Finding 1096990 (2023-002)

Significant Deficiency
Requirement
B
Questioned Costs
$1
Year
2023
Accepted
2025-01-28
Audit: 340111
Organization: Ventures (WA)

AI Summary

  • Core Issue: There is a significant deficiency in internal controls over payroll allocations for Federal awards, leading to inaccuracies in reported costs.
  • Impacted Requirements: Compliance with 2 CFR 200.430 is at risk, as payroll records do not consistently match actual hours worked and allocations are miscalculated.
  • Recommended Follow-Up: Use a single spreadsheet for payroll allocations and strengthen controls to ensure accurate reporting of hours worked on Federal grants.

Finding Text

Federal Agency: U.S. Department of the Treasury Federal Program Name: Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027 Federal Award Identification Number and Year: SLFRP0002 – 2021, SLFRP1045 – 2021, SLFRP0194 - 2021 Pass-Through Agency: Washington State Department of Commerce, City of Seattle, Snohomish County Pass-Through Number(s): (DOC) 23-F21400119-017, DC222308, CLFR-042 Award Period: Various Type of Finding: • Significant Deficiency in Internal Control Over Compliance Criteria or specific requirement: 2 CFR 200.430 states: Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. In addition, records must 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 or a Federal award and non-Federal award. Further, budget estimates (i.e., estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards. Condition: For some paychecks tested, it was noted the percentage of hours worked on the Federal program as indicated on the timesheet did not always tie to the allocation spreadsheet which determined the payroll costs that was ultimately charged to the major program. In addition, for one employee paycheck tested that was partially allocated to the major program, it was found that there was an error in the calculation of a salary increase, which resulted in an incorrect amount being charged to the program. Questioned costs: $2,339 Context: Of the 40 paychecks tested, 10 paychecks showed a potential over allocation of payroll costs to the Federal program. These over allocations varied from paycheck to paycheck and ranged from $5 to $1,648. One of the paychecks tested also included the miscalculation of salary amount. Cause: The person responsible for allocating payroll is no longer employed with Ventures. Therefore, specific cause cannot be identified. It was noted, however, there were two allocation spreadsheet templates being used during this fiscal year causing both a redundancy of information and a lack of synchronized information in some areas. This was likely the main reason for the allocation related issues encountered during the audit. In addition, the miscalculation of the payrate that occurred was not detected by the organization’s internal controls. Effect: Potential outcome is an overallocation to the Federal program leading to requests for reimbursement of funds (in the payroll expense category). Repeat finding: No Recommendation: We recommend the Organization utilize one spreadsheet for allocating payroll costs and implement additional controls to ensure the allocations to Federal grants accurately reflect the actual hours worked. Views of responsible officials: There is no disagreement with the audit finding.

Categories

Questioned Costs Allowable Costs / Cost Principles Cash Management Significant Deficiency Matching / Level of Effort / Earmarking

Other Findings in this Audit

  • 520548 2023-002
    Significant Deficiency
  • 520549 2023-002
    Significant Deficiency
  • 520550 2023-002
    Significant Deficiency
  • 520551 2023-003
    Significant Deficiency
  • 520552 2023-003
    Significant Deficiency
  • 520553 2023-003
    Significant Deficiency
  • 520554 2023-004
    Significant Deficiency
  • 1096991 2023-002
    Significant Deficiency
  • 1096992 2023-002
    Significant Deficiency
  • 1096993 2023-003
    Significant Deficiency
  • 1096994 2023-003
    Significant Deficiency
  • 1096995 2023-003
    Significant Deficiency
  • 1096996 2023-004
    Significant Deficiency

Programs in Audit

ALN Program Name Expenditures
21.024 Community Development Financial Institutions Rapid Response Program (cdfi Rrp) $213,000
21.025 Small Dollar Loan Program $124,588
21.027 Coronavirus State and Local Fiscal Recovery Funds $121,472
11.034 2023 Mbda Capital Readiness Program $75,967
59.046 Microloan Program $68,159
59.050 Prime Technical Assistance $29,129