Finding Text
Finding Number: 2023-001
Finding Type: Federal award finding
Federal Assistance Listing No.: 64.033
Program Name: VA Supportive Services for Veteran Families Program
Federal Agency: U.S. Department of Veterans Affairs
Pass-Through Entity: Transition Projects, Inc.
Grant Number: SSVF 19-ZZ-127
Federal Award Year: 2022 through 2023
Control Deficiency Type: Material weakness over compliance
Instance of Noncompliance: Yes
Compliance Requirement: Allowable costs/cost principles
Questioned Costs: None
Repeat Finding: Yes
Criteria: In accordance with Title 38, U.S. Code of Federal Regulations, Part 62, Supportive Services for Veteran Families Program, the determination of allowable costs must be made in accordance with the applicable Federal Cost Principles set forth in 2 CFR Part 200. Title 2, U.S. Code of Federal Regulations, Part 200, Uniform Administrative Requirements, Costs Principles, and Audit Requirements for Federal Awards, Subpart E – Cost Principles, states that payroll costs charged to a federal award must be supported by a system of internal controls which provides reasonable assurance that time charges are accurate, allowable, and properly allocated, and support the distribution of the employee’s salary among specific activities or costs objectives, if the employee works on projects supported by more than one Federal award or a Federal award and a non-Federal award.
Condition: The organization lacked a system of internal controls to provide reasonable assurance related to the accuracy of salaries charged to the major program grant for employees working on projects supported by multiple funding sources. Payroll costs charged to the major program from January through March of 2023 were allocated based on estimates. However, we noted starting in April of 2023, the organization implemented a new timekeeping system and charges were based on actual timecard entries.
Cause: The organization did not have written policies and procedures over cost principles establishing allowability or unallowability of certain items of costs in accordance with 2 CFR sections 200.420 through 200.476. The organization also did not have internal controls in place to ensure its timekeeping system for employees working on multiple funding sources was in compliance with federal requirements.
Effect: For three of the twelve months, the distribution of employees’ salaries among specific activities did not fully comply with the cost principles specified in the Federal Regulations.
Questioned Costs: No known or likely questioned costs greater than $25,000.
Audit Recommendation: We recommend that the organization adopt written procedures establishing allowable or unallowable costs as well as implement the necessary procedures to ensure compensation costs are charged to federal awards based on a fair and equitable distribution method that is adequately documented and in accordance with Federal Regulations.
Management’s Response: As of April 15, 2023, a new timecard system was implemented and charges to grants are supported by actual timecard entries. Timecards are approved by the employee and reviewed by a supervisor prior to payroll processing.