Finding Text
CONDITION: Employee time and effort reports were not consistently completed, certified, and maintained in accordance with the grant requirements. The auditor's review of a sample of employee timesheets found discrepancies in how time was allocated and reported for federal projects versus the PALM’s internal records. CRITERIA: The PALM is required by federal grant guidelines, specifically 2 CFR 200.430, to maintain internal controls over all aspects of their federal awards. This includes accurate and consistent documentation of personnel activity reports, timesheets, and payroll distribution records to support the direct labor costs charged to federal awards. CAUSE: The PALM lacked a formal, documented policy and procedure for tracking, certifying, and approving employee time spent on grant-related activities. Insufficient training was provided to employees and supervisors regarding the specific documentation requirements for federal grants. This resulted in personnel recording their time using inconsistent methods, including estimations at the end of a pay period, which increased the risk of inaccurate billing. EFFECT: Inaccurate time allocation led to the questioning of $95,618 in costs charged to the federal award. Since the timekeeping records did not provide reliable assurance that employee compensation was accurately charged, a portion of the labor costs was unsupported. This finding exposes the PALM to the risk of having to repay the federal agency for unallowable costs and could impact future grant funding. RECOMMENDATION: We recommend that the PALM utilize a time management software which integrates with their payroll processing, to easily identify direct labor costs related to the federal program. VIEWS OF RESPONSIBLE OFFICIALS AND PLANNED CORRECTIVE ACTION: The PALM agrees with the finding, and started utilizing a new time management software in 2025 to prevent overbilling of direct labor costs. QUESTIONED COSTS: A total of $77,538 in salaries and $18,080 in benefits were calculated as questioned costs, based on annualized differences from testing.