Finding Text
Condition: Amount of salaries allocated to federal programs are not consistently supported by employee timesheets or other similar documentation. We noted a several paychecks tested were not supported by relevant timesheets or reconciliations.
Criteria: Reports reflecting the distribution of activity of each employee must be maintained for all staff members whose compensation is charged, in whole or in part, directly to awards, in accordance with Cost Principles for Non-Profit Organizations (2 CFR Part 230.8). Internal controls should be in place that provide reasonable assurance that salaries for employees charged to federal programs are properly documented and reconciled to ensure that they are accurate, allowable, and properly allocated.
Cause: While there are procedures in place that require reconciliation of actual hours expended to the program and related monthly adjustments, the related costs charged to the program were not fully adjusted to the reconciled amounts.
Effect: It is possible that employees' time and related costs may be inappropriately allocated amongst functional activities, including cost allocations to federal awards programs. This could result in noncompliance with the Uniform Guidance.
Recommendation: Existing timesheet reconciliation procedures should be revised. The Organization should not only ensure that costs are adjusted on a monthly basis prior to the submission of vouchers or funding requests but also perform a true-up calculation prior to the submission of the final voucher of the grant year to ensure no unreconciled variances remain.
Views of Responsible Officials and Planned Corrective Actions: The organization conducts a monthly timesheet reconciliation, during which any necessary payroll adjustments are recorded. Upon noting the discrepancies identified by the auditors, the organization enhanced its payroll allocation review process in subsequent years.