Finding Text
Criteria:
Uniform Guidance requires that salaries charged to Federal awards are subject to its Standards of
Documentation which state that salaries and wages must be based on records that accurately reflect the
work performed. CDFI award states fringe benefits such as annual leave and holiday are allowable as long
as they are made under formally established and consistently applied policies and subject to Uniform
Guidance requirements. . UG states leave such as holidays and paid time off are allowable under specific
circumstances, one of which is that they are equally allocated to all activities and Federal awards. The
award also prohibits indirect costs.
Condition:
During our audit we tested a sample of salary charges and cash disbursements to the award during the
period ended September 30, 2023. One charge to salaries was a journal entry posted at year end and the
other a journal entry to expenditures for the respective fringe benefits. The timesheets provided to support
these charges did not have time directly charged to the CDFI FA award. In addition, the PAR report
provided to support the entries included time that would be in normal circumstances classified as indirect
activities based on definitions in the Uniform Guidance section 200.413 and not allowable under the award.
Cause:
An analysis was performed by Management at year end to review salaries charged to funding sources.
General journal entries were then posted to salaries and fringe to reallocate time and fringe charged to
unrestricted awards to the CDFI award but not to any other award. The methodology used to charge and
time and fringe in the analysis was not consistent with the methodology used throughout the year.
In addition, there was confusion as to the requirements of the award and the requirements imposed by the
Uniform Guidance and how the two interact. For instance, some items such as leave and holiday were
considered allowable in the analysis, but Uniform Guidance puts specific criteria that must be met for it to
be allowable. There was also confusion on what is considered a direct administrative cost (costs identified
with a specific award) and indirect costs which apply to multiple awards.
Effect:
This process overrode the bi-weekly internal controls and created errors in the reclassification. The
reclassification included indirect costs charged as direct costs and benefits such as annual leave and
holidays not charged appropriately or consistently across the multiple awards as required by Uniform
Guidance.
Question Costs
None. The Organization had met the terms of the award through the deployment of loan products.