(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.
Finding 2022–002: Internal Controls over Allowable Costs Federal Department: U.S. Department of Treasury Pass-through Agencies: Cook County, Illinois and Women's Business Development Center COVID-19 - Coronavirus State and Local Fiscal Recovery Funds, Federal Assistance Listing Number 21.027 Criteria 2 CFR Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, Subpart D – Post-Federal Award Requirements Standards for Financial and Program Management Section 200.303, Internal controls states “The non-Federal” entity must: (1) establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and terms and conditions of the Federal award. Section 200.430 (i) Standards for Documentation of Personnel Expenses states (1) Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (ii) Be incorporated into the official records of the non-Federal entity; (iii) Reasonably reflect the total activity for which the employee is compensated by the non-Federal entity, not exceeding 100% of compensated activities…; (v) Comply with the established accounting policies and practices of the non-Federal entity. Condition During the current audit period, SDA did not maintain adequate controls over allowable costs related to its federally funded program. Cause Based on our discussions with management, this finding occurred due to staff turnovers. This resulted in consistent documentation not maintained to support the approval of invoices and related expenditures charged to the program. Effect The failure to maintain adequate documentation to verify that expenditures are properly reviewed and approved and to maintain adequate supporting documentation to ensure all payroll expenditures are reasonable and properly reviewed is a violation of federal regulations, which could result in unallowed costs being charged to the federally funded program. Questioned Costs We noted total questioned costs of $2,666. Context During our review of 45 expenditures (from a 326 population), we noted seven expenditures had no evidence of invoice approval prior to payment. From our review of these expenditures and related invoices, we did not note any costs that were deemed to be unallowed per the grantor(s) requirements and federal regulations. During our test of payroll, we noted two employees were charged to the grant with expenditures totaling $4,833. For one employee tested, we noted no evidence, such as time and effort reporting, to determine whether the employee worked on this grant and to support the amount of $2,666 charged to the program. Identification of Repeated Findings Repeated (Prior Finding No. 2021-002, 2020-002). Recommendation We recommend that SDA implement procedures to ensure all expenditures are properly reviewed and approved, and supporting documentation maintained in accordance with federal regulations. Views of Responsible Officials and Planned Corrective Action SDA agrees with the finding and recommendation. See SDA’s Corrective Action Plan on pages 40–44.
Finding 2022–002: Internal Controls over Allowable Costs Federal Department: U.S. Department of Treasury Pass-through Agencies: Cook County, Illinois and Women's Business Development Center COVID-19 - Coronavirus State and Local Fiscal Recovery Funds, Federal Assistance Listing Number 21.027 Criteria 2 CFR Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, Subpart D – Post-Federal Award Requirements Standards for Financial and Program Management Section 200.303, Internal controls states “The non-Federal” entity must: (1) establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and terms and conditions of the Federal award. Section 200.430 (i) Standards for Documentation of Personnel Expenses states (1) Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (ii) Be incorporated into the official records of the non-Federal entity; (iii) Reasonably reflect the total activity for which the employee is compensated by the non-Federal entity, not exceeding 100% of compensated activities…; (v) Comply with the established accounting policies and practices of the non-Federal entity. Condition During the current audit period, SDA did not maintain adequate controls over allowable costs related to its federally funded program. Cause Based on our discussions with management, this finding occurred due to staff turnovers. This resulted in consistent documentation not maintained to support the approval of invoices and related expenditures charged to the program. Effect The failure to maintain adequate documentation to verify that expenditures are properly reviewed and approved and to maintain adequate supporting documentation to ensure all payroll expenditures are reasonable and properly reviewed is a violation of federal regulations, which could result in unallowed costs being charged to the federally funded program. Questioned Costs We noted total questioned costs of $2,666. Context During our review of 45 expenditures (from a 326 population), we noted seven expenditures had no evidence of invoice approval prior to payment. From our review of these expenditures and related invoices, we did not note any costs that were deemed to be unallowed per the grantor(s) requirements and federal regulations. During our test of payroll, we noted two employees were charged to the grant with expenditures totaling $4,833. For one employee tested, we noted no evidence, such as time and effort reporting, to determine whether the employee worked on this grant and to support the amount of $2,666 charged to the program. Identification of Repeated Findings Repeated (Prior Finding No. 2021-002, 2020-002). Recommendation We recommend that SDA implement procedures to ensure all expenditures are properly reviewed and approved, and supporting documentation maintained in accordance with federal regulations. Views of Responsible Officials and Planned Corrective Action SDA agrees with the finding and recommendation. See SDA’s Corrective Action Plan on pages 40–44.
Item: 2022-003 Assistance Listing Number: 93.940 Programs: HIV Prevention Activities Federal Agency: U.S. Department of Health and Human Services Pass-Through Agencies: Arizona Department of Health Services Pass-Through Grantor Identifying Number: 252026/152034/152035 Award Year: January 1, 2022 to December 31, 2022; April 1, 2021 to July 15, 2022; August 1, 2022 to July 31, 2023 Compliance Requirement: Allowable Activities and Costs Criteria: In accordance with 2 CFR § 200.430 – Compensation – charges to federal programs for salaries and wages should be supported by a system of internal controls which provides reasonable assurance the amounts charged are accurate, allowable and properly allocated. Condition: The entity’s system of internal controls did not retain contemporaneous documentation of supervisory review over payroll allocations charged to the federal programs. Questioned Costs: n/a Context: In a population of over 250 payroll costs charged to the program, we conducted a non-statistical sample of 40 payroll costs charged to the program. In our sample of 40, we noted that 23 selections were charged to the program based on an allocation process. Payroll records and the nature of the Organization's programs evidenced that allowable cost and activities occurred. Recordkeeping regarding the supervisory review of the allocations was inadequate. As such, this is deemed to be a material weakness in internal control over compliance. Effect: The system of internal controls was not properly implemented. Cause: Turnover within key positions of the organization resulted in insufficient documentation and/or inadequate implementation of the control procedures. Identification as a Repeat Finding: Repeat finding Recommendation: The Organization should enhance it processes and controls to ensure that supervisory review of the payroll allocations is evidenced within the Organization’s books and records. Views of Responsible Officials: Management of the Organization concurs with the finding. See Corrective Action Plan.
Item: 2022-004 Assistance Listing Number: 93.940 Programs: HIV Prevention Activities Federal Agency: U.S. Department of Health and Human Services Pass-Through Agencies: Arizona Department of Health Services Pass-Through Grantor Identifying Number: 252026/152034/152035 Award Year: January 1, 2022 to December 31, 2022; April 1, 2021 to July 15, 2022; August 1, 2022 to July 31, 2023 Compliance Requirement: Allowable Activities and Costs Criteria: In accordance with 2 CFR § 200.430 – Compensation – charges to federal programs for salaries and wages should be supported by a system of internal controls which provides reasonable assurance the amounts charged are accurate, allowable and properly allocated. Condition: The entity’s system of internal controls did detect, or document the rationale for, instances in which the amounts charged to a federal program did not agree to the underlying supporting documentation maintained by the Organization. Questioned Costs: n/a Context: In a population of over 250 payroll costs charged to the program, we conducted a non-statistical sample of 40 payroll costs charged to the program. In our sample of 40, we noted that 2 selections were charged to the program for amounts that did not agree to the underlying supporting documentation maintained by the Organization. The variances between the amounts charged and the amounts supported, as well as the projected impact to the entire population, were trivial in nature. However, the deviation rate in the control objective resulted in the conclusion that this is deemed to be a material weakness in internal control over compliance. Effect: The system of internal controls was not properly implemented. Cause: Turnover within key positions of the organization resulted in insufficient documentation and/or inadequate implementation of the control procedures. Identification as a Repeat Finding: Not a repeat finding Recommendation: The Organization should enhance its processes and controls to ensure that differences between the amounts billed to federal awards and the underlying supporting documentation are thoroughly investigated. If the differences are justifiable, the justification should be documented and retained. If the differences are in error, the billing should be corrected prior to submission. Views of Responsible Officials: Management of the Organization concurs with the finding. See Corrective Action Plan.
U. S. Department of Health and Human Services 2022-002 Allowable Costs Program(s) Name of Federal Program (Assistance Listing Number) Urban Indian Health Services (93.193) Special Diabetes Program for Indians - Diabetes Prevention and Treatment Projects (93.237) Criteria - Recipients of federal awards must follow the costs principles set out at 2 CFR section 200.430 to substantiate compensation and other purchases charged to a federal program. “Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: …(iii) reasonable reflect the total activity for which the employee is compensated by the non-Federal entity” 2 CFR section 200.430(i). The Organization’s processes did not maintain sufficient documentation of the approval of the activity of each employee or the purchase of goods/services for the programs identified above. Context and Condition - We selected 27 paychecks from three pay periods to test for compliance with standards in these two programs. Records for six of the paychecks tested lacked documentation of approval of the employee’s supervisor. We also selected 16 transactions for purchased goods and services to test compliance with standards in these two programs. Records for two transactions tested lacked documentation of approval by the program director. Cause - The Organization replaced its payroll processing servicer subsequent to 2022. Access to certain records from the prior servicer were no longer available. Personnel turnover resulting in inconsistencies in maintaining required documentation. Effect - A federal program could be charged compensation for employees who did not provide services directly attributable to the program or charged for goods/services not related to the program. Questioned Costs - No costs were questioned. Repeat finding - No Statistically valid - Yes Recommendation - We recommend the Organization ensure it 1) maintains records of each employee’s activity and 2) monitors compliance with the job-costing system implemented. Views of responsible officials - The Organization believes the paychecks and purchases identified were approved prior to payment. We will ensure that documentation is downloaded each pay period to ensure such documentation is not lost when a change in servicer is made.
U. S. Department of Health and Human Services 2022-002 Allowable Costs Program(s) Name of Federal Program (Assistance Listing Number) Urban Indian Health Services (93.193) Special Diabetes Program for Indians - Diabetes Prevention and Treatment Projects (93.237) Criteria - Recipients of federal awards must follow the costs principles set out at 2 CFR section 200.430 to substantiate compensation and other purchases charged to a federal program. “Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: …(iii) reasonable reflect the total activity for which the employee is compensated by the non-Federal entity” 2 CFR section 200.430(i). The Organization’s processes did not maintain sufficient documentation of the approval of the activity of each employee or the purchase of goods/services for the programs identified above. Context and Condition - We selected 27 paychecks from three pay periods to test for compliance with standards in these two programs. Records for six of the paychecks tested lacked documentation of approval of the employee’s supervisor. We also selected 16 transactions for purchased goods and services to test compliance with standards in these two programs. Records for two transactions tested lacked documentation of approval by the program director. Cause - The Organization replaced its payroll processing servicer subsequent to 2022. Access to certain records from the prior servicer were no longer available. Personnel turnover resulting in inconsistencies in maintaining required documentation. Effect - A federal program could be charged compensation for employees who did not provide services directly attributable to the program or charged for goods/services not related to the program. Questioned Costs - No costs were questioned. Repeat finding - No Statistically valid - Yes Recommendation - We recommend the Organization ensure it 1) maintains records of each employee’s activity and 2) monitors compliance with the job-costing system implemented. Views of responsible officials - The Organization believes the paychecks and purchases identified were approved prior to payment. We will ensure that documentation is downloaded each pay period to ensure such documentation is not lost when a change in servicer is made.
Federal Program: Section 223 Demonstration Programs to Improve Community Mental Health Services Federal Agency: U.S. Department of Health and Human Services Pass-Through Entity: Not Applicable Assistance Listing Number (ALN): 93.829 Federal Award Number: H79SM083269 Federal Award Year: December 31, 2022 Criteria: 2 CFR 200.430(i)(1)(i) & (vii) state 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; and support the distribution of the employee's salary or wages among specific activities or cost objectives if the employee works on more than one federal award, or a federal award and non-federal award Condition/Context: Six of the twenty-five personnel transactions that were tested did not have evidence of approval for the amount allocated to the federal program. The Organization experienced an unusually elevated level of turn-over of key personnel in business operations during the period of time that the control procedures lapsed as the individuals replacing those responsible for attaining allocation authorizations were not yet hired or fully trained in their assignments. The sample was not a statistically valid sample. Cause: The Organization's control process for monthly program allocation authorizations was not properly implemented during the months of May and June of 2022. Effect: Inadequate controls over the allocation of costs could result in unallowable costs being improperly applied to the federal program. Questioned Costs: None noted Recommendation: The Organization should have formal written procedure to ensure that all relevant authorization and reviews have been completed before allocating costs to federal programs. Views of responsible officials: Management agrees with the auditors' finding and will take action to implement controlling procedures over federal programs.
#2022-002 – Material Weakness – Allowable Costs/Cost Principles Opioid STR Grant ALN 93.788 Block Grants for Prevention and Treatment of Substance Abuse 93.959 Criteria The Office of Management and Budget issuance of the Code of Federal Regulations (CFR) specifically states uniform administrative requirements, cost principles, and audit requirements for federal awards. CFR 200.430 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 control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated.” Condition During the course of the audit, we noted that the Organization used an allocation methodology to allocate salaries to the federal award based upon time spent on the program. However, for 54 employee time periods, there were no timesheets to support the amount of time allocated to the Organization’s grant programs. Cause The cause is a lack of proper internal controls which would require the Organization to maintain adequate support for time spent on grant programs and a formal allocation process to allocate payroll costs across the grant programs. Effect The potential effects of not having supporting documentation for the allocation of payroll expenses is the overbilling of expenses to the grant program. Questioned Costs $397,499 Perspective Information We reviewed a sample of monthly reports filed with the Pennsylvania Department of Military and Veterans Affairs and the Drug and Alcohol Program. We examined the payroll for each employee charged to the grant for a total of twenty-six employees. The finding is related to multiple individuals who did not complete timesheets or provide supporting documentation for the amount of time spent on the Organization’s grant programs. Identification as a repeat finding A similar issue was noted in prior year finding #2021-002. Recommendation We recommend that the Organization require timesheets for the hours allocated to the grant programs for all employees whether they are salary or hourly to ensure that the payroll charged to grants is accurate and properly supported.
#2022-003 – Material Weakness – Activities Allowed or Unallowed Opioid STR Grant ALN 93.788 Block Grants for Prevention and Treatment of Substance Abuse 93.959 Criteria The Office of Management and Budget issuance of the Code of Federal Regulations (CFR) specifically states uniform administrative requirements, cost principles, and audit requirements for federal awards. In accordance with CFR 200.430, payroll costs charged to the program are allowable when: the total compensation paid to individual employees is reasonable according to the work performed on the program and the compensation is in accordance with the established policies of the organization. Condition During the audit we noted the Organization does not have established policies and procedures over payroll. We noted that while the Organization has established hourly and salary pay rates, these rates are not formally established and approved by the Organization’s Board. Cause The cause is a lack of a proper control structure that requires Board approval of pay rates and salaries. The Organization also does not have a process in place to ensure that payroll reports are properly reviewed and approved by a second independent reviewer prior to submission to the payroll company for processing. Effect The potential effects of not having formally approved pay rates and not having payroll reports reviewed by a second level prior to payroll processing is the potential for errors and overcharging of grants. Questioned Costs None Perspective Information We reviewed a sample of reports filed with the Pennsylvania Department of Military and Veterans Affairs and the Drug and Alcohol Program. We examined the payroll for each employee charged to the grants for a total of 284 samples. The finding represents the unsupported costs noted from this review. Identification as a repeat finding A similar issue was noted in prior year finding #2021-003. Recommendation We recommend that the Organization begin to formally establish and approve employee pay rates and salaries at Official Board Meetings and that these rates are documented in the Board Minutes. The Organization should also implement procedures to include a second level review of the payroll report for accuracy and completeness prior to submission for payment.
#2022-007 – Significant Deficiency – Special Tests Criteria Uniform Guidance (UG) requires non-Federal entities that receive grant funding to have written policies in the following areas: Internal Controls (2 CFR 200.303) Travel (2 CFR 200.474) Financial Management and Accounting which includes Cash Management and Allowability (2CFR 200.302) Personnel Compensation – Time and Effort Reporting (2CFR 200.430(i)) Conflict of Interest/Disclosures (2CFR 200.318) Procurement (2CFR 200.319) Condition During the audit we noted that the Organization does not have written policies in place over these areas in accordance with UG. Cause The Organization was not aware of the requirement to have these written policies in place. Effect The potential effect of not having these policies in place is that the Organization’s expenses are not in accordance with UG. Questioned Costs None Perspective Information No policies or procedures were noted that are in accordance with UG. As a response to the prior year finding, the Organization noted that they will add policies to the fiscal manual for future compliance. Identification as a repeat finding A similar issue was noted in prior year finding #2021-007. Recommendation We recommend that the Organization update the fiscal manual to include policies that are compliant with UG.
#2022-002 – Material Weakness – Allowable Costs/Cost Principles Opioid STR Grant ALN 93.788 Block Grants for Prevention and Treatment of Substance Abuse 93.959 Criteria The Office of Management and Budget issuance of the Code of Federal Regulations (CFR) specifically states uniform administrative requirements, cost principles, and audit requirements for federal awards. CFR 200.430 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 control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated.” Condition During the course of the audit, we noted that the Organization used an allocation methodology to allocate salaries to the federal award based upon time spent on the program. However, for 54 employee time periods, there were no timesheets to support the amount of time allocated to the Organization’s grant programs. Cause The cause is a lack of proper internal controls which would require the Organization to maintain adequate support for time spent on grant programs and a formal allocation process to allocate payroll costs across the grant programs. Effect The potential effects of not having supporting documentation for the allocation of payroll expenses is the overbilling of expenses to the grant program. Questioned Costs $397,499 Perspective Information We reviewed a sample of monthly reports filed with the Pennsylvania Department of Military and Veterans Affairs and the Drug and Alcohol Program. We examined the payroll for each employee charged to the grant for a total of twenty-six employees. The finding is related to multiple individuals who did not complete timesheets or provide supporting documentation for the amount of time spent on the Organization’s grant programs. Identification as a repeat finding A similar issue was noted in prior year finding #2021-002. Recommendation We recommend that the Organization require timesheets for the hours allocated to the grant programs for all employees whether they are salary or hourly to ensure that the payroll charged to grants is accurate and properly supported.
#2022-003 – Material Weakness – Activities Allowed or Unallowed Opioid STR Grant ALN 93.788 Block Grants for Prevention and Treatment of Substance Abuse 93.959 Criteria The Office of Management and Budget issuance of the Code of Federal Regulations (CFR) specifically states uniform administrative requirements, cost principles, and audit requirements for federal awards. In accordance with CFR 200.430, payroll costs charged to the program are allowable when: the total compensation paid to individual employees is reasonable according to the work performed on the program and the compensation is in accordance with the established policies of the organization. Condition During the audit we noted the Organization does not have established policies and procedures over payroll. We noted that while the Organization has established hourly and salary pay rates, these rates are not formally established and approved by the Organization’s Board. Cause The cause is a lack of a proper control structure that requires Board approval of pay rates and salaries. The Organization also does not have a process in place to ensure that payroll reports are properly reviewed and approved by a second independent reviewer prior to submission to the payroll company for processing. Effect The potential effects of not having formally approved pay rates and not having payroll reports reviewed by a second level prior to payroll processing is the potential for errors and overcharging of grants. Questioned Costs None Perspective Information We reviewed a sample of reports filed with the Pennsylvania Department of Military and Veterans Affairs and the Drug and Alcohol Program. We examined the payroll for each employee charged to the grants for a total of 284 samples. The finding represents the unsupported costs noted from this review. Identification as a repeat finding A similar issue was noted in prior year finding #2021-003. Recommendation We recommend that the Organization begin to formally establish and approve employee pay rates and salaries at Official Board Meetings and that these rates are documented in the Board Minutes. The Organization should also implement procedures to include a second level review of the payroll report for accuracy and completeness prior to submission for payment.
#2022-007 – Significant Deficiency – Special Tests Criteria Uniform Guidance (UG) requires non-Federal entities that receive grant funding to have written policies in the following areas: Internal Controls (2 CFR 200.303) Travel (2 CFR 200.474) Financial Management and Accounting which includes Cash Management and Allowability (2CFR 200.302) Personnel Compensation – Time and Effort Reporting (2CFR 200.430(i)) Conflict of Interest/Disclosures (2CFR 200.318) Procurement (2CFR 200.319) Condition During the audit we noted that the Organization does not have written policies in place over these areas in accordance with UG. Cause The Organization was not aware of the requirement to have these written policies in place. Effect The potential effect of not having these policies in place is that the Organization’s expenses are not in accordance with UG. Questioned Costs None Perspective Information No policies or procedures were noted that are in accordance with UG. As a response to the prior year finding, the Organization noted that they will add policies to the fiscal manual for future compliance. Identification as a repeat finding A similar issue was noted in prior year finding #2021-007. Recommendation We recommend that the Organization update the fiscal manual to include policies that are compliant with UG.
Federal Agency: Department of Justice Federal Assistance Listing Numbers: 16.756, 16.726 Programs: Court Appointed Special Advocates, Juvenile Mentoring Program Award/Pass-Through Entity Identifying Numbers: 2018-CH-BX-K001, 15PJDP-21-GK-02762-CASA, 2019-MU-FX-0004, 2020-JU-FX-0028 Criteria: Per 2 CFR §200.430, Compensation – Personal Services: “Standards for Documentation of Personnel Expenses (1) Charges to federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (ii) Be incorporated into the official records of the non-federal entity; (iii) Reasonably reflect the total activity for which the employee is compensated by the non-federal entity, not exceeding 100% of compensated activities; (iv) Encompass federally assisted and all other activities compensated by the non-federal entity on an integrated basis, but may include the use of subsidiary records as defined in the non-federal entity’s written policy; (v) Comply with the established accounting policies and practices of the non-federal entity; and (vi) [Reserved] (vii) Support the distribution of the employee’s salary or wages among specific activities or cost objectives if the employee works on more than one federal award; a federal award and non-federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. (viii) Budget estimates (i.e., estimates determined before the services are performed) alone do not qualify as support for charges to federal awards, 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: For both programs, National CASA/GAL did not include the retention of reviewed payroll allocation workbooks (journal entry support) in its procedures. No transactions were selected for testing related to the review of these workbooks as the control was determined to not be functioning prior to testing. Additionally, we noted that National CASA/GAL allocated year-end payroll accrual expenditures to the Juvenile Mentoring Program based on budget allocation rates. There was no procedure in place to determine if a true-up was necessary from allocated costs. 37 transactions were tested, of which three were charged based on budgets and were not trued-up. Cause: National CASA/GAL did not have policies and procedures in place requiring the retention of the review and approval of timesheet allocations (journal entries). Effect or Potential Effect: Without adequate controls in place to ensure allocations are adequately reviewed and approved, and document this review and approval, National CASA/GAL could incorrectly charge expenditures to the federal program, or not request appropriate reimbursement National CASA/GAL is entitled to under the terms of the grant. Questioned Costs: Below reporting threshold. Context: This is a condition identified per review of National CASA/GAL’s compliance with specified requirements not using a statistically valid sample. There were 61 total timesheets tested for controls across both programs (51 within Court Appointed Special Advocates and ten within the Juvenile Mentoring Program). 97 total payroll transactions were tested across both programs (60 for Court Appointed Special Advocates and 37 for the Juvenile Mentoring Program) for compliance. Payroll costs for the Court Appointed Special Advocates in 2022 were $3,734,509. Payroll costs for the Juvenile Mentoring Program in 2022 were $160,643. Identification as a Repeat Finding: Not a repeat finding. Recommendation: We recommend that National CASA/GAL consistently document the review and approval of the payroll allocations (journal entries), including any budget true-ups that are required for estimates at year end. Views of Responsible Officials: Management agrees with the finding that documentation of review and approval of journal entries was not retained and that a true-up of estimates was not specified in procedures. Management revised the control process in 2023 to include detailed review and approval of allocation workbooks within the general ledger. Management additionally has updated their policies and procedures to evaluate year-end payroll accruals and the considerations for any necessary true-ups.
Federal Agency: Department of Justice Federal Assistance Listing Numbers: 16.756, 16.726 Programs: Court Appointed Special Advocates, Juvenile Mentoring Program Award/Pass-Through Entity Identifying Numbers: 2018-CH-BX-K001, 15PJDP-21-GK-02762-CASA, 2019-MU-FX-0004, 2020-JU-FX-0028 Criteria: Per 2 CFR §200.430, Compensation – Personal Services: “Standards for Documentation of Personnel Expenses (1) Charges to federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (ii) Be incorporated into the official records of the non-federal entity; (iii) Reasonably reflect the total activity for which the employee is compensated by the non-federal entity, not exceeding 100% of compensated activities; (iv) Encompass federally assisted and all other activities compensated by the non-federal entity on an integrated basis, but may include the use of subsidiary records as defined in the non-federal entity’s written policy; (v) Comply with the established accounting policies and practices of the non-federal entity; and (vi) [Reserved] (vii) Support the distribution of the employee’s salary or wages among specific activities or cost objectives if the employee works on more than one federal award; a federal award and non-federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. (viii) Budget estimates (i.e., estimates determined before the services are performed) alone do not qualify as support for charges to federal awards, 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: For both programs, National CASA/GAL did not include the retention of reviewed payroll allocation workbooks (journal entry support) in its procedures. No transactions were selected for testing related to the review of these workbooks as the control was determined to not be functioning prior to testing. Additionally, we noted that National CASA/GAL allocated year-end payroll accrual expenditures to the Juvenile Mentoring Program based on budget allocation rates. There was no procedure in place to determine if a true-up was necessary from allocated costs. 37 transactions were tested, of which three were charged based on budgets and were not trued-up. Cause: National CASA/GAL did not have policies and procedures in place requiring the retention of the review and approval of timesheet allocations (journal entries). Effect or Potential Effect: Without adequate controls in place to ensure allocations are adequately reviewed and approved, and document this review and approval, National CASA/GAL could incorrectly charge expenditures to the federal program, or not request appropriate reimbursement National CASA/GAL is entitled to under the terms of the grant. Questioned Costs: Below reporting threshold. Context: This is a condition identified per review of National CASA/GAL’s compliance with specified requirements not using a statistically valid sample. There were 61 total timesheets tested for controls across both programs (51 within Court Appointed Special Advocates and ten within the Juvenile Mentoring Program). 97 total payroll transactions were tested across both programs (60 for Court Appointed Special Advocates and 37 for the Juvenile Mentoring Program) for compliance. Payroll costs for the Court Appointed Special Advocates in 2022 were $3,734,509. Payroll costs for the Juvenile Mentoring Program in 2022 were $160,643. Identification as a Repeat Finding: Not a repeat finding. Recommendation: We recommend that National CASA/GAL consistently document the review and approval of the payroll allocations (journal entries), including any budget true-ups that are required for estimates at year end. Views of Responsible Officials: Management agrees with the finding that documentation of review and approval of journal entries was not retained and that a true-up of estimates was not specified in procedures. Management revised the control process in 2023 to include detailed review and approval of allocation workbooks within the general ledger. Management additionally has updated their policies and procedures to evaluate year-end payroll accruals and the considerations for any necessary true-ups.
Federal Agency: Department of Justice Federal Assistance Listing Numbers: 16.756, 16.726 Programs: Court Appointed Special Advocates, Juvenile Mentoring Program Award/Pass-Through Entity Identifying Numbers: 2018-CH-BX-K001, 15PJDP-21-GK-02762-CASA, 2019-MU-FX-0004, 2020-JU-FX-0028 Criteria: Per 2 CFR §200.430, Compensation – Personal Services: “Standards for Documentation of Personnel Expenses (1) Charges to federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (ii) Be incorporated into the official records of the non-federal entity; (iii) Reasonably reflect the total activity for which the employee is compensated by the non-federal entity, not exceeding 100% of compensated activities; (iv) Encompass federally assisted and all other activities compensated by the non-federal entity on an integrated basis, but may include the use of subsidiary records as defined in the non-federal entity’s written policy; (v) Comply with the established accounting policies and practices of the non-federal entity; and (vi) [Reserved] (vii) Support the distribution of the employee’s salary or wages among specific activities or cost objectives if the employee works on more than one federal award; a federal award and non-federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. (viii) Budget estimates (i.e., estimates determined before the services are performed) alone do not qualify as support for charges to federal awards, 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: For both programs, National CASA/GAL did not include the retention of reviewed payroll allocation workbooks (journal entry support) in its procedures. No transactions were selected for testing related to the review of these workbooks as the control was determined to not be functioning prior to testing. Additionally, we noted that National CASA/GAL allocated year-end payroll accrual expenditures to the Juvenile Mentoring Program based on budget allocation rates. There was no procedure in place to determine if a true-up was necessary from allocated costs. 37 transactions were tested, of which three were charged based on budgets and were not trued-up. Cause: National CASA/GAL did not have policies and procedures in place requiring the retention of the review and approval of timesheet allocations (journal entries). Effect or Potential Effect: Without adequate controls in place to ensure allocations are adequately reviewed and approved, and document this review and approval, National CASA/GAL could incorrectly charge expenditures to the federal program, or not request appropriate reimbursement National CASA/GAL is entitled to under the terms of the grant. Questioned Costs: Below reporting threshold. Context: This is a condition identified per review of National CASA/GAL’s compliance with specified requirements not using a statistically valid sample. There were 61 total timesheets tested for controls across both programs (51 within Court Appointed Special Advocates and ten within the Juvenile Mentoring Program). 97 total payroll transactions were tested across both programs (60 for Court Appointed Special Advocates and 37 for the Juvenile Mentoring Program) for compliance. Payroll costs for the Court Appointed Special Advocates in 2022 were $3,734,509. Payroll costs for the Juvenile Mentoring Program in 2022 were $160,643. Identification as a Repeat Finding: Not a repeat finding. Recommendation: We recommend that National CASA/GAL consistently document the review and approval of the payroll allocations (journal entries), including any budget true-ups that are required for estimates at year end. Views of Responsible Officials: Management agrees with the finding that documentation of review and approval of journal entries was not retained and that a true-up of estimates was not specified in procedures. Management revised the control process in 2023 to include detailed review and approval of allocation workbooks within the general ledger. Management additionally has updated their policies and procedures to evaluate year-end payroll accruals and the considerations for any necessary true-ups.
Federal Agency: Department of Justice Federal Assistance Listing Numbers: 16.756, 16.726 Programs: Court Appointed Special Advocates, Juvenile Mentoring Program Award/Pass-Through Entity Identifying Numbers: 2018-CH-BX-K001, 15PJDP-21-GK-02762-CASA, 2019-MU-FX-0004, 2020-JU-FX-0028 Criteria: Per 2 CFR §200.430, Compensation – Personal Services: “Standards for Documentation of Personnel Expenses (1) Charges to federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (ii) Be incorporated into the official records of the non-federal entity; (iii) Reasonably reflect the total activity for which the employee is compensated by the non-federal entity, not exceeding 100% of compensated activities; (iv) Encompass federally assisted and all other activities compensated by the non-federal entity on an integrated basis, but may include the use of subsidiary records as defined in the non-federal entity’s written policy; (v) Comply with the established accounting policies and practices of the non-federal entity; and (vi) [Reserved] (vii) Support the distribution of the employee’s salary or wages among specific activities or cost objectives if the employee works on more than one federal award; a federal award and non-federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. (viii) Budget estimates (i.e., estimates determined before the services are performed) alone do not qualify as support for charges to federal awards, 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: For both programs, National CASA/GAL did not include the retention of reviewed payroll allocation workbooks (journal entry support) in its procedures. No transactions were selected for testing related to the review of these workbooks as the control was determined to not be functioning prior to testing. Additionally, we noted that National CASA/GAL allocated year-end payroll accrual expenditures to the Juvenile Mentoring Program based on budget allocation rates. There was no procedure in place to determine if a true-up was necessary from allocated costs. 37 transactions were tested, of which three were charged based on budgets and were not trued-up. Cause: National CASA/GAL did not have policies and procedures in place requiring the retention of the review and approval of timesheet allocations (journal entries). Effect or Potential Effect: Without adequate controls in place to ensure allocations are adequately reviewed and approved, and document this review and approval, National CASA/GAL could incorrectly charge expenditures to the federal program, or not request appropriate reimbursement National CASA/GAL is entitled to under the terms of the grant. Questioned Costs: Below reporting threshold. Context: This is a condition identified per review of National CASA/GAL’s compliance with specified requirements not using a statistically valid sample. There were 61 total timesheets tested for controls across both programs (51 within Court Appointed Special Advocates and ten within the Juvenile Mentoring Program). 97 total payroll transactions were tested across both programs (60 for Court Appointed Special Advocates and 37 for the Juvenile Mentoring Program) for compliance. Payroll costs for the Court Appointed Special Advocates in 2022 were $3,734,509. Payroll costs for the Juvenile Mentoring Program in 2022 were $160,643. Identification as a Repeat Finding: Not a repeat finding. Recommendation: We recommend that National CASA/GAL consistently document the review and approval of the payroll allocations (journal entries), including any budget true-ups that are required for estimates at year end. Views of Responsible Officials: Management agrees with the finding that documentation of review and approval of journal entries was not retained and that a true-up of estimates was not specified in procedures. Management revised the control process in 2023 to include detailed review and approval of allocation workbooks within the general ledger. Management additionally has updated their policies and procedures to evaluate year-end payroll accruals and the considerations for any necessary true-ups.
Criteria: In accordance with 2 CFR Section 200.430.8(i), charges to Federal awards for salaries and wages must be based on records that reflect the actual work performed. The charges must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated, and must be incorporated into the official records of the non-Federal entity. In addition, 2 CFR Section 200.430.8(i)(viii) states that budget estimates alone do not qualify as support for charges to Federal awards, but may be used for interim accounting, provided certain additional internal controls are implemented. Condition: During our testing of salaries and wages, we noted that all 242 sampled transactions did not have adequate supporting documentation and necessary approvals. Charges to Federal awards for salaries and wages were based on estimated allocations, rather than use of a system of internal controls that accounts for actual time and effort allocations. Allocation schedules, which included calculation and position title errors, were not prepared timely and documentation of approval by individuals knowledgeable of the Federal program was not retained. Cause: While there is a time keeping system implemented to track daily hours worked by employees, the Corporation’s current internal control system does not allow for specific coding for time actually spent on each federally funded program that would support the amount charged to the Federal award. Effect or Potential Effect: We were unable to determine whether charges to Federal awards for salaries and wages reflect specific time worked or amounts allocated by employee to specific Federal programs. Allowable costs incurred by the Corporation exceeded the amount of approved grant funding, therefore no questioned costs are reported. Questioned costs: Unknown Context: We selected 242 salary transactions charged to the Federal programs to test controls over allowable costs. All transactions charged to the Federal programs were based on budgeted Full Time Equivalents (FTE), and not actual hours employees worked for each Federal program. No analysis or true-up was performed to determine the accuracy of employee titles or amounts charged versus actual time and effort incurred. This is a condition identified per review of the Corporation’s compliance with specified requirements using a statistically valid sample. Repeat finding: This is a repeat finding from prior year. This was reported as finding 2021-005 in the 2021 report. Recommendation: We recommend the Corporation develop and incorporate internal controls in order to track specific time spent on each Federal program. This can include, time and effort reports completed on a routine basis, such as monthly, and adjust program expenditures as needed to properly reflect actual work performed. Completed time and effort reports should be reviewed and verified by management for accuracy. View of Responsible Officials: Due to turnover of several key financial executives and personnel, the Corporation did not maintain evidence of approval of salary and wage allocations.
Criteria: In accordance with 2 CFR Section 200.430.8(i), charges to Federal awards for salaries and wages must be based on records that reflect the actual work performed. The charges must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated, and must be incorporated into the official records of the non-Federal entity. In addition, 2 CFR Section 200.430.8(i)(viii) states that budget estimates alone do not qualify as support for charges to Federal awards, but may be used for interim accounting, provided certain additional internal controls are implemented. Condition: During our testing of salaries and wages, we noted that all 242 sampled transactions did not have adequate supporting documentation and necessary approvals. Charges to Federal awards for salaries and wages were based on estimated allocations, rather than use of a system of internal controls that accounts for actual time and effort allocations. Allocation schedules, which included calculation and position title errors, were not prepared timely and documentation of approval by individuals knowledgeable of the Federal program was not retained. Cause: While there is a time keeping system implemented to track daily hours worked by employees, the Corporation’s current internal control system does not allow for specific coding for time actually spent on each federally funded program that would support the amount charged to the Federal award. Effect or Potential Effect: We were unable to determine whether charges to Federal awards for salaries and wages reflect specific time worked or amounts allocated by employee to specific Federal programs. Allowable costs incurred by the Corporation exceeded the amount of approved grant funding, therefore no questioned costs are reported. Questioned costs: Unknown Context: We selected 242 salary transactions charged to the Federal programs to test controls over allowable costs. All transactions charged to the Federal programs were based on budgeted Full Time Equivalents (FTE), and not actual hours employees worked for each Federal program. No analysis or true-up was performed to determine the accuracy of employee titles or amounts charged versus actual time and effort incurred. This is a condition identified per review of the Corporation’s compliance with specified requirements using a statistically valid sample. Repeat finding: This is a repeat finding from prior year. This was reported as finding 2021-005 in the 2021 report. Recommendation: We recommend the Corporation develop and incorporate internal controls in order to track specific time spent on each Federal program. This can include, time and effort reports completed on a routine basis, such as monthly, and adjust program expenditures as needed to properly reflect actual work performed. Completed time and effort reports should be reviewed and verified by management for accuracy. View of Responsible Officials: Due to turnover of several key financial executives and personnel, the Corporation did not maintain evidence of approval of salary and wage allocations.
Criteria: In accordance with 2 CFR Section 200.430.8(i), charges to Federal awards for salaries and wages must be based on records that reflect the actual work performed. The charges must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated, and must be incorporated into the official records of the non-Federal entity. In addition, 2 CFR Section 200.430.8(i)(viii) states that budget estimates alone do not qualify as support for charges to Federal awards, but may be used for interim accounting, provided certain additional internal controls are implemented. Condition: During our testing of salaries and wages, we noted that all 242 sampled transactions did not have adequate supporting documentation and necessary approvals. Charges to Federal awards for salaries and wages were based on estimated allocations, rather than use of a system of internal controls that accounts for actual time and effort allocations. Allocation schedules, which included calculation and position title errors, were not prepared timely and documentation of approval by individuals knowledgeable of the Federal program was not retained. Cause: While there is a time keeping system implemented to track daily hours worked by employees, the Corporation’s current internal control system does not allow for specific coding for time actually spent on each federally funded program that would support the amount charged to the Federal award. Effect or Potential Effect: We were unable to determine whether charges to Federal awards for salaries and wages reflect specific time worked or amounts allocated by employee to specific Federal programs. Allowable costs incurred by the Corporation exceeded the amount of approved grant funding, therefore no questioned costs are reported. Questioned costs: Unknown Context: We selected 242 salary transactions charged to the Federal programs to test controls over allowable costs. All transactions charged to the Federal programs were based on budgeted Full Time Equivalents (FTE), and not actual hours employees worked for each Federal program. No analysis or true-up was performed to determine the accuracy of employee titles or amounts charged versus actual time and effort incurred. This is a condition identified per review of the Corporation’s compliance with specified requirements using a statistically valid sample. Repeat finding: This is a repeat finding from prior year. This was reported as finding 2021-005 in the 2021 report. Recommendation: We recommend the Corporation develop and incorporate internal controls in order to track specific time spent on each Federal program. This can include, time and effort reports completed on a routine basis, such as monthly, and adjust program expenditures as needed to properly reflect actual work performed. Completed time and effort reports should be reviewed and verified by management for accuracy. View of Responsible Officials: Due to turnover of several key financial executives and personnel, the Corporation did not maintain evidence of approval of salary and wage allocations.
Criteria: In accordance with 2 CFR Section 200.430.8(i), charges to Federal awards for salaries and wages must be based on records that reflect the actual work performed. The charges must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated, and must be incorporated into the official records of the non-Federal entity. In addition, 2 CFR Section 200.430.8(i)(viii) states that budget estimates alone do not qualify as support for charges to Federal awards, but may be used for interim accounting, provided certain additional internal controls are implemented. Condition: During our testing of salaries and wages, we noted that all 242 sampled transactions did not have adequate supporting documentation and necessary approvals. Charges to Federal awards for salaries and wages were based on estimated allocations, rather than use of a system of internal controls that accounts for actual time and effort allocations. Allocation schedules, which included calculation and position title errors, were not prepared timely and documentation of approval by individuals knowledgeable of the Federal program was not retained. Cause: While there is a time keeping system implemented to track daily hours worked by employees, the Corporation’s current internal control system does not allow for specific coding for time actually spent on each federally funded program that would support the amount charged to the Federal award. Effect or Potential Effect: We were unable to determine whether charges to Federal awards for salaries and wages reflect specific time worked or amounts allocated by employee to specific Federal programs. Allowable costs incurred by the Corporation exceeded the amount of approved grant funding, therefore no questioned costs are reported. Questioned costs: Unknown Context: We selected 242 salary transactions charged to the Federal programs to test controls over allowable costs. All transactions charged to the Federal programs were based on budgeted Full Time Equivalents (FTE), and not actual hours employees worked for each Federal program. No analysis or true-up was performed to determine the accuracy of employee titles or amounts charged versus actual time and effort incurred. This is a condition identified per review of the Corporation’s compliance with specified requirements using a statistically valid sample. Repeat finding: This is a repeat finding from prior year. This was reported as finding 2021-005 in the 2021 report. Recommendation: We recommend the Corporation develop and incorporate internal controls in order to track specific time spent on each Federal program. This can include, time and effort reports completed on a routine basis, such as monthly, and adjust program expenditures as needed to properly reflect actual work performed. Completed time and effort reports should be reviewed and verified by management for accuracy. View of Responsible Officials: Due to turnover of several key financial executives and personnel, the Corporation did not maintain evidence of approval of salary and wage allocations.
Criteria: In accordance with 2 CFR Section 200.430.8(i), charges to Federal awards for salaries and wages must be based on records that reflect the actual work performed. The charges must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated, and must be incorporated into the official records of the non-Federal entity. In addition, 2 CFR Section 200.430.8(i)(viii) states that budget estimates alone do not qualify as support for charges to Federal awards, but may be used for interim accounting, provided certain additional internal controls are implemented. Condition: During our testing of salaries and wages, we noted that all 242 sampled transactions did not have adequate supporting documentation and necessary approvals. Charges to Federal awards for salaries and wages were based on estimated allocations, rather than use of a system of internal controls that accounts for actual time and effort allocations. Allocation schedules, which included calculation and position title errors, were not prepared timely and documentation of approval by individuals knowledgeable of the Federal program was not retained. Cause: While there is a time keeping system implemented to track daily hours worked by employees, the Corporation’s current internal control system does not allow for specific coding for time actually spent on each federally funded program that would support the amount charged to the Federal award. Effect or Potential Effect: We were unable to determine whether charges to Federal awards for salaries and wages reflect specific time worked or amounts allocated by employee to specific Federal programs. Allowable costs incurred by the Corporation exceeded the amount of approved grant funding, therefore no questioned costs are reported. Questioned costs: Unknown Context: We selected 242 salary transactions charged to the Federal programs to test controls over allowable costs. All transactions charged to the Federal programs were based on budgeted Full Time Equivalents (FTE), and not actual hours employees worked for each Federal program. No analysis or true-up was performed to determine the accuracy of employee titles or amounts charged versus actual time and effort incurred. This is a condition identified per review of the Corporation’s compliance with specified requirements using a statistically valid sample. Repeat finding: This is a repeat finding from prior year. This was reported as finding 2021-005 in the 2021 report. Recommendation: We recommend the Corporation develop and incorporate internal controls in order to track specific time spent on each Federal program. This can include, time and effort reports completed on a routine basis, such as monthly, and adjust program expenditures as needed to properly reflect actual work performed. Completed time and effort reports should be reviewed and verified by management for accuracy. View of Responsible Officials: Due to turnover of several key financial executives and personnel, the Corporation did not maintain evidence of approval of salary and wage allocations.
Criteria: In accordance with 2 CFR Section 200.430.8(i), charges to Federal awards for salaries and wages must be based on records that reflect the actual work performed. The charges must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated, and must be incorporated into the official records of the non-Federal entity. In addition, 2 CFR Section 200.430.8(i)(viii) states that budget estimates alone do not qualify as support for charges to Federal awards, but may be used for interim accounting, provided certain additional internal controls are implemented. Condition: During our testing of salaries and wages, we noted that all 242 sampled transactions did not have adequate supporting documentation and necessary approvals. Charges to Federal awards for salaries and wages were based on estimated allocations, rather than use of a system of internal controls that accounts for actual time and effort allocations. Allocation schedules, which included calculation and position title errors, were not prepared timely and documentation of approval by individuals knowledgeable of the Federal program was not retained. Cause: While there is a time keeping system implemented to track daily hours worked by employees, the Corporation’s current internal control system does not allow for specific coding for time actually spent on each federally funded program that would support the amount charged to the Federal award. Effect or Potential Effect: We were unable to determine whether charges to Federal awards for salaries and wages reflect specific time worked or amounts allocated by employee to specific Federal programs. Allowable costs incurred by the Corporation exceeded the amount of approved grant funding, therefore no questioned costs are reported. Questioned costs: Unknown Context: We selected 242 salary transactions charged to the Federal programs to test controls over allowable costs. All transactions charged to the Federal programs were based on budgeted Full Time Equivalents (FTE), and not actual hours employees worked for each Federal program. No analysis or true-up was performed to determine the accuracy of employee titles or amounts charged versus actual time and effort incurred. This is a condition identified per review of the Corporation’s compliance with specified requirements using a statistically valid sample. Repeat finding: This is a repeat finding from prior year. This was reported as finding 2021-005 in the 2021 report. Recommendation: We recommend the Corporation develop and incorporate internal controls in order to track specific time spent on each Federal program. This can include, time and effort reports completed on a routine basis, such as monthly, and adjust program expenditures as needed to properly reflect actual work performed. Completed time and effort reports should be reviewed and verified by management for accuracy. View of Responsible Officials: Due to turnover of several key financial executives and personnel, the Corporation did not maintain evidence of approval of salary and wage allocations.
Payroll Allocations Finding Number: 2022-007 Assistance Listing Number and Title: AL # 14.871 - Section 8 Housing Choice Vouchers/Housing Voucher Cluster Federal Award Identification Number / Year: 2022 Federal Agency: U.S. Department of Housing and Urban Development Compliance Requirement: Activities Allowed or Unallowed and Allowable Costs/Cost Principles Pass-Through Entity: N/A Repeat Finding from Prior Audit? No Noncompliance and Significant Deficiency 2 CFR § 2400.101 gives regulatory effect to the Department of Housing and Urban Development for 2 C.F.R. § 200.430 which provides, in part, that costs of compensation are allowable to the extent that they satisfy the specific requirements of this part, and that the total compensation for individual employees is reasonable for the services rendered and conforms to the established written policy of the non-Federal entity consistently applied to both Federal and non-Federal activities. The Authority approved a standard allocation of 64% of administrative salaries to the Housing Choice Voucher (HCV) Program. However, due to a failure of internal controls when a fire at the Authority offices limited staff access to the Office resulting in the Executive Director circumventing established controls to process payroll, one payroll processed during 2022 allocated 100% of salaries to the HCV Program rather than the approved 64%. The total amount posted to HCV in error was $3,348. The Executive Director and Financial Director should ensure that all payroll is correctly allocated by program for every payroll.
Payroll Allocations Finding Number: 2022-007 Assistance Listing Number and Title: AL # 14.871 - Section 8 Housing Choice Vouchers/Housing Voucher Cluster Federal Award Identification Number / Year: 2022 Federal Agency: U.S. Department of Housing and Urban Development Compliance Requirement: Activities Allowed or Unallowed and Allowable Costs/Cost Principles Pass-Through Entity: N/A Repeat Finding from Prior Audit? No Noncompliance and Significant Deficiency 2 CFR § 2400.101 gives regulatory effect to the Department of Housing and Urban Development for 2 C.F.R. § 200.430 which provides, in part, that costs of compensation are allowable to the extent that they satisfy the specific requirements of this part, and that the total compensation for individual employees is reasonable for the services rendered and conforms to the established written policy of the non-Federal entity consistently applied to both Federal and non-Federal activities. The Authority approved a standard allocation of 64% of administrative salaries to the Housing Choice Voucher (HCV) Program. However, due to a failure of internal controls when a fire at the Authority offices limited staff access to the Office resulting in the Executive Director circumventing established controls to process payroll, one payroll processed during 2022 allocated 100% of salaries to the HCV Program rather than the approved 64%. The total amount posted to HCV in error was $3,348. The Executive Director and Financial Director should ensure that all payroll is correctly allocated by program for every payroll.
Finding: Item 2022-002 – Allowable Costs Federal Program – Healthy Start Initiative Assistance Listing Number – 93.926 Federal Program – Supportive Housing for Veterans Assistance Listing Number – 64.033 Material Weakness Criteria: 2 CFR §200.430 (8)(i) Compensation – personal services, Standards for Documentation of Personnel Expenses specifies that charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must (i) be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (viii) Budget estimates alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that (…) (c) the non-Federal entity’s system of internal controls includes processes to review after-the-fact interim charges made to a Federal award based on budget estimates. Condition/context: The Council allocates payroll costs to grants primarily based on initial budgets. The Council did not have internal controls established to verify that the employees’ actual work performed did not alter from initial budgeting, which may require an adjustment to costs charged to the grants. Cause: The Council did not have internal controls or processes established to track which programs an employee worked on throughout the year. Effect: Inadequate documentation for payroll allocations increases the risk of inaccurate, unallowable, or wrongly allocated payroll expenses charged to grants, which may result in questioned costs and potential reduction or loss of future funding due to noncompliance. Questioned cost: Questioned costs below are aggregated from the five months tested. Healthy Start Initiative: $157,251 Supportive Housing for Veterans: $446,184 Recommendation: We recommend the Council establish a process and related internal controls to monitor for which programs an employee performs work and adjust any incorrectly allocated grant expenses, if applicable. View of responsible officials: Management’s response is reported in “Corrective Action Plan” at the end of this report.
Finding: Item 2022-002 – Allowable Costs Federal Program – Healthy Start Initiative Assistance Listing Number – 93.926 Federal Program – Supportive Housing for Veterans Assistance Listing Number – 64.033 Material Weakness Criteria: 2 CFR §200.430 (8)(i) Compensation – personal services, Standards for Documentation of Personnel Expenses specifies that charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must (i) be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (viii) Budget estimates alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that (…) (c) the non-Federal entity’s system of internal controls includes processes to review after-the-fact interim charges made to a Federal award based on budget estimates. Condition/context: The Council allocates payroll costs to grants primarily based on initial budgets. The Council did not have internal controls established to verify that the employees’ actual work performed did not alter from initial budgeting, which may require an adjustment to costs charged to the grants. Cause: The Council did not have internal controls or processes established to track which programs an employee worked on throughout the year. Effect: Inadequate documentation for payroll allocations increases the risk of inaccurate, unallowable, or wrongly allocated payroll expenses charged to grants, which may result in questioned costs and potential reduction or loss of future funding due to noncompliance. Questioned cost: Questioned costs below are aggregated from the five months tested. Healthy Start Initiative: $157,251 Supportive Housing for Veterans: $446,184 Recommendation: We recommend the Council establish a process and related internal controls to monitor for which programs an employee performs work and adjust any incorrectly allocated grant expenses, if applicable. View of responsible officials: Management’s response is reported in “Corrective Action Plan” at the end of this report.
Finding: Item 2022-002 – Allowable Costs Federal Program – Healthy Start Initiative Assistance Listing Number – 93.926 Federal Program – Supportive Housing for Veterans Assistance Listing Number – 64.033 Material Weakness Criteria: 2 CFR §200.430 (8)(i) Compensation – personal services, Standards for Documentation of Personnel Expenses specifies that charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must (i) be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (viii) Budget estimates alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that (…) (c) the non-Federal entity’s system of internal controls includes processes to review after-the-fact interim charges made to a Federal award based on budget estimates. Condition/context: The Council allocates payroll costs to grants primarily based on initial budgets. The Council did not have internal controls established to verify that the employees’ actual work performed did not alter from initial budgeting, which may require an adjustment to costs charged to the grants. Cause: The Council did not have internal controls or processes established to track which programs an employee worked on throughout the year. Effect: Inadequate documentation for payroll allocations increases the risk of inaccurate, unallowable, or wrongly allocated payroll expenses charged to grants, which may result in questioned costs and potential reduction or loss of future funding due to noncompliance. Questioned cost: Questioned costs below are aggregated from the five months tested. Healthy Start Initiative: $157,251 Supportive Housing for Veterans: $446,184 Recommendation: We recommend the Council establish a process and related internal controls to monitor for which programs an employee performs work and adjust any incorrectly allocated grant expenses, if applicable. View of responsible officials: Management’s response is reported in “Corrective Action Plan” at the end of this report.
Criteria or specific requirement: 2 CFR 200.403(b) states that costs must "Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items". Per the Federal award (contract 2018-51300-28430, PTEIN C0535A-A), there was no specific allowability for “Fees”, and the budget indicated $0 allocated to “Fees”. 2 CFR 200.303(a) requires nonfederal entities receiving Federal awards to "Establish and maintain internal controls over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award." 2 CFR 200.430(i)(1) states that "Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed." Condition: (10.307) During testing of general disbursements, it was noted that the Organization did not retain documentary evidence of review and approval of disbursements for 4 out of 17 samples tested. In addition, for 1 sample, the Organization charged unallowable costs (bank fees) to the major program. During testing of payroll, it was noted that inadequate time and effort documentation was retained for 2 out of 26 samples tested, resulting in wages being charged erroneously between programs. (10.311) During testing of general disbursements, it was noted that the Organization did not retain documentary evidence of review and approval of disbursements for 5 out of 14 samples tested. During testing of payroll, it was noted that inadequate time and effort documentation was retained for 2 out of 21 samples tested, resulting in wages being charged erroneously between programs. During testing of indirect costs, it was noted that direct costs used to calculate the applied indirect cost rate were not supported by underlying documentation of costs incurred. Questioned costs: None Context: (10.307) For testing of general disbursements, a sample of 17 was made from a population of 113 disbursement transactions. Of the 17 sampled, 4 did not include documentary evidence of review and approval of the disbursement. In addition, 1 sample was found to be out of compliance with the provisions for 2 CFR 200.403(b). For testing of payroll, a sample of 26 was made from a population of 168 unique employee paychecks. Of the 26 sampled, 2 had inadequate documentation of time and effort spent on the major program, resulting in an overbilling in one sample and an underbilling in the second sample. (10.311) For testing of general disbursements, a sample of 14 was made from a population of 90 disbursement transactions. Of the 14 sampled, 5 did not include documentary evidence of review and approval of the disbursement. For testing of payroll, a sample of 21 was made from a population of 139 unique employee paychecks. Of the 21 sampled, 2 had inadequate documentation of time and effort spent on the major program, resulting in an overbilling in one sample and an underbilling in the second sample. For testing of indirect costs, a sample of 6 was made from a population of 21 monthly reimbursement invoices. Of the 6 sampled, 3 did not include sufficient documentation to support the direct costs used to apply the indirect cost rate. Cause: The Organization does not have adequate controls around the documentation of the supervisor review and approval process. Supervisory review and approvals are currently being communicated verbally. In addition, inadequate documentation is retained to document the time and effort of employee time spent on grants and the total direct costs that should be considered when applying the indirect cost rate. Effect: Without adequate records retained, the Organization is at risk of noncompliance with Federal programs and grant regulations, which could result in penalties or repayment obligations. Without adequate documentation and controls in place to ensure costs are reasonable and intended for the program charged, the Organization could incorrectly charge expenditures to the Federal program, report fraudulent expenditures, or not request appropriate reimbursement that the Organization is entitled to under the terms of the grant. Repeat Finding: No Recommendation: CLA recommends for the Organization to evaluate its current policies and procedures to implement an additional layer of review, and to formally document such review and approval procedures for all transactions affecting federal funds (i.e. approval of general expenditures, approval of timesheets, approval of indirect cost allocations). In addition, the Organization should emphasize the importance of detailed reviewed timesheets, including a second level review by the Finance Manager to ensure the accuracy and documentation of time and effort billed to each Federal program. Views of responsible officials: Management agrees with the finding.
Criteria or specific requirement: 2 CFR 200.403(b) states that costs must "Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items". Per the Federal award (contract 2018-51300-28430, PTEIN C0535A-A), there was no specific allowability for “Fees”, and the budget indicated $0 allocated to “Fees”. 2 CFR 200.303(a) requires nonfederal entities receiving Federal awards to "Establish and maintain internal controls over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award." 2 CFR 200.430(i)(1) states that "Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed." Condition: (10.307) During testing of general disbursements, it was noted that the Organization did not retain documentary evidence of review and approval of disbursements for 4 out of 17 samples tested. In addition, for 1 sample, the Organization charged unallowable costs (bank fees) to the major program. During testing of payroll, it was noted that inadequate time and effort documentation was retained for 2 out of 26 samples tested, resulting in wages being charged erroneously between programs. (10.311) During testing of general disbursements, it was noted that the Organization did not retain documentary evidence of review and approval of disbursements for 5 out of 14 samples tested. During testing of payroll, it was noted that inadequate time and effort documentation was retained for 2 out of 21 samples tested, resulting in wages being charged erroneously between programs. During testing of indirect costs, it was noted that direct costs used to calculate the applied indirect cost rate were not supported by underlying documentation of costs incurred. Questioned costs: None Context: (10.307) For testing of general disbursements, a sample of 17 was made from a population of 113 disbursement transactions. Of the 17 sampled, 4 did not include documentary evidence of review and approval of the disbursement. In addition, 1 sample was found to be out of compliance with the provisions for 2 CFR 200.403(b). For testing of payroll, a sample of 26 was made from a population of 168 unique employee paychecks. Of the 26 sampled, 2 had inadequate documentation of time and effort spent on the major program, resulting in an overbilling in one sample and an underbilling in the second sample. (10.311) For testing of general disbursements, a sample of 14 was made from a population of 90 disbursement transactions. Of the 14 sampled, 5 did not include documentary evidence of review and approval of the disbursement. For testing of payroll, a sample of 21 was made from a population of 139 unique employee paychecks. Of the 21 sampled, 2 had inadequate documentation of time and effort spent on the major program, resulting in an overbilling in one sample and an underbilling in the second sample. For testing of indirect costs, a sample of 6 was made from a population of 21 monthly reimbursement invoices. Of the 6 sampled, 3 did not include sufficient documentation to support the direct costs used to apply the indirect cost rate. Cause: The Organization does not have adequate controls around the documentation of the supervisor review and approval process. Supervisory review and approvals are currently being communicated verbally. In addition, inadequate documentation is retained to document the time and effort of employee time spent on grants and the total direct costs that should be considered when applying the indirect cost rate. Effect: Without adequate records retained, the Organization is at risk of noncompliance with Federal programs and grant regulations, which could result in penalties or repayment obligations. Without adequate documentation and controls in place to ensure costs are reasonable and intended for the program charged, the Organization could incorrectly charge expenditures to the Federal program, report fraudulent expenditures, or not request appropriate reimbursement that the Organization is entitled to under the terms of the grant. Repeat Finding: No Recommendation: CLA recommends for the Organization to evaluate its current policies and procedures to implement an additional layer of review, and to formally document such review and approval procedures for all transactions affecting federal funds (i.e. approval of general expenditures, approval of timesheets, approval of indirect cost allocations). In addition, the Organization should emphasize the importance of detailed reviewed timesheets, including a second level review by the Finance Manager to ensure the accuracy and documentation of time and effort billed to each Federal program. Views of responsible officials: Management agrees with the finding.
Criteria or specific requirement: 2 CFR 200.403(b) states that costs must "Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items". Per the Federal award (contract 2018-51300-28430, PTEIN C0535A-A), there was no specific allowability for “Fees”, and the budget indicated $0 allocated to “Fees”. 2 CFR 200.303(a) requires nonfederal entities receiving Federal awards to "Establish and maintain internal controls over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award." 2 CFR 200.430(i)(1) states that "Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed." Condition: (10.307) During testing of general disbursements, it was noted that the Organization did not retain documentary evidence of review and approval of disbursements for 4 out of 17 samples tested. In addition, for 1 sample, the Organization charged unallowable costs (bank fees) to the major program. During testing of payroll, it was noted that inadequate time and effort documentation was retained for 2 out of 26 samples tested, resulting in wages being charged erroneously between programs. (10.311) During testing of general disbursements, it was noted that the Organization did not retain documentary evidence of review and approval of disbursements for 5 out of 14 samples tested. During testing of payroll, it was noted that inadequate time and effort documentation was retained for 2 out of 21 samples tested, resulting in wages being charged erroneously between programs. During testing of indirect costs, it was noted that direct costs used to calculate the applied indirect cost rate were not supported by underlying documentation of costs incurred. Questioned costs: None Context: (10.307) For testing of general disbursements, a sample of 17 was made from a population of 113 disbursement transactions. Of the 17 sampled, 4 did not include documentary evidence of review and approval of the disbursement. In addition, 1 sample was found to be out of compliance with the provisions for 2 CFR 200.403(b). For testing of payroll, a sample of 26 was made from a population of 168 unique employee paychecks. Of the 26 sampled, 2 had inadequate documentation of time and effort spent on the major program, resulting in an overbilling in one sample and an underbilling in the second sample. (10.311) For testing of general disbursements, a sample of 14 was made from a population of 90 disbursement transactions. Of the 14 sampled, 5 did not include documentary evidence of review and approval of the disbursement. For testing of payroll, a sample of 21 was made from a population of 139 unique employee paychecks. Of the 21 sampled, 2 had inadequate documentation of time and effort spent on the major program, resulting in an overbilling in one sample and an underbilling in the second sample. For testing of indirect costs, a sample of 6 was made from a population of 21 monthly reimbursement invoices. Of the 6 sampled, 3 did not include sufficient documentation to support the direct costs used to apply the indirect cost rate. Cause: The Organization does not have adequate controls around the documentation of the supervisor review and approval process. Supervisory review and approvals are currently being communicated verbally. In addition, inadequate documentation is retained to document the time and effort of employee time spent on grants and the total direct costs that should be considered when applying the indirect cost rate. Effect: Without adequate records retained, the Organization is at risk of noncompliance with Federal programs and grant regulations, which could result in penalties or repayment obligations. Without adequate documentation and controls in place to ensure costs are reasonable and intended for the program charged, the Organization could incorrectly charge expenditures to the Federal program, report fraudulent expenditures, or not request appropriate reimbursement that the Organization is entitled to under the terms of the grant. Repeat Finding: No Recommendation: CLA recommends for the Organization to evaluate its current policies and procedures to implement an additional layer of review, and to formally document such review and approval procedures for all transactions affecting federal funds (i.e. approval of general expenditures, approval of timesheets, approval of indirect cost allocations). In addition, the Organization should emphasize the importance of detailed reviewed timesheets, including a second level review by the Finance Manager to ensure the accuracy and documentation of time and effort billed to each Federal program. Views of responsible officials: Management agrees with the finding.
Criteria or specific requirement: 2 CFR 200.403(b) states that costs must "Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items". Per the Federal award (contract 2018-51300-28430, PTEIN C0535A-A), there was no specific allowability for “Fees”, and the budget indicated $0 allocated to “Fees”. 2 CFR 200.303(a) requires nonfederal entities receiving Federal awards to "Establish and maintain internal controls over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award." 2 CFR 200.430(i)(1) states that "Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed." Condition: (10.307) During testing of general disbursements, it was noted that the Organization did not retain documentary evidence of review and approval of disbursements for 4 out of 17 samples tested. In addition, for 1 sample, the Organization charged unallowable costs (bank fees) to the major program. During testing of payroll, it was noted that inadequate time and effort documentation was retained for 2 out of 26 samples tested, resulting in wages being charged erroneously between programs. (10.311) During testing of general disbursements, it was noted that the Organization did not retain documentary evidence of review and approval of disbursements for 5 out of 14 samples tested. During testing of payroll, it was noted that inadequate time and effort documentation was retained for 2 out of 21 samples tested, resulting in wages being charged erroneously between programs. During testing of indirect costs, it was noted that direct costs used to calculate the applied indirect cost rate were not supported by underlying documentation of costs incurred. Questioned costs: None Context: (10.307) For testing of general disbursements, a sample of 17 was made from a population of 113 disbursement transactions. Of the 17 sampled, 4 did not include documentary evidence of review and approval of the disbursement. In addition, 1 sample was found to be out of compliance with the provisions for 2 CFR 200.403(b). For testing of payroll, a sample of 26 was made from a population of 168 unique employee paychecks. Of the 26 sampled, 2 had inadequate documentation of time and effort spent on the major program, resulting in an overbilling in one sample and an underbilling in the second sample. (10.311) For testing of general disbursements, a sample of 14 was made from a population of 90 disbursement transactions. Of the 14 sampled, 5 did not include documentary evidence of review and approval of the disbursement. For testing of payroll, a sample of 21 was made from a population of 139 unique employee paychecks. Of the 21 sampled, 2 had inadequate documentation of time and effort spent on the major program, resulting in an overbilling in one sample and an underbilling in the second sample. For testing of indirect costs, a sample of 6 was made from a population of 21 monthly reimbursement invoices. Of the 6 sampled, 3 did not include sufficient documentation to support the direct costs used to apply the indirect cost rate. Cause: The Organization does not have adequate controls around the documentation of the supervisor review and approval process. Supervisory review and approvals are currently being communicated verbally. In addition, inadequate documentation is retained to document the time and effort of employee time spent on grants and the total direct costs that should be considered when applying the indirect cost rate. Effect: Without adequate records retained, the Organization is at risk of noncompliance with Federal programs and grant regulations, which could result in penalties or repayment obligations. Without adequate documentation and controls in place to ensure costs are reasonable and intended for the program charged, the Organization could incorrectly charge expenditures to the Federal program, report fraudulent expenditures, or not request appropriate reimbursement that the Organization is entitled to under the terms of the grant. Repeat Finding: No Recommendation: CLA recommends for the Organization to evaluate its current policies and procedures to implement an additional layer of review, and to formally document such review and approval procedures for all transactions affecting federal funds (i.e. approval of general expenditures, approval of timesheets, approval of indirect cost allocations). In addition, the Organization should emphasize the importance of detailed reviewed timesheets, including a second level review by the Finance Manager to ensure the accuracy and documentation of time and effort billed to each Federal program. Views of responsible officials: Management agrees with the finding.
U.S. Department of Health and Human Services, passed through Kansas Department of Aging Aging Cluster - ALN 93.045 - Special Programs for the Aging _Title III, Part C_Nutrition Services - 2201KSOAHD Criteria or Specific Requirement – Allowable Costs/Cost Principles and Material Weakness Federal regulations state that “charges to federal awards for salaries and wages, must be based on records that accurately reflect the work performed.” The regulations also state that “the records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and property allocated” and “budget estimates alone do not qualify as support for charges to federal awards” (2 CFR 200.430(i)). Per 2 CFR 200.303, the non-Federal entities receiving federal awards (i.e ., auditee management) establish and maintain internal control design to reasonably ensure compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition – During our test work over the ALN 93.045 grant, we noted the the Unified Government did not have time and activity records with sufficient detail per federal regulations document to support its compensation and fringe benefit expenses. Questioned Costs – Total questioned costs of $2,332 were identified as a result of lack of proper documentation to support the charge and allocation to the grant. Context – We selected a sample of 40 charges totaling $16,402 to the Aging Cluster grants of which 28 were salaries and benefits expenditures with a value of $2,332. Within our sample, none of the 28 selections had proper documentation to support allocation to the grant. Per discussions with management and further review, the amounts charged to the grant were based on the approved budget for the position and the internal allocation performed each payroll period. Salaries and benefits charged to the entire cluster in the audit period totaled $306,658 and represented 16% of the total grant expenditures for the period. The sample was not intended to be, and was not, a statistically valid sample. Identification of Prior Year Finding: N/A Effect – Based on testing completed, the the Unified Government did not have sufficient procedures to allocate salaries and fringe benefits activity related to Aging Cluster throughout fiscal year 2022. Cause – Management indicated that this was attributed to a misunderstanding of the requirements and the inability to rely on budgeted estimates alone. Recommendation – We recommend that management utilize a time and activity method which meets the requirements of federal regulations. We also recommend employees and their supervisors are provided training on the requirements. Views of Responsible Official and Planned Corrective Actions – Management agrees with the stated finding and has implemented a corrective action plan.
U.S. Department of Health and Human Services, passed through Kansas Department of Aging Aging Cluster - ALN 93.045 - Special Programs for the Aging _Title III, Part C_Nutrition Services - 2201KSOAHD Criteria or Specific Requirement – Allowable Costs/Cost Principles and Material Weakness Federal regulations state that “charges to federal awards for salaries and wages, must be based on records that accurately reflect the work performed.” The regulations also state that “the records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and property allocated” and “budget estimates alone do not qualify as support for charges to federal awards” (2 CFR 200.430(i)). Per 2 CFR 200.303, the non-Federal entities receiving federal awards (i.e ., auditee management) establish and maintain internal control design to reasonably ensure compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition – During our test work over the ALN 93.045 grant, we noted the the Unified Government did not have time and activity records with sufficient detail per federal regulations document to support its compensation and fringe benefit expenses. Questioned Costs – Total questioned costs of $2,332 were identified as a result of lack of proper documentation to support the charge and allocation to the grant. Context – We selected a sample of 40 charges totaling $16,402 to the Aging Cluster grants of which 28 were salaries and benefits expenditures with a value of $2,332. Within our sample, none of the 28 selections had proper documentation to support allocation to the grant. Per discussions with management and further review, the amounts charged to the grant were based on the approved budget for the position and the internal allocation performed each payroll period. Salaries and benefits charged to the entire cluster in the audit period totaled $306,658 and represented 16% of the total grant expenditures for the period. The sample was not intended to be, and was not, a statistically valid sample. Identification of Prior Year Finding: N/A Effect – Based on testing completed, the the Unified Government did not have sufficient procedures to allocate salaries and fringe benefits activity related to Aging Cluster throughout fiscal year 2022. Cause – Management indicated that this was attributed to a misunderstanding of the requirements and the inability to rely on budgeted estimates alone. Recommendation – We recommend that management utilize a time and activity method which meets the requirements of federal regulations. We also recommend employees and their supervisors are provided training on the requirements. Views of Responsible Official and Planned Corrective Actions – Management agrees with the stated finding and has implemented a corrective action plan.
Criteria: The Association’s procedures for processing expenditures, and primarily allocating expenditures to programs, should include controls that ensure expenditures are properly charged to program and allocated in accordance with the federal grant requirements. The objective of the Assistance Listing 93.600 Head Start program (including Early Head Start and Early Head Start Partnerships) is to promote school readiness of low-income children (including American Indians, Alaska Natives and migrant and seasonal farm workers) by enhancing children’s cognitive, social and emotional development. During the fiscal year ending December 31, 2022, the Association expended $4,546,478 in major program funding. Federal regulations require award recipients to establish and follow internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls. Federal regulations require the Association to have adequate time-and-effort documentation to support all payroll costs charged to the Head Start awards. 2 CFR 200.430, Compensation – personal services, states, in part: “(i) Standards for Documentation of Personnel Expenses (1) Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (ii) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated…”. Depending on the number and types of activities employees perform, time and effort documentation can be in the form of semi-annual certification or monthly personnel activity reports, such as a timesheet. Condition: The Association’s controls were not effective to ensure it maintained adequate time and effort documentation, as required by federal regulations and the grantor. During review of payroll costs for the year ended December 31, 2022, it was noted payroll costs were charged according to budgeted time rather than reconciling to actual hours worked. This internal control deficiency is considered to be a significant deficiency. Questioned Costs: None. Context: Procedures included examining payroll charges for 40 randomly selected employees for January through December 2022. Cause: The Association changed the software used for payroll processing from QuickBooks to MIP in July 2020. They then changed their fiscal accounting software from QuickBooks to MIP in January 2021. The new software implementation was fraught with many challenges, one of which being implementing electronic processes that met the time and effort requirements outlined in the Association’s policy manual. Effect: By not keeping proper time-and-effort records, the Association cannot demonstrate compliance with grantor’s requirements that require support for payroll costs charged to the federal program. The Association provided alternate documentation that demonstrated the payroll costs charged to the program were allowable. Therefore, we are not questioning costs. Repeat finding: This finding is a repeat finding in the immediately prior year. Prior year finding number 2021-004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendation: The Association follow its own documented controls to ensure it prepares adequate time-and-effort documentation to support payroll costs charged to the federal grant. View of Responsible Officials: There is no disagreement with this audit finding.
Criteria: The Association’s procedures for processing expenditures, and primarily allocating expenditures to programs, should include controls that ensure expenditures are properly charged to program and allocated in accordance with the federal grant requirements. The objective of the Assistance Listing 93.600 Head Start program (including Early Head Start and Early Head Start Partnerships) is to promote school readiness of low-income children (including American Indians, Alaska Natives and migrant and seasonal farm workers) by enhancing children’s cognitive, social and emotional development. During the fiscal year ending December 31, 2022, the Association expended $4,546,478 in major program funding. Federal regulations require award recipients to establish and follow internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls. Federal regulations require the Association to have adequate time-and-effort documentation to support all payroll costs charged to the Head Start awards. 2 CFR 200.430, Compensation – personal services, states, in part: “(i) Standards for Documentation of Personnel Expenses (1) Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (ii) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated…”. Depending on the number and types of activities employees perform, time and effort documentation can be in the form of semi-annual certification or monthly personnel activity reports, such as a timesheet. Condition: The Association’s controls were not effective to ensure it maintained adequate time and effort documentation, as required by federal regulations and the grantor. During review of payroll costs for the year ended December 31, 2022, it was noted payroll costs were charged according to budgeted time rather than reconciling to actual hours worked. This internal control deficiency is considered to be a significant deficiency. Questioned Costs: None. Context: Procedures included examining payroll charges for 40 randomly selected employees for January through December 2022. Cause: The Association changed the software used for payroll processing from QuickBooks to MIP in July 2020. They then changed their fiscal accounting software from QuickBooks to MIP in January 2021. The new software implementation was fraught with many challenges, one of which being implementing electronic processes that met the time and effort requirements outlined in the Association’s policy manual. Effect: By not keeping proper time-and-effort records, the Association cannot demonstrate compliance with grantor’s requirements that require support for payroll costs charged to the federal program. The Association provided alternate documentation that demonstrated the payroll costs charged to the program were allowable. Therefore, we are not questioning costs. Repeat finding: This finding is a repeat finding in the immediately prior year. Prior year finding number 2021-004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendation: The Association follow its own documented controls to ensure it prepares adequate time-and-effort documentation to support payroll costs charged to the federal grant. View of Responsible Officials: There is no disagreement with this audit finding.
Criteria: The Association’s procedures for processing expenditures, and primarily allocating expenditures to programs, should include controls that ensure expenditures are properly charged to program and allocated in accordance with the federal grant requirements. The objective of the Assistance Listing 93.600 Head Start program (including Early Head Start and Early Head Start Partnerships) is to promote school readiness of low-income children (including American Indians, Alaska Natives and migrant and seasonal farm workers) by enhancing children’s cognitive, social and emotional development. During the fiscal year ending December 31, 2022, the Association expended $4,546,478 in major program funding. Federal regulations require award recipients to establish and follow internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls. Federal regulations require the Association to have adequate time-and-effort documentation to support all payroll costs charged to the Head Start awards. 2 CFR 200.430, Compensation – personal services, states, in part: “(i) Standards for Documentation of Personnel Expenses (1) Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (ii) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated…”. Depending on the number and types of activities employees perform, time and effort documentation can be in the form of semi-annual certification or monthly personnel activity reports, such as a timesheet. Condition: The Association’s controls were not effective to ensure it maintained adequate time and effort documentation, as required by federal regulations and the grantor. During review of payroll costs for the year ended December 31, 2022, it was noted payroll costs were charged according to budgeted time rather than reconciling to actual hours worked. This internal control deficiency is considered to be a significant deficiency. Questioned Costs: None. Context: Procedures included examining payroll charges for 40 randomly selected employees for January through December 2022. Cause: The Association changed the software used for payroll processing from QuickBooks to MIP in July 2020. They then changed their fiscal accounting software from QuickBooks to MIP in January 2021. The new software implementation was fraught with many challenges, one of which being implementing electronic processes that met the time and effort requirements outlined in the Association’s policy manual. Effect: By not keeping proper time-and-effort records, the Association cannot demonstrate compliance with grantor’s requirements that require support for payroll costs charged to the federal program. The Association provided alternate documentation that demonstrated the payroll costs charged to the program were allowable. Therefore, we are not questioning costs. Repeat finding: This finding is a repeat finding in the immediately prior year. Prior year finding number 2021-004. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendation: The Association follow its own documented controls to ensure it prepares adequate time-and-effort documentation to support payroll costs charged to the federal grant. View of Responsible Officials: There is no disagreement with this audit finding.
Finding 2022–001: Internal Controls over Allowable Costs Federal Department: U.S. Department of Education Pass-through Agencies: State of South Carolina Department of Education, Minnesota Department of Education, and DC Office of the State Superintendent of Education Federal Program Name: Twenty-First Century Community Learning Centers Assistance Listing Number: 84.287 Type of Finding: Significant Deficiency in Internal Control over Compliance Other Matters Criteria 2 CFR Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, Subpart D – Post-Federal Award Requirements Standards Section 200.303, Internal controls states “The non-Federal” entity must: (1) establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and terms and conditions of the Federal award. Section 200.430 (i) Standards for Documentation of Personnel Expenses states (1) Charges to federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (ii) Be incorporated into the official records of the non-federal entity; (iii) Reasonably reflect the total activity for which the employee is compensated by the non-federal entity, not exceeding 100% of compensated activities…; (v) Comply with the established accounting policies and practices of the non-federal entity…; (viii) Budget estimates (i.e., estimates determined before the services are performed) alone do not qualify as support for charges to federal awards, but may be used for interim accounting purposes, provided that: (A) The system for establishing the estimates produces reasonable approximations of the activity actually performed; (B) Significant changes in the corresponding work activity (as defined by the non-federal entity's written policies) are identified and entered into the records in a timely manner. Short-term (such as one or two months) fluctuation between workload categories need not be considered as long as the distribution of salaries and wages is reasonable over the longer term; and (C) The non-federal entity's system of internal controls includes processes to review after-the-fact interim charges made to a federal award based on budget estimates. All necessary adjustments must be made such that the final amount charged to the federal award is accurate, allowable, and properly allocated. Condition/Context During the current audit period, CDF did not maintain adequate control over allowable costs related to its federally funded program. Exceptions noted in 11 of 60 tested payroll expenditures: For 11 payroll expenditures tested, we were not provided with any evidence of approval of the payroll allocations. We noted these allocations were based on budget estimates, instead of actual time and effort reporting. Exceptions noted in 23 of 60 non-payroll expenditures tested: For 22 non-payroll expenditures tested, we were not provided with any evidence of approval of the overhead allocations. We reviewed the supporting documentation, and the expenditures are deemed allowable. For one expenditure tested, we were not provided with any supporting documentation to determine if the expenditure was allowable. Cause Based on our discussions with management, this finding occurred due to staff turnover. This resulted in consistent documentation not maintained to support the approval of expenditure allocations. Effect The failure to maintain adequate documentation to verify that expenditures are properly reviewed and approved and to maintain adequate supporting documentation to ensure all payroll and non-payroll expenditures are reasonable and properly reviewed is a violation of federal regulations, which could result in unallowed costs being charged to the federally funded program. Questioned Costs $4,697 Identification of Repeat Findings Not a repeat finding. Recommendation We recommend that CDF implement procedures to ensure all expenditure allocations are properly reviewed and approved and supporting documentation is maintained in accordance with federal regulations. Views of Responsible Officials and Corrective Action Plan CDF agrees with the finding and recommendation. See CDF’s Corrective Action Plan on pages 17-18.
Finding 2022–001: Internal Controls over Allowable Costs Federal Department: U.S. Department of Education Pass-through Agencies: State of South Carolina Department of Education, Minnesota Department of Education, and DC Office of the State Superintendent of Education Federal Program Name: Twenty-First Century Community Learning Centers Assistance Listing Number: 84.287 Type of Finding: Significant Deficiency in Internal Control over Compliance Other Matters Criteria 2 CFR Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, Subpart D – Post-Federal Award Requirements Standards Section 200.303, Internal controls states “The non-Federal” entity must: (1) establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and terms and conditions of the Federal award. Section 200.430 (i) Standards for Documentation of Personnel Expenses states (1) Charges to federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (ii) Be incorporated into the official records of the non-federal entity; (iii) Reasonably reflect the total activity for which the employee is compensated by the non-federal entity, not exceeding 100% of compensated activities…; (v) Comply with the established accounting policies and practices of the non-federal entity…; (viii) Budget estimates (i.e., estimates determined before the services are performed) alone do not qualify as support for charges to federal awards, but may be used for interim accounting purposes, provided that: (A) The system for establishing the estimates produces reasonable approximations of the activity actually performed; (B) Significant changes in the corresponding work activity (as defined by the non-federal entity's written policies) are identified and entered into the records in a timely manner. Short-term (such as one or two months) fluctuation between workload categories need not be considered as long as the distribution of salaries and wages is reasonable over the longer term; and (C) The non-federal entity's system of internal controls includes processes to review after-the-fact interim charges made to a federal award based on budget estimates. All necessary adjustments must be made such that the final amount charged to the federal award is accurate, allowable, and properly allocated. Condition/Context During the current audit period, CDF did not maintain adequate control over allowable costs related to its federally funded program. Exceptions noted in 11 of 60 tested payroll expenditures: For 11 payroll expenditures tested, we were not provided with any evidence of approval of the payroll allocations. We noted these allocations were based on budget estimates, instead of actual time and effort reporting. Exceptions noted in 23 of 60 non-payroll expenditures tested: For 22 non-payroll expenditures tested, we were not provided with any evidence of approval of the overhead allocations. We reviewed the supporting documentation, and the expenditures are deemed allowable. For one expenditure tested, we were not provided with any supporting documentation to determine if the expenditure was allowable. Cause Based on our discussions with management, this finding occurred due to staff turnover. This resulted in consistent documentation not maintained to support the approval of expenditure allocations. Effect The failure to maintain adequate documentation to verify that expenditures are properly reviewed and approved and to maintain adequate supporting documentation to ensure all payroll and non-payroll expenditures are reasonable and properly reviewed is a violation of federal regulations, which could result in unallowed costs being charged to the federally funded program. Questioned Costs $4,697 Identification of Repeat Findings Not a repeat finding. Recommendation We recommend that CDF implement procedures to ensure all expenditure allocations are properly reviewed and approved and supporting documentation is maintained in accordance with federal regulations. Views of Responsible Officials and Corrective Action Plan CDF agrees with the finding and recommendation. See CDF’s Corrective Action Plan on pages 17-18.
Finding 2022–001: Internal Controls over Allowable Costs Federal Department: U.S. Department of Education Pass-through Agencies: State of South Carolina Department of Education, Minnesota Department of Education, and DC Office of the State Superintendent of Education Federal Program Name: Twenty-First Century Community Learning Centers Assistance Listing Number: 84.287 Type of Finding: Significant Deficiency in Internal Control over Compliance Other Matters Criteria 2 CFR Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, Subpart D – Post-Federal Award Requirements Standards Section 200.303, Internal controls states “The non-Federal” entity must: (1) establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and terms and conditions of the Federal award. Section 200.430 (i) Standards for Documentation of Personnel Expenses states (1) Charges to federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (ii) Be incorporated into the official records of the non-federal entity; (iii) Reasonably reflect the total activity for which the employee is compensated by the non-federal entity, not exceeding 100% of compensated activities…; (v) Comply with the established accounting policies and practices of the non-federal entity…; (viii) Budget estimates (i.e., estimates determined before the services are performed) alone do not qualify as support for charges to federal awards, but may be used for interim accounting purposes, provided that: (A) The system for establishing the estimates produces reasonable approximations of the activity actually performed; (B) Significant changes in the corresponding work activity (as defined by the non-federal entity's written policies) are identified and entered into the records in a timely manner. Short-term (such as one or two months) fluctuation between workload categories need not be considered as long as the distribution of salaries and wages is reasonable over the longer term; and (C) The non-federal entity's system of internal controls includes processes to review after-the-fact interim charges made to a federal award based on budget estimates. All necessary adjustments must be made such that the final amount charged to the federal award is accurate, allowable, and properly allocated. Condition/Context During the current audit period, CDF did not maintain adequate control over allowable costs related to its federally funded program. Exceptions noted in 11 of 60 tested payroll expenditures: For 11 payroll expenditures tested, we were not provided with any evidence of approval of the payroll allocations. We noted these allocations were based on budget estimates, instead of actual time and effort reporting. Exceptions noted in 23 of 60 non-payroll expenditures tested: For 22 non-payroll expenditures tested, we were not provided with any evidence of approval of the overhead allocations. We reviewed the supporting documentation, and the expenditures are deemed allowable. For one expenditure tested, we were not provided with any supporting documentation to determine if the expenditure was allowable. Cause Based on our discussions with management, this finding occurred due to staff turnover. This resulted in consistent documentation not maintained to support the approval of expenditure allocations. Effect The failure to maintain adequate documentation to verify that expenditures are properly reviewed and approved and to maintain adequate supporting documentation to ensure all payroll and non-payroll expenditures are reasonable and properly reviewed is a violation of federal regulations, which could result in unallowed costs being charged to the federally funded program. Questioned Costs $4,697 Identification of Repeat Findings Not a repeat finding. Recommendation We recommend that CDF implement procedures to ensure all expenditure allocations are properly reviewed and approved and supporting documentation is maintained in accordance with federal regulations. Views of Responsible Officials and Corrective Action Plan CDF agrees with the finding and recommendation. See CDF’s Corrective Action Plan on pages 17-18.
Federal Agency: U.S. Department of Health and Human Services Federal Program Name: Block Grants for Prevention and Treatment of Substance Abuse Assistance Listing Number: 93.959 Federal Award Identification Number: 43CAZ03215 Award Period: January 1, 2022 – December 31, 2022 Type of Finding: Material Weakness in internal control over compliance Criteria: The cost principles in 2 CFR Part 200, subpart E (Cost Principles) prescribe requirements for allowable costs relative to compensation and substantiation requirements specifically, 2 CFR Part 200.430(i) states “Cost must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated.” Condition: Employee change of status forms are not consistently maintained in accordance with applicable requirements. Questioned Costs: None. Context: 5 Employee files that were selected for verification disclosed 4 instances where forms were not available for review. Cause: Employee change of status forms or offer letters were not maintained on file or available for review. Effect: Inability to review employee change of status forms or offer letters limits the ability to verify costs allowability as required. As a result of the missing forms, it is not possible to fully ascertain compliance with allowable costs as required by 2 CFR 200.430. Repeat Finding: Yes Recommendation: Offer letters or employee change of status forms should be maintained on file. We recommend management implement a second layer of review of personnel files. Views of Responsible Official: Since the hiring of the Executive Director in March of 2022, we have implemented the following: Created A Human Resources Department, which did not exist at CRA before 2022. Hired a Human Resources Director to oversee department. Initiated a comprehensive HR information system where staff can review their pay, track their time, and review benefits. Initiated the process of uploading personnel information to our new system, while keeping backups secured. This includes hiring documentation and change of status forms for employees.
Federal Agency: U.S. Department of Health and Human Services Federal Program Name: Block Grants for Prevention and Treatment of Substance Abuse Assistance Listing Number: 93.959 Federal Award Identification Number: 43CAZ03215 Award Period: January 1, 2022 – December 31, 2022 Type of Finding: Material Weakness in internal control over compliance Criteria: The cost principles in 2 CFR Part 200, subpart E (Cost Principles) prescribe requirements for allowable costs relative to compensation and substantiation requirements specifically, 2 CFR Part 200.430(i) states “Cost must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated.” Condition: Employee change of status forms are not consistently maintained in accordance with applicable requirements. Questioned Costs: None. Context: 5 Employee files that were selected for verification disclosed 4 instances where forms were not available for review. Cause: Employee change of status forms or offer letters were not maintained on file or available for review. Effect: Inability to review employee change of status forms or offer letters limits the ability to verify costs allowability as required. As a result of the missing forms, it is not possible to fully ascertain compliance with allowable costs as required by 2 CFR 200.430. Repeat Finding: Yes Recommendation: Offer letters or employee change of status forms should be maintained on file. We recommend management implement a second layer of review of personnel files. Views of Responsible Official: Since the hiring of the Executive Director in March of 2022, we have implemented the following: Created A Human Resources Department, which did not exist at CRA before 2022. Hired a Human Resources Director to oversee department. Initiated a comprehensive HR information system where staff can review their pay, track their time, and review benefits. Initiated the process of uploading personnel information to our new system, while keeping backups secured. This includes hiring documentation and change of status forms for employees.
2022-007 Payroll (Material Weakness) Criteria: Title 2 CFR Part 200 §200.430(g). Charges to federal awards for salaries and wages must be based on records that accurately reflect the work performed. Condition: Timesheets were not always obtained and did not include information to support employee time and effort as required by federal regulations. Time records did not always include evidence of review/approval. Additionally, for two employees of 60 tested, differences existed between the approved hourly pay rate and the hourly rate paid per the payroll summary. Cause: As discussed at Finding 2022-005, we noted that no policy exists over the form and content of documentation to support employee time and effort under 2 CFR Part 200. And policies are not in place for the review and approval of payroll transactions. Effect: Payroll records did not comply with federal regulations. Because of the failure to require appropriate documentation and review/approval, there is increased risk that payroll transactions could be inappropriately charged to government programs. Questioned Costs: Not determinable due to limitations in the Organization’s accounting system. Perspective: When timesheets were not obtained, we were able to examine other evidence of time worked (such as emails). Forty of 60 tested had no evidence of approval. Repeat Finding: Yes Recommendation: Procedures should be implemented to require appropriate contemporaneous documentation to support time and effort reporting under 2 CFR Part 200. In addition, procedures should also be implemented to require the review and approval of payroll. Views of Responsible Officials: Management acknowledges the control weaknesses as described above as there was not proper documentation of payroll transactions including evidence of review and approval. The Organization has undertaken a review of its policies and procedures, including consultation of an outside accounting firm to ensure proper control procedures over payroll are implemented.
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 actual work performed, which must, among other things: (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) and reasonably reflect the total activity for which the employee is compensated by the non-Federal entity.
Finding 2022-002: Lack of documentation of review and approval - Material Weakness Program name: Office for Coastal Management Assistance Listing: 11.473 Federal award Identification number: 20 NFWF 339630 Federal award year: 9/1/2020 - 8/31/2023 Federal awarding agency: U.S. Department of Commerce Criteria - In accordance with 2 CFR 200.303, recipients and subrecipients must establish, document and maintain effective internal control over Federal awards. These controls should be in compliance with Federal statutes, regulations, and the terms and conditions of the award, and should align with standards such as the “Standards for Internal Control in the Federal Government” (Green Book) or the COSO framework. This includes controls over: * Payroll: Ensuring labor charges are accurate, allowable, and properly approved (2 CFR 200.430). * Expenses: Ensuring proper documentation and approval. (2 CFR 200.400(d) ) * Reporting: Ensuring financial reports are accurate, complete, and reviewed prior to submission (2 CFR 200.328). Condition - The Organization has limited written processes of certain transaction classes. There was a pervasive lack of documentation of approval over transactions, including payroll, expenses, and reporting. Cause - The Organization did not maintain or consistently apply documentation protocols for internal control reviews. Formal documentation practices were not in place during the audit period. Effect - Lack of documentation as evidence that controls over compliance were being performed. Documentation should be maintained as evidence that sufficient control activities are in place and would effectively prevent or detect and correct noncompliance. Controls must be followed for every transaction and documentation of the control being performed must be maintained. Questioned costs - None identified. Perspective - The deficiency was pervasive across multiple compliance areas and was not isolated to a specific transaction or department. The scope indicates a systemic control weakness during the audit period. Identification of Repeat Findings - This is not a repeat finding. Recommendation - We recommend that the Organization ensure updated policies and procedures are implemented and consistently applied. This includes: * Documented review and approval of all transactions related to payroll, expenses, and reporting. * Maintenance of written evidence supporting such reviews. * Regular training and internal monitoring to ensure control procedures are consistently followed. Management response - See corrective action plan
Federal Agency: U.S. Department of Health and Human Services Federal Program Name: Epidemiology and Laboratory Capacity for Infectious Diseases (Contract Tracing and Response grants); Support of Immunization Initiative-Focusing on Childhood Vaccination Programs (Mass Vacation) Assistance Listing Number: 93.323 and 93.268 Federal Award Identification Number and Year: 6NU50CK000559-01-08 Year 2020 and 2021; NH23IP922637 Year 2021 Pass-Through Agency: Illinois Department of Public Health Pass-Through Number: 05180138H; 28180539J; 15080638I-1 Award Period: June 1, 2020 through March 31, 2022; July 1, 2022 through December 31, 2022; December 1, 2020 through December 31, 2022 Type of Finding: ? Significant Deficiency in Internal Control over Compliance ? Other Matters Criteria or specific requirement: Uniform Grant Guidance (2 CFR 200.430) requires a non-federal entity to maintain sufficient time and effort records for personal services to accurately reflect work performed. Condition: Overtime was being charged to the program on days that vacation and sick time was used. A lump sum overtime payment was made for built up unrecorded/unpaid hours with no supporting documentation regarding what days the hours were worked. Questioned costs: $777.72 Contract Tracing; $194.43 Mass Vaccination; $12,573.77 Response Context: All overtime charged to the grants by the Health Department Administrator Cause: Time cards did not provide sufficient detail to determine which days in the period were being charged for overtime, and appears overtime was charged during paid time off. Effect: Lack of proper time and effort reporting can lead to unallowable costs. Repeat Finding: This finding is a repeat of a finding in the prior year. The prior year finding number was 2021-004. Recommendation: We recommend the County review time and effort records to ensure overtime is not charged to Federal grants on days in which vacation and sick time is used. More detailed reporting of the days in which the vacation and sick days are used and the overtime days would assist with this process. Views of responsible officials: There is no disagreement with the audit finding.
Federal Agency: U.S. Department of Health and Human Services Federal Program Name: Epidemiology and Laboratory Capacity for Infectious Diseases (Contract Tracing and Response grants); Support of Immunization Initiative-Focusing on Childhood Vaccination Programs (Mass Vacation) Assistance Listing Number: 93.323 and 93.268 Federal Award Identification Number and Year: 6NU50CK000559-01-08 Year 2020 and 2021; NH23IP922637 Year 2021 Pass-Through Agency: Illinois Department of Public Health Pass-Through Number: 05180138H; 28180539J; 15080638I-1 Award Period: June 1, 2020 through March 31, 2022; July 1, 2022 through December 31, 2022; December 1, 2020 through December 31, 2022 Type of Finding: ? Significant Deficiency in Internal Control over Compliance ? Other Matters Criteria or specific requirement: Uniform Grant Guidance (2 CFR 200.430) requires a non-federal entity to maintain sufficient time and effort records for personal services to accurately reflect work performed. Condition: Overtime was being charged to the program on days that vacation and sick time was used. A lump sum overtime payment was made for built up unrecorded/unpaid hours with no supporting documentation regarding what days the hours were worked. Questioned costs: $777.72 Contract Tracing; $194.43 Mass Vaccination; $12,573.77 Response Context: All overtime charged to the grants by the Health Department Administrator Cause: Time cards did not provide sufficient detail to determine which days in the period were being charged for overtime, and appears overtime was charged during paid time off. Effect: Lack of proper time and effort reporting can lead to unallowable costs. Repeat Finding: This finding is a repeat of a finding in the prior year. The prior year finding number was 2021-004. Recommendation: We recommend the County review time and effort records to ensure overtime is not charged to Federal grants on days in which vacation and sick time is used. More detailed reporting of the days in which the vacation and sick days are used and the overtime days would assist with this process. Views of responsible officials: There is no disagreement with the audit finding.
Federal Agency: U.S. Department of Health and Human Services Federal Program Name: Epidemiology and Laboratory Capacity for Infectious Diseases (Contract Tracing and Response grants); Support of Immunization Initiative-Focusing on Childhood Vaccination Programs (Mass Vacation) Assistance Listing Number: 93.323 and 93.268 Federal Award Identification Number and Year: 6NU50CK000559-01-08 Year 2020 and 2021; NH23IP922637 Year 2021 Pass-Through Agency: Illinois Department of Public Health Pass-Through Number: 05180138H; 28180539J; 15080638I-1 Award Period: June 1, 2020 through March 31, 2022; July 1, 2022 through December 31, 2022; December 1, 2020 through December 31, 2022 Type of Finding: ? Significant Deficiency in Internal Control over Compliance ? Other Matters Criteria or specific requirement: Uniform Grant Guidance (2 CFR 200.430) requires a non-federal entity to maintain sufficient time and effort records for personal services to accurately reflect work performed. Condition: Overtime was being charged to the program on days that vacation and sick time was used. A lump sum overtime payment was made for built up unrecorded/unpaid hours with no supporting documentation regarding what days the hours were worked. Questioned costs: $777.72 Contract Tracing; $194.43 Mass Vaccination; $12,573.77 Response Context: All overtime charged to the grants by the Health Department Administrator Cause: Time cards did not provide sufficient detail to determine which days in the period were being charged for overtime, and appears overtime was charged during paid time off. Effect: Lack of proper time and effort reporting can lead to unallowable costs. Repeat Finding: This finding is a repeat of a finding in the prior year. The prior year finding number was 2021-004. Recommendation: We recommend the County review time and effort records to ensure overtime is not charged to Federal grants on days in which vacation and sick time is used. More detailed reporting of the days in which the vacation and sick days are used and the overtime days would assist with this process. Views of responsible officials: There is no disagreement with the audit finding.
Federal Agency: U.S. Department of Health and Human Services Federal Program Name: Epidemiology and Laboratory Capacity for Infectious Diseases (Contract Tracing and Response grants); Support of Immunization Initiative-Focusing on Childhood Vaccination Programs (Mass Vacation) Assistance Listing Number: 93.323 and 93.268 Federal Award Identification Number and Year: 6NU50CK000559-01-08 Year 2020 and 2021; NH23IP922637 Year 2021 Pass-Through Agency: Illinois Department of Public Health Pass-Through Number: 05180138H; 28180539J; 15080638I-1 Award Period: June 1, 2020 through March 31, 2022; July 1, 2022 through December 31, 2022; December 1, 2020 through December 31, 2022 Type of Finding: ? Significant Deficiency in Internal Control over Compliance ? Other Matters Criteria or specific requirement: Uniform Grant Guidance (2 CFR 200.430) requires a non-federal entity to maintain sufficient time and effort records for personal services to accurately reflect work performed. Condition: Overtime was being charged to the program on days that vacation and sick time was used. A lump sum overtime payment was made for built up unrecorded/unpaid hours with no supporting documentation regarding what days the hours were worked. Questioned costs: $777.72 Contract Tracing; $194.43 Mass Vaccination; $12,573.77 Response Context: All overtime charged to the grants by the Health Department Administrator Cause: Time cards did not provide sufficient detail to determine which days in the period were being charged for overtime, and appears overtime was charged during paid time off. Effect: Lack of proper time and effort reporting can lead to unallowable costs. Repeat Finding: This finding is a repeat of a finding in the prior year. The prior year finding number was 2021-004. Recommendation: We recommend the County review time and effort records to ensure overtime is not charged to Federal grants on days in which vacation and sick time is used. More detailed reporting of the days in which the vacation and sick days are used and the overtime days would assist with this process. Views of responsible officials: There is no disagreement with the audit finding.