Finding Text
Allowable Costs/Cost Principles Criteria: Cost principles outlined in Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards require an after-the-fact determination of the actual activity of each employee to account for the total activity for which employees are compensated. Condition: The Organization incorrectly calculated the rate at which employees’ time was charged to the federal program. The Organization calculated the employees’ time charged to the federal program using incorrect hours worked rather than actual hours due to a formula error. This error resulted in the employees’ time being charged to the federal program at a higher rate for four out of the twelve months. Questioned Costs: None noted above the reportable threshold. Context: A sample of twenty-four payroll employee timecards were selected for testing. Nine of the items tested indicated a variance in the calculated amount charged to the federal program. Upon further review, the Organization noted four out of the twelve months indicated formula errors when calculating each employees’ time charged to the program. Effect: Amount charged to the federal program for direct labor was not based on actual hours worked. Cause: The Organization did not properly calculate the direct labor chargeable to the federal program. Recommendation: The Organization should develop formally documented internal control procedures to ensure that direct labor is charged to the federal program at the appropriate rate. View of Responsible Officials and Planned Corrective Actions: Following the 2024 grant year, the Organization made updates to the internal controls procedures to ensure greater oversight of financial calculation and appropriate segregation of duties. These updates include additional steps for review and approval of drawdown submissions, training for supervisory staff, and procedures for updating controls procedures as our staff grows and changes. These updates were completed as part of the Company's Corrective Action Plan administered through AmeriCorps’ Office of Monitoring and confirmed as resolved in a notice dated November 25, 2025 [Re: Notification of Corrective Action Plan Closed – 23NDFMA002]. In considering the recommendations provided in this report, the Organization will further amend our internal controls procedures to include an additional layer of review, reconciliation, and approval of staff time and salary calculations related to AmeriCorps grant activities. In addition to the existing process of compilation by the Chief Operating Officer and review and approval by the Chief Executive Officer, staff time and salary calculations will now also be conducted by the Director of People Operations independently. This secondary calculation will be used for review and reconciliation by the Chief Operating Officer and Director of People Operations to ensure alignment and compliance to AmeriCorps and general accounting standards.