Finding Text
Federal Agency: U.S. Department of Human Services
Federal Program Title: MFIP and TANF Youth
AL Number: 93.558
Pass-Through Agency: Various Counties
Pass-Through Number(s): N/A
Award Period: 1/1/2022-12/31/2022; 1/1/23-12/31/2023
Type of Finding:
• Significant Deficiency in Internal Control over Major Federal Programs and Other Matters
Criteria or specific requirement: Charges to federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must be supported by a system of internal controls which provides reasonable assurance that the charges are accurate, allowable, and properly allocated.
Condition: The Organization did not retain adequate documentation to support the allocation of an individual's time to various federally-funded programs for the fiscal year ending June 30, 2023.
Questioned costs: N/A
Context: During testing of payroll related expenses, it was identified that 1 of 29 selections did not have support for the allocation used in allocating payroll expenses to various grants.
Cause: The Organization lacks a formalized process for retaining and organizing documentation related to the allocation of individual employees' time. This may be due to insufficient training of staff responsible for timekeeping and financial record-keeping or inadequate internal controls over documentation retention.
Effect: Without proper documentation, there is an increased risk that personnel costs may be improperly allocated, leading to potential non-compliance with federal regulations. This could result in questioned costs during an audit, potential disallowance of costs, and the need to return funds to the federal government.
Repeat finding: No
Recommendation: The Organization should implement a comprehensive documentation retention policy that includes specific procedures for maintaining records supporting the allocation of individual employees' time. This policy should ensure that all relevant documentation, such as timesheets and work allocation records, is retained for the required period and is easily accessible for audit purposes. Additionally, staff responsible for timekeeping and financial record-keeping should receive training on the importance of documentation retention and the specific requirements under the Uniform Guidance.
Views of responsible officials and planned corrective actions: To establish a standardized cost allocation methodology for staff time, CMJTS implemented in-person monthly allocation meetings with the executive team and program managers responsible for programming, staffing, and budget oversight. These meetings provide a thorough review of program expenditures and staff time, ensuring accurate alignment with funding requirements. Conducting payroll allocation reviews in a group setting allows the executive team to validate cost assignments, address changes in percentage allocations across cost categories, and maintain compliance with administrative regulations and funding guidelines.