Federal Program Information: Funding Agency: U.S. Department of Education Title: Teacher & School Leader Incentive Program Assistance Listing: 84.374 A Passthrough: N/A Award Year: 2022 Criteria: 2 CFR Chapter I, and Chapter II, Parts 200, 215, 220, 225, and 230 Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards ? 200.430 Compensation ? personal services (i) Standards for Documentation of Personnel Expenses (1) Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system 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 compensation activities (for IHE, this per the IHE?s definition of IBS); (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 (See paragraph (h)(1)(ii) above for treatment of incidental work for IHEs.); and (vii) Support the distribution of the employee?s salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity (viii) Budget estimates (i.e., estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that: (A) The system for establishing the estimates produces reasonable approximations of the activity actually performed; (B) Significant changes in the corresponding work activity (as defined by the non-Federal entity?s written policies) are identified and entered into the records in a timely manner. Short term (such as one or two months) fluctuation between workload categories need not be considered as long as the distribution of salaries and wages is reasonable over the longer term; and (C) The non-Federal entity?s system of internal controls includes processes to review after-the-fact interim charges made to a Federal award based on budget estimates. All necessary adjustment must be made such that the final amount charged to the Federal award is accurate, allowable, and properly allocated. Condition: The Foundation does not have a system of internal control to accurately track personnel costs when the individual works on more than one program. The Foundation makes a good-faith effort to budget an individual?s time based on their best estimate of the distribution of the employee?s time over the various programs. However, the Foundation?s employees were not required to track their time on a daily basis and identify which program was worked on during that day. The Foundation did not require those employees who are assigned to multiple cost programs to track and certify their time. The Foundation did not ?true-up? actual time versus budgeted time for the various programs during the year. Questioned Costs: None Cause: The Foundation had not implemented a method to track time for employees allocated between multiple program costs and to adjust those costs based on actual time spent on the programs. The Foundation believed that their goodfaithed effort to budget accurately an employee?s time was sufficient to meet the personnel requirements. Since bringing this to the attention of the Foundation, it has implemented a method for employees to properly track their time by program and to square-up their time to actual time on a timely and consistent basis. Effect: The Foundation is not in compliance with Federal regulations related to the grant and could put funding in jeopardy or require the Foundation to reimburse the program. Auditor?s Recommendation: The Foundation should implement internal control policies and procedures which require employees who work under two or more programs to track their time in a method that allows for proper allocation of expenses between those programs. Additionally, the Foundation should implement a process for employees to certify that their time is properly tracked and allocated. Finally, the Foundation should implement a time-frame to adjust budgeted salaries to actual salaries based upon the tracking performed by employees. Responsible official?s view: ? Specific corrective action plan for finding: Dr. Linda Coy in conjunction with James Coy, CFO and Patty Eaton, Business Manager have developed a revised process of collecting T & E data from employees affected by this action. Each affected employee will collect daily activities tied to the percentage of time allocated to their respective positions and submit on a monthly basis to the business office. The business office will calculate the time spent on each project and provide that information back to the employee for adjustment during the following month. The documentation, for each employee that is part of this process will be available to the auditors during the next audit cycle. The HR department will maintain these files for inspection. ? Timeline for completion of corrective action plan: After consultation with the auditors, it was decided that the effective date for implementation is September 1, 2023. ? Employee position(s) responsible for meeting the timeline: Dr. Linda Coy, Three Rivers Education Foundation Director & James L. Coy CFO
Finding 2022-005 Assistance Listing and State ID Numbers: 93.563 and 437.7502 Program Titles: Child Support Enforcement and CS State GPR/PR Funding Allocation Award Number / Year: 437.7502 / 2022 Pass-Through Entity: Wisconsin Department of Children and Families Criteria: 2 CFR section 200.430(i)(1)(viii)(C) requires the system of internal controls to include processes to conduct after-the-fact reviews of interim charges made to federal awards based on budget estimates used to charge salaries and wages. All necessary adjustments must be made such that the final amount charged to the federal award is accurate, allowable, and properly allocated. Condition/Context: One of the thirty-seven payroll transactions tested was more than actual costs incurred due to incorrect payroll information being used to calculate the payroll expense. Our sample was not statistically valid. Cause: The payroll cost allocation spreadsheet was not properly reviewed against the payroll system. Effect: Payroll costs were overcharged to the award. Questioned Costs: Questioned costs of $269 related to excess payroll charges are reported in accordance with the thresholds of the Wisconsin State Single Audit Guidelines and relate to expenditures funded by both federal and state sources, specifically 93.563 Child Support Enforcement and 437.7502 CS State GPR/PR Funding Allocation. Recommendation: The County should review its internal control procedures to ensure there are proper review and approval processes over payroll information used to calculate amounts claimed for grant reimbursement. Management's Response: The reimbursement reports prepared by the Clerk of Courts will be reviewed by a person other than the preparer to ensure accuracy. The review will be completed before the reimbursement request is submitted to Child Support.
2022-001 Compensation for Personal Services (Repeat Finding) Food Insecurity Nutrition Incentive Grants Program ? Assistance Listing Number 10.331 ? Award Period: September 1, 2020 through August 31, 2023 Type of Finding: Significant Deficiency in Internal Control over Compliance, Other Matters Condition: During our testing of time and effort records we noted that actual time spent working on different funding sources/cost objectives was not tracked. Instead, percentage of time was documented on the timesheet then multiplied by the number of work hours in the month. Percentage of time did not change from month to month indicating budgeted allocations were used. Criteria: According to 2 CFR Part 200.430(i)(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 (for IHE, this per the IHE's definition of IBS); (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; and (vii) Support the distribution of the employee's salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. (viii) Budget estimates (i.e., estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that: (A) The system for establishing the estimates produces reasonable approximations of the activity actually performed; (B) Significant changes in the corresponding work activity (as defined by the non-Federal entity's written policies) are identified and entered into the records in a timely manner. Short term (such as one or two months) fluctuation between workload categories need not be considered as long as the distribution of salaries and wages is reasonable over the longer term; and (C) The non-Federal entity's system of internal controls includes processes to review after-the-fact interim charges made to a Federal award based on budget estimates. All necessary adjustment must be made such that the final amount charged to the Federal award is accurate, allowable, and properly allocated. Additionally, 2 CFR Part 200.430(i)(7) states, For Federal awards of similar purpose activity or instances of approved blended funding, a non-Federal entity may submit performance plans that incorporate funds from multiple Federal awards and account for their combined use based on performance-oriented metrics, provided that such plans are approved in advance by all involved Federal awarding agencies. In these instances, the non-Federal entity must submit a request for waiver of the requirements based on documentation that describes the method of charging costs, relates the charging of costs to the specific activity that is applicable to all fund sources, and is based on quantifiable measures of the activity in relation to time charged. Cause: The Organization used budgeted allocations to charge salaries and wages to Federal awards without documentation of reconciliation after-the-fact to actual time worked on different funding sources/cost objectives. Effect: Costs for salaries and wages were not fully supported by documentation in accordance with 2 CFR Part 200.430. Allowable costs could potentially be overpaid or underpaid or disallowed and required to be paid back to the Federal awarding agency. Recommendation: The Organization should strengthen policies and procedures to support a system of internal control which provides a reasonable assurance that the charges to Federal awards for salaries and wages are accurate, allowable, and properly allocated. This might include: 1. Improving timesheet tracking to charge actual time spent working on different funding sources/cost objectives, or 2. Establishing a process to periodically review after-the-fact interim charges made to Federal awards based on budget estimates, make timely adjustments, and document their reconciliation or 3. If applicable, obtain a waiver from all involved Federal awarding agencies for blended funding and charge costs based on the approved performance plan. Views of Responsible Officials and Planned Corrective Actions: Management agrees. See separately issued Corrective Action Plan.
Finding 2022-001 U.S. Department of Education Native Hawaiian Education Assistance Listing No. 84.362A Criteria ? Under Section 200.405 of Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), if a cost benefits two or more projects or activities in proportions that can be determined without undue effort or cost, the cost must be allocated to the projects based on the proportional benefit. If a cost benefits two or more projects or activities in proportions that cannot be determined, the costs may be allocated on a reasonable documented basis. Under Section 200.430 of the Uniform Guidance, salaries and wages charged to federal awards must be based on records that accurately reflect the work performed. Condition ? During the audit for the year ended December 31, 2022, the bases used to allocate nonpayroll costs to two or more programs were not adequately documented. In addition, salaries and wages charged to federal awards were not based on records that accurately reflected the work performed. Cause ? The Organization did not document the basis for the allocation of nonpayroll costs to its various federal programs. The Organization did not maintain records that accurately reflected the work performed on its federal programs. Salaries and wages charged to federal awards were based on budgeted amounts. Effect or Potential Effect ? Nonpayroll costs that benefit more than one federal program may be misallocated among federal and other programs. Salaries and wages for employees who work on more than one federal program may be misallocated among federal and other programs. Questioned Costs ? Unknown. Context ? The Organization had $573,039 in nonpayroll costs and $417,366 in salaries and wages included in its federal expenditures during the year ended December 31, 2022. Recommendation ? Maintain documentation to support the allocation of nonpayroll costs between two or more programs. Maintain documentation, such as a timesheet or certified statement, to substantiate the salaries and wages charged to the federal programs that is based on the actual time worked by personnel. Responsible Official?s Response and Corrective Action Planned ? Refer to the Corrective Action Plan.
DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT Continuum of Care, CFDA # 14.267 2022-001: Criteria: According to 2 CFR 200.430 i(i)(vii) charges to federal awards for salaries and wages must be based on records that accurately reflect the work performed and there should be support to the distributions of the employee?s salary or wages among specific activities or cost objectives if the employee works on more than one Federal award. Condition: In gaining our understanding of controls over payroll, we noted the following control: the majority of the employees at Housing Forward and Subsidiary work for only one grant with the exception of management that may work for two. We viewed 40 timesheets related to the CoC program of which twelve showed the employee working for multiple grants but did not include the number of hours worked for each program on the timesheet, it was tracked through management and staff. Cause: The timesheets that were missing a breakdown of time and effort applied to each grant did not have a detailed tracking of hours by grants to remind employees to allocate their time by grant. The allocation was made based on a percentage rather than the actual time worked. Effect: The hours charged to a program could be under or overstated based budget compared to actual hours that should be documented on the timesheets. Auditor?s Recommendation: We recommend that the timesheets revised to either have ability to breakout the hours per day by grant and remind staff the importance to track their time by funder. Management Response: Employees have transitioned to submitting time and effort bi-weekly within the ADP payroll system to ensure timeliness of allocation of wages. Hours will be reported based on actual time worked in projects, even when employees are working in a single project. These hours are used to allocate salaries and wages and unpaid time off bi-weekly. Fringe benefits will be allocated on a monthly basis using the allocation of hours for that month. Allocation of hours and coding is reviewed by the Finance department for accuracy and allowance before submittal of payroll. If changes are needed after processing, Finance staff will work with staff to correct time and effort reporting through a manual time and effort report.
2022-003 Department of Justice Passed through State of South Dakota Department of Public Safety Federal Financial Assistance Listing #16.575 2022-COMBO-VA018, 7/1/2021 ? 6/30/2022; 2023-COMBO-VA023, 7/1/2022 ? 6/30/2023 Crime Victim Assistance Activities Allowed or Unallowed and Allowable Costs/Cost Principles Material Weakness in Internal Control over Compliance Criteria: The Organization is required to have procedures in place to ensure that federal awards are expended only for allowable costs in accordance with Subpart E ? Cost Principles of the Uniform Guidance. Allowable costs are supported by appropriate documentation and correctly charged as to account, amount, and period. 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. 2 CFR 200.430(i) establishes the standards for documentation of personnel expenses including charges to Federal awards for salaries and wages. Charges must be based on records that accurately reflect the work performed with the records meeting the following standards: a) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. b) Be incorporated into the official records of the non-Federal entity. c) Reasonably reflect the total activity for which the employee is compensated by the non-Federal entity, not exceeding 100% of compensated activities. d) Encompass both federally assisted, and all other activities compensated by the non-Federal entity on an integrated basis, but may include the use of subsidiary records as defined in the non-Federal entity?s written policy. e) Comply with the established accounting policies and practices of the non-Federal entity. f) Support the distribution of the employee?s salary or wages among specific activities or cost objectives. g) Budget estimates alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes. Condition: Our testing over payroll expenditures charged to federal program identified nine instances in which percentage of VOCA hours worked per employee timesheet differed from the percentage of VOCA hours charged to the federal program. Cause: The Organization?s internal control process did not detect the errors. Effect: The Organization?s controls did not detect or correct the errors identified, which results in a reasonable possibility that the Organization could submit disallowed costs under the federal awards. Questioned Costs: No questioned costs Context: A nonstatistical sample of 60 expenditures were selected for testing, including 40 payroll transactions out of approximately 300 total payroll transactions, accounting for approximately $54,423 of $494,822 total payroll costs charged to federal program and 20 non-payroll transactions out of approximately 1,160 total nonpayroll transactions, accounting for approximately $26,192 of $244,249 total non-payroll costs charged to the federal program. Repeat Finding from Prior Year: Yes, prior year finding 2021-003 Recommendation: We recommend management to review payroll policies and procedures over the tracking of time and allocation of wages with related program employees. Views of Responsible Officials: Management is in agreement.
FINDING 2022-005 Subject: CDBG - Entitlement Grants Cluster - Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Program Income Federal Agency: Department of Housing and Urban Development Federal Programs: Community Development Block Grants/Entitlement Grants, COVID-19 - Community Development Block Grants/Entitlement Grants Assistance Listings Number: 14.218 Federal Award Numbers and Years (or Other Identifying Numbers): B-19-MC-18-0015, B-20-MC-20-0015, B-20-MW-18-0015, B-21-MC-18-0015, B-22-MC-18-0015 Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Program Income Audit Findings: Material Weakness, Modified Opinion Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2021-003. Condition and Context Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Program Income - Use Payroll The City charged employee salaries for Community Development Block Grants/Entitlement Grants (grant) activities to the grant based on fixed percentages. Adequate time and effort records were not maintained to support the percentages charged to the federal award. Two employees were paid from the grant funds during the audit period: ? The first employee's salary and benefits were being paid 50 percent from federal grant funds. However, documentation to support the distribution of the employee's pay (i.e., time and effort logs) did not begin until November 19, 2022. The amount paid from the beginning of the audit period until November 19, 2022, was $48,677. As this amount was not adequately supported, it is considered questioned costs. ? The second employee was paid 100 percent from the federal grant. The City made a payroll correction to remove the employee's pay for the months of July through December. After the payroll adjustment, there was a remaining amount of payroll and benefits of $5,611 for the period of July through December charged to the grant which lacked supporting documentation that the costs were appropriate for the grant. This amount, $5,611, is considered questioned costs. Vendor Late fees and taxes were paid from the federal grant funds. A total of $51 was paid in late fees and sales tax during the audit period. This amount was determined to be a questioned cost. Program Income - Determining or Assessing and Recording Program income is gross income earned by a non-federal entity that is directly generated by a supported activity or earned as a result of the federal award during the period of performance. Program income is to be recorded in the unit's financial system along with the Housing and Urban Development (HUD) nationwide database, the Integrated Disbursement and Information System (IDIS). The City recorded program income in the accounting ledger for the sale of a Neighborhood Stabilization Property. After determining an approval process would be necessary to consider this program income, a request was sent to the HUD. Prior to receiving permission to include the sale as program income to the federal grant, an adjustment was made to transfer this program income to another fund. It was later recorded in the IDIS as program income but was never adjusted back into the unit's federal grant fund designated for this grant. The internal controls in place were not effective to ensure the amounts recorded in the accounting ledger and the amounts recorded in the IDIS agree and are accurate. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.430(i)(1) states in part: "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 . . . (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. . . ." 24 CFR 570.504(a) states: "Recording program income. The receipt and expenditure of program income as defined in ? 570.500(a) shall be recorded as part of the financial transactions of the grant program." 24 CFR 570.504(b)(2) states in part: "If the recipient chooses to retain program income, that program income shall be disposed of as follows: . . . (ii) Substantially all other program income shall be disbursed for eligible activities before additional cash withdrawals are made from the U.S. Treasury. . . ." Cause A proper system of internal controls was not designed by management of the City. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the City's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, payments were made that resulted in questioned costs. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the City. Questioned Costs There were known questioned costs of $54,288. Recommendation We recommended that management of the City design and implement a proper system of internal controls, including policies and procedures that would provide segregation of duties to ensure appropriate reviews, approvals, and oversight are taking place over payroll, benefits, and vendor payments, as well as the proper recording of program income for the grant. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2022-005 Subject: CDBG - Entitlement Grants Cluster - Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Program Income Federal Agency: Department of Housing and Urban Development Federal Programs: Community Development Block Grants/Entitlement Grants, COVID-19 - Community Development Block Grants/Entitlement Grants Assistance Listings Number: 14.218 Federal Award Numbers and Years (or Other Identifying Numbers): B-19-MC-18-0015, B-20-MC-20-0015, B-20-MW-18-0015, B-21-MC-18-0015, B-22-MC-18-0015 Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Program Income Audit Findings: Material Weakness, Modified Opinion Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2021-003. Condition and Context Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Program Income - Use Payroll The City charged employee salaries for Community Development Block Grants/Entitlement Grants (grant) activities to the grant based on fixed percentages. Adequate time and effort records were not maintained to support the percentages charged to the federal award. Two employees were paid from the grant funds during the audit period: ? The first employee's salary and benefits were being paid 50 percent from federal grant funds. However, documentation to support the distribution of the employee's pay (i.e., time and effort logs) did not begin until November 19, 2022. The amount paid from the beginning of the audit period until November 19, 2022, was $48,677. As this amount was not adequately supported, it is considered questioned costs. ? The second employee was paid 100 percent from the federal grant. The City made a payroll correction to remove the employee's pay for the months of July through December. After the payroll adjustment, there was a remaining amount of payroll and benefits of $5,611 for the period of July through December charged to the grant which lacked supporting documentation that the costs were appropriate for the grant. This amount, $5,611, is considered questioned costs. Vendor Late fees and taxes were paid from the federal grant funds. A total of $51 was paid in late fees and sales tax during the audit period. This amount was determined to be a questioned cost. Program Income - Determining or Assessing and Recording Program income is gross income earned by a non-federal entity that is directly generated by a supported activity or earned as a result of the federal award during the period of performance. Program income is to be recorded in the unit's financial system along with the Housing and Urban Development (HUD) nationwide database, the Integrated Disbursement and Information System (IDIS). The City recorded program income in the accounting ledger for the sale of a Neighborhood Stabilization Property. After determining an approval process would be necessary to consider this program income, a request was sent to the HUD. Prior to receiving permission to include the sale as program income to the federal grant, an adjustment was made to transfer this program income to another fund. It was later recorded in the IDIS as program income but was never adjusted back into the unit's federal grant fund designated for this grant. The internal controls in place were not effective to ensure the amounts recorded in the accounting ledger and the amounts recorded in the IDIS agree and are accurate. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.430(i)(1) states in part: "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 . . . (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. . . ." 24 CFR 570.504(a) states: "Recording program income. The receipt and expenditure of program income as defined in ? 570.500(a) shall be recorded as part of the financial transactions of the grant program." 24 CFR 570.504(b)(2) states in part: "If the recipient chooses to retain program income, that program income shall be disposed of as follows: . . . (ii) Substantially all other program income shall be disbursed for eligible activities before additional cash withdrawals are made from the U.S. Treasury. . . ." Cause A proper system of internal controls was not designed by management of the City. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the City's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, payments were made that resulted in questioned costs. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the City. Questioned Costs There were known questioned costs of $54,288. Recommendation We recommended that management of the City design and implement a proper system of internal controls, including policies and procedures that would provide segregation of duties to ensure appropriate reviews, approvals, and oversight are taking place over payroll, benefits, and vendor payments, as well as the proper recording of program income for the grant. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
2 CFR ?2400.101 gives regulatory effect to the Department of Housing and Urban Development for 2 CFR ?200.303(a) states that the non-Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework?, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Furthermore, 2 CFR ?200.430(i)(1)(i) states "charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must be supported by a system of internal controls which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. During testing of payroll expenses for AL #14.218 CDBG Entitlement Grant Cluster, we noted the City utilized employee-completed time-sheets for allocating payroll expenses to the federal program. However, the City?s established internal control procedures did not occur for six out of 40 timesheets. The timesheets did not contain appropriate evidence that the timesheet was reviewed and approved by a supervisor with direct knowledge of the employee?s activities to support proper allocation to the program. We were able to substantiate the related expenses through additional means to support allocation to the federal program. Failure to ensure all time sheets are appropriately approved by a knowledgeable supervisor could result in unallowable costs being allocated to a federal program and could ultimately result in a questioned cost. We recommend the City review established policies and procedures and ensure all timesheets are appropriately reviewed prior to allocation to a federal program.
2 CFR ?2400.101 gives regulatory effect to the Department of Housing and Urban Development for 2 CFR ?200.303(a) states that the non-Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework?, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Furthermore, 2 CFR ?200.430(i)(1)(i) states "charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must be supported by a system of internal controls which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. During testing of payroll expenses for AL #14.218 CDBG Entitlement Grant Cluster, we noted the City utilized employee-completed time-sheets for allocating payroll expenses to the federal program. However, the City?s established internal control procedures did not occur for six out of 40 timesheets. The timesheets did not contain appropriate evidence that the timesheet was reviewed and approved by a supervisor with direct knowledge of the employee?s activities to support proper allocation to the program. We were able to substantiate the related expenses through additional means to support allocation to the federal program. Failure to ensure all time sheets are appropriately approved by a knowledgeable supervisor could result in unallowable costs being allocated to a federal program and could ultimately result in a questioned cost. We recommend the City review established policies and procedures and ensure all timesheets are appropriately reviewed prior to allocation to a federal program.
2 CFR ?2400.101 gives regulatory effect to the Department of Housing and Urban Development for 2 CFR ?200.303(a) states that the non-Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework?, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Furthermore, 2 CFR ?200.430(i)(1)(i) states "charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must be supported by a system of internal controls which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. During testing of payroll expenses for AL #14.218 CDBG Entitlement Grant Cluster, we noted the City utilized employee-completed time-sheets for allocating payroll expenses to the federal program. However, the City?s established internal control procedures did not occur for six out of 40 timesheets. The timesheets did not contain appropriate evidence that the timesheet was reviewed and approved by a supervisor with direct knowledge of the employee?s activities to support proper allocation to the program. We were able to substantiate the related expenses through additional means to support allocation to the federal program. Failure to ensure all time sheets are appropriately approved by a knowledgeable supervisor could result in unallowable costs being allocated to a federal program and could ultimately result in a questioned cost. We recommend the City review established policies and procedures and ensure all timesheets are appropriately reviewed prior to allocation to a federal program.
2 CFR ?2400.101 gives regulatory effect to the Department of Housing and Urban Development for 2 CFR ?200.303(a) states that the non-Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework?, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Furthermore, 2 CFR ?200.430(i)(1)(i) states "charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must be supported by a system of internal controls which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. During testing of payroll expenses for AL #14.218 CDBG Entitlement Grant Cluster, we noted the City utilized employee-completed time-sheets for allocating payroll expenses to the federal program. However, the City?s established internal control procedures did not occur for six out of 40 timesheets. The timesheets did not contain appropriate evidence that the timesheet was reviewed and approved by a supervisor with direct knowledge of the employee?s activities to support proper allocation to the program. We were able to substantiate the related expenses through additional means to support allocation to the federal program. Failure to ensure all time sheets are appropriately approved by a knowledgeable supervisor could result in unallowable costs being allocated to a federal program and could ultimately result in a questioned cost. We recommend the City review established policies and procedures and ensure all timesheets are appropriately reviewed prior to allocation to a federal program.
2 CFR ?2400.101 gives regulatory effect to the Department of Housing and Urban Development for 2 CFR ?200.303(a) states that the non-Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework?, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Furthermore, 2 CFR ?200.430(i)(1)(i) states "charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must be supported by a system of internal controls which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. During testing of payroll expenses for AL #14.218 CDBG Entitlement Grant Cluster, we noted the City utilized employee-completed time-sheets for allocating payroll expenses to the federal program. However, the City?s established internal control procedures did not occur for six out of 40 timesheets. The timesheets did not contain appropriate evidence that the timesheet was reviewed and approved by a supervisor with direct knowledge of the employee?s activities to support proper allocation to the program. We were able to substantiate the related expenses through additional means to support allocation to the federal program. Failure to ensure all time sheets are appropriately approved by a knowledgeable supervisor could result in unallowable costs being allocated to a federal program and could ultimately result in a questioned cost. We recommend the City review established policies and procedures and ensure all timesheets are appropriately reviewed prior to allocation to a federal program.
2 CFR ?2400.101 gives regulatory effect to the Department of Housing and Urban Development for 2 CFR ?200.303(a) states that the non-Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework?, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Furthermore, 2 CFR ?200.430(i)(1)(i) states "charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must be supported by a system of internal controls which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. During testing of payroll expenses for AL #14.218 CDBG Entitlement Grant Cluster, we noted the City utilized employee-completed time-sheets for allocating payroll expenses to the federal program. However, the City?s established internal control procedures did not occur for six out of 40 timesheets. The timesheets did not contain appropriate evidence that the timesheet was reviewed and approved by a supervisor with direct knowledge of the employee?s activities to support proper allocation to the program. We were able to substantiate the related expenses through additional means to support allocation to the federal program. Failure to ensure all time sheets are appropriately approved by a knowledgeable supervisor could result in unallowable costs being allocated to a federal program and could ultimately result in a questioned cost. We recommend the City review established policies and procedures and ensure all timesheets are appropriately reviewed prior to allocation to a federal program.
2 CFR ?2400.101 gives regulatory effect to the Department of Housing and Urban Development for 2 CFR ?200.303(a) states that the non-Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework?, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Furthermore, 2 CFR ?200.430(i)(1)(i) states "charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must be supported by a system of internal controls which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. During testing of payroll expenses for AL #14.218 CDBG Entitlement Grant Cluster, we noted the City utilized employee-completed time-sheets for allocating payroll expenses to the federal program. However, the City?s established internal control procedures did not occur for six out of 40 timesheets. The timesheets did not contain appropriate evidence that the timesheet was reviewed and approved by a supervisor with direct knowledge of the employee?s activities to support proper allocation to the program. We were able to substantiate the related expenses through additional means to support allocation to the federal program. Failure to ensure all time sheets are appropriately approved by a knowledgeable supervisor could result in unallowable costs being allocated to a federal program and could ultimately result in a questioned cost. We recommend the City review established policies and procedures and ensure all timesheets are appropriately reviewed prior to allocation to a federal program.
2 CFR ?2400.101 gives regulatory effect to the Department of Housing and Urban Development for 2 CFR ?200.303(a) states that the non-Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework?, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Furthermore, 2 CFR ?200.430(i)(1)(i) states "charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must be supported by a system of internal controls which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. During testing of payroll expenses for AL #14.218 CDBG Entitlement Grant Cluster, we noted the City utilized employee-completed time-sheets for allocating payroll expenses to the federal program. However, the City?s established internal control procedures did not occur for six out of 40 timesheets. The timesheets did not contain appropriate evidence that the timesheet was reviewed and approved by a supervisor with direct knowledge of the employee?s activities to support proper allocation to the program. We were able to substantiate the related expenses through additional means to support allocation to the federal program. Failure to ensure all time sheets are appropriately approved by a knowledgeable supervisor could result in unallowable costs being allocated to a federal program and could ultimately result in a questioned cost. We recommend the City review established policies and procedures and ensure all timesheets are appropriately reviewed prior to allocation to a federal program.
2 CFR ?2400.101 gives regulatory effect to the Department of Housing and Urban Development for 2 CFR ?200.303(a) states that the non-Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework?, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Furthermore, 2 CFR ?200.430(i)(1)(i) states "charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must be supported by a system of internal controls which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. During testing of payroll expenses for AL #14.218 CDBG Entitlement Grant Cluster, we noted the City utilized employee-completed time-sheets for allocating payroll expenses to the federal program. However, the City?s established internal control procedures did not occur for six out of 40 timesheets. The timesheets did not contain appropriate evidence that the timesheet was reviewed and approved by a supervisor with direct knowledge of the employee?s activities to support proper allocation to the program. We were able to substantiate the related expenses through additional means to support allocation to the federal program. Failure to ensure all time sheets are appropriately approved by a knowledgeable supervisor could result in unallowable costs being allocated to a federal program and could ultimately result in a questioned cost. We recommend the City review established policies and procedures and ensure all timesheets are appropriately reviewed prior to allocation to a federal program.
Section III - Federal Award Findings and Questioned Costs (2 CFR 200.516(a)) Finding 2022-001: Payroll Allocations Information on the Federal Programs: 98.001 and 19.519 Criteria or specific requirement (including statutory, regulatory, or other citation): Under 2 CFR 200.430 all charges to federal awards for salaries and wages must be based on records that accurately reflect work performed, and these records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable and properly allocated. Condition: MdMUSA keeps a payroll allocation spreadsheet for each federal grant on a monthly basis to allocate time. MdMUSA determines percentage of time worked on each grant on the basis of hours worked during the month divided by total hours in the month. Instances were noted in which the total number of hours in a month was different for various grants in the same month. Additionally, there were instances in which employee timesheets were changed after the fact, and the finance department had to re-allocate significant values of time to reflect the modified timesheet. Cause: Total hours in the month is a manual input on each grant's allocation sheet and is calculated by multiplying 8 hours times the total number of working days in the month. Instances in which total number of hours in the month varied across different grants were the result of management oversight. There is no documented review and approval of employee timesheets. Effect or Potential Effect: When using the incorrect basis for the number of hours during a month, MdMUSA could inadvertently charge more or less time to certain awards than was actually spent. This could result in the Federal Government over-paying for salaries associated with the award. Additionally, lack of documented supervisory review of timesheets could result in timesheets being incorrect and time not being appropriately allocated to federal awards. Questioned Costs: Not determined. Context: Our audit procedures consisted of testwork performed over various payroll transactions during the year. We consisted our testwork to be representative of the population. The condition appears to be systematic in nature. Identification as a Repeat Finding, if Applicable: Not a repeat finding. Recommendation: We recommend that MdMUSA implement a review process over each grant's monthly payroll allocation sheet. This will ensure that the total hours for the month will be accurate and consistent across all awards. Additionally, we recommend that management implement a monthly review process over employee timesheets. Employee timesheets should be reviewed by an appropriate supervisor, or by the executive director, whichever is appropriate.
Section III - Federal Award Findings and Questioned Costs (2 CFR 200.516(a)) Finding 2022-001: Payroll Allocations Information on the Federal Programs: 98.001 and 19.519 Criteria or specific requirement (including statutory, regulatory, or other citation): Under 2 CFR 200.430 all charges to federal awards for salaries and wages must be based on records that accurately reflect work performed, and these records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable and properly allocated. Condition: MdMUSA keeps a payroll allocation spreadsheet for each federal grant on a monthly basis to allocate time. MdMUSA determines percentage of time worked on each grant on the basis of hours worked during the month divided by total hours in the month. Instances were noted in which the total number of hours in a month was different for various grants in the same month. Additionally, there were instances in which employee timesheets were changed after the fact, and the finance department had to re-allocate significant values of time to reflect the modified timesheet. Cause: Total hours in the month is a manual input on each grant's allocation sheet and is calculated by multiplying 8 hours times the total number of working days in the month. Instances in which total number of hours in the month varied across different grants were the result of management oversight. There is no documented review and approval of employee timesheets. Effect or Potential Effect: When using the incorrect basis for the number of hours during a month, MdMUSA could inadvertently charge more or less time to certain awards than was actually spent. This could result in the Federal Government over-paying for salaries associated with the award. Additionally, lack of documented supervisory review of timesheets could result in timesheets being incorrect and time not being appropriately allocated to federal awards. Questioned Costs: Not determined. Context: Our audit procedures consisted of testwork performed over various payroll transactions during the year. We consisted our testwork to be representative of the population. The condition appears to be systematic in nature. Identification as a Repeat Finding, if Applicable: Not a repeat finding. Recommendation: We recommend that MdMUSA implement a review process over each grant's monthly payroll allocation sheet. This will ensure that the total hours for the month will be accurate and consistent across all awards. Additionally, we recommend that management implement a monthly review process over employee timesheets. Employee timesheets should be reviewed by an appropriate supervisor, or by the executive director, whichever is appropriate.
Section III - Federal Award Findings and Questioned Costs (2 CFR 200.516(a)) Finding 2022-001: Payroll Allocations Information on the Federal Programs: 98.001 and 19.519 Criteria or specific requirement (including statutory, regulatory, or other citation): Under 2 CFR 200.430 all charges to federal awards for salaries and wages must be based on records that accurately reflect work performed, and these records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable and properly allocated. Condition: MdMUSA keeps a payroll allocation spreadsheet for each federal grant on a monthly basis to allocate time. MdMUSA determines percentage of time worked on each grant on the basis of hours worked during the month divided by total hours in the month. Instances were noted in which the total number of hours in a month was different for various grants in the same month. Additionally, there were instances in which employee timesheets were changed after the fact, and the finance department had to re-allocate significant values of time to reflect the modified timesheet. Cause: Total hours in the month is a manual input on each grant's allocation sheet and is calculated by multiplying 8 hours times the total number of working days in the month. Instances in which total number of hours in the month varied across different grants were the result of management oversight. There is no documented review and approval of employee timesheets. Effect or Potential Effect: When using the incorrect basis for the number of hours during a month, MdMUSA could inadvertently charge more or less time to certain awards than was actually spent. This could result in the Federal Government over-paying for salaries associated with the award. Additionally, lack of documented supervisory review of timesheets could result in timesheets being incorrect and time not being appropriately allocated to federal awards. Questioned Costs: Not determined. Context: Our audit procedures consisted of testwork performed over various payroll transactions during the year. We consisted our testwork to be representative of the population. The condition appears to be systematic in nature. Identification as a Repeat Finding, if Applicable: Not a repeat finding. Recommendation: We recommend that MdMUSA implement a review process over each grant's monthly payroll allocation sheet. This will ensure that the total hours for the month will be accurate and consistent across all awards. Additionally, we recommend that management implement a monthly review process over employee timesheets. Employee timesheets should be reviewed by an appropriate supervisor, or by the executive director, whichever is appropriate.
Section III - Federal Award Findings and Questioned Costs (2 CFR 200.516(a)) Finding 2022-001: Payroll Allocations Information on the Federal Programs: 98.001 and 19.519 Criteria or specific requirement (including statutory, regulatory, or other citation): Under 2 CFR 200.430 all charges to federal awards for salaries and wages must be based on records that accurately reflect work performed, and these records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable and properly allocated. Condition: MdMUSA keeps a payroll allocation spreadsheet for each federal grant on a monthly basis to allocate time. MdMUSA determines percentage of time worked on each grant on the basis of hours worked during the month divided by total hours in the month. Instances were noted in which the total number of hours in a month was different for various grants in the same month. Additionally, there were instances in which employee timesheets were changed after the fact, and the finance department had to re-allocate significant values of time to reflect the modified timesheet. Cause: Total hours in the month is a manual input on each grant's allocation sheet and is calculated by multiplying 8 hours times the total number of working days in the month. Instances in which total number of hours in the month varied across different grants were the result of management oversight. There is no documented review and approval of employee timesheets. Effect or Potential Effect: When using the incorrect basis for the number of hours during a month, MdMUSA could inadvertently charge more or less time to certain awards than was actually spent. This could result in the Federal Government over-paying for salaries associated with the award. Additionally, lack of documented supervisory review of timesheets could result in timesheets being incorrect and time not being appropriately allocated to federal awards. Questioned Costs: Not determined. Context: Our audit procedures consisted of testwork performed over various payroll transactions during the year. We consisted our testwork to be representative of the population. The condition appears to be systematic in nature. Identification as a Repeat Finding, if Applicable: Not a repeat finding. Recommendation: We recommend that MdMUSA implement a review process over each grant's monthly payroll allocation sheet. This will ensure that the total hours for the month will be accurate and consistent across all awards. Additionally, we recommend that management implement a monthly review process over employee timesheets. Employee timesheets should be reviewed by an appropriate supervisor, or by the executive director, whichever is appropriate.
Section III - Federal Award Findings and Questioned Costs (2 CFR 200.516(a)) Finding 2022-001: Payroll Allocations Information on the Federal Programs: 98.001 and 19.519 Criteria or specific requirement (including statutory, regulatory, or other citation): Under 2 CFR 200.430 all charges to federal awards for salaries and wages must be based on records that accurately reflect work performed, and these records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable and properly allocated. Condition: MdMUSA keeps a payroll allocation spreadsheet for each federal grant on a monthly basis to allocate time. MdMUSA determines percentage of time worked on each grant on the basis of hours worked during the month divided by total hours in the month. Instances were noted in which the total number of hours in a month was different for various grants in the same month. Additionally, there were instances in which employee timesheets were changed after the fact, and the finance department had to re-allocate significant values of time to reflect the modified timesheet. Cause: Total hours in the month is a manual input on each grant's allocation sheet and is calculated by multiplying 8 hours times the total number of working days in the month. Instances in which total number of hours in the month varied across different grants were the result of management oversight. There is no documented review and approval of employee timesheets. Effect or Potential Effect: When using the incorrect basis for the number of hours during a month, MdMUSA could inadvertently charge more or less time to certain awards than was actually spent. This could result in the Federal Government over-paying for salaries associated with the award. Additionally, lack of documented supervisory review of timesheets could result in timesheets being incorrect and time not being appropriately allocated to federal awards. Questioned Costs: Not determined. Context: Our audit procedures consisted of testwork performed over various payroll transactions during the year. We consisted our testwork to be representative of the population. The condition appears to be systematic in nature. Identification as a Repeat Finding, if Applicable: Not a repeat finding. Recommendation: We recommend that MdMUSA implement a review process over each grant's monthly payroll allocation sheet. This will ensure that the total hours for the month will be accurate and consistent across all awards. Additionally, we recommend that management implement a monthly review process over employee timesheets. Employee timesheets should be reviewed by an appropriate supervisor, or by the executive director, whichever is appropriate.
Section III - Federal Award Findings and Questioned Costs (2 CFR 200.516(a)) Finding 2022-001: Payroll Allocations Information on the Federal Programs: 98.001 and 19.519 Criteria or specific requirement (including statutory, regulatory, or other citation): Under 2 CFR 200.430 all charges to federal awards for salaries and wages must be based on records that accurately reflect work performed, and these records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable and properly allocated. Condition: MdMUSA keeps a payroll allocation spreadsheet for each federal grant on a monthly basis to allocate time. MdMUSA determines percentage of time worked on each grant on the basis of hours worked during the month divided by total hours in the month. Instances were noted in which the total number of hours in a month was different for various grants in the same month. Additionally, there were instances in which employee timesheets were changed after the fact, and the finance department had to re-allocate significant values of time to reflect the modified timesheet. Cause: Total hours in the month is a manual input on each grant's allocation sheet and is calculated by multiplying 8 hours times the total number of working days in the month. Instances in which total number of hours in the month varied across different grants were the result of management oversight. There is no documented review and approval of employee timesheets. Effect or Potential Effect: When using the incorrect basis for the number of hours during a month, MdMUSA could inadvertently charge more or less time to certain awards than was actually spent. This could result in the Federal Government over-paying for salaries associated with the award. Additionally, lack of documented supervisory review of timesheets could result in timesheets being incorrect and time not being appropriately allocated to federal awards. Questioned Costs: Not determined. Context: Our audit procedures consisted of testwork performed over various payroll transactions during the year. We consisted our testwork to be representative of the population. The condition appears to be systematic in nature. Identification as a Repeat Finding, if Applicable: Not a repeat finding. Recommendation: We recommend that MdMUSA implement a review process over each grant's monthly payroll allocation sheet. This will ensure that the total hours for the month will be accurate and consistent across all awards. Additionally, we recommend that management implement a monthly review process over employee timesheets. Employee timesheets should be reviewed by an appropriate supervisor, or by the executive director, whichever is appropriate.
Section III - Federal Award Findings and Questioned Costs (2 CFR 200.516(a)) Finding 2022-001: Payroll Allocations Information on the Federal Programs: 98.001 and 19.519 Criteria or specific requirement (including statutory, regulatory, or other citation): Under 2 CFR 200.430 all charges to federal awards for salaries and wages must be based on records that accurately reflect work performed, and these records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable and properly allocated. Condition: MdMUSA keeps a payroll allocation spreadsheet for each federal grant on a monthly basis to allocate time. MdMUSA determines percentage of time worked on each grant on the basis of hours worked during the month divided by total hours in the month. Instances were noted in which the total number of hours in a month was different for various grants in the same month. Additionally, there were instances in which employee timesheets were changed after the fact, and the finance department had to re-allocate significant values of time to reflect the modified timesheet. Cause: Total hours in the month is a manual input on each grant's allocation sheet and is calculated by multiplying 8 hours times the total number of working days in the month. Instances in which total number of hours in the month varied across different grants were the result of management oversight. There is no documented review and approval of employee timesheets. Effect or Potential Effect: When using the incorrect basis for the number of hours during a month, MdMUSA could inadvertently charge more or less time to certain awards than was actually spent. This could result in the Federal Government over-paying for salaries associated with the award. Additionally, lack of documented supervisory review of timesheets could result in timesheets being incorrect and time not being appropriately allocated to federal awards. Questioned Costs: Not determined. Context: Our audit procedures consisted of testwork performed over various payroll transactions during the year. We consisted our testwork to be representative of the population. The condition appears to be systematic in nature. Identification as a Repeat Finding, if Applicable: Not a repeat finding. Recommendation: We recommend that MdMUSA implement a review process over each grant's monthly payroll allocation sheet. This will ensure that the total hours for the month will be accurate and consistent across all awards. Additionally, we recommend that management implement a monthly review process over employee timesheets. Employee timesheets should be reviewed by an appropriate supervisor, or by the executive director, whichever is appropriate.
Section III - Federal Award Findings and Questioned Costs (2 CFR 200.516(a)) Finding 2022-001: Payroll Allocations Information on the Federal Programs: 98.001 and 19.519 Criteria or specific requirement (including statutory, regulatory, or other citation): Under 2 CFR 200.430 all charges to federal awards for salaries and wages must be based on records that accurately reflect work performed, and these records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable and properly allocated. Condition: MdMUSA keeps a payroll allocation spreadsheet for each federal grant on a monthly basis to allocate time. MdMUSA determines percentage of time worked on each grant on the basis of hours worked during the month divided by total hours in the month. Instances were noted in which the total number of hours in a month was different for various grants in the same month. Additionally, there were instances in which employee timesheets were changed after the fact, and the finance department had to re-allocate significant values of time to reflect the modified timesheet. Cause: Total hours in the month is a manual input on each grant's allocation sheet and is calculated by multiplying 8 hours times the total number of working days in the month. Instances in which total number of hours in the month varied across different grants were the result of management oversight. There is no documented review and approval of employee timesheets. Effect or Potential Effect: When using the incorrect basis for the number of hours during a month, MdMUSA could inadvertently charge more or less time to certain awards than was actually spent. This could result in the Federal Government over-paying for salaries associated with the award. Additionally, lack of documented supervisory review of timesheets could result in timesheets being incorrect and time not being appropriately allocated to federal awards. Questioned Costs: Not determined. Context: Our audit procedures consisted of testwork performed over various payroll transactions during the year. We consisted our testwork to be representative of the population. The condition appears to be systematic in nature. Identification as a Repeat Finding, if Applicable: Not a repeat finding. Recommendation: We recommend that MdMUSA implement a review process over each grant's monthly payroll allocation sheet. This will ensure that the total hours for the month will be accurate and consistent across all awards. Additionally, we recommend that management implement a monthly review process over employee timesheets. Employee timesheets should be reviewed by an appropriate supervisor, or by the executive director, whichever is appropriate.
Section III - Federal Award Findings and Questioned Costs (2 CFR 200.516(a)) Finding 2022-001: Payroll Allocations Information on the Federal Programs: 98.001 and 19.519 Criteria or specific requirement (including statutory, regulatory, or other citation): Under 2 CFR 200.430 all charges to federal awards for salaries and wages must be based on records that accurately reflect work performed, and these records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable and properly allocated. Condition: MdMUSA keeps a payroll allocation spreadsheet for each federal grant on a monthly basis to allocate time. MdMUSA determines percentage of time worked on each grant on the basis of hours worked during the month divided by total hours in the month. Instances were noted in which the total number of hours in a month was different for various grants in the same month. Additionally, there were instances in which employee timesheets were changed after the fact, and the finance department had to re-allocate significant values of time to reflect the modified timesheet. Cause: Total hours in the month is a manual input on each grant's allocation sheet and is calculated by multiplying 8 hours times the total number of working days in the month. Instances in which total number of hours in the month varied across different grants were the result of management oversight. There is no documented review and approval of employee timesheets. Effect or Potential Effect: When using the incorrect basis for the number of hours during a month, MdMUSA could inadvertently charge more or less time to certain awards than was actually spent. This could result in the Federal Government over-paying for salaries associated with the award. Additionally, lack of documented supervisory review of timesheets could result in timesheets being incorrect and time not being appropriately allocated to federal awards. Questioned Costs: Not determined. Context: Our audit procedures consisted of testwork performed over various payroll transactions during the year. We consisted our testwork to be representative of the population. The condition appears to be systematic in nature. Identification as a Repeat Finding, if Applicable: Not a repeat finding. Recommendation: We recommend that MdMUSA implement a review process over each grant's monthly payroll allocation sheet. This will ensure that the total hours for the month will be accurate and consistent across all awards. Additionally, we recommend that management implement a monthly review process over employee timesheets. Employee timesheets should be reviewed by an appropriate supervisor, or by the executive director, whichever is appropriate.
Section III - Federal Award Findings and Questioned Costs (2 CFR 200.516(a)) Finding 2022-001: Payroll Allocations Information on the Federal Programs: 98.001 and 19.519 Criteria or specific requirement (including statutory, regulatory, or other citation): Under 2 CFR 200.430 all charges to federal awards for salaries and wages must be based on records that accurately reflect work performed, and these records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable and properly allocated. Condition: MdMUSA keeps a payroll allocation spreadsheet for each federal grant on a monthly basis to allocate time. MdMUSA determines percentage of time worked on each grant on the basis of hours worked during the month divided by total hours in the month. Instances were noted in which the total number of hours in a month was different for various grants in the same month. Additionally, there were instances in which employee timesheets were changed after the fact, and the finance department had to re-allocate significant values of time to reflect the modified timesheet. Cause: Total hours in the month is a manual input on each grant's allocation sheet and is calculated by multiplying 8 hours times the total number of working days in the month. Instances in which total number of hours in the month varied across different grants were the result of management oversight. There is no documented review and approval of employee timesheets. Effect or Potential Effect: When using the incorrect basis for the number of hours during a month, MdMUSA could inadvertently charge more or less time to certain awards than was actually spent. This could result in the Federal Government over-paying for salaries associated with the award. Additionally, lack of documented supervisory review of timesheets could result in timesheets being incorrect and time not being appropriately allocated to federal awards. Questioned Costs: Not determined. Context: Our audit procedures consisted of testwork performed over various payroll transactions during the year. We consisted our testwork to be representative of the population. The condition appears to be systematic in nature. Identification as a Repeat Finding, if Applicable: Not a repeat finding. Recommendation: We recommend that MdMUSA implement a review process over each grant's monthly payroll allocation sheet. This will ensure that the total hours for the month will be accurate and consistent across all awards. Additionally, we recommend that management implement a monthly review process over employee timesheets. Employee timesheets should be reviewed by an appropriate supervisor, or by the executive director, whichever is appropriate.
Section III - Federal Award Findings and Questioned Costs (2 CFR 200.516(a)) Finding 2022-001: Payroll Allocations Information on the Federal Programs: 98.001 and 19.519 Criteria or specific requirement (including statutory, regulatory, or other citation): Under 2 CFR 200.430 all charges to federal awards for salaries and wages must be based on records that accurately reflect work performed, and these records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable and properly allocated. Condition: MdMUSA keeps a payroll allocation spreadsheet for each federal grant on a monthly basis to allocate time. MdMUSA determines percentage of time worked on each grant on the basis of hours worked during the month divided by total hours in the month. Instances were noted in which the total number of hours in a month was different for various grants in the same month. Additionally, there were instances in which employee timesheets were changed after the fact, and the finance department had to re-allocate significant values of time to reflect the modified timesheet. Cause: Total hours in the month is a manual input on each grant's allocation sheet and is calculated by multiplying 8 hours times the total number of working days in the month. Instances in which total number of hours in the month varied across different grants were the result of management oversight. There is no documented review and approval of employee timesheets. Effect or Potential Effect: When using the incorrect basis for the number of hours during a month, MdMUSA could inadvertently charge more or less time to certain awards than was actually spent. This could result in the Federal Government over-paying for salaries associated with the award. Additionally, lack of documented supervisory review of timesheets could result in timesheets being incorrect and time not being appropriately allocated to federal awards. Questioned Costs: Not determined. Context: Our audit procedures consisted of testwork performed over various payroll transactions during the year. We consisted our testwork to be representative of the population. The condition appears to be systematic in nature. Identification as a Repeat Finding, if Applicable: Not a repeat finding. Recommendation: We recommend that MdMUSA implement a review process over each grant's monthly payroll allocation sheet. This will ensure that the total hours for the month will be accurate and consistent across all awards. Additionally, we recommend that management implement a monthly review process over employee timesheets. Employee timesheets should be reviewed by an appropriate supervisor, or by the executive director, whichever is appropriate.
Section III - Federal Award Findings and Questioned Costs (2 CFR 200.516(a)) Finding 2022-001: Payroll Allocations Information on the Federal Programs: 98.001 and 19.519 Criteria or specific requirement (including statutory, regulatory, or other citation): Under 2 CFR 200.430 all charges to federal awards for salaries and wages must be based on records that accurately reflect work performed, and these records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable and properly allocated. Condition: MdMUSA keeps a payroll allocation spreadsheet for each federal grant on a monthly basis to allocate time. MdMUSA determines percentage of time worked on each grant on the basis of hours worked during the month divided by total hours in the month. Instances were noted in which the total number of hours in a month was different for various grants in the same month. Additionally, there were instances in which employee timesheets were changed after the fact, and the finance department had to re-allocate significant values of time to reflect the modified timesheet. Cause: Total hours in the month is a manual input on each grant's allocation sheet and is calculated by multiplying 8 hours times the total number of working days in the month. Instances in which total number of hours in the month varied across different grants were the result of management oversight. There is no documented review and approval of employee timesheets. Effect or Potential Effect: When using the incorrect basis for the number of hours during a month, MdMUSA could inadvertently charge more or less time to certain awards than was actually spent. This could result in the Federal Government over-paying for salaries associated with the award. Additionally, lack of documented supervisory review of timesheets could result in timesheets being incorrect and time not being appropriately allocated to federal awards. Questioned Costs: Not determined. Context: Our audit procedures consisted of testwork performed over various payroll transactions during the year. We consisted our testwork to be representative of the population. The condition appears to be systematic in nature. Identification as a Repeat Finding, if Applicable: Not a repeat finding. Recommendation: We recommend that MdMUSA implement a review process over each grant's monthly payroll allocation sheet. This will ensure that the total hours for the month will be accurate and consistent across all awards. Additionally, we recommend that management implement a monthly review process over employee timesheets. Employee timesheets should be reviewed by an appropriate supervisor, or by the executive director, whichever is appropriate.
Federal Program Research and Development Cluster Pass-through Entities University of Delaware Federal Agency U.S. Department of Health and Human Services Federal Award Number and Award Year 93.732 2M01HP31317-05 9/1/21-6/30/22 93.859 59449 7/1/21-6/30/22 Criteria In accordance with the documentation standards of 2 CFR section 200.430(i), costs of compensation for personal services are allowable to the extent the total compensation for individual employees: a) 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; b) follows an appointment made in accordance with the non-federal entity?s rules or written policies and meets the requirements of federal statute, where applicable; and c) is determined and supported as provided in 2 CFR section 200.430(i), including that charges to federal awards for salaries and wages must be based on records that accurately reflect the work performed. Per 2 CFR 200.303, a non-Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal Award. Condition and Context We identified four of 60 payroll expenditure samples where the amount recorded and submitted as an allowable expenditure under the grant exceeded the amount that should have been recorded based on the records and inputs detailing the work performed by the employees on the related programs. The value of the errors was $5,783 and the value of the sample items tested was $66,269. Possible Cause and Effect As a result of the implementation of a new payroll system in 2022, payroll expenditures of employees working on these programs were allocated via a manual process to the applicable cost centers (activity codes) based on documented time and effort allocation rates. Allocation rates were updated throughout the year as employee effort changed via multiple forms of communication including the submission of support tickets and email follow ups. Due to the manual nature of this process, increased risk of differences between recorded allocations and actual work performed arose requiring subsequent adjustment. While the Foundation recorded correcting entries and cost transfers in some instances to subsequently update certain issues that arose, there is a missing control to ensure all such entries were made completely and accurately. The effect is that potentially unallowable costs are submitted to the granting agencies as certain corrections were not made accurately and completely. Questioned Costs Known questioned costs of $5,783. Statistically Valid Sample The sample was not intended to be, and was not, a statistically valid sample. Repeat of Prior Finding No Recommendations The Foundation should standardize, centralize, and potentially automate the process by which updates to effort allocation percentages of employees working on federally funded programs are communicated and recorded. Additionally, a periodic review of these rates by the employees to which they relate, or their direct supervisors, should be implemented to detect any issues or changes that need to be made. Lastly, a process to follow up on and review the completeness and accuracy of correcting entries and cost transfers to validate all required entries are recorded appropriately should be implemented. View of Responsible Official Management agrees with the noted finding.
Federal Program Research and Development Cluster Pass-through Entities University of Delaware Federal Agency U.S. Department of Health and Human Services Federal Award Number and Award Year 93.732 2M01HP31317-05 9/1/21-6/30/22 93.859 59449 7/1/21-6/30/22 Criteria In accordance with the documentation standards of 2 CFR section 200.430(i), costs of compensation for personal services are allowable to the extent the total compensation for individual employees: a) 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; b) follows an appointment made in accordance with the non-federal entity?s rules or written policies and meets the requirements of federal statute, where applicable; and c) is determined and supported as provided in 2 CFR section 200.430(i), including that charges to federal awards for salaries and wages must be based on records that accurately reflect the work performed. Per 2 CFR 200.303, a non-Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal Award. Condition and Context We identified four of 60 payroll expenditure samples where the amount recorded and submitted as an allowable expenditure under the grant exceeded the amount that should have been recorded based on the records and inputs detailing the work performed by the employees on the related programs. The value of the errors was $5,783 and the value of the sample items tested was $66,269. Possible Cause and Effect As a result of the implementation of a new payroll system in 2022, payroll expenditures of employees working on these programs were allocated via a manual process to the applicable cost centers (activity codes) based on documented time and effort allocation rates. Allocation rates were updated throughout the year as employee effort changed via multiple forms of communication including the submission of support tickets and email follow ups. Due to the manual nature of this process, increased risk of differences between recorded allocations and actual work performed arose requiring subsequent adjustment. While the Foundation recorded correcting entries and cost transfers in some instances to subsequently update certain issues that arose, there is a missing control to ensure all such entries were made completely and accurately. The effect is that potentially unallowable costs are submitted to the granting agencies as certain corrections were not made accurately and completely. Questioned Costs Known questioned costs of $5,783. Statistically Valid Sample The sample was not intended to be, and was not, a statistically valid sample. Repeat of Prior Finding No Recommendations The Foundation should standardize, centralize, and potentially automate the process by which updates to effort allocation percentages of employees working on federally funded programs are communicated and recorded. Additionally, a periodic review of these rates by the employees to which they relate, or their direct supervisors, should be implemented to detect any issues or changes that need to be made. Lastly, a process to follow up on and review the completeness and accuracy of correcting entries and cost transfers to validate all required entries are recorded appropriately should be implemented. View of Responsible Official Management agrees with the noted finding.
Department of Health and Human Services Federal Financial Assistance Listing 93.958, All Awards Block Grants for Community Mental Health Services Activities Allowable or Unallowed, Allowable Costs/Cost Principles, and Period of Performance Material Weakness in Internal Control over Compliance and Other Noncompliance Criteria: CFR 200.430 set forth the compensation for personal services standards non-federal entities other than states must follow when operating federal programs. Condition: Washburn Center has an internal control process designed to approve and calculate the payroll expenses and allocation of time to the program, but they did not maintain support for a true up of actual time spent on the program compared to the budget. Cause: The controls in place did not operate as designed and failed to detect that support was not maintained to support actual time spent working on the program versus the budget amount. Effect: Nine employees? wages did not include support for actual time spent working on the program. Questioned Costs: No questioned costs over $25,000. Context: Nine employees, accounting for $199,840, were selected for testing for the program from a total of 28 total employees that accounted for $736,089. Repeat Finding from Prior Years: No Recommendation: We recommend the procedures related to payroll expenses be reviewed with applicable program employees to ensure the control process is properly followed and documentation is retained to support compliance with program requirements. Views of Responsible Officials: Management agrees with the finding.
Finding Number: 2022-006 Repeat Finding: Yes Type of Finding: Significant Deficiency in Internal Control and Nonmaterial Noncompliance Description: Payroll Expenditures Major Programs: AL#93.243 - Substance Abuse and Mental Health Services ? Direct Award (DHHS) ? Award numbers: 1H79SM087536-01, 1H79M087590-01, 5H79SP081724-03, 5H79SP081724-04, 5IH79SM082160-03, 5IH79SM082160-04, 6H79SP082229-01M001, 6H79SP082229-01M002, 5H79SM080189-03 AL#93.665 - Emergency Grants to Address Mental and Substance Use Disorders During COVID-19 ? Direct Award (DHHS) ? Award numbers: 6H79FG000252-01M003 and 6H79FG000689-01M004 AL#93.738 ? PPHF: Racial and Ethnic Approaches to Community Health Program financed solely by Public Prevention and Health Funds ? Direct Award (DHHS) ? Award numbers: 5NU58DP006960-02-00 and 6NU58DP006960-01-01 AL#93.772 - Tribal Public Health Capacity Building and Quality Improvement Umbrella Cooperative Agreement ? Direct Award (DHHS) ? Award numbers: 5NU38OT000257-04-00 and 5NU38OT000257-05-00 AL#93.933 ? Demonstration Projects for Indian Health ? Direct Award (DHHS) ? Award numbers: H1H5IHS001-01-01 and H1H5IHS001-02-00 Questioned Costs: None How the questioned costs were computed: N/A Compliance Requirements: Activities Allowed or Unallowed and Allowable Costs, Cost Principles Condition: Out of the sample tested, there were numerous payroll transactions where the number of hours on the timesheet for the program, was not the amount that was allocated to the grant in the general ledger. Criteria: 2 CFR 200.430(i) states that ?Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated?. Cause: The Organization does not have the proper review process in place to ensure salaries and wages allocated to grants agree to employee timesheets. Effect: Without proper reconciliation between the number of hours coded to grants on the timesheets to the allocation to the grants in the general ledger, it is possible that grants could be over or undercharged. Recommendation: We recommend that a comparison of time charged to grants on the timesheet to the amount charged to the grants in the general ledger be performed prior to payroll being processed to ensure grants are charged for the correct amount of payroll expenses. View of Responsible Officials: Management agrees with the finding and has committed to a corrective action plan.
Finding Number: 2022-006 Repeat Finding: Yes Type of Finding: Significant Deficiency in Internal Control and Nonmaterial Noncompliance Description: Payroll Expenditures Major Programs: AL#93.243 - Substance Abuse and Mental Health Services ? Direct Award (DHHS) ? Award numbers: 1H79SM087536-01, 1H79M087590-01, 5H79SP081724-03, 5H79SP081724-04, 5IH79SM082160-03, 5IH79SM082160-04, 6H79SP082229-01M001, 6H79SP082229-01M002, 5H79SM080189-03 AL#93.665 - Emergency Grants to Address Mental and Substance Use Disorders During COVID-19 ? Direct Award (DHHS) ? Award numbers: 6H79FG000252-01M003 and 6H79FG000689-01M004 AL#93.738 ? PPHF: Racial and Ethnic Approaches to Community Health Program financed solely by Public Prevention and Health Funds ? Direct Award (DHHS) ? Award numbers: 5NU58DP006960-02-00 and 6NU58DP006960-01-01 AL#93.772 - Tribal Public Health Capacity Building and Quality Improvement Umbrella Cooperative Agreement ? Direct Award (DHHS) ? Award numbers: 5NU38OT000257-04-00 and 5NU38OT000257-05-00 AL#93.933 ? Demonstration Projects for Indian Health ? Direct Award (DHHS) ? Award numbers: H1H5IHS001-01-01 and H1H5IHS001-02-00 Questioned Costs: None How the questioned costs were computed: N/A Compliance Requirements: Activities Allowed or Unallowed and Allowable Costs, Cost Principles Condition: Out of the sample tested, there were numerous payroll transactions where the number of hours on the timesheet for the program, was not the amount that was allocated to the grant in the general ledger. Criteria: 2 CFR 200.430(i) states that ?Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated?. Cause: The Organization does not have the proper review process in place to ensure salaries and wages allocated to grants agree to employee timesheets. Effect: Without proper reconciliation between the number of hours coded to grants on the timesheets to the allocation to the grants in the general ledger, it is possible that grants could be over or undercharged. Recommendation: We recommend that a comparison of time charged to grants on the timesheet to the amount charged to the grants in the general ledger be performed prior to payroll being processed to ensure grants are charged for the correct amount of payroll expenses. View of Responsible Officials: Management agrees with the finding and has committed to a corrective action plan.
Finding Number: 2022-006 Repeat Finding: Yes Type of Finding: Significant Deficiency in Internal Control and Nonmaterial Noncompliance Description: Payroll Expenditures Major Programs: AL#93.243 - Substance Abuse and Mental Health Services ? Direct Award (DHHS) ? Award numbers: 1H79SM087536-01, 1H79M087590-01, 5H79SP081724-03, 5H79SP081724-04, 5IH79SM082160-03, 5IH79SM082160-04, 6H79SP082229-01M001, 6H79SP082229-01M002, 5H79SM080189-03 AL#93.665 - Emergency Grants to Address Mental and Substance Use Disorders During COVID-19 ? Direct Award (DHHS) ? Award numbers: 6H79FG000252-01M003 and 6H79FG000689-01M004 AL#93.738 ? PPHF: Racial and Ethnic Approaches to Community Health Program financed solely by Public Prevention and Health Funds ? Direct Award (DHHS) ? Award numbers: 5NU58DP006960-02-00 and 6NU58DP006960-01-01 AL#93.772 - Tribal Public Health Capacity Building and Quality Improvement Umbrella Cooperative Agreement ? Direct Award (DHHS) ? Award numbers: 5NU38OT000257-04-00 and 5NU38OT000257-05-00 AL#93.933 ? Demonstration Projects for Indian Health ? Direct Award (DHHS) ? Award numbers: H1H5IHS001-01-01 and H1H5IHS001-02-00 Questioned Costs: None How the questioned costs were computed: N/A Compliance Requirements: Activities Allowed or Unallowed and Allowable Costs, Cost Principles Condition: Out of the sample tested, there were numerous payroll transactions where the number of hours on the timesheet for the program, was not the amount that was allocated to the grant in the general ledger. Criteria: 2 CFR 200.430(i) states that ?Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated?. Cause: The Organization does not have the proper review process in place to ensure salaries and wages allocated to grants agree to employee timesheets. Effect: Without proper reconciliation between the number of hours coded to grants on the timesheets to the allocation to the grants in the general ledger, it is possible that grants could be over or undercharged. Recommendation: We recommend that a comparison of time charged to grants on the timesheet to the amount charged to the grants in the general ledger be performed prior to payroll being processed to ensure grants are charged for the correct amount of payroll expenses. View of Responsible Officials: Management agrees with the finding and has committed to a corrective action plan.
Finding Number: 2022-006 Repeat Finding: Yes Type of Finding: Significant Deficiency in Internal Control and Nonmaterial Noncompliance Description: Payroll Expenditures Major Programs: AL#93.243 - Substance Abuse and Mental Health Services ? Direct Award (DHHS) ? Award numbers: 1H79SM087536-01, 1H79M087590-01, 5H79SP081724-03, 5H79SP081724-04, 5IH79SM082160-03, 5IH79SM082160-04, 6H79SP082229-01M001, 6H79SP082229-01M002, 5H79SM080189-03 AL#93.665 - Emergency Grants to Address Mental and Substance Use Disorders During COVID-19 ? Direct Award (DHHS) ? Award numbers: 6H79FG000252-01M003 and 6H79FG000689-01M004 AL#93.738 ? PPHF: Racial and Ethnic Approaches to Community Health Program financed solely by Public Prevention and Health Funds ? Direct Award (DHHS) ? Award numbers: 5NU58DP006960-02-00 and 6NU58DP006960-01-01 AL#93.772 - Tribal Public Health Capacity Building and Quality Improvement Umbrella Cooperative Agreement ? Direct Award (DHHS) ? Award numbers: 5NU38OT000257-04-00 and 5NU38OT000257-05-00 AL#93.933 ? Demonstration Projects for Indian Health ? Direct Award (DHHS) ? Award numbers: H1H5IHS001-01-01 and H1H5IHS001-02-00 Questioned Costs: None How the questioned costs were computed: N/A Compliance Requirements: Activities Allowed or Unallowed and Allowable Costs, Cost Principles Condition: Out of the sample tested, there were numerous payroll transactions where the number of hours on the timesheet for the program, was not the amount that was allocated to the grant in the general ledger. Criteria: 2 CFR 200.430(i) states that ?Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated?. Cause: The Organization does not have the proper review process in place to ensure salaries and wages allocated to grants agree to employee timesheets. Effect: Without proper reconciliation between the number of hours coded to grants on the timesheets to the allocation to the grants in the general ledger, it is possible that grants could be over or undercharged. Recommendation: We recommend that a comparison of time charged to grants on the timesheet to the amount charged to the grants in the general ledger be performed prior to payroll being processed to ensure grants are charged for the correct amount of payroll expenses. View of Responsible Officials: Management agrees with the finding and has committed to a corrective action plan.
Finding Number: 2022-006 Repeat Finding: Yes Type of Finding: Significant Deficiency in Internal Control and Nonmaterial Noncompliance Description: Payroll Expenditures Major Programs: AL#93.243 - Substance Abuse and Mental Health Services ? Direct Award (DHHS) ? Award numbers: 1H79SM087536-01, 1H79M087590-01, 5H79SP081724-03, 5H79SP081724-04, 5IH79SM082160-03, 5IH79SM082160-04, 6H79SP082229-01M001, 6H79SP082229-01M002, 5H79SM080189-03 AL#93.665 - Emergency Grants to Address Mental and Substance Use Disorders During COVID-19 ? Direct Award (DHHS) ? Award numbers: 6H79FG000252-01M003 and 6H79FG000689-01M004 AL#93.738 ? PPHF: Racial and Ethnic Approaches to Community Health Program financed solely by Public Prevention and Health Funds ? Direct Award (DHHS) ? Award numbers: 5NU58DP006960-02-00 and 6NU58DP006960-01-01 AL#93.772 - Tribal Public Health Capacity Building and Quality Improvement Umbrella Cooperative Agreement ? Direct Award (DHHS) ? Award numbers: 5NU38OT000257-04-00 and 5NU38OT000257-05-00 AL#93.933 ? Demonstration Projects for Indian Health ? Direct Award (DHHS) ? Award numbers: H1H5IHS001-01-01 and H1H5IHS001-02-00 Questioned Costs: None How the questioned costs were computed: N/A Compliance Requirements: Activities Allowed or Unallowed and Allowable Costs, Cost Principles Condition: Out of the sample tested, there were numerous payroll transactions where the number of hours on the timesheet for the program, was not the amount that was allocated to the grant in the general ledger. Criteria: 2 CFR 200.430(i) states that ?Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated?. Cause: The Organization does not have the proper review process in place to ensure salaries and wages allocated to grants agree to employee timesheets. Effect: Without proper reconciliation between the number of hours coded to grants on the timesheets to the allocation to the grants in the general ledger, it is possible that grants could be over or undercharged. Recommendation: We recommend that a comparison of time charged to grants on the timesheet to the amount charged to the grants in the general ledger be performed prior to payroll being processed to ensure grants are charged for the correct amount of payroll expenses. View of Responsible Officials: Management agrees with the finding and has committed to a corrective action plan.
Finding Number: 2022-006 Repeat Finding: Yes Type of Finding: Significant Deficiency in Internal Control and Nonmaterial Noncompliance Description: Payroll Expenditures Major Programs: AL#93.243 - Substance Abuse and Mental Health Services ? Direct Award (DHHS) ? Award numbers: 1H79SM087536-01, 1H79M087590-01, 5H79SP081724-03, 5H79SP081724-04, 5IH79SM082160-03, 5IH79SM082160-04, 6H79SP082229-01M001, 6H79SP082229-01M002, 5H79SM080189-03 AL#93.665 - Emergency Grants to Address Mental and Substance Use Disorders During COVID-19 ? Direct Award (DHHS) ? Award numbers: 6H79FG000252-01M003 and 6H79FG000689-01M004 AL#93.738 ? PPHF: Racial and Ethnic Approaches to Community Health Program financed solely by Public Prevention and Health Funds ? Direct Award (DHHS) ? Award numbers: 5NU58DP006960-02-00 and 6NU58DP006960-01-01 AL#93.772 - Tribal Public Health Capacity Building and Quality Improvement Umbrella Cooperative Agreement ? Direct Award (DHHS) ? Award numbers: 5NU38OT000257-04-00 and 5NU38OT000257-05-00 AL#93.933 ? Demonstration Projects for Indian Health ? Direct Award (DHHS) ? Award numbers: H1H5IHS001-01-01 and H1H5IHS001-02-00 Questioned Costs: None How the questioned costs were computed: N/A Compliance Requirements: Activities Allowed or Unallowed and Allowable Costs, Cost Principles Condition: Out of the sample tested, there were numerous payroll transactions where the number of hours on the timesheet for the program, was not the amount that was allocated to the grant in the general ledger. Criteria: 2 CFR 200.430(i) states that ?Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated?. Cause: The Organization does not have the proper review process in place to ensure salaries and wages allocated to grants agree to employee timesheets. Effect: Without proper reconciliation between the number of hours coded to grants on the timesheets to the allocation to the grants in the general ledger, it is possible that grants could be over or undercharged. Recommendation: We recommend that a comparison of time charged to grants on the timesheet to the amount charged to the grants in the general ledger be performed prior to payroll being processed to ensure grants are charged for the correct amount of payroll expenses. View of Responsible Officials: Management agrees with the finding and has committed to a corrective action plan.
Finding Number: 2022-006 Repeat Finding: Yes Type of Finding: Significant Deficiency in Internal Control and Nonmaterial Noncompliance Description: Payroll Expenditures Major Programs: AL#93.243 - Substance Abuse and Mental Health Services ? Direct Award (DHHS) ? Award numbers: 1H79SM087536-01, 1H79M087590-01, 5H79SP081724-03, 5H79SP081724-04, 5IH79SM082160-03, 5IH79SM082160-04, 6H79SP082229-01M001, 6H79SP082229-01M002, 5H79SM080189-03 AL#93.665 - Emergency Grants to Address Mental and Substance Use Disorders During COVID-19 ? Direct Award (DHHS) ? Award numbers: 6H79FG000252-01M003 and 6H79FG000689-01M004 AL#93.738 ? PPHF: Racial and Ethnic Approaches to Community Health Program financed solely by Public Prevention and Health Funds ? Direct Award (DHHS) ? Award numbers: 5NU58DP006960-02-00 and 6NU58DP006960-01-01 AL#93.772 - Tribal Public Health Capacity Building and Quality Improvement Umbrella Cooperative Agreement ? Direct Award (DHHS) ? Award numbers: 5NU38OT000257-04-00 and 5NU38OT000257-05-00 AL#93.933 ? Demonstration Projects for Indian Health ? Direct Award (DHHS) ? Award numbers: H1H5IHS001-01-01 and H1H5IHS001-02-00 Questioned Costs: None How the questioned costs were computed: N/A Compliance Requirements: Activities Allowed or Unallowed and Allowable Costs, Cost Principles Condition: Out of the sample tested, there were numerous payroll transactions where the number of hours on the timesheet for the program, was not the amount that was allocated to the grant in the general ledger. Criteria: 2 CFR 200.430(i) states that ?Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated?. Cause: The Organization does not have the proper review process in place to ensure salaries and wages allocated to grants agree to employee timesheets. Effect: Without proper reconciliation between the number of hours coded to grants on the timesheets to the allocation to the grants in the general ledger, it is possible that grants could be over or undercharged. Recommendation: We recommend that a comparison of time charged to grants on the timesheet to the amount charged to the grants in the general ledger be performed prior to payroll being processed to ensure grants are charged for the correct amount of payroll expenses. View of Responsible Officials: Management agrees with the finding and has committed to a corrective action plan.
Finding No. 2022-002 ? Allocation of Payroll Costs to Government Grant Programs Federal Agency: Department of Education Federal Program: 84.235F Rehabilitation Services Demonstration and Training Program Type of Finding: Material Weakness in Internal Control over Compliance Material Weakness in Internal Control over Financial Reporting Finding: Internal control processes over compliance did not ensure all payroll and labor costs were allocated in a consistent manner to grant programs. Criteria: Per guidance: 2 CFR 200.430, (i) Standards for Documentation of Personnel Expenses, (1) Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Condition and context: The Organization paid bonuses to employees and allocated those costs to the federal and other government grant programs based upon criteria other than time and effort for actual work performed. These costs were allocated without obtaining a certification of the bonus allocation from staff members. Internal controls were not properly designed to allocate one-time payroll costs in accordance with the requirements of the Uniform Guidance. Sample Size and Population: Sampling was not applicable to this finding. Cause: The Organization?s internal controls over bi-monthly payroll allocation were not applied to bonus allocations. Effect: Payroll cost allocations not based on actual time and effort expended can result in unallowable costs charged to federal and other government grant programs. Questioned Costs: $5,000 Recommendation: Management and those charged with governance should consider increasing the controls around the allocation of payroll costs to ensure allocation is made based upon actual time and effort expended, and that a certification of time allocations is obtained from all employees in a timely and consistent manner, including one-time payroll bonuses and any time allocated to programs which is not eligible for reimbursement. Views of Management and Corrective Action Plan: Management?s response is reported in the ?Corrective Action Plan? at the end of this report. Contact Person: Ginger Kwan, Executive Director
Finding 2022-002 – Allowable Costs/Cost Principles U.S. Department of Health and Human Services – Passed through DHS – Title IV-E Foster Care (ALN 93.658) Condition: During our audit, it was noted that there was no process in place to ensure that payroll costs allocated to the Title IV-E Foster Care program was in accordance with the Uniform Guidance. During our testing, we noted that payroll was allocated based on a semi-annual time study. The time study was used to allocate the payroll costs for the year, without determining if the semi-annual periods were representative of the time worked by employees for the remainder of the year. Criteria: The Code of Federal Regulations (2 CFR 200.430) requires that payroll costs be allocated in an equitable manner. Cause: The County Children’s Services department does not have adequate procedures in place to verify that payroll costs are allocated in an equitable manner in accordance with the Uniform Guidance. Effect: The County Children’s Services department may not be allocating payroll costs equitably. Questioned Costs: The amount of reimbursable questioned costs, if any, is not able to be determined. Recommendation: We recommend that the County Children’s Services department establish procedures that provide a system and related documentation to support an equitable allocation of payroll costs. Views of Responsible Official: Management agrees with the finding. See Corrective Action Plan.
Finding 2022-002 – Allowable Costs/Cost Principles U.S. Department of Health and Human Services – Passed through DHS – Title IV-E Foster Care (ALN 93.658) Condition: During our audit, it was noted that there was no process in place to ensure that payroll costs allocated to the Title IV-E Foster Care program was in accordance with the Uniform Guidance. During our testing, we noted that payroll was allocated based on a semi-annual time study. The time study was used to allocate the payroll costs for the year, without determining if the semi-annual periods were representative of the time worked by employees for the remainder of the year. Criteria: The Code of Federal Regulations (2 CFR 200.430) requires that payroll costs be allocated in an equitable manner. Cause: The County Children’s Services department does not have adequate procedures in place to verify that payroll costs are allocated in an equitable manner in accordance with the Uniform Guidance. Effect: The County Children’s Services department may not be allocating payroll costs equitably. Questioned Costs: The amount of reimbursable questioned costs, if any, is not able to be determined. Recommendation: We recommend that the County Children’s Services department establish procedures that provide a system and related documentation to support an equitable allocation of payroll costs. Views of Responsible Official: Management agrees with the finding. See Corrective Action Plan.
Finding 2022-002 – Allowable Costs/Cost Principles U.S. Department of Health and Human Services – Passed through DHS – Title IV-E Foster Care (ALN 93.658) Condition: During our audit, it was noted that there was no process in place to ensure that payroll costs allocated to the Title IV-E Foster Care program was in accordance with the Uniform Guidance. During our testing, we noted that payroll was allocated based on a semi-annual time study. The time study was used to allocate the payroll costs for the year, without determining if the semi-annual periods were representative of the time worked by employees for the remainder of the year. Criteria: The Code of Federal Regulations (2 CFR 200.430) requires that payroll costs be allocated in an equitable manner. Cause: The County Children’s Services department does not have adequate procedures in place to verify that payroll costs are allocated in an equitable manner in accordance with the Uniform Guidance. Effect: The County Children’s Services department may not be allocating payroll costs equitably. Questioned Costs: The amount of reimbursable questioned costs, if any, is not able to be determined. Recommendation: We recommend that the County Children’s Services department establish procedures that provide a system and related documentation to support an equitable allocation of payroll costs. Views of Responsible Official: Management agrees with the finding. See Corrective Action Plan.
Finding 2022-002 – Allowable Costs/Cost Principles U.S. Department of Health and Human Services – Passed through DHS – Title IV-E Foster Care (ALN 93.658) Condition: During our audit, it was noted that there was no process in place to ensure that payroll costs allocated to the Title IV-E Foster Care program was in accordance with the Uniform Guidance. During our testing, we noted that payroll was allocated based on a semi-annual time study. The time study was used to allocate the payroll costs for the year, without determining if the semi-annual periods were representative of the time worked by employees for the remainder of the year. Criteria: The Code of Federal Regulations (2 CFR 200.430) requires that payroll costs be allocated in an equitable manner. Cause: The County Children’s Services department does not have adequate procedures in place to verify that payroll costs are allocated in an equitable manner in accordance with the Uniform Guidance. Effect: The County Children’s Services department may not be allocating payroll costs equitably. Questioned Costs: The amount of reimbursable questioned costs, if any, is not able to be determined. Recommendation: We recommend that the County Children’s Services department establish procedures that provide a system and related documentation to support an equitable allocation of payroll costs. Views of Responsible Official: Management agrees with the finding. See Corrective Action Plan.
Finding 2022-002 – Allowable Costs/Cost Principles U.S. Department of Health and Human Services – Passed through DHS – Title IV-E Foster Care (ALN 93.658) Condition: During our audit, it was noted that there was no process in place to ensure that payroll costs allocated to the Title IV-E Foster Care program was in accordance with the Uniform Guidance. During our testing, we noted that payroll was allocated based on a semi-annual time study. The time study was used to allocate the payroll costs for the year, without determining if the semi-annual periods were representative of the time worked by employees for the remainder of the year. Criteria: The Code of Federal Regulations (2 CFR 200.430) requires that payroll costs be allocated in an equitable manner. Cause: The County Children’s Services department does not have adequate procedures in place to verify that payroll costs are allocated in an equitable manner in accordance with the Uniform Guidance. Effect: The County Children’s Services department may not be allocating payroll costs equitably. Questioned Costs: The amount of reimbursable questioned costs, if any, is not able to be determined. Recommendation: We recommend that the County Children’s Services department establish procedures that provide a system and related documentation to support an equitable allocation of payroll costs. Views of Responsible Official: Management agrees with the finding. See Corrective Action Plan.
Type of Finding: Material Weakness in Internal Control over Compliance and Material Noncompliance Federal Agency: U.S. Department of Health and Human Services Federal Program Name: Substance Abuse and Mental Health Services Projects of Regional and National Significance Assistance Listing Number: 93.243 Federal Award Identification Number and Year: H79TI081935 – 2022, H79TI080298 – 2022, H79TI085517 – 2022 Pass-Through Agency: Pierce County Pass-Through Number(s): SC-107323, SC-105454, SC-110121 Award Period: May 31, 2019 through May 30, 2024, September 30, 2017 through September 29, 2022, September 30, 2022 through September 30, 2027 Criteria or specific requirement: 2 CFR 200.430(i)(1)(viii) states that “budget estimates (i.e., estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that: (A) The system for establishing the estimates produces reasonable approximations of the activity actually performed; (B) Significant changes in the corresponding work activity (as defined by the non-Federal entity's written policies) are identified and entered into the records in a timely manner. Short term (such as one or two months) fluctuation between workload categories need not be considered as long as the distribution of salaries and wages is reasonable over the longer term; and (C) The non-Federal entity's system of internal controls includes processes to review after-the-fact interim changes made to a Federal award based on budget estimates. All necessary adjustments must be made such that the final amount charged to the Federal award is accurate, allowable, and properly allocated.” Condition: Grant hours are not consistently tracked on the employee monthly timesheet. Wages charged to the program are based on budgeted estimates. Per 2 CFR 200.430(i)(1)(viii), this is not allowed without additional steps to ensure accuracy, allowability and proper allocation. Insufficient evidence was presented to support a reasonable reflection of employee federal and non-federal activity. The alliance does not have a written policy nor system of internal controls to review and true-up grant wages to actual. Questioned costs: $447,634 Context: A sample of 40 was made from a population of 504 transactions charged to the major program for salaries and benefit expenses. Of the 40 sampled costs, all were found to be out of compliance with the provisions for 2 CFR 200.430 Compensation - personal services of Uniform Guidance. Sampled wages totaled $137,021.54. Total salaries and wages totaled $971,744 of the $1,599,883 tracked to the major program. Extrapolating the error to the actual costs reported on the SEFA results in a likely questioned cost amount of $447,634. Cause: Management was aware that estimated budgeted costs alone are not sufficient to support personnel costs charged to Federal awards. Effect: Charging grant wages based on estimates rather than actual hours worked on the program may raise compliance concerns. Estimating grant wages without adequate support for time and effort documentation may result in noncompliance with grant regulations. This can also lead to overcharging or undercharging the federal grant, which may result in penalties or repayment obligations. Repeat Finding: No. Recommendation: We recommend that the Alliance incorporate a system of internal controls that clearly documents the time and effort that each individual employee spends on each grant per month. This can be done by adjusting the format of the monthly timesheet to include a column that specifies how many hours per day were spent on which federal and nonfederal activities. PCA can further enhance clarity, accountability, and transparency by moving from a "day" format to an "hour" format on their timesheets. Views of responsible officials: Management has provide a response to the finding in their Corrective Action Plan.
Type of Finding: Material Weakness in Internal Control over Compliance and Material Noncompliance Federal Agency: U.S. Department of Health and Human Services Federal Program Name: Substance Abuse and Mental Health Services Projects of Regional and National Significance Assistance Listing Number: 93.243 Federal Award Identification Number and Year: H79TI081935 – 2022, H79TI080298 – 2022, H79TI085517 – 2022 Pass-Through Agency: Pierce County Pass-Through Number(s): SC-107323, SC-105454, SC-110121 Award Period: May 31, 2019 through May 30, 2024, September 30, 2017 through September 29, 2022, September 30, 2022 through September 30, 2027 Criteria or specific requirement: 2 CFR 200.430(i)(1)(viii) states that “budget estimates (i.e., estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that: (A) The system for establishing the estimates produces reasonable approximations of the activity actually performed; (B) Significant changes in the corresponding work activity (as defined by the non-Federal entity's written policies) are identified and entered into the records in a timely manner. Short term (such as one or two months) fluctuation between workload categories need not be considered as long as the distribution of salaries and wages is reasonable over the longer term; and (C) The non-Federal entity's system of internal controls includes processes to review after-the-fact interim changes made to a Federal award based on budget estimates. All necessary adjustments must be made such that the final amount charged to the Federal award is accurate, allowable, and properly allocated.” Condition: Grant hours are not consistently tracked on the employee monthly timesheet. Wages charged to the program are based on budgeted estimates. Per 2 CFR 200.430(i)(1)(viii), this is not allowed without additional steps to ensure accuracy, allowability and proper allocation. Insufficient evidence was presented to support a reasonable reflection of employee federal and non-federal activity. The alliance does not have a written policy nor system of internal controls to review and true-up grant wages to actual. Questioned costs: $447,634 Context: A sample of 40 was made from a population of 504 transactions charged to the major program for salaries and benefit expenses. Of the 40 sampled costs, all were found to be out of compliance with the provisions for 2 CFR 200.430 Compensation - personal services of Uniform Guidance. Sampled wages totaled $137,021.54. Total salaries and wages totaled $971,744 of the $1,599,883 tracked to the major program. Extrapolating the error to the actual costs reported on the SEFA results in a likely questioned cost amount of $447,634. Cause: Management was aware that estimated budgeted costs alone are not sufficient to support personnel costs charged to Federal awards. Effect: Charging grant wages based on estimates rather than actual hours worked on the program may raise compliance concerns. Estimating grant wages without adequate support for time and effort documentation may result in noncompliance with grant regulations. This can also lead to overcharging or undercharging the federal grant, which may result in penalties or repayment obligations. Repeat Finding: No. Recommendation: We recommend that the Alliance incorporate a system of internal controls that clearly documents the time and effort that each individual employee spends on each grant per month. This can be done by adjusting the format of the monthly timesheet to include a column that specifies how many hours per day were spent on which federal and nonfederal activities. PCA can further enhance clarity, accountability, and transparency by moving from a "day" format to an "hour" format on their timesheets. Views of responsible officials: Management has provide a response to the finding in their Corrective Action Plan.
Type of Finding: Material Weakness in Internal Control over Compliance and Material Noncompliance Federal Agency: U.S. Department of Health and Human Services Federal Program Name: Substance Abuse and Mental Health Services Projects of Regional and National Significance Assistance Listing Number: 93.243 Federal Award Identification Number and Year: H79TI081935 – 2022, H79TI080298 – 2022, H79TI085517 – 2022 Pass-Through Agency: Pierce County Pass-Through Number(s): SC-107323, SC-105454, SC-110121 Award Period: May 31, 2019 through May 30, 2024, September 30, 2017 through September 29, 2022, September 30, 2022 through September 30, 2027 Criteria or specific requirement: 2 CFR 200.430(i)(1)(viii) states that “budget estimates (i.e., estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that: (A) The system for establishing the estimates produces reasonable approximations of the activity actually performed; (B) Significant changes in the corresponding work activity (as defined by the non-Federal entity's written policies) are identified and entered into the records in a timely manner. Short term (such as one or two months) fluctuation between workload categories need not be considered as long as the distribution of salaries and wages is reasonable over the longer term; and (C) The non-Federal entity's system of internal controls includes processes to review after-the-fact interim changes made to a Federal award based on budget estimates. All necessary adjustments must be made such that the final amount charged to the Federal award is accurate, allowable, and properly allocated.” Condition: Grant hours are not consistently tracked on the employee monthly timesheet. Wages charged to the program are based on budgeted estimates. Per 2 CFR 200.430(i)(1)(viii), this is not allowed without additional steps to ensure accuracy, allowability and proper allocation. Insufficient evidence was presented to support a reasonable reflection of employee federal and non-federal activity. The alliance does not have a written policy nor system of internal controls to review and true-up grant wages to actual. Questioned costs: $447,634 Context: A sample of 40 was made from a population of 504 transactions charged to the major program for salaries and benefit expenses. Of the 40 sampled costs, all were found to be out of compliance with the provisions for 2 CFR 200.430 Compensation - personal services of Uniform Guidance. Sampled wages totaled $137,021.54. Total salaries and wages totaled $971,744 of the $1,599,883 tracked to the major program. Extrapolating the error to the actual costs reported on the SEFA results in a likely questioned cost amount of $447,634. Cause: Management was aware that estimated budgeted costs alone are not sufficient to support personnel costs charged to Federal awards. Effect: Charging grant wages based on estimates rather than actual hours worked on the program may raise compliance concerns. Estimating grant wages without adequate support for time and effort documentation may result in noncompliance with grant regulations. This can also lead to overcharging or undercharging the federal grant, which may result in penalties or repayment obligations. Repeat Finding: No. Recommendation: We recommend that the Alliance incorporate a system of internal controls that clearly documents the time and effort that each individual employee spends on each grant per month. This can be done by adjusting the format of the monthly timesheet to include a column that specifies how many hours per day were spent on which federal and nonfederal activities. PCA can further enhance clarity, accountability, and transparency by moving from a "day" format to an "hour" format on their timesheets. Views of responsible officials: Management has provide a response to the finding in their Corrective Action Plan.
Federal Agency: U.S. Department of the Treasury Federal Program Name: Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027 Federal Award Identification Number and Year: N/A Pass-Through Agency: State of Arizona, the Office of the Governor Pass-Through Number(s): GR-ARPA-AHCA-050122-01 Award Period: May 1, 2022 - June 30, 2024 Type of Finding: Significant Deficiency in Internal Control over Compliance and Other Matters Condition/Context: Although management had processes and procedures in place to allocate budgeted employee time and costs to their grant award program, management either did not maintain or did not perform procedure to formally track employees' actual time and effort. Criteria or specific requirement: In accordance with the Compliance Supplement, Part 6 – Internal Control, 2 CFR section 200.303 requires that nonfederal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the nonfederal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. In accordance with 2 CFR 200.430 (a), 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: (1) 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; (2) Follows an appointment made in accordance with a non-Federal entity's laws and/or rules or written policies and meets the requirements of Federal statute, where applicable; and (3) Is determined and supported as provided in paragraph (i) of this section, when applicable. In accordance with 2 CFR 200.430 (g), for compensation to members of nonprofit organizations, trustees, directors, associates, officers, or the immediate families thereof, determination must be made that such compensation is reasonable for the actual personal services rendered rather than a distribution of earnings in excess of costs. This may include director's and executive committee member's fees, incentive awards, allowances for off-site pay, incentive pay, location allowances, hardship pay, and cost-of-living differentials. Questioned costs: None. Cause: The Organization did not have established internal controls and policies over the documentation of time and effort related to payroll disbursements. Because of the limited number of staff participating in the grant, management was aware that the actual time spent by employees met or exceeded the budgeted allocations. Effect: The Organization was not in compliance with the Compliance Supplement and the Code of Federal Regulations related to the documentation of time and effort provisions for payroll disbursements. Repeat Finding: No Recommendation: We recommend that the Association adopt a formal policy for tracking employee time and effort supporting grant expenses. Additionally, management should summarize the actual time employees spend on grant award programs and adjust the budgeted cost allocations to reflect the actual time spent. A second person knowledgeable of grant award requirements should review the time and effort summaries for proper completion and recording. This will help ensure that internal controls over compliance are established and will help ensure that cost charged to grant award programs are supported and allowable. Views of responsible officials: Management agrees with the audit condition.
(2022-003) Allowable Costs Federal Agency: U.S. Department of Treasury CFDA No.: 21.027 Federal Program: Coronavirus State and Local Fiscal Recovery Funds Federal Award Year: 2022 Control Category: Allowable Costs Questioned Costs: $118,513 Condition The Center charged payroll expenses to the program based an allocation and did not adjust the charges to reconcile to actual time documents per employee timesheets. Criteria 2 CFR 200.430(i), Standards for Documentation of Personnel Expenses, states, in part: “Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed…” Charges 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;…” And “budget estimates (i.e., estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards.” Cause The Center's calculation of payroll charged to the grant is not reconciled to the actual hours reported by the employee on their individual timesheet. Effect Payroll costs charged to the program were greater than amounts supported by the documentation Questioned Costs There were questioned costs in the amount of $19,688 for the sample selected, which was extrapolated to $118,513 when the error rate was applied to the personnel costs not tested. Recommendation We recommend that the Center charge time to the program based on actual hours worked per the employees' timesheets. Management Response Personnel costs will be charged to the program based on actual time recorded in the organization’s case management software. Hours will be audited quarterly to ensure accuracy and completeness. The Center notes that the grantor, the State Bar of California, never requested the Center to charge payroll expenses to the program based on actual time documents, nor had they ever noted this discrepancy during their periodic audits of the program.