Finding Text
Education Stabilization Fund Education Stabilization Fund Federal Assistance Listing No. 84.425D, 84.425U and 84.425W 2024-008: Controls for Monitoring Payroll Charged to the Grant Compliance Requirement: Allowable Costs/Cost Principles Type of Finding: Compliance and Material Weakness in Internal Control Over Compliance Criteria or Specific Requirement: Grantees must provide reasonable assurance that Federal Awards are expended only for allowable activities and that the costs of goods and services charged to Federal awards are allowable and in accordance with applicable cost principles. Condition: Payroll expenditures charged to the Education Stabilization Fund grant are required to be supported with documentation (i.e., semi-annual certifications and personnel activity reports) substantiating that the employees are eligible to be charged to the grant and that the payroll charged relates to time spent accomplishing grant objectives. The City utilizes semi-annual time and effort certification forms to document the eligibility of the employees paid out of the grant. However, these forms were not completed for each employee whose salary was charged to the grant. A total of 38 payroll expenditures amounting to $250,328, were selected for testing and could not be substantiated through time and effort reports or any similar internal control process. Context: The City did not maintain sufficient documentation to demonstrate compliance with federal and state time and effort reporting requirements in accordance with the provisions of Title 2 U.S. Code of Federal Regulations Part 225 Cost Principals for State, Local, and Indian Tribal Governments. Cause: Management has not established written guidelines and procedures outlining the time and effort reporting and documentation requirements that department heads must adhere with to ensure compliance with federal and state time and effort reporting requirements. Such guidelines and procedures should indicate under what circumstances semi-annual certifications and personnel activity reports (PARS) are required. Management also has not adopted and implemented standardized forms that include all data as required by federal and state guidelines to demonstrate compliance with these requirements. Effect: The City has not complied with the federal and state time and effort reporting requirements, which could result in improper spending of grant funding. Questioned Costs: Total payroll costs charged to the grant of $1,833,922 are questioned costs. Repeat Finding: This matter was reported as a finding in the previous year as finding 2023-006. Recommendation: The City should establish written policies and procedures outlining the time and effort reporting and documentation requirements that must be adhered with to ensure compliance with federal and state time and effort reporting requirements. Management should adopt and implement standardized forms that include all data required by federal and state guidelines and provide training to ensure that program personnel understand the time and effort reporting requirements. Views of Responsible Officials: See Corrective Action Plan.