Finding 1176574 (2025-008)

Material Weakness Repeat Finding
Requirement
ABN
Questioned Costs
-
Year
2025
Accepted
2026-03-05
Audit: 390365
Organization: Johnson C. Smith University (NC)
Auditor: BDO USA PC

AI Summary

  • Core Issue: The University failed to timely review effort certifications and lacked documentation for payroll and non-payroll costs charged to federal awards.
  • Impacted Requirements: Compliance with 2 CFR Part 220 and 2 CFR Part 200, Subpart E regarding allowable costs and effort reporting.
  • Recommended Follow-Up: Enhance internal controls and establish formal policies to ensure timely documentation and monitoring of federal expenditures.

Finding Text

Federal Program Information: Connecting Minority Communities Pilot Program (“CMC”) (ALN: 11.028), Higher Education Institutional Aid (“Title III”) (ALN: 84.031B and 84.031E) and TRIO Cluster (“TRIO”) (ALN: 84.047A, 84.042A and 84.217A) Criteria or Specific Requirement (Including Statutory, Regulatory or Other Citation): A. Activities Allowed or Unallowed/N. Special Tests and Provisions – Per 2 Code of Federal Regulation (“CFR”) Part 220, the method used for apportioning salaries must recognize the principle of after-the-fact confirmation or determination so that costs distributed represent actual costs, unless a mutually satisfactory alternative agreement is reached. Direct cost activities as well as facilities and administration (“F&A”) cost activities may be confirmed by responsible persons with suitable means of verification that the work was performed. Confirmation by the employee is not a requirement for either direct or F&A cost activities if other responsible persons make appropriate confirmations. For after-the-fact activity records: a) Activity reports will reflect the distribution of activity expended by employees covered by the system (compensation for incidental work as described in subsection a need not be included); (b) These reports will reflect an after-the-fact reporting of the percentage distribution of activity of employees. Charges may be made initially on the basis of estimates made before the services are performed, provided that such charges are promptly adjusted if significant differences are indicated by activity records. Labor costs charged to federal awards must reasonably reflect the actual labor effort contributed by the employee to meet the objectives of the award and that adequate documentation must be maintained to support labor costs charged to sponsored agreements. For professorial and professional staff, effort certifications will be prepared each academic term, but no less frequently than every six months. For other employees, unless alternate arrangements are agreed to, the reports will be prepared no less frequently than monthly and will coincide with one or more pay periods. B. Allowable Costs and Cost Principles - In order for costs to be allowable under federal awards, they must be necessary and reasonable for the performance of the federal award and be allocable thereto under the principles in 2 CFR Part 200, Subpart E, be consistent with policies and procedures that apply uniformly to both federally financed and other activities of the non-federal entity, be accorded consistent treatment, and be determined in accordance with generally accepted accounting principles. Condition: For certain payroll costs charged to federal awards, effort certifications were not reviewed timely during the fiscal year and/or the effort certified was not commensurate with the amount charged to the grant. Additionally, for certain payroll and non-payroll expenditures selected for testing, the University was unable to provide documentation supporting the amount charged to the federal award. Cause: Insufficient administrative oversight and internal controls with respect to the University’s administration of federal awards in accordance with certain compliance requirements. Effect or Potential Effect: The University was unable to support certain amounts charged to federal awards and effort certifications supporting certain payroll costs charged to federal awards were not completed timely and/or appropriately monitored during the year. Questioned Costs: Indeterminable. For certain expenditures sufficient documentation was not available to support the amount charged to the federal award or to determine the amount that should have been charged. Additionally, sufficient information was not available to determine whether questioned costs may have resulted from similar issues in the untested population. Context: We noted the following exceptions during our testing: • For 7 of 24 payroll Title III expenditures selected for testing, the time and effort report certified by the employee was not certified timely. • For 2 of 24 payroll Title III expenditures selected for testing, the amounts charged to the federal award were not commensurate with the level of effort certified by the employee. • For 1 of 12 non-payroll TRIO expenditures selected for testing, the sampled expenditure was improperly duplicated in the system and charged to the federal award twice. • For 1 of 12 non-payroll TRIO expenditures selected for testing, the sampled expenditure was for an unallowable cost. • For 21 of 28 payroll TRIO expenditures selected for testing, time and effort reports certified by the employee were not certified timely. • For 1 of 28 payroll TRIO expenditures selected for testing, the sampled expenditure was charged to the incorrect TRIO program. • For 3 of 5 payroll CMC expenditures selected for testing, the time and effort report certified by the employee was not certified timely. • For 1 of 5 payroll CMC expenditures selected for testing, the University was unable to provide documentation supporting the amount charged to the federal award. Identification as a Repeat Finding: This is a repeat finding from prior year. This was reported as Finding 2024-008 in the prior year schedule of findings and questioned costs. Recommendation: We recommend that the University enhance its internal controls and implement formal policies and procedures over the applicable compliance requirements to ensure that the University has appropriate and formal documentation to support federal expenditures as required, as well as appropriately monitoring time and effort reporting in a timely manner. Views of Responsible Officials: The University experienced turnover of key positions throughout campus, particularly in the Division of Finance, Government Sponsored Programs and various federally funds programs over the last few fiscal years. The changes in staffing lead to a loss of institutional knowledge, and interrupted policy and process enforcement campus wide. During the Fall of 2024 the University began work to enhance its internal controls, policies, and procedures to ensure the appropriate documentation to support expenditures was properly maintained, and to ensure that level of effort reporting appropriately documented and timely completed. While there were some improvements (i.e., level of effort reporting), issues were not fully remediated. At the beginning of the 2025, GSPAR transitioned time and effort reporting to a semester-based reporting cycle to aid in ensuring the accuracy and timely certification of time and effort reporting. These changes aided in increasing the accuracy and efficiency of certification. Although we noticed positive progress, we still have room to improve time and effort certification.

Corrective Action Plan

Corrective Action Plan: The University is committed to ensuring compliance with all federal, institutional, and program regulations. The University continues to enhance its internal controls, policies, and procedures to ensure the appropriate documentation to support is maintained, and to ensure that level of effort is appropriately documented and reported. To this end the University enlisted the support of Moore & Van Allen and associates law firm to support in developing enhanced policies, procedures, and training modules to support an increased level of compliance support. Moore & Van Allen is a wellrespected international law firm that specializes in reporting compliance and compliance training.To address the specific audit concerns Moore & Van Allen in conjunction with the JCSU executive cabinet, Government Sponsored Programs, the President and Board of Trustees to develop these policies, supporting procedures and training modules. These policies have been approved as of the January 15, 2026 Board of Trustees meeting: Time and Effort Reporting Policy, Government- Sponsored Equipment and Property Management Policy, Post-Award Management Policy, Grant Records Management Policy and Revised Extra Compensation for Faculty and Staff Policy. The level of effort reporting process has been modified to a consistent reporting for all campus awards. Level of effort reports are done by academic term, and the reports are due within 60 days following the end of the term. The Office of Government Sponsored Programs (“GSPAR”) has implemented monitoring and tracking measures to all reports are captured and completed according to federal guidelines. A system of multiple reviews has been implemented to help in reducing errors in reporting and increase efficiency in timeliness of the reports. Additionally, GSPAR intends to work closely with the Human Resources division to ensure accurate and efficient Time and Effort reporting. To address this concern, the Payroll unit has been reorganized into the Business and Finance Office to streamline communication and time and effort report fidelity between Payroll and GSPAR. In addition, the University mandated participation in compliance training for all faculty and staff; participants are required to submit an acknowledgment that they participated in the training and are aware of the compliance requirements. The mandatory training will occur annually for the university and all new grant award recipients will receive this training as part of their grant startup process. All GSPAR employees will also participate in training related to time and effort and allowable costs compliance, annually. Specific to the TRIO programs, as the result of a re-organization in February 2025 the University created a new position: Assistant Vice President (AVP) for Student Affairs, TRIO, and Well-being. This role will oversee Time and Effort Reporting, Annual Performance Report submissions, and financial transactions, ensuring accuracy and adherence to all relevant policies, regulations, and procedures. Additionally, this position will support professional development initiatives to enhance grant management and compliance. The AVP will also support university efforts to conduct regular program reviews to ensure proper documentation supporting TRIO eligibility and adherence to program requirements. To improve program knowledge and standardize practices, TRIO personnel will continue engaging in professional development offered locally and nationally. Internally, the TRIO Leadership Team (TRIO Project Directors and SVP of Student Enrollment & Retention Management) established TRIO Professional Development Day, a two-day training designed specifically for JCSU TRIO staff. These sessions provide guidance on university policies, financial compliance, Time and Effort reporting, effective record-keeping, and data management. The event also includes a roundtable discussion to promote collaboration and shared learning across programs. In addition, the TRIO Leadership Team will continue to explore best practices from high-functioning TRIO programs. To enhance communication and strengthen internal controls, the TRIO Leadership Team implemented monthly TRIO Program meetings. These meetings, involving TRIO Project Directors and the Senior Vice President of Strategic Enrollment and Retention Management, facilitate discussions on compliance, streamline processes, and support policy development. Additionally, the TRIO Leadership Team established monthly interdepartmental meetings among TRIO programs, the Division of Government Sponsored Programs and Research, and the Division of Business and Finance to further ensure alignment with institutional and federal requirements. Human Resources will also participate in future meetings to review Time and Effort Reporting procedures. TRIO Project Directors maintain ongoing communication with the Department of Education Program Officer, seeking written guidance on allowable costs, staffing adjustments, and fund reallocations, when necessary. Continuous monitoring and evaluation will ensure the effectiveness of these corrective actions, allowing the university to identify areas for ongoing improvement and maintain full compliance with all regulatory requirements Anticipated Completion Date: December 2026

Categories

Allowable Costs / Cost Principles Matching / Level of Effort / Earmarking Internal Control / Segregation of Duties Special Tests & Provisions

Other Findings in this Audit

  • 1176550 2025-001
    Material Weakness Repeat
  • 1176551 2025-001
    Material Weakness Repeat
  • 1176552 2025-001
    Material Weakness Repeat
  • 1176553 2025-001
    Material Weakness Repeat
  • 1176554 2025-002
    Material Weakness Repeat
  • 1176555 2025-002
    Material Weakness Repeat
  • 1176556 2025-003
    Material Weakness Repeat
  • 1176557 2025-003
    Material Weakness Repeat
  • 1176558 2025-003
    Material Weakness Repeat
  • 1176559 2025-003
    Material Weakness Repeat
  • 1176560 2025-004
    Material Weakness Repeat
  • 1176561 2025-005
    Material Weakness Repeat
  • 1176562 2025-005
    Material Weakness Repeat
  • 1176563 2025-005
    Material Weakness Repeat
  • 1176564 2025-006
    Material Weakness Repeat
  • 1176565 2025-006
    Material Weakness Repeat
  • 1176566 2025-006
    Material Weakness Repeat
  • 1176567 2025-007
    Material Weakness Repeat
  • 1176568 2025-007
    Material Weakness Repeat
  • 1176569 2025-008
    Material Weakness Repeat
  • 1176570 2025-008
    Material Weakness Repeat
  • 1176571 2025-008
    Material Weakness Repeat
  • 1176572 2025-008
    Material Weakness Repeat
  • 1176573 2025-008
    Material Weakness Repeat
  • 1176575 2025-009
    Material Weakness Repeat
  • 1176576 2025-009
    Material Weakness Repeat
  • 1176577 2025-009
    Material Weakness Repeat
  • 1176578 2025-010
    Material Weakness Repeat
  • 1176579 2025-010
    Material Weakness Repeat

Programs in Audit

ALN Program Name Expenditures
84.268 FEDERAL DIRECT STUDENT LOANS $12.35M
84.063 FEDERAL PELL GRANT PROGRAM $6.16M
11.028 CONNECTING MINORITY COMMUNITIES PILOT PROGRAM $2.38M
84.031 HIGHER EDUCATION INSTITUTIONAL AID $499,663
84.007 FEDERAL SUPPLEMENTAL EDUCATIONAL OPPORTUNITY GRANTS $457,333
84.120 MINORITY SCIENCE AND ENGINEERING IMPROVEMENT $401,852
84.033 FEDERAL WORK-STUDY PROGRAM $388,738
84.047 TRIO UPWARD BOUND $369,588
84.042 TRIO STUDENT SUPPORT SERVICES $366,285
47.076 STEM EDUCATION (FORMERLY EDUCATION AND HUMAN RESOURCES) $269,267
84.217 TRIO MCNAIR POST-BACCALAUREATE ACHIEVEMENT $232,533
93.243 SUBSTANCE ABUSE AND MENTAL HEALTH SERVICES PROJECTS OF REGIONAL AND NATIONAL SIGNIFICANCE $201,323
21.027 CORONAVIRUS STATE AND LOCAL FISCAL RECOVERY FUNDS $185,839
93.391 ACTIVITIES TO SUPPORT STATE, TRIBAL, LOCAL AND TERRITORIAL (STLT) HEALTH DEPARTMENT RESPONSE TO PUBLIC HEALTH OR HEALTHCARE CRISES $48,474
89.003 NATIONAL HISTORICAL PUBLICATIONS AND RECORDS GRANTS $46,856
97.062 SCIENTIFIC LEADERSHIP AWARDS $26,250
97.061 CENTERS FOR HOMELAND SECURITY $15,207
11.417 SEA GRANT SUPPORT $5,250
93.859 BIOMEDICAL RESEARCH AND RESEARCH TRAINING $4,800
93.310 TRANS-NIH RESEARCH SUPPORT $2,000
17.268 H-1B JOB TRAINING GRANTS $1,078
54.001 INTELLIGENCE COMMUNITY CENTERS FOR ACADEMIC EXCELLENCE $773