Finding Text
Finding No.2023-003: Improve Controls Over Expense Reporting and Payroll Charges
Assistance Listing Number: 93.566
Assistance Listing Program Title: Refugee and Entrant Assistance – State - Administered Programs
Federal Agency: Department of Health and Human Services (HHS)
Passed Through Entity: 1. San Diego Refugee Communities Coalition/United Women of East Africa Support Team
2. California Department of Social Services (CDSS)
Federal Award Number:
1. Not available in the contract
2. ACS22-05-CAIR-A1
Federal Award Year:
1. February 1, 2023 – March 31, 2024
2. November 1, 2022 – March 31, 2025
Compliance Requirement: Allowable Costs/Cost Principles
Criteria or Specific Requirements:
In accordance with 2 CFR 200.403 and 200.405, costs charged to a federal award must be necessary, reasonable, and allocable.
In addition, 2 CFR 200.430 Compensation-personal services, provides that compensation for personal services must be based on records that accurately reflect the work performed. These records must be supported by a system of internal control that provides reasonable assurance that the charges are accurate, allowable, and properly allocated.
Condition:
During our testing of 21 non-payroll expenses, we identified one instance wherein translation services amounting to $795, provided by a staff member, were charged under professional fees, even though the individual's salary was recorded and billed under salary expenses.
Additionally, in our testing of 25 payroll expenses, we identified one instance of overbilling in the amount $622. This occurred because the payroll charge was based on budgeted Full Time Equivalents (FTEs) rather than the actual time worked.
Cause:
CAIR-CA's current internal controls for reviewing billings under the federal program were not sufficient to consistently prevent or detect duplicate or inaccurate charges.
Furthermore, CAIR-CA lacked adequate internal controls to ensure that payroll allocations were based on actual time worked on the federal program.
Effect:
These control deficiencies resulted in the overbilling of federal funds.
Questioned Cost: $1,417
Recommendation:
To ensure compliance with the Uniform Guidance, we recommend that CAIR-CA strengthen its internal controls over expense reporting by implementing enhanced review procedures to verify the allowability of costs charged to federal awards.
Additionally, CAIR-CA should establish formal procedures to ensure that payroll charges to federal programs are based on actual time and effort records. Management should conduct regular reviews and make necessary adjustments to payroll allocations to accurately reflect the work performed on federally funded activities.
Views of Responsible Officials and Corrective Action Plan:
Management concurs with the finding and has already initiated enhancements to its review process to ensure that expense reports are consistently reviewed and approved by both supervisors and finance personnel prior to being charged to federal awards. These steps are designed to further strengthen internal controls and support compliance with federal requirements.
In addition, Finance staff are formalizing procedures to reconcile payroll charges on a regular basis to ensure compliance with federal requirements and to confirm that all charges to federal programs are supported by actual time and effort records.
Responsible person: Jackie Ramirez, Operations & Finance Associate Director
Expected Implementation date: October 31, 2025