Finding Text
Finding 2024-001: Payroll Allocations
Information on the Federal Program: 93.073 - Centers for Disease Control and Prevention: Birth Defects and Developmental Disabilities, Prevention and Surveillance. See Finding 2024-001.
Criteria or Specific Requirement: Under Uniform Guidance (2 CFR Part 200), specifically § 200.430 (Compensation – Personal Services), labor costs must be allocated to programs based on actual time worked by employees on those specific programs. The guidance also mandates that overtime pay must be allocated in proportion to the time worked across the different programs. Failure to properly allocate employee time and overtime costs could result in non-compliance with Federal grant requirements, misreporting of program costs, and inaccurate financial statements.
Condition: During the audit for the fiscal year ended June 30, 2024, it was found that employee time worked, including overtime hours, was not being properly allocated to the various programs. Specifically, overtime hours worked by employees were not included in the program allocations, resulting in the misallocation of labor costs. In several cases, overtime worked by employees on specific programs was omitted or incorrectly allocated, leading to a misrepresentation of actual program costs.
Cause: Overtime hours were excluded from program allocations entirely.
Effect or Potential Effect: Due to incorrect allocation of hours, including overtime, the financial statements inaccurately reflect the costs of various programs or projects. Many programs, especially those funded by grants or other restricted funding sources, require accurate reporting of labor costs. The failure to allocate overtime to the appropriate programs could result in non-compliance with the terms of those grants or funding agreements, potentially leading to audits, penalties, or the loss of funding.
Questioned Costs: None.
Context: CHADD misallocated time to programs for any employee that worked overtime for the fiscal year ending June 30, 2024.
Identification as a Repeat Finding, if Applicable: Not applicable.
Recommendation: The payroll system should be updated to automatically calculate and allocate overtime hours to the correct program or project. This should be integrated with the standard time allocation processes, ensuring that overtime pay is properly distributed across programs.