Finding 1149563 (2024-001)

Material Weakness
Requirement
AB
Questioned Costs
$1
Year
2024
Accepted
2025-08-08

AI Summary

  • Core Issue: Payroll charges are based on budget estimates rather than actual time and effort, leading to potential inaccuracies in funding allocations.
  • Impacted Requirements: Non-compliance with federal regulations regarding documentation of personnel costs, risking funding and audit integrity.
  • Recommended Follow-Up: Establish a robust internal control process for tracking employee time and effort, ensuring accurate payroll allocation and compliance with federal standards.

Finding Text

Reference: 2024-001 U.S. Department of Health and Human Services Pass-through entities: NYS Office of Addiction Services and Supports Block Grant for Prevention and Treatment of Substance Abuse 93.959 Program Year: April 1, 2023 – March 31, 2024 and April 1, 2024 – June 30, 2025 Criteria: In accordance with the Code of Federal Regulations Part 200.430(g) - Standards for Documentation of Personnel Expenses, charges to Federal awards for salaries and wages must be based upon records that accurately reflect the work performed including support for the distribution of the employees’ 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 or a combination thereof. Budget estimates alone do not qualify as support for charges to Federal awards. The internal controls environment should dictate the necessity for documenting, retaining and monitoring the time and effort by program and/or service of each employee. This is critical to ensure payroll charges are accurate and reasonable when allocated across different funding sources. Cause/Condition: Management charges payroll to different funding sources based on budgeted figures and does not consider actual time and effort through periodic tracking and monitoring. The internal control process was not effective in accounting recording payroll to appropriate grants. Questioned Costs: Indeterminable due to systemic deficiency and lack of comprehensive documentation to support the allocation of salary or wages. Effect: The Organization was not in compliance with the Code of Federal Regulations Part 200.420(g) – Standards for Documentation of Personnel Costs. Without internal controls that require precise records of time and effort of employees, discrepancies can arise that jeopardize funding compliance and audit accuracy, ultimately affecting budget allocations and financial planning, as well as increasing risk for the occurrence of non-compliance with Federal regulations. Context: All payroll salaries, wages and related payroll costs associated with employees who perform or work within more than one program and/or service, or participate in indirect cost activities is potentially appliable. 24 Recommendation: We recommend that management design an internal control process for employees to periodically record time and effort spent by program, service and intended funding source (including Federal awards). Such records should be accumulated and used in determining the allocation of payroll for those employees. Documentation should be retained and periodically monitored for reasonableness and accuracy. Management’s Response: Management will implement periodic time studies throughout contract durations to support accurate allocation of personnel costs. Staff will be reminded of relevant compliance requirements, and internal processes will be adjusted as needed. We will continue to monitor this area and document efforts to ensure ongoing alignment with applicable regulations.

Categories

Questioned Costs Subrecipient Monitoring Allowable Costs / Cost Principles Matching / Level of Effort / Earmarking Internal Control / Segregation of Duties

Other Findings in this Audit

  • 573121 2024-001
    Material Weakness

Programs in Audit

ALN Program Name Expenditures
93.959 Block Grants for Prevention and Treatment of Substance Abuse $509,459
95.007 Research and Data Analysis $173,329
14.231 Emergency Solutions Grant Program $16,250
93.788 Opioid Str $2,876