Finding Text
Documentation of Allocations for Certain Costs (Repeat of Finding 2024-003) Federal Agency: U.S. Department of Agriculture Pass-Through Agency: MN DEED Assistance Listing Number(s):17.258, 17.278 and 17.259 (WIOA Cluster) Federal Agency: U.S. Department of Health and Human Services Pass-Through Agencies: MN DEED and various counties Assistance Listing Number: 93.558 (TANF) Compliance Requirement: Allowable Cost Criteria: In accordance with the Uniform Guidance, charges to federal awards must be supported by records that accurately reflect the work performed. These records must be maintained within a system of internal controls that provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Condition: For the fiscal year ending June 30, 2025, the Organization started implementing a process for retaining and documenting cost allocation methodologies for expenses charged to federal awards. However, this process was not consistently applied to all disbursements tested during the audit period. For the WIOA Cluster 4 of the 60 disbursements tested (totaling $148, all related to communication expenses) could not be traced back to support showing what the allocation percentages by grant should have been or how the allocation percentages were determined. For the TANF 4 of the 60 disbursements tested (totaling $2, all related to communication expenses) could not be traced back to support showing what the allocation percentages by grant should have been or how the allocation percentages were determined. Cause: While the Organization has developed a process for documenting and retaining allocation support, the process was not consistently followed in all instances. Effect: Failure to consistently retain and apply allocation documentation increases the risk that costs may be inaccurately allocated among federal programs, resulting in potential noncompliance with Uniform Guidance requirements. This could lead to questioned costs, disallowed expenditures, and the potential need to return funds to the federal government. Questioned Costs: None Recommendation: The Organization should reinforce its existing allocation documentation procedures by ensuring they are consistently applied to all disbursements charged to federal programs. Management should enhance oversight and monitoring controls to verify that required documentation is completed and retained for every applicable transaction. Responsible Officials Response: CMJTS has since worked with DEED to update our cost allocation policy, and DEED approved our new policy. In this policy, the CMJTS fiscal team will work with CMJTS program managers to update allocations for the upcoming month. Changes to allocations will be documented and saved for record retention. CMJTS also migrated to a new accounting system in February 2025 which makes it easier to track allocations and ensure required documentation is completed and retained.