Finding Text
Finding 2024-001: Allowable Cost/Cost Principles – Enhanced Documentation of Cost Allocation (Repeat Finding)
Criteria or Specific Requirements
Per 2 CFR Part 200.430 (g)(1), 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. Per Uniform Guidance Compliance Supplement part 6 – Internal Control, non-federal entities are required to establish and maintain internal control over the federal awards that provides reasonable assurance that the non-federal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards.
Condition
Description
A. Improved Documentation for Basis of Cost Allocation for Employee Time Charges
Of the 50 employee monthly reimbursements (10 for ALN 14.241; 40 for ALN 93.914) selected for allowable costs testwork, we noted 2 employee monthly reimbursements (1 for ALN 14.241; 1 for ALN 93.914) for where the hours reported per the timesheet did not agree with the hours reported in the related request for reimbursement invoices. The hours reported per the reimbursement invoices were greater than the hours reported per the timesheets. The Foundation subsequently provided documentation indicating that such differences had been properly corrected in the following month’s reimbursement invoice through an adjustment to the reported hours per the reimbursement invoice.
B. Improved Documentation of Routinary Reviews of Employee Hours Charged to the Grants
We performed testwork over the Foundation’s implementation of the Corrective Action Plan (CAP) for Finding 2023-001. Per the CAP, the Foundation will perform regular reviews of tracked hours and reconciliations at least quarterly. Of the 18 payroll reimbursement months (for ALN 93.914), and 4 payroll reimbursement months (for ALN 93.940) selected for testwork, we noted a total of 2 months (1 for ALN 93.914; 1 for ALN 93.940) whereby the related reviews of tracked hours were performed more than 90 days after the respective reimbursement month.
C. Timecard Lacking Employee and Manager Approvals
In performing allowable costs testwork over payroll expenditures, we noted the following:
Questioned Costs
A. Improved Documentation for Basis of Cost Allocation for Employee Time Charges
None. The Foundation corrected the discrepancies in subsequent monthly reimbursements. This issue is considered an internal control finding.
B. Improved Documentation of Routinary Reviews of Employee Hours Charged to Grants
None. This issue is considered an internal control finding.
C. Timecards Lacking Employee and Manager Approvals
None. This issue is considered an internal control finding.
Cause and Effect
A. Improved Documentation for Basis of Cost Allocation for Employee Time Charges
Per the Associate Director of Contract Accounting, this was a one-time error in the month’s request for reimbursement invoice. This error was corrected within the grant period and did not result in overbilling the funder. However, since the correction occurred after the Foundation’s fiscal year-end, it resulted in an overstatement of expenditures reported on the SEFA for the year ended December 31, 2024.
B. Improved Documentation of Routinary Reviews of Employees' Hours Charged to Grants.
Per the Associate Director of Contract Accounting, the routinary review of employee hours occurred. However, there were still reclassifications that needed to be performed beyond the normal review process. The review process was not properly implemented.
C. Timecards Lacking Employee and Manager Approvals
The identified condition resulted from failure to follow formal procedures requiring both the employee and manager to sign off on the timesheets.