Finding Text
U.S. Department of State
Professional & Cultural Exchange Programs
Assistance Listing #19.415
Finding 2023-003
Material Weakness, Material Noncompliance – Allowable Costs/Activities
Criteria: The A-102 Common Rule requires that non-Federal entities receiving Federal awards establish and maintain internal control designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. Adequate segregation of duties provided between performance, review, and recordkeeping of a task is a control activity which will reasonably ensure compliance with Federal laws, regulations, and program requirements. 2 CFR 200.302 requires that non-federal entities must maintain records that identify adequately the source and application of funds for federally funded activities and be supported by source documentation.
Condition: Internal control could not be readily substantiated for the allocation percentages applied to personnel expenses. Source documentation could not be readily substantiated for personnel expenses charged to the program and time actually worked.
Questioned Costs: Personnel expenses charged to the FLEX and YES awards were approximately $464,332 and $318,813 respectively, for a total of approximately $783,145.
Context: Review of personnel expenses and the allocation percentages applied could not be readily substantiated.
Effect: By not maintaining adequate and consistent documentation of review and source documentation, the Organization may not be able to readily prevent, detect, and correct potential errors in allowable costs/activities. Therefore, the Organization may be incorrectly reimbursed for expenditures under the program requirements.
Cause: Current processes do not include maintaining adequate review and source documentation to support personnel.
Recommendation: The Organization should improve policies & procedures to ensure that personnel expenses are adequately supported by source documentation and documentation is readily available.
Management’s Response: Management considers this resolved as of August 2024. Greenheart is in the process of establishing a timecard system for all staff who work on grants and have their time allocated to a grant. Investing in hour tracking within the payroll system will ensure that personnel allocations are accurate and approved by management. In the meantime, in early 2024, the Grants Director worked directly with payroll and department leaders to review and update the list of personnel who are working on the grant. This was a documented process.