Finding Text
Finding 2023-006 Pass-Through Entity: Federated States of Micronesia National Government Federal Agency: U.S Department of Education AL Program: 84.027 Special Education – Grants to States (IDEA, Part B) Federal Award No: H027A220005 Area: Allowable Costs/Cost Principles Questioned Costs: $18,980 Criteria: Expenditures must be necessary and reasonable for program purposes and supported by adequate financial and programmatic documentation in accordance with federal allowable cost/cost principles requirements. Condition: 1. For 4 (7%) of 60 non-payroll transactions tested, totaling $57,356 of $1,091,202 in program expenditures, no supporting financial or programmatic records (e.g., vendor invoices, contracts, receiving reports, or grantor-approved budgets) were provided for the following: 2. For 39 (65%) of 60 payroll transactions tested, totaling $28,582, no departmental timecards or timesheets were provided to support compensation, taxes, and fringe benefits for the following: 3. Of the 21 payroll transactions with timecards or timesheets: a. Two (2) cases reported fewer hours on departmental records than on the uniform timesheet. b. Three (3) cases had irreconcilable time entries due to missing or inconsistent daily records. c. Five (5) cases logged 80 regular hours on the uniform timesheet, while departmental timesheets reflected sick leave or missing hours. Cause: The causes of the above conditions are as follows; a. Condition 1: Ineffective documentation retention at treasury, exacerbated by office relocation. b. Condition 2: Ineffective retention at departmental agencies where timesheets are held. c. Conditions 3(a) and 3(c): Weak internal controls over reconciliation between departmental timesheets and treasury uniform timesheets. Treasury does not regularly obtain departmental timesheets. d. Condition 3(b): Manual timecard errors from daily stamp-based systems. Effect: The State is not in compliance with applicable allowable costs/cost principles requirements. Projected questioned costs exceed $25,000 and therefore the known amount of $18,980 is questioned. Recommendation: The State should consider the following: 1. Strengthen documentation retention controls. 2. Enhance monitoring at the departmental level or implement a uniform timekeeping system to reduce reconciliation issues. 3. Require submission of departmental timekeeping reports to treasury for secondary reconciliation. 4. Ensure explanatory documentation is retained when uniform timesheets differ from departmental records. Identification as a Repeat Finding: N/A View of Responsible Officials: The State’s response and corrective action plan addressing this finding is included in the accompanying corrective action plan.