Finding Text
Federal Agency: U.S. Department of Defense
Program/Cluster: Community Economic Adjustment Assistance for Responding to Threats to the Resilience of a Military Installation
Federal Assistance Listing Number: 12.003
Award No.: MIR1973-22-01
Award Year: 2023
Compliance Requirement: Matching, Level of Effort and Earmarking
Type of Finding: Significant Deficiency in Internal Control over Compliance, Instance of Noncompliance
Criteria:
2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award.
2 CFR 200.430(g)(4) Salaries and wages of employees used in meeting cost sharing requirements on Federal awards must be supported in the same manner as salaries and wages claimed for reimbursement from Federal awards.
2 CFR 200.306(f) requires that if services furnished by a third-party organization are claimed as a cost-sharing match, these services must be valued at the employee’s regular rate of pay, plus an amount of fringe benefits that is reasonable, necessary, allocable, and otherwise allowable.
Condition:
We noted personnel services furnished by third-party organizations totaled $31,025 for the life of the grant, including $10,854 in fiscal year 2024. For the services furnished by third-party organizations as a local match of costs, the City valued the personnel time based on budgeted rates. The City could not provide documentation supporting the actual cost incurred by the third-party organization to support the in-kind services claimed.
Cause:
The City’s policies and procedures for in-kind services furnished by third-party organizations toward the grant did not include obtaining documentation to support the actual costs incurred and value of services claimed.
Effect:
The City did not comply with required local match of expenses for the grant.
Questioned Costs:
We identified questioned costs totaling $2,435 for unsubstantiated costs furnished by third-party organizations claimed as local cost share expenditures.
Context/Sampling:
A nonstatistical sample of 13 out of 54 local cost share expenditures were tested. This represents $9,114 of local cost share expenditures out of a total of $46,809 incurred for fiscal year 2024. Upon further investigation, the questioned costs were isolated to contributed services furnished by third-party organizations which totaled $10,854 in the fiscal year 2024.
Repeat Finding from Prior Year(s):
No.
Recommendation:
We recommend the City establish policies and procedures and documentation standards to comply with the Uniform Guidance standards for documentation of personnel expenses used to meet the local share of expenses.
Views of Responsible Officials:
Management concurs with the finding. See separate corrective action plan.