Finding 1160395 (2023-004)

Material Weakness Repeat Finding

Requirement

Questioned Costs

Year

2023

Accepted

2025-10-14

Audit: 370809

Organization: California Asian Pacific Chamber of Commerce (CA)

Auditor: Richardson & Company LLP

AI Summary

Core Issue: Payroll costs are manually allocated using spreadsheets, leading to potential errors and difficulty in tracking costs across multiple grants.
Impacted Requirements: Compliance with 2 CFR 200.400 on direct cost allocation is not being met, risking improper reimbursement and documentation issues.
Recommended Follow-Up: Implement an automated time tracking system and conduct time studies to ensure accurate payroll cost allocations by 2024.

Finding Text

Finding 2023-004: Significant Deficiency – Payroll Allocations Federal grantor: Department of Commerce Condition: The allocation of payroll costs to programs are done manually using spreadsheets instead of done based on entity-wide timesheets. Criteria: Under 2 CFR 200.400, direct costs allocation principle state that if a cost benefits two or more projects or activities in proportions that can be determined without undue effort or cost, the cost must be allocated to the projects based on the proportional benefit. If a cost benefits two or more projects or activities in proportions that cannot be determined because of the interrelationship of the work involved, then the costs may be allocated or transferred to benefitted projects on any reasonable documented basis. Further, a cost may not be assigned to a Federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the Federal awards as an indirect cost. Costs are required to be adequately documented. Cause: The Chamber is not able to readily determine the amount of payroll costs billable to the grants. Effect: The approach of manually allocating payroll costs to grant projects leaves room for error, and makes it difficult to determine that costs are not being reimbursed by more than one source. Recommendation: The Chamber needs to prepare time studies or require employees to prepare timesheets on an automated system to support the payroll costs allocated to programs. Views of Responsible Officials and Planned Corrective Actions: The Chamber agrees with the finding and is in the process of implementing a better time and expense tracking system that will be effective in 2024.

Corrective Action Plan

Finding Reference Number: 2023-004 Description of Finding: The allocation of payroll costs to programs are done manually instead of done based on entity-wide timesheets. Statement of Concurrence or Nonconcurrence: The California Asian Pacific Chamber of Commerce (CalAsian) agrees with the finding. Corrective Action: CalAsian acknowledges the serious nature of this finding and the potential for damage to relationships with the grantors and Federal entities. The Controller and Director of Finance have implemented an ERP system which allows for better cost collection, reporting and reviews of the grant-related expenses for accuracy, reliability, and reconciliation.We also understand these findings are repetitive from the 2021 and 2022 audits; however, due to catch-up of the prior year audits, we were unable to address these issues prior to completion of the 2023 audit. This delay was caused by a change in auditors as our previous auditor did not have the capacity to retain us as clients due to staff shortages related to COVID. The implemented ERP system includes electronic timesheets for daily charging to specific grants, as well as more visibility into the proper separation of direct, indirect, and unallowable costs per the CFR. Timesheet training has been performed and timesheet completion is required for all employees each day. This began effective January 1, 2025 and provides support for hours worked/billed, as well as documentation of the certification and approvals that all staff time entered is accurate and in compliance with contract requirements and provides proper support for all grant labor costs and indirect costs. Monthly reviews by the Project Directors/Managers plus Accounting will be performed to identify any potential cost charging issues and corrective action(s) required. Name of Contact Person: Ryan Fong, Director of Finance, 916-446-7883, rfong@calasiancc.org Susan Wright, Controller, 256-689-7055, swright@calasiancc.org Pat Fong Kushida, President & CEO, 916-446-7883, patfongkushida@calasiancc.org Projected Completion Date: January 2025

Other Findings in this Audit

1160392 2023-001

Material Weakness Repeat
1160393 2023-002

Material Weakness Repeat
1160394 2023-003

Material Weakness Repeat
1160396 2023-005

Material Weakness Repeat

Programs in Audit

ALN	Program Name	Expenditures
59.037	Small Business Development Centers	$167,500
11.034	2023 Mbda Capital Readiness Program	$93,359
11.805	Mbda Business Center	$31,163
20.910	Assistance to Small and Disadvantaged Businesses	$15,000