Finding 1061638 (2023-003)

Significant Deficiency
Requirement
AB
Questioned Costs
-
Year
2023
Accepted
2024-08-27
Audit: 318000
Organization: City of Stockton (CA)

AI Summary

  • Core Issue: The City failed to provide necessary timesheets and documentation for payroll costs charged to federal programs, leading to potential non-compliance with federal requirements.
  • Impacted Requirements: Salaries must be based on accurate records reflecting actual work performed, as outlined in 2 CFR §200.430(i), including proper allocation and documentation of employee time.
  • Recommended Follow-Up: Enhance internal controls by implementing policies to ensure all payroll costs are supported by timely documentation and maintain proper records during system transitions.

Finding Text

2023-003 – Allowable Costs/Cost Principles – Internal Control over Payroll Expenditures Identification of the Federal Program: Assistance Listing Number: 14.231 Assistance Listing Title: Emergency Solutions Grant Program Federal Agency: U.S. Department of Housing and Urban Development Pass-Through Entity: N/A Federal Award Identification Number: E-20-MW-06-0026, E-21-MC-06-0026, E-22-MC-06-0026 Assistance Listing Number: 14.218 Assistance Listing Title: Community Development Block Grants-Entitlement Grants Cluster Federal Agency: U.S. Department of Housing and Urban Development Pass-Through Entity: N/A Federal Award Identification Number: B-20-MW-06-0026, B-21-MC-06-0026, B-22-MC-06-0026, B-23-MC-06-0026 Program Income Criteria or Specific Requirement (Including Statutory, Regulatory, or Other Citation): Total salaries charged to Federal awards (including extra service pay) are subject to the Standards of Documentation as described by 2 CFR §200.430(i). Per this section, salaries and wages charged to Federal awards must be based on records that accurately reflect the work performed. These records must: - Be incorporated into the organization’s official records; - Reasonably reflect the total activity for which the employee is compensating across all grant related and non-grant related activities (100% effort); - Support the distribution of employee salary across multiple activities or cost objectives (for example, effort spent on multiple federal awards, spent on general/or administrative activities, vacation, sick leave, leave without pay, etc.); and - Utilize an "after-the-fact" review of the employee’s actual hours worked during the reporting period for identifying and correcting significant changes (as defined by the organization’s written policies). Condition: Emergency Solutions Grant Program The City was unable to locate and provide the timesheets for (2) out of eleven (11) samples tested with Payroll Cost allocated to the Program. Within the overall population of a hundred and five (105) lines of ESG and ESGCV payroll charges, the City also had four (4) unsupported employee benefits charged to the program has benefit charged to program. Community Development Block Grants-Entitlement Grants Cluster Payroll costs for eighteen (18) out of forty (40) samples tested were allocated to programs were not supported by approved time samples or updated cost allocation methods/plan, nor were they reconciled to actual time spent on the various programs. Cause: The City did not adhere to its established policies and procedures for verifying that employee compensation charged to federal programs was supported by contemporaneous time records or an after-the-fact distribution of actual time and effort spent on federal program activities. Additionally, a thorough review and reconciliation of payroll time entries and postings from the old financial system (HTE) to the new financial system (MUNIS) was not conducted, resulting in the failure to preserve supporting documentation, such as timesheets, during the transition process. Effect or Potential Effect: The City did not comply with the program’s requirements for allowable costs. There is an increased risk that employees’ compensation charged to the program may not have represented an actual time and effort expended on the program’s activities. Questioned Costs: None. Context: See condition above for the context of the finding. Identification as a Repeat Finding, If Applicable: Not applicable. Recommendation: We recommend that the City enhance its internal controls over payroll processes by implementing policies and procedures that ensure employee compensation charged to federal programs is supported by contemporaneous or after-the-fact documentation of actual time and effort spent on federal program activities. Additionally, all supporting documentation should be properly saved. Views of Responsible Officials: Management concurs with the finding.

Categories

Allowable Costs / Cost Principles

Other Findings in this Audit

  • 485187 2023-003
    Significant Deficiency
  • 485188 2023-003
    Significant Deficiency
  • 485189 2023-003
    Significant Deficiency
  • 485190 2023-003
    Significant Deficiency
  • 485191 2023-005
    Significant Deficiency
  • 485192 2023-003
    Significant Deficiency
  • 485193 2023-006
    Significant Deficiency Repeat
  • 485194 2023-003
    Significant Deficiency
  • 485195 2023-006
    Significant Deficiency Repeat
  • 485196 2023-003
    Significant Deficiency
  • 485197 2023-006
    Significant Deficiency Repeat
  • 485198 2023-004
    Material Weakness Repeat
  • 485199 2023-004
    Material Weakness Repeat
  • 485200 2023-004
    Material Weakness Repeat
  • 1061629 2023-003
    Significant Deficiency
  • 1061630 2023-003
    Significant Deficiency
  • 1061631 2023-003
    Significant Deficiency
  • 1061632 2023-003
    Significant Deficiency
  • 1061633 2023-005
    Significant Deficiency
  • 1061634 2023-003
    Significant Deficiency
  • 1061635 2023-006
    Significant Deficiency Repeat
  • 1061636 2023-003
    Significant Deficiency
  • 1061637 2023-006
    Significant Deficiency Repeat
  • 1061639 2023-006
    Significant Deficiency Repeat
  • 1061640 2023-004
    Material Weakness Repeat
  • 1061641 2023-004
    Material Weakness Repeat
  • 1061642 2023-004
    Material Weakness Repeat

Programs in Audit

ALN Program Name Expenditures
66.958 Water Infrastructure Finance and Innovation (wifia) (e) $108.00M
21.019 Coronavirus Relief Fund $2.78M
21.027 Coronavirus State and Local Fiscal Recovery Funds $2.25M
97.083 Staffing for Adequate Fire and Emergency Response (safer) $1.37M
14.231 Emergency Solutions Grant Program $889,971
16.753 Congressionally Recommended Awards $410,914
66.818 Brownfields Assessment and Cleanup Cooperative Agreements $186,954
20.608 Minimum Penalties for Repeat Offenders for Driving While Intoxicated $163,683
21.023 Emergency Rental Assistance Program $157,845
20.600 State and Community Highway Safety $139,917
14.239 Home Investment Partnerships Program $43,873
16.034 Coronavirus Emergency Supplemental Funding Program $42,348
16.123 Community-Based Violence Prevention Program $31,683
16.738 Edward Byrne Memorial Justice Assistance Grant Program $16,840
97.044 Assistance to Firefighters Grant $13,899
14.218 Community Development Block Grants/entitlement Grants $1,007
20.205 Highway Planning and Construction $495
59.059 Congrssional Earmarks Initiative $283