Finding Text
Finding 2024‐005—Period of Performance—SIGNIFICANT DEFICIENCY IN INTERNAL CONTROLS OVER COMPLIANCE AND NONCOMPLIANCE Federal Program: COVID-19 Coronavirus State and Local Fiscal Recovery Funds (CSLFRF) Assistance Listing Number: 21.027 Year(s): 2024 Federal Agency: US Department of Treasury Pass‐Through Agencies: City of Modesto, Sacred Heart Community Service, and Second Harvest of Silicon Valley Criteria—A non-federal entity may charge only allowable costs incurred during the approved budget period of a federal award’s period of performance and any costs incurred before the federal awarding agency or pass-through entity made the federal award that were authorized by the federal awarding agency or pass-through entity (2 CFR sections 200.308, 200.309, and 200.403(h)). A period of performance may contain one or more budget periods. Condition and Context—During testing of the Period of Performance (POP) requirement, 5 selected payroll expenditures totaling $7,983 of a total of 40 selections were incurred prior to the grant's start date as stated in the grant agreement with the pass-through entity, Sacred Heart Community Service. These 5 selections were related to payroll and benefits expenditures and were for the pay period May 19, 2024, to June 1, 2024, whereas the grant start date was June 1, 2024. Although the Division paid for those expenditures after the grant's start date, the underlying expenditure was incurred prior to such date, resulting in noncompliance with the POP compliance requirement and the associated control. There were a total of 42 payroll and benefits transactions totaling $43,861 that were incurred before the grant’s start date. Cause—Management focused on ensuring that the underlying costs were paid for within the grant's approved budget period rather than ensuring that the underlying costs were incurred within that period. Further, management did not obtain authorization from the grantor to charge costs that were incurred before the grant's approved budget period. Effect—The Division will be in noncompliance with its POP compliance requirement and there is risk the grantor will not reimburse the costs incurred. Questioned Cost—$43,861. Repeat Finding from Prior Year—No. Recommendation—We recommend that management take steps to ensure that only costs incurred during the approved budget period of a federal award’s period of performance are charged to the grant and any costs incurred before the federal award was made was authorized by the pass-through entity. View of Responsible Officials—See Corrective Action Plan.