Finding Text
Finding Number 2021-004 Internal Controls and Compliance over Allowable Costs/Cost Principles Activities, U.S. Department of Housing and Urban Development, Passed Through Arizona Department of Economic Security, Aging Cluster, ALN 93.044/93.045/93.053, July 1, 2020 through June 30, 2021 (Significant Deficiency). Statement of Condition: Employee time charged to programs, federally funded and non-federally funded, was not tracked. Questioned Costs: Unknown Criteria: Federal requirements call for charges for salaries and wages to be based upon records that accurately reflect the actual work performed and be supported by a system of internal controls that reasonably assure that the charges are accurate, allowable, and properly allocated. The records should support the distribution of the employee’s salary or wages among the specific activities (grants) charged. Cause: The Organization’s does not have an adequate time and effort policy. Effect: Salary and wage allocations may not be accurate on salary and wage costs charged to specific grants. While there is an allocation done by management for each employee, which appears reasonable, the Organization has not maintained records of time and effort in accordance with applicable cost principles. Recommendation: We recommend that the Organization’s time and effort policy be implemented in order to comply with applicable cost principles. Charges for salaries and wages must be supported by records indicating the total number of hours worked each day, with a breakdown by specific program. These should be signed by the employee and other responsible individual with knowledge of the employee’s activity. These should then be reviewed and reconciled with the budget by grant.