Finding Text
Allocation and Documentation of Payroll Costs Federal Agencies: Corporation for National and Community Services, U.S. Department of Labor, and U.S. Department of Housing and Urban Development Federal Program Names: AmeriCorps State and National Grants, WIOA Adult Program, and Community Development Block Grants/Entitlement Grants Cluster Assistance Listing Numbers: 94.006, 17.258, and 14.218 Pass-Through Agencies: Illinois Department of Human Services, Chicago Cook Workforce Partnership, City of Chicago Department of Family and Support Services, and City of Chicago Department of Housing Pass-Through Numbers: FCSDY07205, FCSDY07201, FCSDY07898; Adult-2021-2135, 177227, 177420, 178768, and 253064 Award Period: July 1, 2024 through June 30, 2025; October 1, 2023 through September 30, 2024; October 1, 2024 through September 30, 2025; and January 1, 2022 through December 31, 2025 Type of Finding: Other Matters Material Weakness in Internal Control over Compliance Criteria or Specific Requirement: Uniform Guidance section 200.430(h)(8)(i) indicates that the standards for documentation of personnel expenses are such that (1) Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must:(i) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated;(ii) Be incorporated into the official records of the non-Federal entity and (iii) Reasonably reflect the total activity for which the employee is compensated by the non-Federal entity, not exceeding 100% of compensated activities. Furthermore, subsection (viii) indicates: Budget estimates alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that:(A) The system for establishing the estimates produces reasonable approximations of the activity actually performed;(B) Significant changes in the corresponding work activity are identified and entered into the records in a timely manner and (C) The non-Federal entity's system of internal controls includes processes to review after-the-fact interim charges made to a Federal awards based on budget estimates. Condition: The Agency is allocating payroll costs to grants based upon budgeted amounts/percentages submitted to the funding agency and does not currently have a system for ensuring that the estimates used produce reasonable approximations of the activity actually performed. Questioned Costs: None Context: This condition occurred in all 53 transactions selected for testing and represented 20 different employees. Cause: Procedures for the allocation of employee time in full compliance with the Uniform Guidance have not yet been fully implemented. Effect: Inaccurate payroll costs may be charged to federal programs if the Agency does not have procedures in place to monitor and record employee time devoted to federal programs. Repeat Finding: This finding is a repeat of finding 2024-002. Recommendation: Management should develop a process whereby payroll costs allocated to federal grants; are supported by a system of internal controls which provides reasonable assurance that the charges are accurate, allowable and properly allocated, reasonably reflect the total activity for which the employee is compensated, and support the distribution of the employee’s wages among specific activities or cost objectives if the employee woks on more than one federally funded program. Views of Responsible Officials: There is no disagreement with this finding.