Finding Text
Criteria: The Maternal, Infant and Early Childhood Home Visiting Program requires that costs charged to a federal award must be allocable in accordance with 2 CFR § 75.405, meaning they are incurred for the Federal award, benefit the award in proportion to the relative benefit, and are necessary to the overall operation of the non-federal entity. Condition: A test of 60 payroll items for program year 2025 revealed that accrued vacation amounts were being calculated by the Center through a spreadsheet with a formula error that resulted in incorrect rates being applied to certain accrued vacation totals. The net variance totaled $2,291. Cause: The spreadsheet formula used to calculate accrued vacation costs referenced employee last names instead of unique identifiers, which did not account for employees with common last names. The error was not detected during the review process, as testing procedures relied on agreement to the spreadsheet calculation without validating the underlying formula logic. This caused certain personnel costs to be inaccurately allocated to the federal award, which is not consistent with 2 CFR § 75.405. Questioned Cost: $-0- Effect: Personnel costs charged to the federal award could be misstated and not properly allocable under 2 CFR § 75.405. Recommendation: We recommend that the Center management strengthen oversight of payroll allocation processes and review spreadsheet calculations to ensure formulas properly reference unique employee identifiers. This will help prevent errors in applying hourly rates and ensure personnel costs charged to the federal award are correctly allocable under 2 CFR § 75.405. Classification: Compliance finding and control deficiency in internal controls.