Finding Text
Federal Agency: U.S. Department of Health and Human Services; U.S. Department of Housing and Urban Development
Federal Program Name: Community Service Block Grant; Community Development Block Grant
Assistance Listing Number: 93.569; 14.218
Pass-through Agency: Pennsylvania Department of Community and Economic Development; City of Bethlehem (CB); Northampton County (NC)
Pass-Through Number: Contract #C000067069; Contract #C000082084; B-22-MC-42-0003 (CB)
Award Period: April 1, 2020 – September 30, 2022; January 1, 2022 – December 31, 2027; January 1, 2022 - December 31, 2023 (CB); July 1, 2020 - December 31, 2022 (NC)
Type of Finding:
• Material Weakness in Internal Control over Compliance
• Other Matters
Criteria:
3 CFR Part 200 Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Award requires compliance with the provisions of period of performance. The Organization should have procedures and controls in place to ensure expenses are charged to a federal program within the approved period of performance. In addition, in accordance with 2 CFR Part 200.403, allowable costs should be determined in accordance with generally accepted accounting principles (GAAP), therefore payroll accruals should be appropriately reflected when recording program
expenditures.
Condition:
During our testing, we noted there were several salary expenditures charged to the grant based on the payroll period ending date, however the costs were incurred for the period 12/24/22 - 1/6/23, which the first eight days were prior to the start of the period of performance. There was also one transaction selected for testing where no supporting documentation was able to be located and one transaction that was incurred after the period of performance for the program.
Questioned Costs:
No questioned costs above the $25,000 threshold have been identified.
Context:
During the review of community service block grant costs recorded at the beginning of the approved period of performance (January 2023), seventeen transactions charged to the federal program in January 2023 for salary and related payroll taxes were observed. A portion of these expenses was incurred before the start of the contract period, specifically covering the payroll period from 12/24/22 to 1/6/23, with the first eight days outside the approved period of performance. The total amount of these transactions was $11,606. Additionally, one transaction for facilities maintenance totaling $2,625 lacked supporting documentation. Furthermore, during testing of costs recorded towards the end of the period
of performance (September 2022), there was one transaction for outside computer services amounting to $1,125, with the invoice indicating services performed in October 2022.
During the testing of community development block grant costs recorded at the beginning of the approved period of performance (January 2023), seventeen transactions charged to the federal program in January 2023 for salary and related payroll taxes were noted, with a portion incurred prior to the start of the contract period. The total amount of these transactions was $1,079.
Cause:
The Organization recorded the transactions into the general ledger based on the payroll period ending date and invoice date rather than the date the transactions were incurred by the Organization. In addition, the Organization experienced turnover within the finance department and the missing supporting documentation was likely misfiled and therefore unable to be located.
Effect:
If the Organization includes expenses either incurred before the start date or after the end date of the approved period of performance, it could result in funds being required to be returned to the funding agency.
Repeat Finding:
The finding is a repeat of a finding in the immediately prior year. Prior year finding number was 2022-005.
Recommendation:
The Organization should work with the federal agency to provide additional documentation or justification for the expenses, or to adjust the budget or funding limits to ensure that all expenses are within the approved period of performance. It is important to address any period of performance findings as soon as possible to avoid potential penalties or repayment obligations. The Organization should also review its process of entering invoices and payroll related expenses into the accounting software to ensure the correct period is used for federal expenditures.
View of Responsible Officials and Planned Corrective Action:
Please refer to Community Action Committee of the Lehigh Valley, Inc. and subsidiaries’ Corrective Action Plan.