Finding Text
2023-001 – Allowable Costs/Cost Principles (Allocation of Payroll)
Federal Agency: U.S. Department of the Interior; U.S. Fish & Wildlife Service
Federal program title: Endangered Species Conservation Recovery Implementation Funds
Assistance Listing Number: 15.657
Award Period: 09/30/2020 – 09/30/2026
Type of Finding: Compliance and material weakness in internal control over compliance
and
Federal Agency: National Science Foundation
Federal program title: Research and Mentoring for Postbaccalaureates in Biological Sciences Assistance Listing Number: 47.074
Award Period: 04/01/2022 – 09/30/2026
Type of Finding: Compliance and material weakness in internal control over compliance
Criteria:
Uniform Guidance section 200.430(h)(8)(i) indicates that the standards for documentation of personnel expenses are such that (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 nonfederal entity and(iii) Reasonably reflect the total activity for which the employee is compensated by the nonfederal entity, not exceeding 100% of compensated activities. Furthermore, subsection (viii) indicates: Budget estimates 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 are identified and entered into the records in a timely manner and (C) The nonfederal entity’s system of internal controls includes processes to review after-the-fact interim charges made to a federal awards based on budget estimates.
Condition:
The Garden is allocating payroll costs to grants based upon budgeted amounts/percentages submitted to the funding agency and does not currently have a system for ensuring that the estimates used produce reasonable approximations of the activity actually performed.
Questioned Costs:
Unknown.
Context:
This condition occurred in all payroll transactions selected for testing.
Cause:
The Garden has a tracking system in place to monitor the wages by employee charged to federal grants to avoid over-allocation of individual employee wages per the grant budget; however, this tracking system does not contain a process for identifying and allocating wages based on submitted time records.
Effect:
Inaccurate payroll costs may be charged to federal programs if the Garden does not have procedures in place to monitor and record employee time devoted to federal programs.
Recommendation:
Management should develop a process whereby payroll costs allocated to federal grants are supported by a system of internal controls which provides reasonable assurance that the charges are accurate allowable and properly allocated, reasonably reflect the total activity for which the employee is compensated, and support the distribution of the employee’s wages among specific activities or cost objectives if the employee works on more than one federal award.
Management’s Response
Refer to the Correction Action Plan.