Finding Text
2024-003 Time and Effort Documentation (Internal Control) Federal Program: Housing Voucher Cluster; CFDA #14.871 Federal Agency: U.S. Department of Housing and Urban Development Award Period: 2024 Finding resolution status Unresolved Information on universe and population size The universe and population consisted of 26 payroll periods. Sample size information A non‑statistical sample of 3 payroll periods were selected for testing. Identification as a repeat finding This is a repeat finding. Criteria 2 CFR §200.430(i) requires charges to Federal awards for salaries and wages to be based on records that accurately reflect the work performed and that are supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. HUD guidance reiterates the requirement for after the fact time and activity documentation to support payroll allocations to grants. Statement of condition Payroll allocations for four employees were established prospectively at the beginning of the year and were not adjusted to reflect actual time and effort during the year. These employees do not complete detailed timesheets; therefore, there is no after‑the‑fact documentation to support the accuracy of payroll costs charged to Federal programs. Cause Management believed that, because the employees work consistent hours on the same programs each week and supervisory knowledge of attendance exists, maintaining detailed time and effort records was unnecessary. Effect Without contemporaneous, after the fact documentation of actual time spent on each Federal program, the organization cannot demonstrate that salary costs are accurately allocated, increasing the risk of unallowable costs being charged to the grants. Auditor non-compliance code S – Internal Control Deficiencies Questioned costs None Views of responsible officials Management concurs with the finding and has performed a time-study to support program allocations. The allocations have been implemented in 2025. Context The exception was isolated to four administrative employees. The maintenance employee maintained acceptable property specific timesheets and was not included in the exception population. Recommendation We recommend that the organization establish an after the fact time and activity reporting system that meets Uniform Guidance requirements and adjust payroll allocations at least quarterly to reflect actual effort expended. Information on universe and population size The universe and population consisted of 26 payroll periods. Sample size information A non‑statistical sample of 3 payroll periods were selected for testing. Identification as a repeat finding This is a repeat finding. Criteria 2 CFR §200.430(i) requires charges to Federal awards for salaries and wages to be based on records that accurately reflect the work performed and that are supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. HUD guidance reiterates the requirement for after the fact time and activity documentation to support payroll allocations to grants. Statement of condition Payroll allocations for four employees were established prospectively at the beginning of the year and were not adjusted to reflect actual time and effort during the year. These employees do not complete detailed timesheets; therefore, there is no after‑the‑fact documentation to support the accuracy of payroll costs charged to Federal programs. Cause Management believed that, because the employees work consistent hours on the same programs each week and supervisory knowledge of attendance exists, maintaining detailed time and effort records was unnecessary. Effect Without contemporaneous, after the fact documentation of actual time spent on each Federal program, the organization cannot demonstrate that salary costs are accurately allocated, increasing the risk of unallowable costs being charged to the grants. Auditor non-compliance code S – Internal Control Deficiencies Questioned costs None Views of responsible officials Management concurs with the finding and has performed a time-study to support program allocations. The allocations have been implemented in 2025. Context The exception was isolated to four administrative employees. The maintenance employee maintained acceptable property specific timesheets and was not included in the exception population. Recommendation We recommend that the organization establish an after the fact time and activity reporting system that meets Uniform Guidance requirements and adjust payroll allocations at least quarterly to reflect actual effort expended.