Significant Deficiency in Internal Control over Compliance
U.S. Department of Treasury
Aging Cluster
Medicaid Cluster
U.S. Department of Health and Human Services
WIOA Cluster
U.S. Department of Labor
Food Distribution Cluster
U.S. Department of Agriculture
U.S. Department of Justice
Assistance Listing Numbers: 17.258, 17.259, 17.278, 21.027, 10.565, 10.568, 10.569, 93.044, 93.045,
93.053, 93.778, 16.575
Federal Program Names: WIOA Adult Program, WIOA Youth Activities, WIOA Dislocated Worker
Formula Grants, Coronavirus State and Local Fiscal Recovery Funds, Commodity Supplemental Food
Program, Special Programs for the Aging, Title III, Part B, Grants for Supportive Services and Seniors
Centers, Special Programs for the Aging, Title III, Part C, Nutrition Services, Nutrition Services Incentive
Program, Grants to States for Medicaid, and Crime Victim Assistance
Award Years: Various
Criteria: Federally funded entities must establish internal control procedures over compliance with
provisions of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements,
Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) that require, among
other things, that direct charges to federal awards be for allowable costs. To be an allowable cost,
charges must be supported by appropriate documentation and be properly approved.
Condition and context: During the period under audit, a new payroll system was implemented, and the
employee portion of benefits had an allocation error for certain types of employee compensation.
WIOA Cluster (ALN 17.258, 17.259, 17.278) – For four of 25 employees selected, a portion of
employee worker’s compensation was overcharged to the grant. For the sample tested, the known
amount over charged to the grant was $24.
Coronavirus State and Local Fiscal Recovery Funds (ALN 21.027) – For two of 25 employees
selected, a portion of employee benefits were overcharged to the grant. For the sample tested, the
known amount over charged to the grant was $14.
Food Distribution Cluster (ALN 10.565, 10.568, 10.569) – For one of 25 employees selected, a
portion of employee benefits were overcharged to the grant. For the sample tested, the known
amount over charged to the grant was $2.
Aging Cluster (ALN 93.044, 93.045, 93.053) – For three of 25 employees selected, a portion of
employee worker’s compensation was overcharged to the grant. For the sample tested, the known
amount over charged to the grant was $9.
Medicaid Cluster (ALN 93.778) – For one of 25 employees selected, a portion of employee
worker’s compensation was overcharged to the grant. For the sample tested, the known amount
over charged to the grant was $29.
Crime Victim Assistance (ALN 16.575) – For one of 25 employees selected, a portion of employee
benefits were overcharged to the grant. For the sample tested, the known amount over charged to
the grant was $7.
Cause: A new payroll system was implemented, and all allocations of benefits were not reviewed in detail
enough to catch the misallocation of a portion benefits for certain compensation types.
Effect: Allocation of payroll related benefits were incorrectly applied to grants.
Questioned costs: This resulted in the following questioned costs;
ALN 17.258, 17.259, 17.278 – Known questioned costs were $24 and projected costs were $1,087.
ALN 21.027 – Known questioned costs were $14 and projected costs were $153.
ALN 10.565, 10.568, 10.569 – Known questioned costs were $2 and projected costs were $13.
ALN 93.044, 93.045, 93.053 – Known questioned costs were $9 and projected costs were $303.
ALN 93.778 – Known questioned costs were $29 and projected costs were $491.
ALN 16.575 – Known questioned costs were $7 and projected costs were $262.
Repeat finding: No.
Recommendation: We recommend the Organization improve the controls over the payroll allocation
process, including revisions to the current policy and procedure manual. The policy should clearly define
allowable payroll costs, policies for allocation to grants, and outline adequate documentation for
transactions. We additionally suggest a review at the employee level to ensure that allocations are
accurate by pay period.
Views of responsible officials and planned corrective actions: Management agrees with the
assessment and understands the importance of strong controls surrounding payroll allocation. The
Organization has worked hard to bring the new payroll so_x001F_ware in line with the complex requirements of
grant accounting and at the time of this audit issuance the error has been resolved. The Organization will
complete employee level reviews each payroll to ensure that salaries and benefits continue to be
allocated accurately according to hours charged to programs. The Organization is in the process of
revising the accounting policy manual with the full revision expected to be completed by December 2025.
Individual policies will be submitted to the board for approval as they are revised.