FAC Explorer

Finding 1074725 (2023-004)

- Repeat Finding
Requirement
AB
Questioned Costs
$1
Year
2023
Accepted
2024-09-25
Audit: 321037
Organization: City of Seattle (WA)
Auditor: Office of the Washington State Auditor

AI Summary

  • Core Issue: The City charged payroll expenses to CDBG grants without proper documentation, leading to questioned costs of $2,989.
  • Impacted Requirements: Federal regulations require accurate records for salary charges, ensuring they reflect actual work performed.
  • Recommended Follow-Up: The City should ensure all payroll charges comply with regulations and consult the grantor about potential repayment of questioned costs.

Finding Text

2023-004 The City charged payroll-related expenditures that lacked support to the Community Development Block Grants/Entitlement Grants. Assistance Listing Number and Title: 14.218 – Community Development Block Grants/Entitlement Grants 14.218 – COVID-19 Community Development Block Grants/Entitlement Grants Federal Grantor Name: U.S. Department of Housing and Urban Development Federal Award/Contract Number: B18MC530005, B20MC530005, B22MC530005, B23MC530005, COVID-19 B20MW530005 Pass-through Entity Name: N/A Pass-through Award/Contract Number: N/A Known Questioned Cost Amount: $2,989 Prior Year Audit Finding: Yes, Finding 2022-001 Background The City spent $6,183,811 in Community Development Block Grants/Entitlement Grants (CDBG) funds in 2023. CDBG is intended to help provide decent and affordable housing, particularly for people with moderate, low and very low incomes. Funds also help recipients implement strategies for achieving an adequate supply of decent housing and providing a suitable living environment and expanded economic opportunities for people with low incomes. The City may use these grant funds for its program administrative costs. Federal regulations state that personnel expenditures must be supported and recipients must provide reasonable assurance that the charges are accurate, allowable and properly allocated. Further, records must support the distribution of an employee’s salary and wages among specific activities or cost objectives if the employee works on more than one federal ward. The City must base charges to federal awards for salaries and wages on records that accurately reflect the work employees performed. Description of Condition Although the City’s internal controls were adequate for ensuring it materially complied with the program’s allowable activities and costs requirements, during the audit period, the City charged salary and wage expenditures to the CDBG program based on records that did not accurately reflect the work employees performed. Supervisors in the human services department, office of housing, and parks and recreation department preapproved timesheets. Because the timesheets were preapproved, the City could not provide evidence that the timesheets accurately reflected each employee’s actual time worked in the program. Cause of Condition Human services department: The supervisor was on vacation the day payroll was due and approved the time early instead of having a proxy approve the time. Office of housing: Management said that if a supervisor is not working on the day payroll approval is due, they will preapprove the employee’s timesheet. Parks and recreation department: Payroll asked supervisors to approve the time early to ensure time for payroll processing because the pay period end on a holiday. In another instance, the preapproval occurred before management took corrective action in regard to the prior year audit finding. Effect of Condition and Questioned Costs Using a statistical sampling method, we selected 28 payroll transactions in the human services department, office of housing, and parks and recreation department. We identified seven payroll charges totaling $2,989 in known questions costs. Based upon the projection of our statistical sample, we identified an additional $38,643 in estimated overpayments. Federal regulations require the State Auditor’s Office to report known and likely questioned costs that are more than $25,000 for each type of compliance requirement. We question costs when we find the City did not comply with grant regulations and/or when it does not have adequate documentation to support expenditures. Recommendation We recommend the City ensure all payroll-related expenditures it charges to the CDBG program are only for allowable activities, are accurate, are properly allocated and comply with the cost principles set forth in 2 CFR 200 Subpart E. We further recommend the City consult with the grantor to determine whether it needs to repay the questioned costs. City’s Response The Human Services Department The Human Services Department has acknowledged the issue identified regarding timesheet pre-approvals and will take immediate steps to address the issue. HSD will ensure that proxy timesheet approvers are properly assigned in cases where the primary supervisor is unavailable on the day payroll approval is due. HSD will maintain compliance with payroll policies and ensure the accuracy of timesheet approvals. Office of Housing The Office of Housing has acknowledged the finding regarding timesheet preapprovals and will take immediate steps to address the issue. Office of Housing will ensure that proxy timesheet approvers are properly assigned in cases where the primary supervisor is unavailable on the day payroll approval is due. This adjustment will be incorporated into the previous improved practices, eliminating the need for pre-approving timesheets. By ensuring that proxy approvers are in place, the department will maintain compliance with payroll policies and ensure the accuracy of timesheet approvals. Parks and Recreation Department The Parks and Recreation Department acknowledges the finding regarding timesheet pre-approvals and will ensure that proxy timesheet approvers are assigned moving forward as part of the department's ongoing commitment to improved practices. In addition, the department would like to clarify that the preapproval noted occurred before the implementation of the current corrective action plan, which addressed the prior year's finding. The department reassures the State Auditor's Office (SAO) that the newly adopted practices, which prevent preapprovals, will continue to be strictly followed, ensuring compliance and accuracy in payroll processing, even during pay periods that coincide with holidays. Auditor’s Remarks We thank the City for its response and consideration in this matter and the steps it is taking to address this issue. We will review the status of the City’s corrective action during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 403, Factors affecting allowability of costs, describes the cost principles for how direct and indirect costs should be charged to federal programs.

Categories

Questioned Costs Subrecipient Monitoring Allowable Costs / Cost Principles Reporting Internal Control / Segregation of Duties

Other Findings in this Audit

  • 498263 2023-001
    Material Weakness
  • 498264 2023-001
    Material Weakness
  • 498265 2023-001
    Material Weakness
  • 498266 2023-001
    Material Weakness
  • 498267 2023-002
    Material Weakness
  • 498268 2023-002
    Material Weakness
  • 498269 2023-002
    Material Weakness
  • 498270 2023-002
    Material Weakness
  • 498271 2023-003
    Significant Deficiency
  • 498272 2023-003
    Significant Deficiency
  • 498273 2023-003
    Significant Deficiency
  • 498274 2023-003
    Significant Deficiency
  • 498275 2023-003
    Significant Deficiency
  • 498276 2023-004
    - Repeat
  • 498277 2023-004
    - Repeat
  • 498278 2023-004
    - Repeat
  • 498279 2023-004
    - Repeat
  • 498280 2023-004
    - Repeat
  • 498281 2023-004
    - Repeat
  • 498282 2023-004
    - Repeat
  • 498283 2023-004
    - Repeat
  • 498284 2023-004
    - Repeat
  • 498285 2023-005
    Material Weakness Repeat
  • 498286 2023-005
    Material Weakness Repeat
  • 498287 2023-005
    Material Weakness Repeat
  • 498288 2023-005
    Material Weakness Repeat
  • 498289 2023-005
    Material Weakness Repeat
  • 498290 2023-005
    Material Weakness Repeat
  • 498291 2023-005
    Material Weakness Repeat
  • 498292 2023-005
    Material Weakness Repeat
  • 498293 2023-005
    Material Weakness Repeat
  • 498294 2023-006
    Significant Deficiency
  • 1074705 2023-001
    Material Weakness
  • 1074706 2023-001
    Material Weakness
  • 1074707 2023-001
    Material Weakness
  • 1074708 2023-001
    Material Weakness
  • 1074709 2023-002
    Material Weakness
  • 1074710 2023-002
    Material Weakness
  • 1074711 2023-002
    Material Weakness
  • 1074712 2023-002
    Material Weakness
  • 1074713 2023-003
    Significant Deficiency
  • 1074714 2023-003
    Significant Deficiency
  • 1074715 2023-003
    Significant Deficiency
  • 1074716 2023-003
    Significant Deficiency
  • 1074717 2023-003
    Significant Deficiency
  • 1074718 2023-004
    - Repeat
  • 1074719 2023-004
    - Repeat
  • 1074720 2023-004
    - Repeat
  • 1074721 2023-004
    - Repeat
  • 1074722 2023-004
    - Repeat
  • 1074723 2023-004
    - Repeat
  • 1074724 2023-004
    - Repeat
  • 1074726 2023-004
    - Repeat
  • 1074727 2023-005
    Material Weakness Repeat
  • 1074728 2023-005
    Material Weakness Repeat
  • 1074729 2023-005
    Material Weakness Repeat
  • 1074730 2023-005
    Material Weakness Repeat
  • 1074731 2023-005
    Material Weakness Repeat
  • 1074732 2023-005
    Material Weakness Repeat
  • 1074733 2023-005
    Material Weakness Repeat
  • 1074734 2023-005
    Material Weakness Repeat
  • 1074735 2023-005
    Material Weakness Repeat
  • 1074736 2023-006
    Significant Deficiency

Programs in Audit

ALN Program Name Expenditures
21.027 Coronavirus State and Local Fiscal Recovery Funds $36.45M
66.958 Water Infrastructure Finance and Innovation (wifia) (e) $34.24M
93.778 Medical Assistance Program $10.54M
66.458 Capitalization Grants for Clean Water State Revolving Funds $9.00M
97.036 Disaster Grants - Public Assistance (presidentially Declared Disasters) $8.69M
21.023 Emergency Rental Assistance Program $5.19M
21.016 Equitable Sharing $3.94M
93.045 Special Programs for the Aging_title Iii, Part C_nutrition Services $2.48M
93.045 Special Programs for the Aging, Title Iii, Part C, Nutrition Services $2.42M
97.091 Homeland Security Biowatch Program $1.66M
93.044 Special Programs for the Aging_title Iii, Part B_grants for Supportive Services and Senior Centers $1.39M
14.239 Home Investment Partnerships Program $1.31M
16.922 Equitable Sharing Program $1.14M
93.052 National Family Caregiver Support, Title Iii, Part E $738,424
97.108 Homeland Security, Research, Testing, Evaluation, and Demonstration of Technologies $721,140
97.047 Bric: Building Resilient Infrastructure and Communities $716,410
10.558 Child and Adult Care Food Program $666,904
14.241 Housing Opportunities for Persons with Aids $637,090
14.881 Moving to Work Demonstration Program $630,550
16.543 Missing Children's Assistance $592,392
14.228 Community Development Block Grants/state's Program and Non-Entitlement Grants in Hawaii $510,428
93.564 Child Support Enforcement Research $485,553
93.053 Nutrition Services Incentive Program $480,821
97.042 Emergency Management Performance Grants $451,101
20.500 Federal Transit_capital Investment Grants $447,835
16.738 Edward Byrne Memorial Justice Assistance Grant Program $415,453
45.024 Promotion of the Arts_grants to Organizations and Individuals $410,500
97.044 Assistance to Firefighters Grant $409,141
20.525 State of Good Repair Grants Program $367,832
10.559 Summer Food Service Program for Children $247,016
14.218 Community Development Block Grants/entitlement Grants $226,417
16.320 Services for Trafficking Victims $208,391
93.569 Community Services Block Grant $180,466
84.047 Trio_upward Bound $166,434
93.568 Low-Income Home Energy Assistance $149,721
15.916 Outdoor Recreation_acquisition, Development and Planning $132,765
16.835 Body Worn Camera Policy and Implementation $128,368
16.582 Crime Victim Assistance/discretionary Grants $127,953
97.111 Regional Catastrophic Preparedness Grant Program (rcpgp) $126,276
16.590 Grants to Encourage Arrest Policies and Enforcement of Protection Orders Program $123,832
93.969 Pphf Geriatric Education Centers $118,077
97.067 Homeland Security Grant Program $85,998
20.941 Strengthening Mobility and Revolutionizing Transportation (smart) Grants Program $80,794
16.710 Public Safety Partnership and Community Policing Grants $78,414
16.575 Crime Victim Assistance $70,143
20.616 National Priority Safety Programs $50,203
93.043 Special Programs for the Aging_title Iii, Part D_disease Prevention and Health Promotion Services $45,852
93.493 Congressional Directives $40,521
14.231 Emergency Solutions Grant Program $38,052
16.838 Comprehensive Opioid Abuse Site-Based Program $29,516
20.600 State and Community Highway Safety $27,030
81.042 Weatherization Assistance for Low-Income Persons $26,498
14.251 Economic Development Initiative, Community Project Funding, and Miscellaneous Grants $24,000
11.438 Pacific Coast Salmon Recovery_pacific Salmon Treaty Program $22,518
20.205 Highway Planning and Construction $21,301
97.039 Hazard Mitigation Grant $21,062
93.041 Special Programs for the Aging_title Vii, Chapter 3_programs for Prevention of Elder Abuse, Neglect, and Exploitation $16,994
10.576 Senior Farmers Market Nutrition Program $7,025
16.034 Coronavirus Emergency Supplemental Funding Program $5,232
45.310 Grants to States $4,451
20.507 Federal Transit_formula Grants $3,634
97.056 Port Security Grant Program $1,777
32.011 Affordability Connectivity Outreach Grant Program $1,707