet into the reclass spreadsheet, which were not detected as a secondary review was not performed. Effect: The effect of the errors noted above did not exceed $850. Although the overall errors were immaterial, an inherent risk exists that errors could be material and not be detected and corrected without sufficient review. Questioned Costs: N/A Repeat Finding: No Recommendation: We recommend the Organization review its current processes over payroll to ensure that payroll costs are captured and recorded correctly in the financial management system. Response: We concur with the Finding. The CFO will immediately evaluate the need for additional controls to ensure accurate recording of time charged to program as reflected on the employee’s timesheet.
Finding 2023-002 – Internal Controls over Payroll Tracking & Recording Assistance Listing #: ALL Federal Awards: All Criteria: In accordance with the Uniform Guidance’s compensation requirements (2 CFR 200.430), payroll systems must be based on records that accurately reflect the work performed and supported by a system of internal controls that provides reasonable assurances that charges are accurate; allowable and reasonable; and properly allocated amongst programs. Condition: During our testing of 40 payroll transactions, we noted five instances where the time charged on the employee’s timesheet by program did not agree to the programs actually charged in the general ledger, and ultimately billed to the applicable grant award. Cause: The Organization summarizes employee timesheet data amongst programs on a reclass spreadsheet, which serves as the basis for entry into the general ledger. It appears there were errors when entering time from the timesheet into the reclass spreadsheet, which were not detected as a secondary review was not performed. Effect: The effect of the errors noted above did not exceed $850. Although the overall errors were immaterial, an inherent risk exists that errors could be material and not be detected and corrected without sufficient review. Questioned Costs: N/A Repeat Finding: No Recommendation: We recommend the Organization review its current processes over payroll to ensure that payroll costs are captured and recorded correctly in the financial management system. Response: We concur with the Finding. The CFO will immediately evaluate the need for additional controls to ensure accurate recording of time charged to program as reflected on the employee’s timesheet.
Finding 2023-002 – Internal Controls over Payroll Tracking & Recording Assistance Listing #: ALL Federal Awards: All Criteria: In accordance with the Uniform Guidance’s compensation requirements (2 CFR 200.430), payroll systems must be based on records that accurately reflect the work performed and supported by a system of internal controls that provides reasonable assurances that charges are accurate; allowable and reasonable; and properly allocated amongst programs. Condition: During our testing of 40 payroll transactions, we noted five instances where the time charged on the employee’s timesheet by program did not agree to the programs actually charged in the general ledger, and ultimately billed to the applicable grant award. Cause: The Organization summarizes employee timesheet data amongst programs on a reclass spreadsheet, which serves as the basis for entry into the general ledger. It appears there were errors when entering time from the timesheet into the reclass spreadsheet, which were not detected as a secondary review was not performed. Effect: The effect of the errors noted above did not exceed $850. Although the overall errors were immaterial, an inherent risk exists that errors could be material and not be detected and corrected without sufficient review. Questioned Costs: N/A Repeat Finding: No Recommendation: We recommend the Organization review its current processes over payroll to ensure that payroll costs are captured and recorded correctly in the financial management system. Response: We concur with the Finding. The CFO will immediately evaluate the need for additional controls to ensure accurate recording of time charged to program as reflected on the employee’s timesheet.
Finding 2023-002 – Internal Controls over Payroll Tracking & Recording Assistance Listing #: ALL Federal Awards: All Criteria: In accordance with the Uniform Guidance’s compensation requirements (2 CFR 200.430), payroll systems must be based on records that accurately reflect the work performed and supported by a system of internal controls that provides reasonable assurances that charges are accurate; allowable and reasonable; and properly allocated amongst programs. Condition: During our testing of 40 payroll transactions, we noted five instances where the time charged on the employee’s timesheet by program did not agree to the programs actually charged in the general ledger, and ultimately billed to the applicable grant award. Cause: The Organization summarizes employee timesheet data amongst programs on a reclass spreadsheet, which serves as the basis for entry into the general ledger. It appears there were errors when entering time from the timesheet into the reclass spreadsheet, which were not detected as a secondary review was not performed. Effect: The effect of the errors noted above did not exceed $850. Although the overall errors were immaterial, an inherent risk exists that errors could be material and not be detected and corrected without sufficient review. Questioned Costs: N/A Repeat Finding: No Recommendation: We recommend the Organization review its current processes over payroll to ensure that payroll costs are captured and recorded correctly in the financial management system. Response: We concur with the Finding. The CFO will immediately evaluate the need for additional controls to ensure accurate recording of time charged to program as reflected on the employee’s timesheet.
Finding 2023-002 – Internal Controls over Payroll Tracking & Recording Assistance Listing #: ALL Federal Awards: All Criteria: In accordance with the Uniform Guidance’s compensation requirements (2 CFR 200.430), payroll systems must be based on records that accurately reflect the work performed and supported by a system of internal controls that provides reasonable assurances that charges are accurate; allowable and reasonable; and properly allocated amongst programs. Condition: During our testing of 40 payroll transactions, we noted five instances where the time charged on the employee’s timesheet by program did not agree to the programs actually charged in the general ledger, and ultimately billed to the applicable grant award. Cause: The Organization summarizes employee timesheet data amongst programs on a reclass spreadsheet, which serves as the basis for entry into the general ledger. It appears there were errors when entering time from the timesheet into the reclass spreadsheet, which were not detected as a secondary review was not performed. Effect: The effect of the errors noted above did not exceed $850. Although the overall errors were immaterial, an inherent risk exists that errors could be material and not be detected and corrected without sufficient review. Questioned Costs: N/A Repeat Finding: No Recommendation: We recommend the Organization review its current processes over payroll to ensure that payroll costs are captured and recorded correctly in the financial management system. Response: We concur with the Finding. The CFO will immediately evaluate the need for additional controls to ensure accurate recording of time charged to program as reflected on the employee’s timesheet.
Finding 2023-002 – Internal Controls over Payroll Tracking & Recording Assistance Listing #: ALL Federal Awards: All Criteria: In accordance with the Uniform Guidance’s compensation requirements (2 CFR 200.430), payroll systems must be based on records that accurately reflect the work performed and supported by a system of internal controls that provides reasonable assurances that charges are accurate; allowable and reasonable; and properly allocated amongst programs. Condition: During our testing of 40 payroll transactions, we noted five instances where the time charged on the employee’s timesheet by program did not agree to the programs actually charged in the general ledger, and ultimately billed to the applicable grant award. Cause: The Organization summarizes employee timesheet data amongst programs on a reclass spreadsheet, which serves as the basis for entry into the general ledger. It appears there were errors when entering time from the timesheet into the reclass spreadsheet, which were not detected as a secondary review was not performed. Effect: The effect of the errors noted above did not exceed $850. Although the overall errors were immaterial, an inherent risk exists that errors could be material and not be detected and corrected without sufficient review. Questioned Costs: N/A Repeat Finding: No Recommendation: We recommend the Organization review its current processes over payroll to ensure that payroll costs are captured and recorded correctly in the financial management system. Response: We concur with the Finding. The CFO will immediately evaluate the need for additional controls to ensure accurate recording of time charged to program as reflected on the employee’s timesheet.