Finding Text
U.S. Department of Treasury Pass-through Entity: Mecklenburg County, North Carolina Program Name: Coronavirus State and Local Fiscal Recovery Funds Federal Assistance Listing Number: 21.027 Significant Deficiency and Nonmaterial Noncompliance – Allowable Costs and Activities Finding 2025-005 – Repeat Finding Criteria: Per Section 200.303 of the Uniform Grant Guidance, a non-federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition: There were two (2) out of forty (40) samples tested where salaries for individuals working on the grant were allocated to the grant based on the contracts budgeted amount for each position rather than based on their actual time and effort and salary paid during the year for each employee. Questioned Costs: $22,000 – The questioned costs were related to a subset of allocated employees. Each allocated employee was recalculated in total to determine the known questioned costs for the period under audit. Effect: By not having a clearly documented review process, unallowable costs and activities may go undetected prior to filing a request for reimbursement with the grantor. The Organization should further evaluate their process for documenting the allocation of time by employee for those that do not work 100% of their time on one program to ensure proper documentation and approval of the allocation of time is based on actual time spent in determining allowable costs and activities. Cause: The Organization did not have formal policies or procedures in place to document, review, and retain support for payroll allocations for employees working across multiple programs prior to submitting reimbursement requests to the grantor. Recommendation: The Organization should further evaluate and formalize its process for documenting and approving the allocation of employee time for individuals who do not work one hundred percent of their time on a single program to ensure allocations are based on actual time spent and are adequately supported in determining allowable costs and activities. Views of Management: Management agrees with the finding and is implementing procedures to correct this which are further discussed in the Corrective Action Plan. See Corrective Action Plan for more information.