Finding Text
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.