Criteria: In accordance with 2 CFR Section 200.430.8(i), charges to Federal awards for salaries and wages must be based on records that reflect the actual work performed. The charges must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated, and must be incorporated into the official records of the non-Federal entity. In addition, 2 CFR Section 200.430.8(i)(viii) states that budget estimates alone do not qualify as support for charges to Federal awards, but may be used for interim accounting, provided certain additional internal controls are implemented. Condition: During our testing of salaries and wages, we noted that all 242 sampled transactions did not have adequate supporting documentation and necessary approvals. Charges to Federal awards for salaries and wages were based on estimated allocations, rather than use of a system of internal controls that accounts for actual time and effort allocations. Allocation schedules, which included calculation and position title errors, were not prepared timely and documentation of approval by individuals knowledgeable of the Federal program was not retained. Cause: While there is a time keeping system implemented to track daily hours worked by employees, the Corporation’s current internal control system does not allow for specific coding for time actually spent on each federally funded program that would support the amount charged to the Federal award. Effect or Potential Effect: We were unable to determine whether charges to Federal awards for salaries and wages reflect specific time worked or amounts allocated by employee to specific Federal programs. Allowable costs incurred by the Corporation exceeded the amount of approved grant funding, therefore no questioned costs are reported. Questioned costs: Unknown Context: We selected 242 salary transactions charged to the Federal programs to test controls over allowable costs. All transactions charged to the Federal programs were based on budgeted Full Time Equivalents (FTE), and not actual hours employees worked for each Federal program. No analysis or true-up was performed to determine the accuracy of employee titles or amounts charged versus actual time and effort incurred. This is a condition identified per review of the Corporation’s compliance with specified requirements using a statistically valid sample. Repeat finding: This is a repeat finding from prior year. This was reported as finding 2021-005 in the 2021 report. Recommendation: We recommend the Corporation develop and incorporate internal controls in order to track specific time spent on each Federal program. This can include, time and effort reports completed on a routine basis, such as monthly, and adjust program expenditures as needed to properly reflect actual work performed. Completed time and effort reports should be reviewed and verified by management for accuracy. View of Responsible Officials: Due to turnover of several key financial executives and personnel, the Corporation did not maintain evidence of approval of salary and wage allocations.
Criteria: In accordance with 2 CFR Section 200.430.8(i), charges to Federal awards for salaries and wages must be based on records that reflect the actual work performed. The charges must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated, and must be incorporated into the official records of the non-Federal entity. In addition, 2 CFR Section 200.430.8(i)(viii) states that budget estimates alone do not qualify as support for charges to Federal awards, but may be used for interim accounting, provided certain additional internal controls are implemented. Condition: During our testing of salaries and wages, we noted that all 242 sampled transactions did not have adequate supporting documentation and necessary approvals. Charges to Federal awards for salaries and wages were based on estimated allocations, rather than use of a system of internal controls that accounts for actual time and effort allocations. Allocation schedules, which included calculation and position title errors, were not prepared timely and documentation of approval by individuals knowledgeable of the Federal program was not retained. Cause: While there is a time keeping system implemented to track daily hours worked by employees, the Corporation’s current internal control system does not allow for specific coding for time actually spent on each federally funded program that would support the amount charged to the Federal award. Effect or Potential Effect: We were unable to determine whether charges to Federal awards for salaries and wages reflect specific time worked or amounts allocated by employee to specific Federal programs. Allowable costs incurred by the Corporation exceeded the amount of approved grant funding, therefore no questioned costs are reported. Questioned costs: Unknown Context: We selected 242 salary transactions charged to the Federal programs to test controls over allowable costs. All transactions charged to the Federal programs were based on budgeted Full Time Equivalents (FTE), and not actual hours employees worked for each Federal program. No analysis or true-up was performed to determine the accuracy of employee titles or amounts charged versus actual time and effort incurred. This is a condition identified per review of the Corporation’s compliance with specified requirements using a statistically valid sample. Repeat finding: This is a repeat finding from prior year. This was reported as finding 2021-005 in the 2021 report. Recommendation: We recommend the Corporation develop and incorporate internal controls in order to track specific time spent on each Federal program. This can include, time and effort reports completed on a routine basis, such as monthly, and adjust program expenditures as needed to properly reflect actual work performed. Completed time and effort reports should be reviewed and verified by management for accuracy. View of Responsible Officials: Due to turnover of several key financial executives and personnel, the Corporation did not maintain evidence of approval of salary and wage allocations.
Criteria: In accordance with 2 CFR Section 200.430.8(i), charges to Federal awards for salaries and wages must be based on records that reflect the actual work performed. The charges must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated, and must be incorporated into the official records of the non-Federal entity. In addition, 2 CFR Section 200.430.8(i)(viii) states that budget estimates alone do not qualify as support for charges to Federal awards, but may be used for interim accounting, provided certain additional internal controls are implemented. Condition: During our testing of salaries and wages, we noted that all 242 sampled transactions did not have adequate supporting documentation and necessary approvals. Charges to Federal awards for salaries and wages were based on estimated allocations, rather than use of a system of internal controls that accounts for actual time and effort allocations. Allocation schedules, which included calculation and position title errors, were not prepared timely and documentation of approval by individuals knowledgeable of the Federal program was not retained. Cause: While there is a time keeping system implemented to track daily hours worked by employees, the Corporation’s current internal control system does not allow for specific coding for time actually spent on each federally funded program that would support the amount charged to the Federal award. Effect or Potential Effect: We were unable to determine whether charges to Federal awards for salaries and wages reflect specific time worked or amounts allocated by employee to specific Federal programs. Allowable costs incurred by the Corporation exceeded the amount of approved grant funding, therefore no questioned costs are reported. Questioned costs: Unknown Context: We selected 242 salary transactions charged to the Federal programs to test controls over allowable costs. All transactions charged to the Federal programs were based on budgeted Full Time Equivalents (FTE), and not actual hours employees worked for each Federal program. No analysis or true-up was performed to determine the accuracy of employee titles or amounts charged versus actual time and effort incurred. This is a condition identified per review of the Corporation’s compliance with specified requirements using a statistically valid sample. Repeat finding: This is a repeat finding from prior year. This was reported as finding 2021-005 in the 2021 report. Recommendation: We recommend the Corporation develop and incorporate internal controls in order to track specific time spent on each Federal program. This can include, time and effort reports completed on a routine basis, such as monthly, and adjust program expenditures as needed to properly reflect actual work performed. Completed time and effort reports should be reviewed and verified by management for accuracy. View of Responsible Officials: Due to turnover of several key financial executives and personnel, the Corporation did not maintain evidence of approval of salary and wage allocations.
Criteria: In accordance with 2 CFR Section 200.430.8(i), charges to Federal awards for salaries and wages must be based on records that reflect the actual work performed. The charges must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated, and must be incorporated into the official records of the non-Federal entity. In addition, 2 CFR Section 200.430.8(i)(viii) states that budget estimates alone do not qualify as support for charges to Federal awards, but may be used for interim accounting, provided certain additional internal controls are implemented. Condition: During our testing of salaries and wages, we noted that all 242 sampled transactions did not have adequate supporting documentation and necessary approvals. Charges to Federal awards for salaries and wages were based on estimated allocations, rather than use of a system of internal controls that accounts for actual time and effort allocations. Allocation schedules, which included calculation and position title errors, were not prepared timely and documentation of approval by individuals knowledgeable of the Federal program was not retained. Cause: While there is a time keeping system implemented to track daily hours worked by employees, the Corporation’s current internal control system does not allow for specific coding for time actually spent on each federally funded program that would support the amount charged to the Federal award. Effect or Potential Effect: We were unable to determine whether charges to Federal awards for salaries and wages reflect specific time worked or amounts allocated by employee to specific Federal programs. Allowable costs incurred by the Corporation exceeded the amount of approved grant funding, therefore no questioned costs are reported. Questioned costs: Unknown Context: We selected 242 salary transactions charged to the Federal programs to test controls over allowable costs. All transactions charged to the Federal programs were based on budgeted Full Time Equivalents (FTE), and not actual hours employees worked for each Federal program. No analysis or true-up was performed to determine the accuracy of employee titles or amounts charged versus actual time and effort incurred. This is a condition identified per review of the Corporation’s compliance with specified requirements using a statistically valid sample. Repeat finding: This is a repeat finding from prior year. This was reported as finding 2021-005 in the 2021 report. Recommendation: We recommend the Corporation develop and incorporate internal controls in order to track specific time spent on each Federal program. This can include, time and effort reports completed on a routine basis, such as monthly, and adjust program expenditures as needed to properly reflect actual work performed. Completed time and effort reports should be reviewed and verified by management for accuracy. View of Responsible Officials: Due to turnover of several key financial executives and personnel, the Corporation did not maintain evidence of approval of salary and wage allocations.
Criteria: In accordance with 2 CFR Section 200.430.8(i), charges to Federal awards for salaries and wages must be based on records that reflect the actual work performed. The charges must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated, and must be incorporated into the official records of the non-Federal entity. In addition, 2 CFR Section 200.430.8(i)(viii) states that budget estimates alone do not qualify as support for charges to Federal awards, but may be used for interim accounting, provided certain additional internal controls are implemented. Condition: During our testing of salaries and wages, we noted that all 242 sampled transactions did not have adequate supporting documentation and necessary approvals. Charges to Federal awards for salaries and wages were based on estimated allocations, rather than use of a system of internal controls that accounts for actual time and effort allocations. Allocation schedules, which included calculation and position title errors, were not prepared timely and documentation of approval by individuals knowledgeable of the Federal program was not retained. Cause: While there is a time keeping system implemented to track daily hours worked by employees, the Corporation’s current internal control system does not allow for specific coding for time actually spent on each federally funded program that would support the amount charged to the Federal award. Effect or Potential Effect: We were unable to determine whether charges to Federal awards for salaries and wages reflect specific time worked or amounts allocated by employee to specific Federal programs. Allowable costs incurred by the Corporation exceeded the amount of approved grant funding, therefore no questioned costs are reported. Questioned costs: Unknown Context: We selected 242 salary transactions charged to the Federal programs to test controls over allowable costs. All transactions charged to the Federal programs were based on budgeted Full Time Equivalents (FTE), and not actual hours employees worked for each Federal program. No analysis or true-up was performed to determine the accuracy of employee titles or amounts charged versus actual time and effort incurred. This is a condition identified per review of the Corporation’s compliance with specified requirements using a statistically valid sample. Repeat finding: This is a repeat finding from prior year. This was reported as finding 2021-005 in the 2021 report. Recommendation: We recommend the Corporation develop and incorporate internal controls in order to track specific time spent on each Federal program. This can include, time and effort reports completed on a routine basis, such as monthly, and adjust program expenditures as needed to properly reflect actual work performed. Completed time and effort reports should be reviewed and verified by management for accuracy. View of Responsible Officials: Due to turnover of several key financial executives and personnel, the Corporation did not maintain evidence of approval of salary and wage allocations.
Payroll Allocations Finding Number: 2022-007 Assistance Listing Number and Title: AL # 14.871 - Section 8 Housing Choice Vouchers/Housing Voucher Cluster Federal Award Identification Number / Year: 2022 Federal Agency: U.S. Department of Housing and Urban Development Compliance Requirement: Activities Allowed or Unallowed and Allowable Costs/Cost Principles Pass-Through Entity: N/A Repeat Finding from Prior Audit? No Noncompliance and Significant Deficiency 2 CFR § 2400.101 gives regulatory effect to the Department of Housing and Urban Development for 2 C.F.R. § 200.430 which provides, in part, 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. The Authority approved a standard allocation of 64% of administrative salaries to the Housing Choice Voucher (HCV) Program. However, due to a failure of internal controls when a fire at the Authority offices limited staff access to the Office resulting in the Executive Director circumventing established controls to process payroll, one payroll processed during 2022 allocated 100% of salaries to the HCV Program rather than the approved 64%. The total amount posted to HCV in error was $3,348. The Executive Director and Financial Director should ensure that all payroll is correctly allocated by program for every payroll.
Payroll Allocations Finding Number: 2022-007 Assistance Listing Number and Title: AL # 14.871 - Section 8 Housing Choice Vouchers/Housing Voucher Cluster Federal Award Identification Number / Year: 2022 Federal Agency: U.S. Department of Housing and Urban Development Compliance Requirement: Activities Allowed or Unallowed and Allowable Costs/Cost Principles Pass-Through Entity: N/A Repeat Finding from Prior Audit? No Noncompliance and Significant Deficiency 2 CFR § 2400.101 gives regulatory effect to the Department of Housing and Urban Development for 2 C.F.R. § 200.430 which provides, in part, 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. The Authority approved a standard allocation of 64% of administrative salaries to the Housing Choice Voucher (HCV) Program. However, due to a failure of internal controls when a fire at the Authority offices limited staff access to the Office resulting in the Executive Director circumventing established controls to process payroll, one payroll processed during 2022 allocated 100% of salaries to the HCV Program rather than the approved 64%. The total amount posted to HCV in error was $3,348. The Executive Director and Financial Director should ensure that all payroll is correctly allocated by program for every payroll.
Finding: Item 2022-002 – Allowable Costs Federal Program – Healthy Start Initiative Assistance Listing Number – 93.926 Federal Program – Supportive Housing for Veterans Assistance Listing Number – 64.033 Material Weakness Criteria: 2 CFR §200.430 (8)(i) Compensation – personal services, Standards for Documentation of Personnel Expenses specifies that 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; (viii) Budget estimates alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that (…) (c) the non-Federal entity’s system of internal controls includes processes to review after-the-fact interim charges made to a Federal award based on budget estimates. Condition/context: The Council allocates payroll costs to grants primarily based on initial budgets. The Council did not have internal controls established to verify that the employees’ actual work performed did not alter from initial budgeting, which may require an adjustment to costs charged to the grants. Cause: The Council did not have internal controls or processes established to track which programs an employee worked on throughout the year. Effect: Inadequate documentation for payroll allocations increases the risk of inaccurate, unallowable, or wrongly allocated payroll expenses charged to grants, which may result in questioned costs and potential reduction or loss of future funding due to noncompliance. Questioned cost: Questioned costs below are aggregated from the five months tested. Healthy Start Initiative: $157,251 Supportive Housing for Veterans: $446,184 Recommendation: We recommend the Council establish a process and related internal controls to monitor for which programs an employee performs work and adjust any incorrectly allocated grant expenses, if applicable. View of responsible officials: Management’s response is reported in “Corrective Action Plan” at the end of this report.
Finding: Item 2022-002 – Allowable Costs Federal Program – Healthy Start Initiative Assistance Listing Number – 93.926 Federal Program – Supportive Housing for Veterans Assistance Listing Number – 64.033 Material Weakness Criteria: 2 CFR §200.430 (8)(i) Compensation – personal services, Standards for Documentation of Personnel Expenses specifies that 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; (viii) Budget estimates alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that (…) (c) the non-Federal entity’s system of internal controls includes processes to review after-the-fact interim charges made to a Federal award based on budget estimates. Condition/context: The Council allocates payroll costs to grants primarily based on initial budgets. The Council did not have internal controls established to verify that the employees’ actual work performed did not alter from initial budgeting, which may require an adjustment to costs charged to the grants. Cause: The Council did not have internal controls or processes established to track which programs an employee worked on throughout the year. Effect: Inadequate documentation for payroll allocations increases the risk of inaccurate, unallowable, or wrongly allocated payroll expenses charged to grants, which may result in questioned costs and potential reduction or loss of future funding due to noncompliance. Questioned cost: Questioned costs below are aggregated from the five months tested. Healthy Start Initiative: $157,251 Supportive Housing for Veterans: $446,184 Recommendation: We recommend the Council establish a process and related internal controls to monitor for which programs an employee performs work and adjust any incorrectly allocated grant expenses, if applicable. View of responsible officials: Management’s response is reported in “Corrective Action Plan” at the end of this report.
Finding: Item 2022-002 – Allowable Costs Federal Program – Healthy Start Initiative Assistance Listing Number – 93.926 Federal Program – Supportive Housing for Veterans Assistance Listing Number – 64.033 Material Weakness Criteria: 2 CFR §200.430 (8)(i) Compensation – personal services, Standards for Documentation of Personnel Expenses specifies that 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; (viii) Budget estimates alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that (…) (c) the non-Federal entity’s system of internal controls includes processes to review after-the-fact interim charges made to a Federal award based on budget estimates. Condition/context: The Council allocates payroll costs to grants primarily based on initial budgets. The Council did not have internal controls established to verify that the employees’ actual work performed did not alter from initial budgeting, which may require an adjustment to costs charged to the grants. Cause: The Council did not have internal controls or processes established to track which programs an employee worked on throughout the year. Effect: Inadequate documentation for payroll allocations increases the risk of inaccurate, unallowable, or wrongly allocated payroll expenses charged to grants, which may result in questioned costs and potential reduction or loss of future funding due to noncompliance. Questioned cost: Questioned costs below are aggregated from the five months tested. Healthy Start Initiative: $157,251 Supportive Housing for Veterans: $446,184 Recommendation: We recommend the Council establish a process and related internal controls to monitor for which programs an employee performs work and adjust any incorrectly allocated grant expenses, if applicable. View of responsible officials: Management’s response is reported in “Corrective Action Plan” at the end of this report.
Criteria or specific requirement: 2 CFR 200.403(b) states that costs must "Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items". Per the Federal award (contract 2018-51300-28430, PTEIN C0535A-A), there was no specific allowability for “Fees”, and the budget indicated $0 allocated to “Fees”. 2 CFR 200.303(a) requires nonfederal entities receiving Federal awards to "Establish and maintain internal controls over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award." 2 CFR 200.430(i)(1) states that "Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed." Condition: (10.307) During testing of general disbursements, it was noted that the Organization did not retain documentary evidence of review and approval of disbursements for 4 out of 17 samples tested. In addition, for 1 sample, the Organization charged unallowable costs (bank fees) to the major program. During testing of payroll, it was noted that inadequate time and effort documentation was retained for 2 out of 26 samples tested, resulting in wages being charged erroneously between programs. (10.311) During testing of general disbursements, it was noted that the Organization did not retain documentary evidence of review and approval of disbursements for 5 out of 14 samples tested. During testing of payroll, it was noted that inadequate time and effort documentation was retained for 2 out of 21 samples tested, resulting in wages being charged erroneously between programs. During testing of indirect costs, it was noted that direct costs used to calculate the applied indirect cost rate were not supported by underlying documentation of costs incurred. Questioned costs: None Context: (10.307) For testing of general disbursements, a sample of 17 was made from a population of 113 disbursement transactions. Of the 17 sampled, 4 did not include documentary evidence of review and approval of the disbursement. In addition, 1 sample was found to be out of compliance with the provisions for 2 CFR 200.403(b). For testing of payroll, a sample of 26 was made from a population of 168 unique employee paychecks. Of the 26 sampled, 2 had inadequate documentation of time and effort spent on the major program, resulting in an overbilling in one sample and an underbilling in the second sample. (10.311) For testing of general disbursements, a sample of 14 was made from a population of 90 disbursement transactions. Of the 14 sampled, 5 did not include documentary evidence of review and approval of the disbursement. For testing of payroll, a sample of 21 was made from a population of 139 unique employee paychecks. Of the 21 sampled, 2 had inadequate documentation of time and effort spent on the major program, resulting in an overbilling in one sample and an underbilling in the second sample. For testing of indirect costs, a sample of 6 was made from a population of 21 monthly reimbursement invoices. Of the 6 sampled, 3 did not include sufficient documentation to support the direct costs used to apply the indirect cost rate. Cause: The Organization does not have adequate controls around the documentation of the supervisor review and approval process. Supervisory review and approvals are currently being communicated verbally. In addition, inadequate documentation is retained to document the time and effort of employee time spent on grants and the total direct costs that should be considered when applying the indirect cost rate. Effect: Without adequate records retained, the Organization is at risk of noncompliance with Federal programs and grant regulations, which could result in penalties or repayment obligations. Without adequate documentation and controls in place to ensure costs are reasonable and intended for the program charged, the Organization could incorrectly charge expenditures to the Federal program, report fraudulent expenditures, or not request appropriate reimbursement that the Organization is entitled to under the terms of the grant. Repeat Finding: No Recommendation: CLA recommends for the Organization to evaluate its current policies and procedures to implement an additional layer of review, and to formally document such review and approval procedures for all transactions affecting federal funds (i.e. approval of general expenditures, approval of timesheets, approval of indirect cost allocations). In addition, the Organization should emphasize the importance of detailed reviewed timesheets, including a second level review by the Finance Manager to ensure the accuracy and documentation of time and effort billed to each Federal program. Views of responsible officials: Management agrees with the finding.
Criteria or specific requirement: 2 CFR 200.403(b) states that costs must "Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items". Per the Federal award (contract 2018-51300-28430, PTEIN C0535A-A), there was no specific allowability for “Fees”, and the budget indicated $0 allocated to “Fees”. 2 CFR 200.303(a) requires nonfederal entities receiving Federal awards to "Establish and maintain internal controls over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award." 2 CFR 200.430(i)(1) states that "Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed." Condition: (10.307) During testing of general disbursements, it was noted that the Organization did not retain documentary evidence of review and approval of disbursements for 4 out of 17 samples tested. In addition, for 1 sample, the Organization charged unallowable costs (bank fees) to the major program. During testing of payroll, it was noted that inadequate time and effort documentation was retained for 2 out of 26 samples tested, resulting in wages being charged erroneously between programs. (10.311) During testing of general disbursements, it was noted that the Organization did not retain documentary evidence of review and approval of disbursements for 5 out of 14 samples tested. During testing of payroll, it was noted that inadequate time and effort documentation was retained for 2 out of 21 samples tested, resulting in wages being charged erroneously between programs. During testing of indirect costs, it was noted that direct costs used to calculate the applied indirect cost rate were not supported by underlying documentation of costs incurred. Questioned costs: None Context: (10.307) For testing of general disbursements, a sample of 17 was made from a population of 113 disbursement transactions. Of the 17 sampled, 4 did not include documentary evidence of review and approval of the disbursement. In addition, 1 sample was found to be out of compliance with the provisions for 2 CFR 200.403(b). For testing of payroll, a sample of 26 was made from a population of 168 unique employee paychecks. Of the 26 sampled, 2 had inadequate documentation of time and effort spent on the major program, resulting in an overbilling in one sample and an underbilling in the second sample. (10.311) For testing of general disbursements, a sample of 14 was made from a population of 90 disbursement transactions. Of the 14 sampled, 5 did not include documentary evidence of review and approval of the disbursement. For testing of payroll, a sample of 21 was made from a population of 139 unique employee paychecks. Of the 21 sampled, 2 had inadequate documentation of time and effort spent on the major program, resulting in an overbilling in one sample and an underbilling in the second sample. For testing of indirect costs, a sample of 6 was made from a population of 21 monthly reimbursement invoices. Of the 6 sampled, 3 did not include sufficient documentation to support the direct costs used to apply the indirect cost rate. Cause: The Organization does not have adequate controls around the documentation of the supervisor review and approval process. Supervisory review and approvals are currently being communicated verbally. In addition, inadequate documentation is retained to document the time and effort of employee time spent on grants and the total direct costs that should be considered when applying the indirect cost rate. Effect: Without adequate records retained, the Organization is at risk of noncompliance with Federal programs and grant regulations, which could result in penalties or repayment obligations. Without adequate documentation and controls in place to ensure costs are reasonable and intended for the program charged, the Organization could incorrectly charge expenditures to the Federal program, report fraudulent expenditures, or not request appropriate reimbursement that the Organization is entitled to under the terms of the grant. Repeat Finding: No Recommendation: CLA recommends for the Organization to evaluate its current policies and procedures to implement an additional layer of review, and to formally document such review and approval procedures for all transactions affecting federal funds (i.e. approval of general expenditures, approval of timesheets, approval of indirect cost allocations). In addition, the Organization should emphasize the importance of detailed reviewed timesheets, including a second level review by the Finance Manager to ensure the accuracy and documentation of time and effort billed to each Federal program. Views of responsible officials: Management agrees with the finding.
Criteria or specific requirement: 2 CFR 200.403(b) states that costs must "Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items". Per the Federal award (contract 2018-51300-28430, PTEIN C0535A-A), there was no specific allowability for “Fees”, and the budget indicated $0 allocated to “Fees”. 2 CFR 200.303(a) requires nonfederal entities receiving Federal awards to "Establish and maintain internal controls over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award." 2 CFR 200.430(i)(1) states that "Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed." Condition: (10.307) During testing of general disbursements, it was noted that the Organization did not retain documentary evidence of review and approval of disbursements for 4 out of 17 samples tested. In addition, for 1 sample, the Organization charged unallowable costs (bank fees) to the major program. During testing of payroll, it was noted that inadequate time and effort documentation was retained for 2 out of 26 samples tested, resulting in wages being charged erroneously between programs. (10.311) During testing of general disbursements, it was noted that the Organization did not retain documentary evidence of review and approval of disbursements for 5 out of 14 samples tested. During testing of payroll, it was noted that inadequate time and effort documentation was retained for 2 out of 21 samples tested, resulting in wages being charged erroneously between programs. During testing of indirect costs, it was noted that direct costs used to calculate the applied indirect cost rate were not supported by underlying documentation of costs incurred. Questioned costs: None Context: (10.307) For testing of general disbursements, a sample of 17 was made from a population of 113 disbursement transactions. Of the 17 sampled, 4 did not include documentary evidence of review and approval of the disbursement. In addition, 1 sample was found to be out of compliance with the provisions for 2 CFR 200.403(b). For testing of payroll, a sample of 26 was made from a population of 168 unique employee paychecks. Of the 26 sampled, 2 had inadequate documentation of time and effort spent on the major program, resulting in an overbilling in one sample and an underbilling in the second sample. (10.311) For testing of general disbursements, a sample of 14 was made from a population of 90 disbursement transactions. Of the 14 sampled, 5 did not include documentary evidence of review and approval of the disbursement. For testing of payroll, a sample of 21 was made from a population of 139 unique employee paychecks. Of the 21 sampled, 2 had inadequate documentation of time and effort spent on the major program, resulting in an overbilling in one sample and an underbilling in the second sample. For testing of indirect costs, a sample of 6 was made from a population of 21 monthly reimbursement invoices. Of the 6 sampled, 3 did not include sufficient documentation to support the direct costs used to apply the indirect cost rate. Cause: The Organization does not have adequate controls around the documentation of the supervisor review and approval process. Supervisory review and approvals are currently being communicated verbally. In addition, inadequate documentation is retained to document the time and effort of employee time spent on grants and the total direct costs that should be considered when applying the indirect cost rate. Effect: Without adequate records retained, the Organization is at risk of noncompliance with Federal programs and grant regulations, which could result in penalties or repayment obligations. Without adequate documentation and controls in place to ensure costs are reasonable and intended for the program charged, the Organization could incorrectly charge expenditures to the Federal program, report fraudulent expenditures, or not request appropriate reimbursement that the Organization is entitled to under the terms of the grant. Repeat Finding: No Recommendation: CLA recommends for the Organization to evaluate its current policies and procedures to implement an additional layer of review, and to formally document such review and approval procedures for all transactions affecting federal funds (i.e. approval of general expenditures, approval of timesheets, approval of indirect cost allocations). In addition, the Organization should emphasize the importance of detailed reviewed timesheets, including a second level review by the Finance Manager to ensure the accuracy and documentation of time and effort billed to each Federal program. Views of responsible officials: Management agrees with the finding.
Criteria or specific requirement: 2 CFR 200.403(b) states that costs must "Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items". Per the Federal award (contract 2018-51300-28430, PTEIN C0535A-A), there was no specific allowability for “Fees”, and the budget indicated $0 allocated to “Fees”. 2 CFR 200.303(a) requires nonfederal entities receiving Federal awards to "Establish and maintain internal controls over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award." 2 CFR 200.430(i)(1) states that "Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed." Condition: (10.307) During testing of general disbursements, it was noted that the Organization did not retain documentary evidence of review and approval of disbursements for 4 out of 17 samples tested. In addition, for 1 sample, the Organization charged unallowable costs (bank fees) to the major program. During testing of payroll, it was noted that inadequate time and effort documentation was retained for 2 out of 26 samples tested, resulting in wages being charged erroneously between programs. (10.311) During testing of general disbursements, it was noted that the Organization did not retain documentary evidence of review and approval of disbursements for 5 out of 14 samples tested. During testing of payroll, it was noted that inadequate time and effort documentation was retained for 2 out of 21 samples tested, resulting in wages being charged erroneously between programs. During testing of indirect costs, it was noted that direct costs used to calculate the applied indirect cost rate were not supported by underlying documentation of costs incurred. Questioned costs: None Context: (10.307) For testing of general disbursements, a sample of 17 was made from a population of 113 disbursement transactions. Of the 17 sampled, 4 did not include documentary evidence of review and approval of the disbursement. In addition, 1 sample was found to be out of compliance with the provisions for 2 CFR 200.403(b). For testing of payroll, a sample of 26 was made from a population of 168 unique employee paychecks. Of the 26 sampled, 2 had inadequate documentation of time and effort spent on the major program, resulting in an overbilling in one sample and an underbilling in the second sample. (10.311) For testing of general disbursements, a sample of 14 was made from a population of 90 disbursement transactions. Of the 14 sampled, 5 did not include documentary evidence of review and approval of the disbursement. For testing of payroll, a sample of 21 was made from a population of 139 unique employee paychecks. Of the 21 sampled, 2 had inadequate documentation of time and effort spent on the major program, resulting in an overbilling in one sample and an underbilling in the second sample. For testing of indirect costs, a sample of 6 was made from a population of 21 monthly reimbursement invoices. Of the 6 sampled, 3 did not include sufficient documentation to support the direct costs used to apply the indirect cost rate. Cause: The Organization does not have adequate controls around the documentation of the supervisor review and approval process. Supervisory review and approvals are currently being communicated verbally. In addition, inadequate documentation is retained to document the time and effort of employee time spent on grants and the total direct costs that should be considered when applying the indirect cost rate. Effect: Without adequate records retained, the Organization is at risk of noncompliance with Federal programs and grant regulations, which could result in penalties or repayment obligations. Without adequate documentation and controls in place to ensure costs are reasonable and intended for the program charged, the Organization could incorrectly charge expenditures to the Federal program, report fraudulent expenditures, or not request appropriate reimbursement that the Organization is entitled to under the terms of the grant. Repeat Finding: No Recommendation: CLA recommends for the Organization to evaluate its current policies and procedures to implement an additional layer of review, and to formally document such review and approval procedures for all transactions affecting federal funds (i.e. approval of general expenditures, approval of timesheets, approval of indirect cost allocations). In addition, the Organization should emphasize the importance of detailed reviewed timesheets, including a second level review by the Finance Manager to ensure the accuracy and documentation of time and effort billed to each Federal program. Views of responsible officials: Management agrees with the finding.
U.S. Department of Health and Human Services, passed through Kansas Department of Aging Aging Cluster - ALN 93.045 - Special Programs for the Aging _Title III, Part C_Nutrition Services - 2201KSOAHD Criteria or Specific Requirement – Allowable Costs/Cost Principles and Material Weakness Federal regulations state that “charges to federal awards for salaries and wages, must be based on records that accurately reflect the work performed.” The regulations also state that “the records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and property allocated” and “budget estimates alone do not qualify as support for charges to federal awards” (2 CFR 200.430(i)). Per 2 CFR 200.303, the non-Federal entities receiving federal awards (i.e ., auditee management) establish and maintain internal control design to reasonably ensure compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition – During our test work over the ALN 93.045 grant, we noted the the Unified Government did not have time and activity records with sufficient detail per federal regulations document to support its compensation and fringe benefit expenses. Questioned Costs – Total questioned costs of $2,332 were identified as a result of lack of proper documentation to support the charge and allocation to the grant. Context – We selected a sample of 40 charges totaling $16,402 to the Aging Cluster grants of which 28 were salaries and benefits expenditures with a value of $2,332. Within our sample, none of the 28 selections had proper documentation to support allocation to the grant. Per discussions with management and further review, the amounts charged to the grant were based on the approved budget for the position and the internal allocation performed each payroll period. Salaries and benefits charged to the entire cluster in the audit period totaled $306,658 and represented 16% of the total grant expenditures for the period. The sample was not intended to be, and was not, a statistically valid sample. Identification of Prior Year Finding: N/A Effect – Based on testing completed, the the Unified Government did not have sufficient procedures to allocate salaries and fringe benefits activity related to Aging Cluster throughout fiscal year 2022. Cause – Management indicated that this was attributed to a misunderstanding of the requirements and the inability to rely on budgeted estimates alone. Recommendation – We recommend that management utilize a time and activity method which meets the requirements of federal regulations. We also recommend employees and their supervisors are provided training on the requirements. Views of Responsible Official and Planned Corrective Actions – Management agrees with the stated finding and has implemented a corrective action plan.
U.S. Department of Health and Human Services, passed through Kansas Department of Aging Aging Cluster - ALN 93.045 - Special Programs for the Aging _Title III, Part C_Nutrition Services - 2201KSOAHD Criteria or Specific Requirement – Allowable Costs/Cost Principles and Material Weakness Federal regulations state that “charges to federal awards for salaries and wages, must be based on records that accurately reflect the work performed.” The regulations also state that “the records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and property allocated” and “budget estimates alone do not qualify as support for charges to federal awards” (2 CFR 200.430(i)). Per 2 CFR 200.303, the non-Federal entities receiving federal awards (i.e ., auditee management) establish and maintain internal control design to reasonably ensure compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition – During our test work over the ALN 93.045 grant, we noted the the Unified Government did not have time and activity records with sufficient detail per federal regulations document to support its compensation and fringe benefit expenses. Questioned Costs – Total questioned costs of $2,332 were identified as a result of lack of proper documentation to support the charge and allocation to the grant. Context – We selected a sample of 40 charges totaling $16,402 to the Aging Cluster grants of which 28 were salaries and benefits expenditures with a value of $2,332. Within our sample, none of the 28 selections had proper documentation to support allocation to the grant. Per discussions with management and further review, the amounts charged to the grant were based on the approved budget for the position and the internal allocation performed each payroll period. Salaries and benefits charged to the entire cluster in the audit period totaled $306,658 and represented 16% of the total grant expenditures for the period. The sample was not intended to be, and was not, a statistically valid sample. Identification of Prior Year Finding: N/A Effect – Based on testing completed, the the Unified Government did not have sufficient procedures to allocate salaries and fringe benefits activity related to Aging Cluster throughout fiscal year 2022. Cause – Management indicated that this was attributed to a misunderstanding of the requirements and the inability to rely on budgeted estimates alone. Recommendation – We recommend that management utilize a time and activity method which meets the requirements of federal regulations. We also recommend employees and their supervisors are provided training on the requirements. Views of Responsible Official and Planned Corrective Actions – Management agrees with the stated finding and has implemented a corrective action plan.
Criteria: The Association’s procedures for processing expenditures, and primarily allocating expenditures to programs, should include controls that ensure expenditures are properly charged to program and allocated in accordance with the federal grant requirements. The objective of the Assistance Listing 93.600 Head Start program (including Early Head Start and Early Head Start Partnerships) is to promote school readiness of low-income children (including American Indians, Alaska Natives and migrant and seasonal farm workers) by enhancing children’s cognitive, social and emotional development. During the fiscal year ending December 31, 2022, the Association expended $4,546,478 in major program funding. Federal regulations require award recipients to establish and follow internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls. Federal regulations require the Association to have adequate time-and-effort documentation to support all payroll costs charged to the Head Start awards. 2 CFR 200.430, Compensation – personal services, states, in part: “(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: (ii) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated…”. Depending on the number and types of activities employees perform, time and effort documentation can be in the form of semi-annual certification or monthly personnel activity reports, such as a timesheet. Condition: The Association’s controls were not effective to ensure it maintained adequate time and effort documentation, as required by federal regulations and the grantor. During review of payroll costs for the year ended December 31, 2022, it was noted payroll costs were charged according to budgeted time rather than reconciling to actual hours worked. This internal control deficiency is considered to be a significant deficiency. Questioned Costs: None. Context: Procedures included examining payroll charges for 40 randomly selected employees for January through December 2022. Cause: The Association changed the software used for payroll processing from QuickBooks to MIP in July 2020. They then changed their fiscal accounting software from QuickBooks to MIP in January 2021. The new software implementation was fraught with many challenges, one of which being implementing electronic processes that met the time and effort requirements outlined in the Association’s policy manual. Effect: By not keeping proper time-and-effort records, the Association cannot demonstrate compliance with grantor’s requirements that require support for payroll costs charged to the federal program. The Association provided alternate documentation that demonstrated the payroll costs charged to the program were allowable. Therefore, we are not questioning costs. Repeat finding: This finding is a repeat finding in the immediately prior year. Prior year finding number 2021-004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendation: The Association follow its own documented controls to ensure it prepares adequate time-and-effort documentation to support payroll costs charged to the federal grant. View of Responsible Officials: There is no disagreement with this audit finding.
Criteria: The Association’s procedures for processing expenditures, and primarily allocating expenditures to programs, should include controls that ensure expenditures are properly charged to program and allocated in accordance with the federal grant requirements. The objective of the Assistance Listing 93.600 Head Start program (including Early Head Start and Early Head Start Partnerships) is to promote school readiness of low-income children (including American Indians, Alaska Natives and migrant and seasonal farm workers) by enhancing children’s cognitive, social and emotional development. During the fiscal year ending December 31, 2022, the Association expended $4,546,478 in major program funding. Federal regulations require award recipients to establish and follow internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls. Federal regulations require the Association to have adequate time-and-effort documentation to support all payroll costs charged to the Head Start awards. 2 CFR 200.430, Compensation – personal services, states, in part: “(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: (ii) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated…”. Depending on the number and types of activities employees perform, time and effort documentation can be in the form of semi-annual certification or monthly personnel activity reports, such as a timesheet. Condition: The Association’s controls were not effective to ensure it maintained adequate time and effort documentation, as required by federal regulations and the grantor. During review of payroll costs for the year ended December 31, 2022, it was noted payroll costs were charged according to budgeted time rather than reconciling to actual hours worked. This internal control deficiency is considered to be a significant deficiency. Questioned Costs: None. Context: Procedures included examining payroll charges for 40 randomly selected employees for January through December 2022. Cause: The Association changed the software used for payroll processing from QuickBooks to MIP in July 2020. They then changed their fiscal accounting software from QuickBooks to MIP in January 2021. The new software implementation was fraught with many challenges, one of which being implementing electronic processes that met the time and effort requirements outlined in the Association’s policy manual. Effect: By not keeping proper time-and-effort records, the Association cannot demonstrate compliance with grantor’s requirements that require support for payroll costs charged to the federal program. The Association provided alternate documentation that demonstrated the payroll costs charged to the program were allowable. Therefore, we are not questioning costs. Repeat finding: This finding is a repeat finding in the immediately prior year. Prior year finding number 2021-004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendation: The Association follow its own documented controls to ensure it prepares adequate time-and-effort documentation to support payroll costs charged to the federal grant. View of Responsible Officials: There is no disagreement with this audit finding.
Criteria: The Association’s procedures for processing expenditures, and primarily allocating expenditures to programs, should include controls that ensure expenditures are properly charged to program and allocated in accordance with the federal grant requirements. The objective of the Assistance Listing 93.600 Head Start program (including Early Head Start and Early Head Start Partnerships) is to promote school readiness of low-income children (including American Indians, Alaska Natives and migrant and seasonal farm workers) by enhancing children’s cognitive, social and emotional development. During the fiscal year ending December 31, 2022, the Association expended $4,546,478 in major program funding. Federal regulations require award recipients to establish and follow internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls. Federal regulations require the Association to have adequate time-and-effort documentation to support all payroll costs charged to the Head Start awards. 2 CFR 200.430, Compensation – personal services, states, in part: “(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: (ii) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated…”. Depending on the number and types of activities employees perform, time and effort documentation can be in the form of semi-annual certification or monthly personnel activity reports, such as a timesheet. Condition: The Association’s controls were not effective to ensure it maintained adequate time and effort documentation, as required by federal regulations and the grantor. During review of payroll costs for the year ended December 31, 2022, it was noted payroll costs were charged according to budgeted time rather than reconciling to actual hours worked. This internal control deficiency is considered to be a significant deficiency. Questioned Costs: None. Context: Procedures included examining payroll charges for 40 randomly selected employees for January through December 2022. Cause: The Association changed the software used for payroll processing from QuickBooks to MIP in July 2020. They then changed their fiscal accounting software from QuickBooks to MIP in January 2021. The new software implementation was fraught with many challenges, one of which being implementing electronic processes that met the time and effort requirements outlined in the Association’s policy manual. Effect: By not keeping proper time-and-effort records, the Association cannot demonstrate compliance with grantor’s requirements that require support for payroll costs charged to the federal program. The Association provided alternate documentation that demonstrated the payroll costs charged to the program were allowable. Therefore, we are not questioning costs. Repeat finding: This finding is a repeat finding in the immediately prior year. Prior year finding number 2021-004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendation: The Association follow its own documented controls to ensure it prepares adequate time-and-effort documentation to support payroll costs charged to the federal grant. View of Responsible Officials: There is no disagreement with this audit finding.
Finding 2022–001: Internal Controls over Allowable Costs Federal Department: U.S. Department of Education Pass-through Agencies: State of South Carolina Department of Education, Minnesota Department of Education, and DC Office of the State Superintendent of Education Federal Program Name: Twenty-First Century Community Learning Centers Assistance Listing Number: 84.287 Type of Finding: Significant Deficiency in Internal Control over Compliance Other Matters Criteria 2 CFR Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, Subpart D – Post-Federal Award Requirements Standards Section 200.303, Internal controls states “The non-Federal” entity must: (1) establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and terms and conditions of the Federal award. Section 200.430 (i) Standards for Documentation of Personnel Expenses states (1) Charges to federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (ii) Be incorporated into the official records of the non-federal entity; (iii) Reasonably reflect the total activity for which the employee is compensated by the non-federal entity, not exceeding 100% of compensated activities…; (v) Comply with the established accounting policies and practices of the non-federal entity…; (viii) Budget estimates (i.e., estimates determined before the services are performed) alone do not qualify as support for charges to federal awards, but may be used for interim accounting purposes, provided that: (A) The system for establishing the estimates produces reasonable approximations of the activity actually performed; (B) Significant changes in the corresponding work activity (as defined by the non-federal entity's written policies) are identified and entered into the records in a timely manner. Short-term (such as one or two months) fluctuation between workload categories need not be considered as long as the distribution of salaries and wages is reasonable over the longer term; and (C) The non-federal entity's system of internal controls includes processes to review after-the-fact interim charges made to a federal award based on budget estimates. All necessary adjustments must be made such that the final amount charged to the federal award is accurate, allowable, and properly allocated. Condition/Context During the current audit period, CDF did not maintain adequate control over allowable costs related to its federally funded program. Exceptions noted in 11 of 60 tested payroll expenditures: For 11 payroll expenditures tested, we were not provided with any evidence of approval of the payroll allocations. We noted these allocations were based on budget estimates, instead of actual time and effort reporting. Exceptions noted in 23 of 60 non-payroll expenditures tested: For 22 non-payroll expenditures tested, we were not provided with any evidence of approval of the overhead allocations. We reviewed the supporting documentation, and the expenditures are deemed allowable. For one expenditure tested, we were not provided with any supporting documentation to determine if the expenditure was allowable. Cause Based on our discussions with management, this finding occurred due to staff turnover. This resulted in consistent documentation not maintained to support the approval of expenditure allocations. Effect The failure to maintain adequate documentation to verify that expenditures are properly reviewed and approved and to maintain adequate supporting documentation to ensure all payroll and non-payroll expenditures are reasonable and properly reviewed is a violation of federal regulations, which could result in unallowed costs being charged to the federally funded program. Questioned Costs $4,697 Identification of Repeat Findings Not a repeat finding. Recommendation We recommend that CDF implement procedures to ensure all expenditure allocations are properly reviewed and approved and supporting documentation is maintained in accordance with federal regulations. Views of Responsible Officials and Corrective Action Plan CDF agrees with the finding and recommendation. See CDF’s Corrective Action Plan on pages 17-18.
Finding 2022–001: Internal Controls over Allowable Costs Federal Department: U.S. Department of Education Pass-through Agencies: State of South Carolina Department of Education, Minnesota Department of Education, and DC Office of the State Superintendent of Education Federal Program Name: Twenty-First Century Community Learning Centers Assistance Listing Number: 84.287 Type of Finding: Significant Deficiency in Internal Control over Compliance Other Matters Criteria 2 CFR Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, Subpart D – Post-Federal Award Requirements Standards Section 200.303, Internal controls states “The non-Federal” entity must: (1) establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and terms and conditions of the Federal award. Section 200.430 (i) Standards for Documentation of Personnel Expenses states (1) Charges to federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (ii) Be incorporated into the official records of the non-federal entity; (iii) Reasonably reflect the total activity for which the employee is compensated by the non-federal entity, not exceeding 100% of compensated activities…; (v) Comply with the established accounting policies and practices of the non-federal entity…; (viii) Budget estimates (i.e., estimates determined before the services are performed) alone do not qualify as support for charges to federal awards, but may be used for interim accounting purposes, provided that: (A) The system for establishing the estimates produces reasonable approximations of the activity actually performed; (B) Significant changes in the corresponding work activity (as defined by the non-federal entity's written policies) are identified and entered into the records in a timely manner. Short-term (such as one or two months) fluctuation between workload categories need not be considered as long as the distribution of salaries and wages is reasonable over the longer term; and (C) The non-federal entity's system of internal controls includes processes to review after-the-fact interim charges made to a federal award based on budget estimates. All necessary adjustments must be made such that the final amount charged to the federal award is accurate, allowable, and properly allocated. Condition/Context During the current audit period, CDF did not maintain adequate control over allowable costs related to its federally funded program. Exceptions noted in 11 of 60 tested payroll expenditures: For 11 payroll expenditures tested, we were not provided with any evidence of approval of the payroll allocations. We noted these allocations were based on budget estimates, instead of actual time and effort reporting. Exceptions noted in 23 of 60 non-payroll expenditures tested: For 22 non-payroll expenditures tested, we were not provided with any evidence of approval of the overhead allocations. We reviewed the supporting documentation, and the expenditures are deemed allowable. For one expenditure tested, we were not provided with any supporting documentation to determine if the expenditure was allowable. Cause Based on our discussions with management, this finding occurred due to staff turnover. This resulted in consistent documentation not maintained to support the approval of expenditure allocations. Effect The failure to maintain adequate documentation to verify that expenditures are properly reviewed and approved and to maintain adequate supporting documentation to ensure all payroll and non-payroll expenditures are reasonable and properly reviewed is a violation of federal regulations, which could result in unallowed costs being charged to the federally funded program. Questioned Costs $4,697 Identification of Repeat Findings Not a repeat finding. Recommendation We recommend that CDF implement procedures to ensure all expenditure allocations are properly reviewed and approved and supporting documentation is maintained in accordance with federal regulations. Views of Responsible Officials and Corrective Action Plan CDF agrees with the finding and recommendation. See CDF’s Corrective Action Plan on pages 17-18.
Finding 2022–001: Internal Controls over Allowable Costs Federal Department: U.S. Department of Education Pass-through Agencies: State of South Carolina Department of Education, Minnesota Department of Education, and DC Office of the State Superintendent of Education Federal Program Name: Twenty-First Century Community Learning Centers Assistance Listing Number: 84.287 Type of Finding: Significant Deficiency in Internal Control over Compliance Other Matters Criteria 2 CFR Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, Subpart D – Post-Federal Award Requirements Standards Section 200.303, Internal controls states “The non-Federal” entity must: (1) establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and terms and conditions of the Federal award. Section 200.430 (i) Standards for Documentation of Personnel Expenses states (1) Charges to federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (ii) Be incorporated into the official records of the non-federal entity; (iii) Reasonably reflect the total activity for which the employee is compensated by the non-federal entity, not exceeding 100% of compensated activities…; (v) Comply with the established accounting policies and practices of the non-federal entity…; (viii) Budget estimates (i.e., estimates determined before the services are performed) alone do not qualify as support for charges to federal awards, but may be used for interim accounting purposes, provided that: (A) The system for establishing the estimates produces reasonable approximations of the activity actually performed; (B) Significant changes in the corresponding work activity (as defined by the non-federal entity's written policies) are identified and entered into the records in a timely manner. Short-term (such as one or two months) fluctuation between workload categories need not be considered as long as the distribution of salaries and wages is reasonable over the longer term; and (C) The non-federal entity's system of internal controls includes processes to review after-the-fact interim charges made to a federal award based on budget estimates. All necessary adjustments must be made such that the final amount charged to the federal award is accurate, allowable, and properly allocated. Condition/Context During the current audit period, CDF did not maintain adequate control over allowable costs related to its federally funded program. Exceptions noted in 11 of 60 tested payroll expenditures: For 11 payroll expenditures tested, we were not provided with any evidence of approval of the payroll allocations. We noted these allocations were based on budget estimates, instead of actual time and effort reporting. Exceptions noted in 23 of 60 non-payroll expenditures tested: For 22 non-payroll expenditures tested, we were not provided with any evidence of approval of the overhead allocations. We reviewed the supporting documentation, and the expenditures are deemed allowable. For one expenditure tested, we were not provided with any supporting documentation to determine if the expenditure was allowable. Cause Based on our discussions with management, this finding occurred due to staff turnover. This resulted in consistent documentation not maintained to support the approval of expenditure allocations. Effect The failure to maintain adequate documentation to verify that expenditures are properly reviewed and approved and to maintain adequate supporting documentation to ensure all payroll and non-payroll expenditures are reasonable and properly reviewed is a violation of federal regulations, which could result in unallowed costs being charged to the federally funded program. Questioned Costs $4,697 Identification of Repeat Findings Not a repeat finding. Recommendation We recommend that CDF implement procedures to ensure all expenditure allocations are properly reviewed and approved and supporting documentation is maintained in accordance with federal regulations. Views of Responsible Officials and Corrective Action Plan CDF agrees with the finding and recommendation. See CDF’s Corrective Action Plan on pages 17-18.
Federal Agency: U.S. Department of Health and Human Services Federal Program Name: Block Grants for Prevention and Treatment of Substance Abuse Assistance Listing Number: 93.959 Federal Award Identification Number: 43CAZ03215 Award Period: January 1, 2022 – December 31, 2022 Type of Finding: Material Weakness in internal control over compliance Criteria: The cost principles in 2 CFR Part 200, subpart E (Cost Principles) prescribe requirements for allowable costs relative to compensation and substantiation requirements specifically, 2 CFR Part 200.430(i) states “Cost must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated.” Condition: Employee change of status forms are not consistently maintained in accordance with applicable requirements. Questioned Costs: None. Context: 5 Employee files that were selected for verification disclosed 4 instances where forms were not available for review. Cause: Employee change of status forms or offer letters were not maintained on file or available for review. Effect: Inability to review employee change of status forms or offer letters limits the ability to verify costs allowability as required. As a result of the missing forms, it is not possible to fully ascertain compliance with allowable costs as required by 2 CFR 200.430. Repeat Finding: Yes Recommendation: Offer letters or employee change of status forms should be maintained on file. We recommend management implement a second layer of review of personnel files. Views of Responsible Official: Since the hiring of the Executive Director in March of 2022, we have implemented the following: Created A Human Resources Department, which did not exist at CRA before 2022. Hired a Human Resources Director to oversee department. Initiated a comprehensive HR information system where staff can review their pay, track their time, and review benefits. Initiated the process of uploading personnel information to our new system, while keeping backups secured. This includes hiring documentation and change of status forms for employees.
Condition: We identified salary expenses for one employee applied to one housing grant tested that were not authorized in the grant budget. Criteria: As required by 2 CFR section 200.430, the Center must meet the following mandatory standards: (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; (iii) Reasonably reflect the total activity for which the employee is compensated by the non-Federal entity, not exceeding 100% of compensated activities; (vii) Support the distribution of the employee's salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. Cause: The Center retained a third-party accounting firm to perform accounting functions in 2022, due to staff turnover during the fiscal year. As a result, this salary was not correctly allocated to the proper grant. Effect: Claiming salaries that were not authorized in the grant budget may lead to costs that are disallowed under the grant agreement. Recommendation: We recommend that the Center implement a training program for personnel responsible for cost allocation, establish stronger internal controls to verify cost allocation accuracy, and conduct a comprehensive review to identify and correct any misallocations. Views of Responsible Officials and Planned Corrective Actions: The Center agrees that the salary expense for that one employee was not correctly allocated and has provided a corrective action plan. Prior to this finding, in April 2023, the Center had already implemented internal controls and processes regarding allocation of salaries to specific grants, which should prevent this this type of finding going forward.
Finding number: 2022-002 – Significant Deficiency in Internal Control over Compliance Assistance Listing Number – 93.323 Program Title – COVID-19 Epidemiology and Laboratory Capacity for Infectious Diseases Federal award identification number and year – PH-004537, PH-004631, and PH-004855; 2021 and 2022 Name of federal agency – U.S. Department of Health and Human Services Name of pass-through entity – County of Los Angeles Department of Public Health Repeat finding – Yes, of finding number 2021-002 Criteria – Under the Uniform Guidance, specifically 2 CFR 200.430, charges to federal awards for compensation must be supported by a system of internal controls which provides reasonable assurance that costs are allocated appropriately and accurately. Organizations are permitted to use budget estimates when the system for developing the estimates provide reasonable approximations of the allocable costs and the internal controls include an after-the-fact review of charges, with adjustments entered as necessary. Condition/context – There was no written documentation to support the review of payroll costs allocated to federal programs. We selected 25 employees out of 39 whose time and effort was charged to the program. Cause – The management team of the organization is relatively small and conducted its reviews in meetings, without utilizing a formal documentation process. Possible effect – Due to lack of controls, disallowed costs could be charged to the program and go undetected. Questioned cost – N/A Recommendation – Management should review the requirements of CFR 200.430 and implement a system that efficiently and effectively allows for allocation and documentation of compensation costs. The system could be transaction-based (i.e., a change in software that allows for approval of allocations each pay period) or estimate and review based (subsequent modification based on review of budgeted estimates). Views of responsible officials – Agree with the finding. While allocations and allocation methodologies were reviewed by executive and senior management of Rising Communities, these reviews were not adequately documented. Rising Communities has/will take steps to address this finding. First, Rising Communities’ new financial system requires that all journal entries, including journal entries for the recording and allocation of payroll, be approved by a manager. This control has been in place since the beginning of the third quarter of 2022. Second, Rising Communities will implement a process where the appropriate member of the executive management team reviews allocation methodologies and specific allocation percentages for staff. When a change to either the methodology or percentages need to be made, the appropriate executive management team member will approve before implementation. Third, Rising Communities will utilize systems to back test allocation methodologies and allocation percentages. Rising Communities has recently implemented a new payroll system that will allow the tracking of employee time by program. Rising Communities is developing a plan and process to roll this functionality out to all employees during the first quarter of 2023. Rising Communities also utilizes a project management system which executive management reviews on a continual basis, providing them with qualitative information on where Rising Communities resources are being allocated. Finally, Rising Communities, with its new financial system, is implementing reporting to program managers that will allow them to have significantly greater insight into the spending on their respective programs.
Finding number: 2022-002 – Significant Deficiency in Internal Control over Compliance Assistance Listing Number – 93.323 Program Title – COVID-19 Epidemiology and Laboratory Capacity for Infectious Diseases Federal award identification number and year – PH-004537, PH-004631, and PH-004855; 2021 and 2022 Name of federal agency – U.S. Department of Health and Human Services Name of pass-through entity – County of Los Angeles Department of Public Health Repeat finding – Yes, of finding number 2021-002 Criteria – Under the Uniform Guidance, specifically 2 CFR 200.430, charges to federal awards for compensation must be supported by a system of internal controls which provides reasonable assurance that costs are allocated appropriately and accurately. Organizations are permitted to use budget estimates when the system for developing the estimates provide reasonable approximations of the allocable costs and the internal controls include an after-the-fact review of charges, with adjustments entered as necessary. Condition/context – There was no written documentation to support the review of payroll costs allocated to federal programs. We selected 25 employees out of 39 whose time and effort was charged to the program. Cause – The management team of the organization is relatively small and conducted its reviews in meetings, without utilizing a formal documentation process. Possible effect – Due to lack of controls, disallowed costs could be charged to the program and go undetected. Questioned cost – N/A Recommendation – Management should review the requirements of CFR 200.430 and implement a system that efficiently and effectively allows for allocation and documentation of compensation costs. The system could be transaction-based (i.e., a change in software that allows for approval of allocations each pay period) or estimate and review based (subsequent modification based on review of budgeted estimates). Views of responsible officials – Agree with the finding. While allocations and allocation methodologies were reviewed by executive and senior management of Rising Communities, these reviews were not adequately documented. Rising Communities has/will take steps to address this finding. First, Rising Communities’ new financial system requires that all journal entries, including journal entries for the recording and allocation of payroll, be approved by a manager. This control has been in place since the beginning of the third quarter of 2022. Second, Rising Communities will implement a process where the appropriate member of the executive management team reviews allocation methodologies and specific allocation percentages for staff. When a change to either the methodology or percentages need to be made, the appropriate executive management team member will approve before implementation. Third, Rising Communities will utilize systems to back test allocation methodologies and allocation percentages. Rising Communities has recently implemented a new payroll system that will allow the tracking of employee time by program. Rising Communities is developing a plan and process to roll this functionality out to all employees during the first quarter of 2023. Rising Communities also utilizes a project management system which executive management reviews on a continual basis, providing them with qualitative information on where Rising Communities resources are being allocated. Finally, Rising Communities, with its new financial system, is implementing reporting to program managers that will allow them to have significantly greater insight into the spending on their respective programs.
Finding number: 2022-002 – Significant Deficiency in Internal Control over Compliance Assistance Listing Number – 93.323 Program Title – COVID-19 Epidemiology and Laboratory Capacity for Infectious Diseases Federal award identification number and year – PH-004537, PH-004631, and PH-004855; 2021 and 2022 Name of federal agency – U.S. Department of Health and Human Services Name of pass-through entity – County of Los Angeles Department of Public Health Repeat finding – Yes, of finding number 2021-002 Criteria – Under the Uniform Guidance, specifically 2 CFR 200.430, charges to federal awards for compensation must be supported by a system of internal controls which provides reasonable assurance that costs are allocated appropriately and accurately. Organizations are permitted to use budget estimates when the system for developing the estimates provide reasonable approximations of the allocable costs and the internal controls include an after-the-fact review of charges, with adjustments entered as necessary. Condition/context – There was no written documentation to support the review of payroll costs allocated to federal programs. We selected 25 employees out of 39 whose time and effort was charged to the program. Cause – The management team of the organization is relatively small and conducted its reviews in meetings, without utilizing a formal documentation process. Possible effect – Due to lack of controls, disallowed costs could be charged to the program and go undetected. Questioned cost – N/A Recommendation – Management should review the requirements of CFR 200.430 and implement a system that efficiently and effectively allows for allocation and documentation of compensation costs. The system could be transaction-based (i.e., a change in software that allows for approval of allocations each pay period) or estimate and review based (subsequent modification based on review of budgeted estimates). Views of responsible officials – Agree with the finding. While allocations and allocation methodologies were reviewed by executive and senior management of Rising Communities, these reviews were not adequately documented. Rising Communities has/will take steps to address this finding. First, Rising Communities’ new financial system requires that all journal entries, including journal entries for the recording and allocation of payroll, be approved by a manager. This control has been in place since the beginning of the third quarter of 2022. Second, Rising Communities will implement a process where the appropriate member of the executive management team reviews allocation methodologies and specific allocation percentages for staff. When a change to either the methodology or percentages need to be made, the appropriate executive management team member will approve before implementation. Third, Rising Communities will utilize systems to back test allocation methodologies and allocation percentages. Rising Communities has recently implemented a new payroll system that will allow the tracking of employee time by program. Rising Communities is developing a plan and process to roll this functionality out to all employees during the first quarter of 2023. Rising Communities also utilizes a project management system which executive management reviews on a continual basis, providing them with qualitative information on where Rising Communities resources are being allocated. Finally, Rising Communities, with its new financial system, is implementing reporting to program managers that will allow them to have significantly greater insight into the spending on their respective programs.
Finding number: 2022-002 – Significant Deficiency in Internal Control over Compliance Assistance Listing Number – 93.323 Program Title – COVID-19 Epidemiology and Laboratory Capacity for Infectious Diseases Federal award identification number and year – PH-004537, PH-004631, and PH-004855; 2021 and 2022 Name of federal agency – U.S. Department of Health and Human Services Name of pass-through entity – County of Los Angeles Department of Public Health Repeat finding – Yes, of finding number 2021-002 Criteria – Under the Uniform Guidance, specifically 2 CFR 200.430, charges to federal awards for compensation must be supported by a system of internal controls which provides reasonable assurance that costs are allocated appropriately and accurately. Organizations are permitted to use budget estimates when the system for developing the estimates provide reasonable approximations of the allocable costs and the internal controls include an after-the-fact review of charges, with adjustments entered as necessary. Condition/context – There was no written documentation to support the review of payroll costs allocated to federal programs. We selected 25 employees out of 39 whose time and effort was charged to the program. Cause – The management team of the organization is relatively small and conducted its reviews in meetings, without utilizing a formal documentation process. Possible effect – Due to lack of controls, disallowed costs could be charged to the program and go undetected. Questioned cost – N/A Recommendation – Management should review the requirements of CFR 200.430 and implement a system that efficiently and effectively allows for allocation and documentation of compensation costs. The system could be transaction-based (i.e., a change in software that allows for approval of allocations each pay period) or estimate and review based (subsequent modification based on review of budgeted estimates). Views of responsible officials – Agree with the finding. While allocations and allocation methodologies were reviewed by executive and senior management of Rising Communities, these reviews were not adequately documented. Rising Communities has/will take steps to address this finding. First, Rising Communities’ new financial system requires that all journal entries, including journal entries for the recording and allocation of payroll, be approved by a manager. This control has been in place since the beginning of the third quarter of 2022. Second, Rising Communities will implement a process where the appropriate member of the executive management team reviews allocation methodologies and specific allocation percentages for staff. When a change to either the methodology or percentages need to be made, the appropriate executive management team member will approve before implementation. Third, Rising Communities will utilize systems to back test allocation methodologies and allocation percentages. Rising Communities has recently implemented a new payroll system that will allow the tracking of employee time by program. Rising Communities is developing a plan and process to roll this functionality out to all employees during the first quarter of 2023. Rising Communities also utilizes a project management system which executive management reviews on a continual basis, providing them with qualitative information on where Rising Communities resources are being allocated. Finally, Rising Communities, with its new financial system, is implementing reporting to program managers that will allow them to have significantly greater insight into the spending on their respective programs.
Federal Agency: Department of Treasury Federal Program Name: Coronavirus State and Local Recovery Funds Federal Award Identification Number and Year: 03-22-001-0001-0001 - 2022 Pass-Through Agency: Thurston County Pass-Through Number: None Award Period: March 1, 2021 to December 31, 2025 Type of Finding: Significant Deficiency in Internal Control and Compliance over Major Programs Criteria or Specific Requirement: Internal controls and other compliance knowledge should prevent the incorrect coding of employee hours worked. Per 2 CFR § 200.430(i)(1), "charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. Condition: Internal controls and adherence to compliance did not detect an error in payroll expenditures to the Coronavirus State and Local Recovery Funds program. Questioned costs: Total questioned cost of $69 based on 2.75 hours of sick time incorrectly charged to the Coronavirus State and Local Recovery Fund grant (ALN 21.027), contract number 03-22-001-0001-0001. Context: During our testing of payroll, 1 out of the 40 paychecks had hours charged to the Coronavirus State and Local Recovery Funds program. Cause: The error related to charging sick time to the grant rather than to administrative expenses. The error was not detected until the audit. Effect: Lack of review and reconciliation of time and effort could lead to inappropriate charges to Federal programs. Recommendation: CLA recommends increased payroll training and reconciliation. View of Responsible Official: There is no disagreement with the audit finding. Management’s response and corrective action plan is attached to our report.
Federal Agency: Department of Treasury Federal Program Name: Coronavirus State and Local Recovery Funds Federal Award Identification Number and Year: 03-22-001-0001-0001 - 2022 Pass-Through Agency: Thurston County Pass-Through Number: None Award Period: March 1, 2021 to December 31, 2025 Type of Finding: Significant Deficiency in Internal Control and Compliance over Major Programs Criteria or Specific Requirement: Internal controls and other compliance knowledge should prevent the incorrect coding of employee hours worked. Per 2 CFR § 200.430(i)(1), "charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. Condition: Internal controls and adherence to compliance were not followed with regards to an appropriate level of approval of management that is charged to the Coronavirus State and Local Recovery Funds program. Questioned costs: Total questioned cost of $2,983 based on two payroll transactions tested that were not approved at the appropriate level but were charged to the Coronavirus State and Local Recovery Fund grant (ALN 21.027), contract number 03-22-001-0001-0001. Context: During our payroll testing, of the two Executive Director timesheets tested, both didn't show a secondary control offsetting the program manager and for one item, there was no proof of approval at all. Cause: The error was caused by not applying an adequate amount of controls necessary for an executive director's time. For the lack of evidence of review, this likely was caused by an oversight (timesheet shows evidence of review, just no initials). Effect: The Coronavirus State and Local Recovery Funds program and other Federal programs could be incorrectly charged. Recommendation: CLA recommends that the program manager and a member of the finance committee knowledgeable about 2 CFR § 200.430(i)(1) review the executive director costs charged to the Coronavirus State and Local Recovery Funds program. View of Responsible Official: There is no disagreement with the audit finding. Management’s response and corrective action plan is attached to our report.
Finding 2022-004: Salaries and Wages (Allowable Costs) Criteria: According to 2 CFR Section 200.430(i) charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: i. Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; ii. Be incorporated into the official records of the non-Federal entity; iii. Reasonably reflect the total activity for which the employee is compensated by the non-Federal entity, not exceeding 100% of compensated activities; iv. Encompass federally-assisted and all other activities compensated by the non-Federal entity on an integrated basis, but may include the use of subsidiary records as defined in the non-Federal entity’s written policy; v. Comply with the established accounting policies and practices of the non-Federal entity; vi. [Reserved] vii. Support the distribution of the employee’s salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non- Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. viii. Budget estimates (i.e., estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards.” Condition: During our testwork, we determined that SAMU did not adequately document employee time spent on the Federal program versus other programs. In addition, we noted one instance in which an employee offer letter was not available for examination. Cause: SAMU does not require that all employees complete timesheets documenting time spent on the Federal award versus other awards. Additionally, SAMU does not have effective internal controls in place to ensure that employee salary documentation is retained. Effect or Potential Effect: SAMU could inadvertently charge time to the Federal award that was not truly spent working on the Federal award. This could result in the Federal Government over-paying for salaries associated with the award. Questioned Costs: Indeterminable. Context: We noted that employees selected for testing did not have completed, detailed timesheets to indicate time spent on the Federal award versus other programs. We also noted instances in which an employee offer letter and employee transition letter were not available for examination. Identification as a Repeat Finding, if Applicable: Not applicable. Recommendation: We recommend that SAMU implement formal time tracking policies to require all employees to complete a detailed timesheet in order to track actual time spent on various programs. All timesheets should have evidence of both employee and supervisory approval. Additionally, we recommend that SAMU ensure all salary records for employees are retained.
2022-002—ALLOWABLE COSTS AND ACTIVITIES Federal Agency: U.S. Department of Housing and Urban Development Federal Program Name: Housing Opportunities For Persons With Aids Assistance Listing Number: 14.241 Federal Award Identification Number and Year: NMH200032-2020 and NMH2001W068- 2020 Award Period: 6/9/2020 – 06/9/2023 for Grant68 and 05/20/2021 – 05/20/2024 for Grant32 Questioned Costs: $453,784.05 Type of Finding • (D) Material Weakness in Internal Control Over Compliance of Federal Awards • (F) Instances of Noncompliance related to Federal Awards Statement of Condition During our testing of allowable activities and costs, we noted a lack of evidence of internal controls over compliance and lack of evidence of compliance for the Housing Opportunities For Persons With Aids grants NMH200032 and NMH2001W068. Context Internal Control over Compliance 40 transactions out of 40 tested did not have evidence of approval of review of budget to actual, review of allowable activities and allowable costs. The dollar amount of the exceptions were $469,439.37. Compliance 21 transactions out of 40 tested did not have evidence of supporting documentation necessary to determine if the transaction was in compliance with grant requirement. The dollar amount of the exceptions were $453,784.05. Criteria As set forth in 2 CFR part 200 internal controls should be put in place to ensure costs and activities allowable under a Federal award are made in accordance with the government-wide cost principles in the Office of Management and Budget (OMB) Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards In addition, § 200.430 Compensation—personal services. (I) Standards for Documentation of Personnel Expenses: charges to federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must support the distribution of the employee's salary or wages among specific activities or cost objectives if the employee works on more than one federal award; a federal award and non-federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. Examples of illustrative control activities can be found in OMB Compliance Supplement, part 6—Internal Control, Appendix 2. Some examples of control activities as follows: • Supervisors review and approve invoices, cost allocations, efforts of personnel, fringe benefits and indirect charges for allowability, adherence to cost principles, accuracy, and completeness. • Grant supervisor reviews the budget vs. actual report investigating unusual or unexpected variances and documents results of follow-up work performed. • Journal entries to transfer costs from one project to another are reviewed for appropriateness and approved. Effect The organization does not appear to have sufficient internal controls in place and does not appear to be in compliance with grant requirements as set forth in 2 CFR part 200. The lack of compliance has resulted in a disclaimer of opinion for allowable costs for the Housing Opportunities For Persons With Aids grants NMH200032 and NMH2001W068. A potential effect of noncompliance of the federal award or future funding decisions could result in disallowance of costs, suspension or termination of the award, or reduction of future allocations. Cause Internal controls over compliance do not appear to have been adequately implemented due to lack of training, oversight, or resources. Recommendation We recommend the organization prevent recurrence of noncompliance by developing and implementing written policies and procedures, conducting regular reviews and reconciliations, provide training and guidance to staff and monitoring compliance View of Responsible Officials and Corrective Action Plan Response. Agreed. Where feasible, the Housing Trust will aim to improve management of all federal grants. A process of documentation verification prior to any requests made for financial draws will include employee, supervisor, business operations manager, and executive director level approvals to ensure compliance and availability of funds. A monthly federal request for reimbursements with all grantee information will be used and reconciled monthly with QuickBooks. This report will mirror the SEFA form so auditors will receive the information in a timely manner. For any quarterly reports, the three months of reporting will again be reconciled prior to submission. All new processes and compliance will be updated in the policies and procedure manual. As the Executive Director prepares the 2024 budget, a reorganization of the business operations department will be sought. A new position to prepare and work on all federal grant tasks will be hired and report to the Business Operations Manager. In the meantime, the Business Operations Manager has started to develop checks and balances. Corrective Action Plan Timeline: Immediately Designation Of Employee Position Responsible For Meeting Deadline: Business Operations Manager
2022-002—ALLOWABLE COSTS AND ACTIVITIES Federal Agency: U.S. Department of Housing and Urban Development Federal Program Name: Housing Opportunities For Persons With Aids Assistance Listing Number: 14.241 Federal Award Identification Number and Year: NMH200032-2020 and NMH2001W068- 2020 Award Period: 6/9/2020 – 06/9/2023 for Grant68 and 05/20/2021 – 05/20/2024 for Grant32 Questioned Costs: $453,784.05 Type of Finding • (D) Material Weakness in Internal Control Over Compliance of Federal Awards • (F) Instances of Noncompliance related to Federal Awards Statement of Condition During our testing of allowable activities and costs, we noted a lack of evidence of internal controls over compliance and lack of evidence of compliance for the Housing Opportunities For Persons With Aids grants NMH200032 and NMH2001W068. Context Internal Control over Compliance 40 transactions out of 40 tested did not have evidence of approval of review of budget to actual, review of allowable activities and allowable costs. The dollar amount of the exceptions were $469,439.37. Compliance 21 transactions out of 40 tested did not have evidence of supporting documentation necessary to determine if the transaction was in compliance with grant requirement. The dollar amount of the exceptions were $453,784.05. Criteria As set forth in 2 CFR part 200 internal controls should be put in place to ensure costs and activities allowable under a Federal award are made in accordance with the government-wide cost principles in the Office of Management and Budget (OMB) Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards In addition, § 200.430 Compensation—personal services. (I) Standards for Documentation of Personnel Expenses: charges to federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must support the distribution of the employee's salary or wages among specific activities or cost objectives if the employee works on more than one federal award; a federal award and non-federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. Examples of illustrative control activities can be found in OMB Compliance Supplement, part 6—Internal Control, Appendix 2. Some examples of control activities as follows: • Supervisors review and approve invoices, cost allocations, efforts of personnel, fringe benefits and indirect charges for allowability, adherence to cost principles, accuracy, and completeness. • Grant supervisor reviews the budget vs. actual report investigating unusual or unexpected variances and documents results of follow-up work performed. • Journal entries to transfer costs from one project to another are reviewed for appropriateness and approved. Effect The organization does not appear to have sufficient internal controls in place and does not appear to be in compliance with grant requirements as set forth in 2 CFR part 200. The lack of compliance has resulted in a disclaimer of opinion for allowable costs for the Housing Opportunities For Persons With Aids grants NMH200032 and NMH2001W068. A potential effect of noncompliance of the federal award or future funding decisions could result in disallowance of costs, suspension or termination of the award, or reduction of future allocations. Cause Internal controls over compliance do not appear to have been adequately implemented due to lack of training, oversight, or resources. Recommendation We recommend the organization prevent recurrence of noncompliance by developing and implementing written policies and procedures, conducting regular reviews and reconciliations, provide training and guidance to staff and monitoring compliance View of Responsible Officials and Corrective Action Plan Response. Agreed. Where feasible, the Housing Trust will aim to improve management of all federal grants. A process of documentation verification prior to any requests made for financial draws will include employee, supervisor, business operations manager, and executive director level approvals to ensure compliance and availability of funds. A monthly federal request for reimbursements with all grantee information will be used and reconciled monthly with QuickBooks. This report will mirror the SEFA form so auditors will receive the information in a timely manner. For any quarterly reports, the three months of reporting will again be reconciled prior to submission. All new processes and compliance will be updated in the policies and procedure manual. As the Executive Director prepares the 2024 budget, a reorganization of the business operations department will be sought. A new position to prepare and work on all federal grant tasks will be hired and report to the Business Operations Manager. In the meantime, the Business Operations Manager has started to develop checks and balances. Corrective Action Plan Timeline: Immediately Designation Of Employee Position Responsible For Meeting Deadline: Business Operations Manager
Item: 2022-002 Assistance Listing Number: 21.027 Programs: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Federal Agency: U.S. Department of the Treasury Pass-Through Agencies: Arizona State Office of the Governor; Maricopa County Pass-Through Grantor Identifying Number: Unknown Award Year: January 1, 2022 to December 31, 2024; January 28, 2022 to June 30, 2023 Compliance Requirement: Allowable Activities and Costs Criteria: In accordance with 2 CFR § 200.430 – Compensation – the entity’s system of internal controls should include a process to review after-the-fact interim charges made to federal awards based upon budget or allocation estimates. Condition: The entity’s system of internal controls did not include a process to review after-the-fact interim payroll charges made to federal awards based upon budget or allocation estimates. Questioned Costs: n/a Context: In a population of over 250 payroll costs charged to the program, we conducted a non-statistical sample of 40 payroll costs charged to the program. In our sample of 40, we noted that all selections were charged to the program based on budget estimates. Payroll records and the nature of the Organization's programs evidenced that allowable cost and activities occurred. Recordkeeping regarding the measurement of actual effort compared to budgeted or allocated effort was inadequate. As such, this is deemed to be a material weakness in internal control over compliance. Effect: The system of internal controls is not properly designed to detect potential adjustments needed to the amounts that were billed based upon budget or allocation estimates. Cause: Special Olympics Arizona, Inc. did not design processes and controls to perform the after-the-fact review. Identification as a Repeat Finding: Not a repeat finding Recommendation: The entity should design processes and controls to perform the after-the-fact review or implement a process that will allow for billing of actual expenses rather than budgeted expenses. Views of Responsible Officials: Management of the Organization concurs with the finding. See Corrective Action Plan.
Item: 2022-003 Assistance Listing Number: 84.425U Programs: COVID-19 - American Rescue Plan – Elementary and Secondary School Emergency Relief (ARP ESSER) Federal Agency: U.S. Department of Education Pass-Through Agencies: Arizona Department of Education Pass-Through Grantor Identifying Number: Unknown Award Year: April 19, 2022 to September 30, 2024 Compliance Requirement: Allowable Activities and Costs Criteria: In accordance with 2 CFR § 200.430 – Compensation – the entity’s system of internal controls should include a process to review after-the-fact interim charges made to federal awards based upon budget or allocation estimates. Condition: The entity’s system of internal controls did not include a process to review after-the-fact interim payroll charges made to federal awards based upon budget or allocation estimates. Questioned Costs: n/a Context: In a population of 182 payroll costs charged to the program, we conducted a non-statistical sample of 18 payroll costs charged to the program. In our sample of 18, we noted that all selections were charged to the program based on estimated allocations determined in advance based on job descriptions and duties. We noted that actual time incurred was not used to charge expenditures to the program. Payroll records and the nature of the Organization's programs evidenced that allowable cost and activities occurred. Recordkeeping regarding the measurement of actual effort compared to budgeted or allocated effort was inadequate. As such, this is deemed to be a material weakness in internal control over compliance. Effect: The system of internal controls is not properly designed to detect potential adjustments needed to the amounts that were billed based upon budget or allocation estimates. Cause: Special Olympics Arizona, Inc. did not design processes and controls to perform the after-the-fact review. Identification as a Repeat Finding: Not a repeat finding Recommendation: The entity should design processes and controls to perform the after-the-fact review or implement a process that will allow for billing of actual expenses rather than budgeted expenses. Views of Responsible Officials: Management of the Organization concurs with the finding. See Corrective Action Plan.
U.S. Department of Justice, passed through Missouri Department of Social Services Crime Victim Assistance - 16.575 Multiple Awards and Award Years Criteria or Specific Requirement – Allowable Costs/Cost Principles Federal regulations state that “charges to federal awards for salaries and wages, must be based on records that accurately reflect the work performed.” The regulations also state that “the records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and property allocated” and “budget estimates alone do not qualify as support for charges to federal awards” (2 CFR 200.430(i)). The Crime Victim Assistance award document also requires "daily time and activity records for all staff funded by this grant project that document the services and grant projects that the staff person worked on and the time spent providing the services or programs." Condition – During our test work over the Crime Victim Assistance grant, we noted the Organization did not have time and activity records with sufficient detail per federal regulations and Crime Victim Assistance award document to support its compensation and fringe benefit expenses. Questioned Costs – Total questioned costs of $27,051 were identified as a result of lack of proper documentation to support the charge and allocation to the grant. Context – We selected a sample of 60 charges to the Crime Victim Assistance grants of which 59 were salaries and benefits expenditures with a value of $35,957. Within our sample, we noted 47 of the selections did not have proper documentation to support the charge and allocation to the grant (e.g ., daily time and activity records, etc.). These 47 selections had a value of $27,051. Per discussions with management and further review, the amounts charged to the grant were based on the approved budget for the position and the internal allocation performed each payroll period. Salaries and benefits charged to the grant in the audit period totaled $1,378,704 and represented 94% of the total grant expenditures for the period. The sample was not intended to be, and was not, a statistically valid sample. Effect – Based on testing completed, the Organization did not have sufficient procedures to record and verify employees time and activity throughout fiscal year 2022. Cause – Management indicated that this was attributed to a misunderstanding of the requirements of the time and activity reports. This issue was brought to the attention of management in the third quarter of fiscal year 2022. Management implemented a time and activity tracking method that tracks employees' time and effort on a daily basis in the fourth quarter of fiscal year 2022. Identification as a Repeat Finding – Repeat finding, see 2021-004 and 2020-004. Recommendation – We recommend that management utilize a time and activity method which meets the requirements of federal regulations and Crime Victim Assistance award documents. We also recommend employees and their supervisors are provided training on the requirements. Views of Responsible Official and Planned Corrective Actions – Management agrees with the stated finding and has implemented a corrective action plan.
U.S. Department of Justice, passed through Missouri Department of Social Services Crime Victim Assistance - 16.575 Multiple Awards and Award Years Criteria or Specific Requirement – Allowable Costs/Cost Principles Federal regulations state that “charges to federal awards for salaries and wages, must be based on records that accurately reflect the work performed.” The regulations also state that “the records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and property allocated” and “budget estimates alone do not qualify as support for charges to federal awards” (2 CFR 200.430(i)). The Crime Victim Assistance award document also requires "daily time and activity records for all staff funded by this grant project that document the services and grant projects that the staff person worked on and the time spent providing the services or programs." Condition – During our test work over the Crime Victim Assistance grant, we noted the Organization did not have time and activity records with sufficient detail per federal regulations and Crime Victim Assistance award document to support its compensation and fringe benefit expenses. Questioned Costs – Total questioned costs of $27,051 were identified as a result of lack of proper documentation to support the charge and allocation to the grant. Context – We selected a sample of 60 charges to the Crime Victim Assistance grants of which 59 were salaries and benefits expenditures with a value of $35,957. Within our sample, we noted 47 of the selections did not have proper documentation to support the charge and allocation to the grant (e.g ., daily time and activity records, etc.). These 47 selections had a value of $27,051. Per discussions with management and further review, the amounts charged to the grant were based on the approved budget for the position and the internal allocation performed each payroll period. Salaries and benefits charged to the grant in the audit period totaled $1,378,704 and represented 94% of the total grant expenditures for the period. The sample was not intended to be, and was not, a statistically valid sample. Effect – Based on testing completed, the Organization did not have sufficient procedures to record and verify employees time and activity throughout fiscal year 2022. Cause – Management indicated that this was attributed to a misunderstanding of the requirements of the time and activity reports. This issue was brought to the attention of management in the third quarter of fiscal year 2022. Management implemented a time and activity tracking method that tracks employees' time and effort on a daily basis in the fourth quarter of fiscal year 2022. Identification as a Repeat Finding – Repeat finding, see 2021-004 and 2020-004. Recommendation – We recommend that management utilize a time and activity method which meets the requirements of federal regulations and Crime Victim Assistance award documents. We also recommend employees and their supervisors are provided training on the requirements. Views of Responsible Official and Planned Corrective Actions – Management agrees with the stated finding and has implemented a corrective action plan.
U.S. Department of Justice, passed through Missouri Department of Social Services Crime Victim Assistance - 16.575 Multiple Awards and Award Years Criteria or Specific Requirement – Allowable Costs/Cost Principles Federal regulations state that “charges to federal awards for salaries and wages, must be based on records that accurately reflect the work performed.” The regulations also state that “the records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and property allocated” and “budget estimates alone do not qualify as support for charges to federal awards” (2 CFR 200.430(i)). The Crime Victim Assistance award document also requires "daily time and activity records for all staff funded by this grant project that document the services and grant projects that the staff person worked on and the time spent providing the services or programs." Condition – During our test work over the Crime Victim Assistance grant, we noted the Organization did not have time and activity records with sufficient detail per federal regulations and Crime Victim Assistance award document to support its compensation and fringe benefit expenses. Questioned Costs – Total questioned costs of $27,051 were identified as a result of lack of proper documentation to support the charge and allocation to the grant. Context – We selected a sample of 60 charges to the Crime Victim Assistance grants of which 59 were salaries and benefits expenditures with a value of $35,957. Within our sample, we noted 47 of the selections did not have proper documentation to support the charge and allocation to the grant (e.g ., daily time and activity records, etc.). These 47 selections had a value of $27,051. Per discussions with management and further review, the amounts charged to the grant were based on the approved budget for the position and the internal allocation performed each payroll period. Salaries and benefits charged to the grant in the audit period totaled $1,378,704 and represented 94% of the total grant expenditures for the period. The sample was not intended to be, and was not, a statistically valid sample. Effect – Based on testing completed, the Organization did not have sufficient procedures to record and verify employees time and activity throughout fiscal year 2022. Cause – Management indicated that this was attributed to a misunderstanding of the requirements of the time and activity reports. This issue was brought to the attention of management in the third quarter of fiscal year 2022. Management implemented a time and activity tracking method that tracks employees' time and effort on a daily basis in the fourth quarter of fiscal year 2022. Identification as a Repeat Finding – Repeat finding, see 2021-004 and 2020-004. Recommendation – We recommend that management utilize a time and activity method which meets the requirements of federal regulations and Crime Victim Assistance award documents. We also recommend employees and their supervisors are provided training on the requirements. Views of Responsible Official and Planned Corrective Actions – Management agrees with the stated finding and has implemented a corrective action plan.
U.S. Department of Justice, passed through Missouri Department of Social Services Crime Victim Assistance - 16.575 Multiple Awards and Award Years Criteria or Specific Requirement – Allowable Costs/Cost Principles Federal regulations state that “charges to federal awards for salaries and wages, must be based on records that accurately reflect the work performed.” The regulations also state that “the records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and property allocated” and “budget estimates alone do not qualify as support for charges to federal awards” (2 CFR 200.430(i)). The Crime Victim Assistance award document also requires "daily time and activity records for all staff funded by this grant project that document the services and grant projects that the staff person worked on and the time spent providing the services or programs." Condition – During our test work over the Crime Victim Assistance grant, we noted the Organization did not have time and activity records with sufficient detail per federal regulations and Crime Victim Assistance award document to support its compensation and fringe benefit expenses. Questioned Costs – Total questioned costs of $27,051 were identified as a result of lack of proper documentation to support the charge and allocation to the grant. Context – We selected a sample of 60 charges to the Crime Victim Assistance grants of which 59 were salaries and benefits expenditures with a value of $35,957. Within our sample, we noted 47 of the selections did not have proper documentation to support the charge and allocation to the grant (e.g ., daily time and activity records, etc.). These 47 selections had a value of $27,051. Per discussions with management and further review, the amounts charged to the grant were based on the approved budget for the position and the internal allocation performed each payroll period. Salaries and benefits charged to the grant in the audit period totaled $1,378,704 and represented 94% of the total grant expenditures for the period. The sample was not intended to be, and was not, a statistically valid sample. Effect – Based on testing completed, the Organization did not have sufficient procedures to record and verify employees time and activity throughout fiscal year 2022. Cause – Management indicated that this was attributed to a misunderstanding of the requirements of the time and activity reports. This issue was brought to the attention of management in the third quarter of fiscal year 2022. Management implemented a time and activity tracking method that tracks employees' time and effort on a daily basis in the fourth quarter of fiscal year 2022. Identification as a Repeat Finding – Repeat finding, see 2021-004 and 2020-004. Recommendation – We recommend that management utilize a time and activity method which meets the requirements of federal regulations and Crime Victim Assistance award documents. We also recommend employees and their supervisors are provided training on the requirements. Views of Responsible Official and Planned Corrective Actions – Management agrees with the stated finding and has implemented a corrective action plan.
U.S. Department of Justice, passed through Missouri Department of Social Services Crime Victim Assistance - 16.575 Multiple Awards and Award Years Criteria or Specific Requirement – Allowable Costs/Cost Principles Federal regulations state that “charges to federal awards for salaries and wages, must be based on records that accurately reflect the work performed.” The regulations also state that “the records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and property allocated” and “budget estimates alone do not qualify as support for charges to federal awards” (2 CFR 200.430(i)). The Crime Victim Assistance award document also requires "daily time and activity records for all staff funded by this grant project that document the services and grant projects that the staff person worked on and the time spent providing the services or programs." Condition – During our test work over the Crime Victim Assistance grant, we noted the Organization did not have time and activity records with sufficient detail per federal regulations and Crime Victim Assistance award document to support its compensation and fringe benefit expenses. Questioned Costs – Total questioned costs of $27,051 were identified as a result of lack of proper documentation to support the charge and allocation to the grant. Context – We selected a sample of 60 charges to the Crime Victim Assistance grants of which 59 were salaries and benefits expenditures with a value of $35,957. Within our sample, we noted 47 of the selections did not have proper documentation to support the charge and allocation to the grant (e.g ., daily time and activity records, etc.). These 47 selections had a value of $27,051. Per discussions with management and further review, the amounts charged to the grant were based on the approved budget for the position and the internal allocation performed each payroll period. Salaries and benefits charged to the grant in the audit period totaled $1,378,704 and represented 94% of the total grant expenditures for the period. The sample was not intended to be, and was not, a statistically valid sample. Effect – Based on testing completed, the Organization did not have sufficient procedures to record and verify employees time and activity throughout fiscal year 2022. Cause – Management indicated that this was attributed to a misunderstanding of the requirements of the time and activity reports. This issue was brought to the attention of management in the third quarter of fiscal year 2022. Management implemented a time and activity tracking method that tracks employees' time and effort on a daily basis in the fourth quarter of fiscal year 2022. Identification as a Repeat Finding – Repeat finding, see 2021-004 and 2020-004. Recommendation – We recommend that management utilize a time and activity method which meets the requirements of federal regulations and Crime Victim Assistance award documents. We also recommend employees and their supervisors are provided training on the requirements. Views of Responsible Official and Planned Corrective Actions – Management agrees with the stated finding and has implemented a corrective action plan.
U.S. Department of Justice, passed through Missouri Department of Social Services Crime Victim Assistance - 16.575 Multiple Awards and Award Years Criteria or Specific Requirement – Allowable Costs/Cost Principles Federal regulations state that “charges to federal awards for salaries and wages, must be based on records that accurately reflect the work performed.” The regulations also state that “the records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and property allocated” and “budget estimates alone do not qualify as support for charges to federal awards” (2 CFR 200.430(i)). The Crime Victim Assistance award document also requires "daily time and activity records for all staff funded by this grant project that document the services and grant projects that the staff person worked on and the time spent providing the services or programs." Condition – During our test work over the Crime Victim Assistance grant, we noted the Organization did not have time and activity records with sufficient detail per federal regulations and Crime Victim Assistance award document to support its compensation and fringe benefit expenses. Questioned Costs – Total questioned costs of $27,051 were identified as a result of lack of proper documentation to support the charge and allocation to the grant. Context – We selected a sample of 60 charges to the Crime Victim Assistance grants of which 59 were salaries and benefits expenditures with a value of $35,957. Within our sample, we noted 47 of the selections did not have proper documentation to support the charge and allocation to the grant (e.g ., daily time and activity records, etc.). These 47 selections had a value of $27,051. Per discussions with management and further review, the amounts charged to the grant were based on the approved budget for the position and the internal allocation performed each payroll period. Salaries and benefits charged to the grant in the audit period totaled $1,378,704 and represented 94% of the total grant expenditures for the period. The sample was not intended to be, and was not, a statistically valid sample. Effect – Based on testing completed, the Organization did not have sufficient procedures to record and verify employees time and activity throughout fiscal year 2022. Cause – Management indicated that this was attributed to a misunderstanding of the requirements of the time and activity reports. This issue was brought to the attention of management in the third quarter of fiscal year 2022. Management implemented a time and activity tracking method that tracks employees' time and effort on a daily basis in the fourth quarter of fiscal year 2022. Identification as a Repeat Finding – Repeat finding, see 2021-004 and 2020-004. Recommendation – We recommend that management utilize a time and activity method which meets the requirements of federal regulations and Crime Victim Assistance award documents. We also recommend employees and their supervisors are provided training on the requirements. Views of Responsible Official and Planned Corrective Actions – Management agrees with the stated finding and has implemented a corrective action plan.
U.S. Department of Justice, passed through Missouri Department of Social Services Crime Victim Assistance - 16.575 Multiple Awards and Award Years Criteria or Specific Requirement – Allowable Costs/Cost Principles Federal regulations state that “charges to federal awards for salaries and wages, must be based on records that accurately reflect the work performed.” The regulations also state that “the records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and property allocated” and “budget estimates alone do not qualify as support for charges to federal awards” (2 CFR 200.430(i)). The Crime Victim Assistance award document also requires "daily time and activity records for all staff funded by this grant project that document the services and grant projects that the staff person worked on and the time spent providing the services or programs." Condition – During our test work over the Crime Victim Assistance grant, we noted the Organization did not have time and activity records with sufficient detail per federal regulations and Crime Victim Assistance award document to support its compensation and fringe benefit expenses. Questioned Costs – Total questioned costs of $27,051 were identified as a result of lack of proper documentation to support the charge and allocation to the grant. Context – We selected a sample of 60 charges to the Crime Victim Assistance grants of which 59 were salaries and benefits expenditures with a value of $35,957. Within our sample, we noted 47 of the selections did not have proper documentation to support the charge and allocation to the grant (e.g ., daily time and activity records, etc.). These 47 selections had a value of $27,051. Per discussions with management and further review, the amounts charged to the grant were based on the approved budget for the position and the internal allocation performed each payroll period. Salaries and benefits charged to the grant in the audit period totaled $1,378,704 and represented 94% of the total grant expenditures for the period. The sample was not intended to be, and was not, a statistically valid sample. Effect – Based on testing completed, the Organization did not have sufficient procedures to record and verify employees time and activity throughout fiscal year 2022. Cause – Management indicated that this was attributed to a misunderstanding of the requirements of the time and activity reports. This issue was brought to the attention of management in the third quarter of fiscal year 2022. Management implemented a time and activity tracking method that tracks employees' time and effort on a daily basis in the fourth quarter of fiscal year 2022. Identification as a Repeat Finding – Repeat finding, see 2021-004 and 2020-004. Recommendation – We recommend that management utilize a time and activity method which meets the requirements of federal regulations and Crime Victim Assistance award documents. We also recommend employees and their supervisors are provided training on the requirements. Views of Responsible Official and Planned Corrective Actions – Management agrees with the stated finding and has implemented a corrective action plan.
U.S. Department of Justice, passed through Missouri Department of Social Services Crime Victim Assistance - 16.575 Multiple Awards and Award Years Criteria or Specific Requirement – Allowable Costs/Cost Principles Federal regulations state that “charges to federal awards for salaries and wages, must be based on records that accurately reflect the work performed.” The regulations also state that “the records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and property allocated” and “budget estimates alone do not qualify as support for charges to federal awards” (2 CFR 200.430(i)). The Crime Victim Assistance award document also requires "daily time and activity records for all staff funded by this grant project that document the services and grant projects that the staff person worked on and the time spent providing the services or programs." Condition – During our test work over the Crime Victim Assistance grant, we noted the Organization did not have time and activity records with sufficient detail per federal regulations and Crime Victim Assistance award document to support its compensation and fringe benefit expenses. Questioned Costs – Total questioned costs of $27,051 were identified as a result of lack of proper documentation to support the charge and allocation to the grant. Context – We selected a sample of 60 charges to the Crime Victim Assistance grants of which 59 were salaries and benefits expenditures with a value of $35,957. Within our sample, we noted 47 of the selections did not have proper documentation to support the charge and allocation to the grant (e.g ., daily time and activity records, etc.). These 47 selections had a value of $27,051. Per discussions with management and further review, the amounts charged to the grant were based on the approved budget for the position and the internal allocation performed each payroll period. Salaries and benefits charged to the grant in the audit period totaled $1,378,704 and represented 94% of the total grant expenditures for the period. The sample was not intended to be, and was not, a statistically valid sample. Effect – Based on testing completed, the Organization did not have sufficient procedures to record and verify employees time and activity throughout fiscal year 2022. Cause – Management indicated that this was attributed to a misunderstanding of the requirements of the time and activity reports. This issue was brought to the attention of management in the third quarter of fiscal year 2022. Management implemented a time and activity tracking method that tracks employees' time and effort on a daily basis in the fourth quarter of fiscal year 2022. Identification as a Repeat Finding – Repeat finding, see 2021-004 and 2020-004. Recommendation – We recommend that management utilize a time and activity method which meets the requirements of federal regulations and Crime Victim Assistance award documents. We also recommend employees and their supervisors are provided training on the requirements. Views of Responsible Official and Planned Corrective Actions – Management agrees with the stated finding and has implemented a corrective action plan.
U.S. Department of Justice, passed through Missouri Department of Social Services Crime Victim Assistance - 16.575 Multiple Awards and Award Years Criteria or Specific Requirement – Allowable Costs/Cost Principles Federal regulations state that “charges to federal awards for salaries and wages, must be based on records that accurately reflect the work performed.” The regulations also state that “the records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and property allocated” and “budget estimates alone do not qualify as support for charges to federal awards” (2 CFR 200.430(i)). The Crime Victim Assistance award document also requires "daily time and activity records for all staff funded by this grant project that document the services and grant projects that the staff person worked on and the time spent providing the services or programs." Condition – During our test work over the Crime Victim Assistance grant, we noted the Organization did not have time and activity records with sufficient detail per federal regulations and Crime Victim Assistance award document to support its compensation and fringe benefit expenses. Questioned Costs – Total questioned costs of $27,051 were identified as a result of lack of proper documentation to support the charge and allocation to the grant. Context – We selected a sample of 60 charges to the Crime Victim Assistance grants of which 59 were salaries and benefits expenditures with a value of $35,957. Within our sample, we noted 47 of the selections did not have proper documentation to support the charge and allocation to the grant (e.g ., daily time and activity records, etc.). These 47 selections had a value of $27,051. Per discussions with management and further review, the amounts charged to the grant were based on the approved budget for the position and the internal allocation performed each payroll period. Salaries and benefits charged to the grant in the audit period totaled $1,378,704 and represented 94% of the total grant expenditures for the period. The sample was not intended to be, and was not, a statistically valid sample. Effect – Based on testing completed, the Organization did not have sufficient procedures to record and verify employees time and activity throughout fiscal year 2022. Cause – Management indicated that this was attributed to a misunderstanding of the requirements of the time and activity reports. This issue was brought to the attention of management in the third quarter of fiscal year 2022. Management implemented a time and activity tracking method that tracks employees' time and effort on a daily basis in the fourth quarter of fiscal year 2022. Identification as a Repeat Finding – Repeat finding, see 2021-004 and 2020-004. Recommendation – We recommend that management utilize a time and activity method which meets the requirements of federal regulations and Crime Victim Assistance award documents. We also recommend employees and their supervisors are provided training on the requirements. Views of Responsible Official and Planned Corrective Actions – Management agrees with the stated finding and has implemented a corrective action plan.
U.S. Department of Justice, passed through Missouri Department of Social Services Crime Victim Assistance - 16.575 Multiple Awards and Award Years Criteria or Specific Requirement – Allowable Costs/Cost Principles Federal regulations state that “charges to federal awards for salaries and wages, must be based on records that accurately reflect the work performed.” The regulations also state that “the records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and property allocated” and “budget estimates alone do not qualify as support for charges to federal awards” (2 CFR 200.430(i)). The Crime Victim Assistance award document also requires "daily time and activity records for all staff funded by this grant project that document the services and grant projects that the staff person worked on and the time spent providing the services or programs." Condition – During our test work over the Crime Victim Assistance grant, we noted the Organization did not have time and activity records with sufficient detail per federal regulations and Crime Victim Assistance award document to support its compensation and fringe benefit expenses. Questioned Costs – Total questioned costs of $27,051 were identified as a result of lack of proper documentation to support the charge and allocation to the grant. Context – We selected a sample of 60 charges to the Crime Victim Assistance grants of which 59 were salaries and benefits expenditures with a value of $35,957. Within our sample, we noted 47 of the selections did not have proper documentation to support the charge and allocation to the grant (e.g ., daily time and activity records, etc.). These 47 selections had a value of $27,051. Per discussions with management and further review, the amounts charged to the grant were based on the approved budget for the position and the internal allocation performed each payroll period. Salaries and benefits charged to the grant in the audit period totaled $1,378,704 and represented 94% of the total grant expenditures for the period. The sample was not intended to be, and was not, a statistically valid sample. Effect – Based on testing completed, the Organization did not have sufficient procedures to record and verify employees time and activity throughout fiscal year 2022. Cause – Management indicated that this was attributed to a misunderstanding of the requirements of the time and activity reports. This issue was brought to the attention of management in the third quarter of fiscal year 2022. Management implemented a time and activity tracking method that tracks employees' time and effort on a daily basis in the fourth quarter of fiscal year 2022. Identification as a Repeat Finding – Repeat finding, see 2021-004 and 2020-004. Recommendation – We recommend that management utilize a time and activity method which meets the requirements of federal regulations and Crime Victim Assistance award documents. We also recommend employees and their supervisors are provided training on the requirements. Views of Responsible Official and Planned Corrective Actions – Management agrees with the stated finding and has implemented a corrective action plan.
Federal Award Programs: U.S. Department of State Professional and Cultural Exchange Program – Citizen Exchanges (Assistance Listing # 19.415) and U.S. Agency for International Development (USAID) Foreign Assistance for Programs Overseas (Assistance Listing # 98.001) Type of Finding: Material weakness in internal control over compliance and instance of immaterial noncompliance. Compliance Requirement: Allowable costs Criteria: The Uniform Guidance (2 CFR §200.430) states that the salaries or wages of employees must be distributed 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 activity. The Organization’s written policies rely on the use of time sheets and activity reports which document actual hours worked by program/grant. Condition: During the course of our audit testing, we noted the Organization changed the process for recording payroll costs to grants and programs for 2022. Rather than charging individual employee payroll costs to grants and programs, the Organization began aggregating total employee hours by grant/program activity. The aggregated hours for each activity were then divided by total hours for each pay period in order to obtain percentages for each respective activity, which were then multiplied by total employee earnings for the pay period as a basis for allocating the payroll costs to activities. The process using aggregated hours for each activity resulted in an improper allocation of payroll costs due to the differing pay rates of employees included in the allocation. Effect and Context: The condition resulted in incorrect amounts of costs and/or unallowable costs charged to the federal programs. All federal programs were impacted by the improper allocation of payroll costs due to the Organization’s aggregation of total employee hours by activity as a basis for allocating total payroll costs for each pay period. As a result, major programs U.S. Department of State Professional and Cultural Exchange Program – Citizen Exchanges (Assistance Listing # 19.415) was undercharged by approximately $18,683 and U.S. Agency for International Development (USAID) Foreign Assistance for Programs Overseas (Assistance Listing # 98.001) was undercharged by approximately $2,864. Our sample size was 40 payroll transactions and was not a statistically valid sample as it was selected haphazardly. We noted all selections in our sample used the improper allocation methodology and all payroll costs for 2022 were improperly allocated among activities benefited. Questioned Costs: None Repeat finding: No Auditor’s recommendation: We recommend management return to the previous process for recording payroll costs to grants and programs by which individual employee salaries and wages are allocated based on actual time spent on various activities and are directly charged to the respective activity cost centers benefited. Management’s response: Management is in agreement with the auditor’s finding and have implemented changes – see MIUSA’s attached corrective action plan.
Federal Award Programs: U.S. Department of State Professional and Cultural Exchange Program – Citizen Exchanges (Assistance Listing # 19.415) and U.S. Agency for International Development (USAID) Foreign Assistance for Programs Overseas (Assistance Listing # 98.001) Type of Finding: Material weakness in internal control over compliance and instance of immaterial noncompliance. Compliance Requirement: Allowable costs Criteria: The Uniform Guidance (2 CFR §200.430) states that the salaries or wages of employees must be distributed 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 activity. The Organization’s written policies rely on the use of time sheets and activity reports which document actual hours worked by program/grant. Condition: During the course of our audit testing, we noted the Organization changed the process for recording payroll costs to grants and programs for 2022. Rather than charging individual employee payroll costs to grants and programs, the Organization began aggregating total employee hours by grant/program activity. The aggregated hours for each activity were then divided by total hours for each pay period in order to obtain percentages for each respective activity, which were then multiplied by total employee earnings for the pay period as a basis for allocating the payroll costs to activities. The process using aggregated hours for each activity resulted in an improper allocation of payroll costs due to the differing pay rates of employees included in the allocation. Effect and Context: The condition resulted in incorrect amounts of costs and/or unallowable costs charged to the federal programs. All federal programs were impacted by the improper allocation of payroll costs due to the Organization’s aggregation of total employee hours by activity as a basis for allocating total payroll costs for each pay period. As a result, major programs U.S. Department of State Professional and Cultural Exchange Program – Citizen Exchanges (Assistance Listing # 19.415) was undercharged by approximately $18,683 and U.S. Agency for International Development (USAID) Foreign Assistance for Programs Overseas (Assistance Listing # 98.001) was undercharged by approximately $2,864. Our sample size was 40 payroll transactions and was not a statistically valid sample as it was selected haphazardly. We noted all selections in our sample used the improper allocation methodology and all payroll costs for 2022 were improperly allocated among activities benefited. Questioned Costs: None Repeat finding: No Auditor’s recommendation: We recommend management return to the previous process for recording payroll costs to grants and programs by which individual employee salaries and wages are allocated based on actual time spent on various activities and are directly charged to the respective activity cost centers benefited. Management’s response: Management is in agreement with the auditor’s finding and have implemented changes – see MIUSA’s attached corrective action plan.
Federal Award Programs: U.S. Department of State Professional and Cultural Exchange Program – Citizen Exchanges (Assistance Listing # 19.415) and U.S. Agency for International Development (USAID) Foreign Assistance for Programs Overseas (Assistance Listing # 98.001) Type of Finding: Material weakness in internal control over compliance and instance of immaterial noncompliance. Compliance Requirement: Allowable costs Criteria: The Uniform Guidance (2 CFR §200.430) states that the salaries or wages of employees must be distributed 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 activity. The Organization’s written policies rely on the use of time sheets and activity reports which document actual hours worked by program/grant. Condition: During the course of our audit testing, we noted the Organization changed the process for recording payroll costs to grants and programs for 2022. Rather than charging individual employee payroll costs to grants and programs, the Organization began aggregating total employee hours by grant/program activity. The aggregated hours for each activity were then divided by total hours for each pay period in order to obtain percentages for each respective activity, which were then multiplied by total employee earnings for the pay period as a basis for allocating the payroll costs to activities. The process using aggregated hours for each activity resulted in an improper allocation of payroll costs due to the differing pay rates of employees included in the allocation. Effect and Context: The condition resulted in incorrect amounts of costs and/or unallowable costs charged to the federal programs. All federal programs were impacted by the improper allocation of payroll costs due to the Organization’s aggregation of total employee hours by activity as a basis for allocating total payroll costs for each pay period. As a result, major programs U.S. Department of State Professional and Cultural Exchange Program – Citizen Exchanges (Assistance Listing # 19.415) was undercharged by approximately $18,683 and U.S. Agency for International Development (USAID) Foreign Assistance for Programs Overseas (Assistance Listing # 98.001) was undercharged by approximately $2,864. Our sample size was 40 payroll transactions and was not a statistically valid sample as it was selected haphazardly. We noted all selections in our sample used the improper allocation methodology and all payroll costs for 2022 were improperly allocated among activities benefited. Questioned Costs: None Repeat finding: No Auditor’s recommendation: We recommend management return to the previous process for recording payroll costs to grants and programs by which individual employee salaries and wages are allocated based on actual time spent on various activities and are directly charged to the respective activity cost centers benefited. Management’s response: Management is in agreement with the auditor’s finding and have implemented changes – see MIUSA’s attached corrective action plan.
Finding 2022-003: Payroll Allocations Information on the Federal Programs: 98.001 Criteria or Specific Requirement (Including Statutory, Regulatory, or Other Citation): 2 CFR 200.430 Compensation – personal services, section (i) indicates that charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed, and that such records be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Condition: InterAction has a timekeeping system in place that provides for employees to record hours worked to specific cost objectives, including to US Government grants. We reviewed the allocation system during the audit, and noted that it automatically and accurately calculates values to be charged to each project reflective of the time recorded by employees. However we noted that in several cases the allocation amounts as per the timekeeping system were different from the amounts ultimately recorded within InterAction's general ledger. While the differences were not significant, these discrepancies indicate a deficiency in the internal controls around recording of salary expenditures to projects. Cause: The primary cause appears to be human error, and the result of manual recordkeeping. Effect or Potential Effect: Salary expenditures that are not charged in accordance with the standards referenced above may be questioned or disallowed by the donor. Questioned Costs: Undetermined Context: Our procedures included testing a sample of 40 salary transactions. We noted variances of the nature described above for 36 of the 40 samples tested. The issue appears to be systemic. Identification as a Repeat Finding, if Applicable: N/A. Recommendation: We recommend that management revisit its procedures for transferring data from the timekeeping system to the general ledger and implement proper internal controls to ensure that the amounts of salary expenditures charged to grants in the general ledger reconcile to the amounts calculated by the timekeeping system.
Finding 2022-003: Payroll Allocations Information on the Federal Programs: 98.001 Criteria or Specific Requirement (Including Statutory, Regulatory, or Other Citation): 2 CFR 200.430 Compensation – personal services, section (i) indicates that charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed, and that such records be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Condition: InterAction has a timekeeping system in place that provides for employees to record hours worked to specific cost objectives, including to US Government grants. We reviewed the allocation system during the audit, and noted that it automatically and accurately calculates values to be charged to each project reflective of the time recorded by employees. However we noted that in several cases the allocation amounts as per the timekeeping system were different from the amounts ultimately recorded within InterAction's general ledger. While the differences were not significant, these discrepancies indicate a deficiency in the internal controls around recording of salary expenditures to projects. Cause: The primary cause appears to be human error, and the result of manual recordkeeping. Effect or Potential Effect: Salary expenditures that are not charged in accordance with the standards referenced above may be questioned or disallowed by the donor. Questioned Costs: Undetermined Context: Our procedures included testing a sample of 40 salary transactions. We noted variances of the nature described above for 36 of the 40 samples tested. The issue appears to be systemic. Identification as a Repeat Finding, if Applicable: N/A. Recommendation: We recommend that management revisit its procedures for transferring data from the timekeeping system to the general ledger and implement proper internal controls to ensure that the amounts of salary expenditures charged to grants in the general ledger reconcile to the amounts calculated by the timekeeping system.