Finding Text
Finding 2024-001 – Activities Allowed or Unallowed, Allowable Costs/Cost Principles, and Period of Performance
Identification of the federal program:
Federal Grantor: United States Department of Homeland Security
Assistance Listing No.: 97.036, COVID-19 Disaster Grants – Public Assistance (Presidentially Declared Disasters) (FEMA)
Pass-Through Grantor: Indiana Department of Homeland Security
Pass-Through Award Period: 03/01/2020–05/11/2023
Criteria or specific requirement (including statutory, regulatory, or other citation):
Section 200.303 of the Uniform Guidance states the following regarding internal control: “The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).”
Condition:
Payroll expenses charged to FEMA that related to timecards for employees were not reviewed and approved.
Cause:
Community Foundation of Northwest Indiana, Inc. and Subsidiaries (CFNI) does not have internal controls in place that require all timecards for employees submitted to a federal program to be reviewed and approved.
Effect or potential effect:
Expenses may be charged to the federal award that are not in compliance with the federal or pass-through grant agreement.
Questioned costs:
None.
Context:
For three (totaling $1,756) of 40 (totaling $27,583) (8%) payroll transactions sampled during the fiscal year, the employees’ timecards did not have evidence of review and approval by the employees’ manager.
Identification as a repeat finding, if applicable:
This is not a repeat finding.
Recommendation:
CFNI should implement internal controls to require the review and approval of all timecards charged to a program funded with federal funds.
Views of responsible officials: CFNI acknowledges the finding related to the lack of documented review and approval of all timecards for payroll expenses charged to federally funded programs. In line with industry standards, CFNI prioritizes timely payroll processing and does not delay payroll for outstanding timecard approvals. While this is not a recurring issue and did not result in any questioned costs, CFNI recognizes the importance of ensuring compliance with all federal requirements.
To address this finding and prevent recurrence, CFNI is implementing a comprehensive policy that mandates timely review and approval of all timecards associated with payroll expenses charged to federal grants. Additionally, CFNI is establishing a formal process to monitor adherence to this policy, including regular audits and detailed documentation of the review process.