Finding Text
Finding No.: 2022-009 Pass-Through Entity: Republic of the Marshall Islands Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social and Political Development of the Territories Federal Award No.: Compact of Free Association Program, As Amended Area: Allowable Costs/Cost Principles Questioned Costs: $7,277 Criteria: Federal program expenditures should be necessary and reasonable for the performance of the Federal award in accordance with allowable costs/cost principles requirements and be adequately documented. Furthermore, 2 CFR 200.303(a) states that the subrecipient must establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control-Integrated Framework” issued by the COSO. Condition: For nine (or 20%) of forty-six items, aggregating $45,045 of $1,436,730 in total payroll expenditures, deficiencies were noted, as follows: Item # Check# Description Expense Amount Questioned Cost 1 53163 Salaries and wages and benefits $ 208 $ Undeterminable 2 54180 Salaries and wages and benefits 231 $ Undeterminable 3 54497 Salaries and wages and benefits 187 $ Undeterminable 4 54504 Salaries and wages and benefits 16 $ Undeterminable 5 50921 Salaries and wages and benefits 1,021 $ Undeterminable 6 55241 Salaries and wages and benefits 250 250 7 50097 Salaries and wages and benefits 2,509 2,509 8 51398 Salaries and wages 1,600 1,600 9 51386 Salaries and wages and benefits 2,918 2,918 $8,940 $ 7,277 Item #s 1 through 5 relate to employee’s salaries and wages and related fringe benefits (employer contributions for social security and health insurance) allocated and charged to federal grant for which we noted discrepancies in either a) the hours paid compared to the hours recorded on the approved timesheet or b) the rate paid compared to the rate per contract. For item # 6, we noted discrepancies in either a) the hours paid compared to the hours recorded on the approved timesheet or b) the rate paid compared to the rate per contract. Furthermore, a copy of the check payment to support the amount paid to the employee was not on file. Item #s 7 through 9 relate to salaries – overload or adjunct that were not supported by adequate documentation (i.e. instructor’s schedule) to ascertain whether service was received or expenditure was an allowable cost of the underlying grant. Cause: The College lacks adequate internal controls over compliance with the applicable federal regulations relating to allowable costs/cost principles, specifically, obtaining and retaining sufficient documentation to support all transactions. Effect: The College is not in compliance with the applicable allowable costs/cost principles requirements. Accordingly, questioned costs result of $7,277 as the projected questioned costs exceed the $25,000 threshold. For item #s 1 through 5, questioned costs related to federal expenditures that may result from discrepancies noted are not determinable. Identified as a Repeat Finding: 2021-006 Recommendation: College management should improve internal control policies and strengthen controls requiring obtaining and retaining sufficient documentation to support all transactions. Views of Auditee and Planned Corrective Actions: The College agrees with the finding and provides details in its Corrective Action Plan.