Finding Text
Finding Number: 2023-001 – Time Allocation and Budget Monitoring Federal Agencies: United States Department of State Federal Programs: All programs under Assistance Listing Number 19.345 Assistance Listing Numbers: 19.345 Award Identification Number and Year: All awards under Assistance Listing Number 19.345 Criteria or Specific Requirement: 1. Time and Effort Reporting: According to 2 CFR §200.430(i), charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must be supported by a system of internal controls that provide reasonable assurance that the charges are accurate, allowable, and properly allocated. 2. Budget Management: Per 2 CFR §200.308, recipients of Federal funds must monitor actual expenditures against the approved budget to ensure funds are used for allowable activities and to avoid over- or underspending. Condition: CIPE did not properly allocate employee time to Federal programs in accordance with actual time worked, resulting in inaccurate charges to Federal awards. Additionally, CIPE did not maintain adequate oversight of budget-to-actual expenditures, leading to potential mismanagement of Federal funds. Cause: 1. The misallocation of Federal funds was primarily due to a lack of adequate training for staff on time and effort requirements and failure to implement adequate tracking systems. 2. The Budget Oversight deficiency was due primarily to a lack of regular budget reviews, inadequate financial reporting processes, and turnover in key personnel. Effect or Potential Effect: 1. The misallocation of employee time increases the risk of unallowable costs being charged to Federal programs, which could result in questioned costs and potential repayment of funds. 2. Lack of oversight over budget-to-actual expenditures may lead to noncompliance with grant requirements, inefficient use of funds, or missed opportunities to reallocate resources effectively. Questioned Costs: None Context: This finding is considered systemic rather than isolated. The entity has not had prior findings related to time allocations or budget monitoring in recent years. Identification as a Repeat Finding, if Applicable: Not applicable Recommendation: We recommend that CIPE: 1. Establish and enforce a robust time and effort reporting system to ensure employee time is allocated accurately and in compliance with Federal regulations. Provide training to employees and supervisors on proper reporting requirements. 2. Implement regular budget-to-actual reviews to identify variances and take corrective actions promptly. Develop a formalized process for financial oversight that includes periodic reporting to management and grant administrators.