Finding Text
Payroll Distribution - Criteria – The Uniform Guidance, Part 200.430(i), states “Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed.” These records must “Support the distribution of the employee’s salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity.” Also, “Budget estimates (i.e., estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that: The system for establishing the estimates produces reasonable approximations of the activity actually performed; significant changes in the related work activity (as defined by the recipient’s or subrecipient’s written policies) are promptly identified and entered into the records. Short term (such as one or two months) fluctuation between workload categories do not need to be considered as long as the distribution of salaries and wages is reasonable over the long term; and the recipient’s or subrecipient’s system of internal controls includes processes to perform periodic after-the-fact reviews of interim charges made to a Federal award based on budget estimates. All necessary adjustments must be made so that the final amount charged to the Federal award is accurate, allowable, and properly allocated.” Condition – The Agency uses budget estimates to allocate employee payroll costs to federal programs. Employees are not tracking or reporting actual time worked on each federal program. Cause – The Agency did not have policies and procedures in place to ensure all employee time is recorded to the correct federal program. Effect – Payroll costs could be omitted from federal programs or charged to incorrect programs. The result could be incorrect payroll cost allocation and reporting. The effect on individual programs is undeterminable. Recommendation – The Agency should review time reporting for all pay periods and determine if time is or should be charged to federal programs. In addition, the Agency should implement policies and procedures to ensure proper distribution of salaries and wages, and these policies and procedures should be followed. Response – We will update our Accounting Policy Manual and create formal time tracking procedures for staff working Federal projects. Conclusion – Response accepted.