Finding Text
Finding Type: Immaterial noncompliance with major program requirements Title and ALN of Federal Program: 59.046 – Small Business Administration Microloan Program and 93.570 – Community Services Block Grant Discretionary Awards Finding Resolution Status: In review. Information on Universe and Population Size: Salaries and wages pursuant to approved budget for the period July 1, 2024 to June 30, 2025. Sample Size Information: A sample of 20 allocations of salaries and wages allocated to each of the programs during the budget period were selected for testing compliance, including to approved time allocations within the payroll processor and as compared to the Executive Level II Salary max amounts in effect during the budget period. Identification of Repeat Finding and Finding Reference Number: 2024-001 Criteria: Under 2 CFR 200 Subpart E, payroll costs charged to a federal award must be based on actual costs incurred, be allocable to the award, and be supported by accurate records of the compensation paid for work performed on the award during the period being charged. Payroll allocations should be calculated using the pay rates in effect during the period for which the costs are charged. In addition, for programs subject to the federal Executive Level II salary limitation, compensation charged to the award for any individual must not exceed the Executive Level II rate in effect for the applicable period. Statement of Condition: During our testing of allocated salaries and wages, we identified errors in how employee time was allocated to the program, and salaries and wages allocated to the program in excess of the Executive Level II Salary maximum. One employee in each program, 59.046 and 93.570, had an inappropriate wage rate applied to allocated time to the program. Additionally, for the 59.046 program only, one employee had compensation levels allocated to the program in excess of the Executive Level II Salary maximum amount in effect for the respective period. Cause: The Organization did not have adequate procedures in place to ensure that payroll costs were supported by accurate time and rates reporting. Effect or Potential Effect: Salaries and wages charged to the programs included unsupported amounts, resulting in known and likely questioned costs that are less than $25,000 in total across both programs and were not material to the programs. The questioned costs relate to misallocated time and rates for both programs and to Executive Level II Salary exceedances for the 59.046 program only. Auditor Noncompliance Code: A – Activities allowed or unallowed Reporting Views of Responsible Officials: Management agrees with the noncompliance with no sanctions imposed conclusion. Context: No additional context identified by the Organization which is not otherwise presented herein. Recommendation: The Organization should strengthen internal controls over payroll cost allocations, including regular reconciliation of payroll charges to actual time records and rates. Time and rate documentation should be properly reviewed and approved. Auditor’s Summary of the Auditee’s Comments on the Findings and Recommendations: Management should complete regular reconciliations of payroll charges to actual time records and rates. Time and rate documentation should be properly reviewed and approved. Response Indicator: Agree Completion Date: In process. Response: Management acknowledges noncompliance in the current fiscal year and is reviewing its internal controls over payroll cost allocations. Questioned Costs: < $25,000 (not material)