Finding Text
Finding 2025-011 – Allowable Costs (Material Weakness and Noncompliance) Identification of the Federal Program: Highway Planning and Construction, ALN 20.205, Department of Transportation (HPC). Criteria: 2 CFR Part 200 Subpart E establishes cost principles to apply in determining costs under federal awards. Nonfederal entities are also required to establish controls over the disbursement process to ensure compliance with allowable cost requirements. The accounting practices of the recipient and subrecipient must be consistent with these cost principles and support the accumulation of costs as required by these cost principles, including maintaining adequate documentation to support costs charged to the Federal award. Condition: We selected one month’s payroll which included the same five employees reimbursed each month by the state agency. For those five, the time charged to the grant did not agree to the hours that should have been charged based on the recalculation performed from the timesheets. In addition, one employee was paid at an old rate for the first two paychecks of the month after city employees received a 5% COLA effective 10/1/24. And lastly, one employee was not paid 1.5 hours of overtime according to the timesheet and paycheck detail. Also for those five, documentation and/or support for the leave calculation could not be provided. Cause: The City uses a spreadsheet provided by the state agency to calculate the number of hours worked plus a portion of leave to be reimbursed. The hours entered into the spreadsheet did not agree to the hours documented on the timesheets. In addition, the rationale for the amount of leave calculated could not be provided. Lastly, a pay rate was not updated and overtime was not paid during the normal payroll process and controls in place did not detect or prevent the mistake. Effect: The City did not retain proper documentation to support the amounts reimbursed by the grant. Payroll review and approval process did not detect two mistakes noted in the month tested. Questioned Costs: $415. Recommendation: We recommend the City strengthen the fiscal policies and procedures to ensure all pay is properly documented and reviewed for accuracy. Views of Responsible Officials: The City agrees with the finding. See Management’s View and Corrective Action Plan included at the end of the report.