Finding Text
Allocation of Salaries and Other Costs Information on Federal Program: Unaccompanied Alien Children (Assistance Listing No. 93.676) provided by the Department of Health and Human Services. Criteria: The Agency must follow the requirements for allocating salaries as prescribed by the Uniform Guidance and OCFS. The Uniform Guidance section 200.430 requires charges to federal awards for salaries and wages to be based on records that accurately reflect the work performed and include support for the distribution of time the employee works on one or more federal award. In addition, budget estimates (i.e., estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards. Statement of Condition: Currently, the Agency charges direct salaries based on time and attendance records, however, other administrative costs such as maintenance, food costs and general administrative salaries were allocated based on the budget established with granting agencies. In addition, there was limited support for how costs were actually allocated. Statement of Cause: Due to turnover in the CFO position, the previous methodology of allocating costs, which was based on the actual direct costs for the month, was unable to be recreated. There was also no review or reconciliation of expenses in comparison to the budgeted amounts that were approved by the granting agency to ensure that the Agency did not overspend the grant. Statement of Effect: Charges to the federal grants may not be accurate or may be in excess of the amounts budgeted and approved by the granting agency. Questioned Costs: None Perspective Information: Payroll and disbursement transactions under the Federal program are tested for compliance with the grant documentation as part of the audit procedures. Repeat Finding: Yes Recommendation: The Agency should consider creating an allocation methodology for the salary and other costs related to the Federal program that is based on actual results, such as the actual direct costs for the month. The Agency should also develop a tracking methodology to ensure they do not overspend in any areas of the approved budget by the funding agency. Views of the Responsible Officials and Planned Corrective Actions: The Agency’s management agrees with this finding. During the upcoming fiscal year, the Controller, Kimberly Houghton-Bryan, will work with various departments within the Agency including the HR and ORR program directors to identify items that are direct charges or allocated based on percentages to the Unaccompanied Alien Children (UAC) grant where possible. Allocation methods, that are allowable under the funding sources, will be reviewed for implementation. Methods, such as quarterly time studies, direct recording of time or other methods will be considered to ensure there is supporting documentation. The approved budget is also monitored on a monthly and/or quarterly basis and compared to the UAC approved budget. The allocation process as well as other accounting process relating to New Horizons are being reviewed and the Accounting which had been outsourced is being brought internally. The Agency will be performing reviews of the internal allocation methodology, at least every other quarter-end. This enhancement will be implemented by March 31, 2026.