Finding Text
Finding 2022-004: Significant Deficiency – Grant Claim Support
Federal grantor: Department of Commerce
Condition: The allocation of payroll costs to programs are done manually using spreadsheets instead of done based on entity-wide timesheets.
Criteria: Under 2 CFR 200.400, direct cost allocation principles state that if a cost benefits two or more projects or activities in proportions that can be determined without undue effort or cost, the cost must be allocated to the projects based on the proportional benefit. If a cost benefits two or more projects or activities in proportions that cannot be determined because of the interrelationship of the work involved, then the costs may be allocated or transferred to benefitted projects on any reasonable documented basis. Further, a cost may not be assigned to a Federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the Federal award as an indirect cost. Costs are required to be adequately documented.
Cause: The Chamber is not able to readily determine the amount of payroll costs billable to the grants.
Effect: The approach of manually allocating payroll costs to grant projects leaves room for error, and makes it difficult to determine that costs are not being reimbursed by more than one source.
Recommendation: The Chamber needs to prepare time studies or require employees to prepare timesheets on an automated system to support the payroll costs allocated to programs.
Views of Responsible Officials and Planned Corrective Actions: The Chamber agrees with the finding and is in the process of implementing a better time and expense tracking system that will be effective in 2024.