Finding Text
Finding 2024-002 – Allowable Costs (Significant Deficiency and Noncompliance)
Information on the Federal Program: U.S. Department of Education, Trio Cluster and Appalachian Regional Commission (ARC), Appalachian Area Development Assistance Listing No. 23.002
Criteria: 2 CFR 200 Subpart E establishes cost principles to apply in determining costs under federal awards. Nonfederal entities are also required to establish controls over the disbursement process to ensure compliance with allowable cost requirements.
Condition: We selected a Trio sample of 25 payroll charges, containing 56 employee paychecks. Of those 56, five employee's approved pay was not properly documented. The employee had additional pay not on the approved Letter of Appointment (LOA) or the LOA reflected the use of restricted dollars, but the pay was charged to the grant. In addition, of those 56, five employees were charged to a grant that they were not budgeted for.
We selected an ARC sample of 10 nonpayroll disbursements to test for controls. Of those 10, one disbursement of four scholarships was not properly documented as approved for payment.
Cause: Trio employees received additional stipends or adjunct pay that was not on the approved pay documentation. Employees’ pay was charge to the Trio program but their position/job title was not in the grant budget. ARC students received scholarships posted to their student account but documentation of approval to pay was not available.
Effect: Employees’ pay was charged to the Trio grants when they were not allowable based on the budget. Employees’ total pay amounts are not properly documented. Key controls over allowable costs were not operating effectively.
Questioned Costs: $2,854
Recommendation: We recommend the College strengthen its policies and procedures surrounding the disbursement process. Payroll costs funded by federal funds should be adequately documented as to allowability and employees’ total pay documented, reviewed and approved. In addition, all nonpayroll disbursements should be approved by management of the grant program.
Views of Responsible Officials: See Management’s View and Corrective Action Plan included at the end of the report.