Finding Text
Criteria: Cost principles in 2 CFR part 200.431 Compensation ? fringe benefits, prescribe general criteria costs follow to be considered allowable under federal awards. The criteria state costs must be under established written leave policies, the costs are equitably allocated to all related activities and the accounting basis selected for costing each type of leave is consistently followed by the Organization. Questioned Costs: $46,283 Condition: Out of 60 transactions tested, 5 federal expenditures charged to fringe benefits were not equitably allocated to all related activities, 7 transactions had clerical errors leading to overpayment of employees, and 3 transactions where timecards could not be located supporting the transaction. The Organization charged compensated absence payouts to federal expenditures and the Organization was unable to support whether the accrued time occurred while providing services allowable under the federal award. Cause: The Organization was unable to provide adequate support of how and when the employee incurred the accrued leave and it could not be determined if leave was incurred while the employee was providing allowable services under the federal award. Effect: The determination could not be made to whether the incurred expenses were allowable under the federal award leading to questioned costs. Recommendation: We recommend the Organization increase internal controls over payroll relating to federal grants to prevent future documentation issues. Organization Response: Management agrees with the finding. The Organization has implemented a new payroll system, which includes time tracking. It has also changed its policy to pay overtime rather than accruing comp-time, as well as implementing an unlimited PTO policy. These changes will eliminate charging grants for undocumented accrued time.