Finding 1167986 (2025-001)

Material Weakness Repeat Finding
Requirement
B
Questioned Costs
-
Year
2025
Accepted
2026-01-06
Audit: 379642
Organization: Code.org (WA)
Auditor: CLARK NUBER PS

AI Summary

  • Core Issue: There is a significant deficiency in internal controls over compliance related to allowable costs, specifically in payroll calculations for the Federal award.
  • Impacted Requirements: Costs must be necessary, reasonable, and allocable as per 2 CFR 200, which was not met due to incorrect wage rates being used.
  • Recommended Follow-Up: Conduct regular reviews of the salary allocation spreadsheet to ensure wage rates align with approved rates to prevent future errors.

Finding Text

Significant deficiency in internal controls over compliance related to allowable costs. Federal Agency: U.S. Department of Education Program Titles: EDUCATION INNOVATION AND RESEARCH Assistance Listing Number: 84.411C Award Number: U411C190093 Award Period: October 1, 2019 - September 30, 2024 Criteria 2 U.S. Code of Federal Regulations (CFR) 200 Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards requires that costs must be necessary and reasonable for the performance of the Federal award and allocable under the principles of 2 CFR 200, subpart E. Condition/Context During the testing of allowable costs, there was one payroll instance of twenty-five tested where the incorrect gross wage rate was used to calculate the payroll expense charged to the grant. Upon further review of the cause of this error it was determined that this was an error that had occurred multiple times and resulted in the incorrect amount being charged to the Federal Award. Questioned Costs $702 Cause Code.org's internal controls were not designed to identify and correct errors in the calculation of wages being charged to the Federal award. Effect Based on the exception noted in the operation of internal controls, unallowable costs could be charged to the Federal Award. Repeat Finding This is not a repeat finding. Recommendation We recommend that Code.org perform a periodic review of the salary allocation spreadsheet to ensure gross wage rates used in the calculation match current approved wage rates for each employee. Views of Responsible Official of Auditee Management concurs with the finding and has provided accompanying corrective action plan.

Corrective Action Plan

Single Audit Corrective Action Plan 20-Month Audit Period Ending August 31, 2025 Finding: During review of payroll allocations charged to the Education Innovation and Research, #U411C190093, the auditor identified an overcharge of approximately $702.05. This was caused by a formula error in the spreadsheet used to prepare monthly invoices. A VLOOKUP in the staff allocation tab swapped the Rippling employee IDs for two employees with the same last name, resulting in the wrong salary amount being pulled into the allocation calculation. Although monthly staff allocations were reviewed and signed off, this specific formula mismatch was not detected. The grant had already been closed when this error was discovered. Corrective Action: We will implement a validation check within our allocation spreadsheet that requires the reviewer to verify the unique Rippling employee ID number, not a match on last name, before approving payroll allocations. Additionally, for any future Federal awards, we will add an annual salary cross-check to ensure that the salary in the allocation schedule matches the actual salary on record. Contact Person: Reyana Hill, Accounting Manager, reyana.hill@code.org Resolution of Questioned Costs: Management has notified the Department of Education of the $702.05 overpayment and has requested instructions for remitting the funds back to the Government. The repayment will be made within 30 days of receiving instructions.

Categories

Allowable Costs / Cost Principles

Programs in Audit

ALN Program Name Expenditures
84.411 EDUCATION INNOVATION AND RESEARCH (FORMERLY INVESTING IN INNOVATION (I3) FUND) $966,258