Finding Text
Federal Agencies: Department of Housing and Urban Development Federal Assistance Listing Numbers: 14.267 Program: Continuum of Care Program Award/Pass-Through Entity Identifying Numbers: DA-202212-01187, DA-202407-02967, DA 202210 01319 Criteria: The Uniform Guidance in 2 CFR §200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. Per 2 CFR §200.430 Compensation- Personal Services: “Standards for Documentation of Personnel Expenses (1) Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (ii) Be incorporated into the official records of the non-Federal entity; (iii) Reasonably reflect the total activity for which the employee is compensated by the non- Federal entity, not exceeding 100% of compensated activities; (iv) Encompass federally-assisted and all other activities compensated by the non-Federal entity on an integrated basis, but may include the use of subsidiary records as defined in the non-Federal entity’s written policy; (v) Comply with the established accounting policies and practices of the non-Federal entity; and (vi) [Reserved] (vii) Support the distribution of the employee’s 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; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. (viii) Budget estimates (i.e., estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that: (A) The system for establishing the estimates produces reasonable approximations of the activity actually performed; (B) Significant changes in the corresponding work activity (as defined by the non-Federal entity’s written policies) are identified and entered into the records in a timely manner. Short-term (such as one or two months) fluctuation between workload categories need not be considered as long as the distribution of salaries and wages is reasonable over the longer term; and (C) The non-Federal entity’s system of internal controls includes processes to review after-the-fact interim charges made to a Federal award based on budget estimates. All necessary adjustment must be made such that the final amount charged to the Federal award is accurate, allowable, and properly allocated.” Condition: We noted that certain individuals who work in certain departments complete time attestations to certify the time spent on and allocated to the grant for reimbursement. For 1 out of 47 selections, the employee approval of time attestation was not available. For 6 out of 47 selections, the employee attested to time that was less than what was allocated to the grant and no true-up was completed. Cause: LifeWire did not follow their procedures to review and reconcile the estimated amounts of payroll expenditures charged to the Continuum of Care to the actual expenditures for all employees. Effect or Potential Effect: Without adequate controls in place to reconcile the attestations to the costs based on budgeted allocations are appropriate and do not require adjustment, LifeWire could incorrectly charge expenditures to the federal program, or not request appropriate reimbursement LifeWire is entitled to under the terms of the grants. Questioned Costs: Below reporting threshold. Context: This is a condition identified per review of LifeWire’s compliance with specified requirements not using a statistically valid sample. Total payroll costs for the Continuum of Care grants in 2024 were $609,817. Any payroll costs not adequately support by time and effort reports are considered questioned costs. Any payroll costs charged greater than attested time and effort reports are considered questions costs. Identification as a Repeat Finding: 2023-005. Recommendation: We recommend that LifeWire follow their procedures to review and reconcile the estimated amounts of payroll expenditures charged and that sufficient document be maintained to support any adjustments made as required by 2 CFR §200.430. Views of Responsible Officials: Management agrees with the finding. Management has modified policies and procedures to ensure staff time allocated to the grant is properly reviewed and approved and time and effort reports are completed by staff timely and documentation is retained.