Finding Text
2023-001 [2022—002]—ALLOWABLE COSTS AND ACTIVITIES—PAYROLL AND RELATED ITEMS Federal Agency: U.S. Department of Health and Human Services and AmeriCorps- Corporation for National and Community Service Federal Program Name: Special Programs for the Aging, Title IV, and Title II, Discretionary Projects Grants for New and Expanded Services under the Health Center Program and Senior Companion Program Assistance Listing Number: 93.048 and 94.016 Federal Award Identification Number and Year: Multiple Award Period: Project period multiple; Budget period: Multiple Questioned Costs: None Type of Finding (F) Significant Deficiency in Internal Control Over Compliance of Federal Awards (G) Instances of Noncompliance related to Federal Awards Statement of Condition During our audit, we noted instances in which timesheets were not approved, and inconsistent allocations were applied to the grants. In some instances, the percentages of allocations calculated in timesheets were incorrect and did not match the allocation in the general ledger. It appears that allocations are based mainly on budget rather than actual direct and indirect time spent on the grant. In September 2023, the timesheets were improved, and the allocation seems to match the percentages, however, the formulas seem to calculate the payments based on allocated budget rather than actual hours worked. Context 60 transactions were tested. Out of 60, 27 were payroll and payroll taxes related. 20 payroll transactions out of 27 tested, including wages and payroll taxes, could not be traced in such a manner that provided reasonable assurance that the charges to the grant were accurate and properly allocated. It appears that salaries and taxes are allocated based on budget rather than direct time spent on grant. In some instances, some grants were underbilled and in some instances were overbilled and the net effect of questioned costs summed up close to $0. Criteria According to §75.430 (i) select standards for documentation of personal expenses are as follows: (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 both 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 (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. Effect The organization does not appear to have sufficient internal controls in place and does not appear to be in compliance with grant requirements as set forth in 45 CFR Part 75. A potential effect of noncompliance of the federal award could result in disallowance of costs, suspension or termination of the award, or reduction of future allocations. Cause Internal controls over compliance do not appear to have been adequately implemented due to a lack of confirmation that the timesheet expenses match the general ledger. Recommendation We recommend the organization prevent recurrence of noncompliance through conducting regular reviews and reconciliations, providing timesheet training and guidance to staff and monitoring compliance. We also recommend a re-design of the timesheets, so grant allocations and calculations for direct and indirect cost are more easily performed and traceable to the grant general ledger. View of Responsible Official: We concur with these findings and have redesigned our timekeeping system to comply. Finding resolved timeline: October 2024’Designated of employee position responsible for meeting this deadline: Bruce Young-Candelaria, President; Ricardo Colon Padilla, financial officer