Finding Text
Findings 2024-005 – All Federal Programs – Significant Deficiency Type of Finding: Significant Deficiency in Internal Control over Compliance and Compliance – Allowable Costs (Payroll) Federal Agency: National Science Foundation Federal Program Name: Research and Development Cluster - NSF Technology, Innovation and Partnerships CO-WY Climate Resilience Engine Assistance Listing Number: 47.084 Federal Award Identification Number: 2315760 Award Period: March 1, 2024 – February 28, 2026 Criteria or specific requirement: Federal regulations require that charges to federal awards for salaries and wages must be based on records that accurately reflect the work performed. Per 2 CFR §200.430(i), payroll allocations must be supported by after-the-fact records of actual time worked rather than budget. Condition: It was noted through our testing that the Organization allocated salaries and wages to the program based on budgeted percentages rather than after-the-fact records of time and efforts expended by employees. Individuals whose time is fully charged to federal grants are also not required to provide time and effort reporting. Further, for one of the five individuals selected, the individual timesheet could not be located. Questioned costs: Unknown Context: Based on our testing of payroll, for the one individual out of five selected that had time allocated to multiple grants and programs, no time and effort reporting was available to support the allocation to the federal grant. There was also not a consistent process of reviewing and approving payroll time sheets and registers by management. There was also no time reporting required to support individuals that were fully charged to the grant. Cause: The Organization does not currently have a payroll system whereby individuals are required to record time and effort by program or grant. Allocations are entered into the system based on expected budgets for grant programs when individuals participate in more than one program. The payroll system also did not require payroll to be initiated and approved by separate individuals. Effect: As a result, there is an increased risk that payroll costs charged to the federal program do not accurately reflect the actual effort expended, which could result in unallowable costs being charged to the grant. This practice does not comply with federal requirements for documentation of personnel expenses. Repeat finding: No Recommendation: We recommend that the Organization implement procedures to ensure that payroll allocations to federal programs are supported by after-the-fact records of actual time worked, in accordance with 2 CFR part 200.430(i). The Organization should discontinue the use of budget estimates for payroll allocations and require contemporaneous documentation of time and effort for all employees whose salaries are charged to federal awards. Payroll should be initiated and reviewed by different individuals and the process should include a way to verify either manually or electronically that payroll was approved prior to processing. Views of responsible officials: There is no disagreement with the audit finding. See Corrective Action Plan.