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FINDING REFERENCE NUMBER 2024-020 (See Finding Reference Number 2024-001) FEDERAL PROGRAM (ALN – 93.558) TEMPORARY ASSISTANCE FOR NEEDY FAMILIES (TANF) U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES AWARD NUMBERS 2022G996117; 2023996117 (Federal Award Years: 10/1/2021 through 9/30/2023) 2401PRTANF1 (Federal Award Years: 10/1/2023 through 9/30/2026) ADMINISTRATION ADMINISTRATION FOR SOCIOECONOMIC DEVELOPMENT OF THE FAMILY (ADSEF, BY ITS SPANISH ACRONYM) COMPLIANCE REQUIREMENT ACTIVITIES ALLOWED OR UNALLOWED // ALLOWABLE COSTS/COSTS PRINCIPLES TYPE OF FINDING INTERNAL CONTROL AND COMPLIANCE – MATERIAL WEAKNESS AND MATERIAL NONCOMPLIANCE CRITERIA Uniform Guidance at 2 CFR 200 Subpart E §200.403, Factor affecting allowability of costs, establishes that: “Except where otherwise authorized by statute, costs must meet the following criteria to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. (c) Be consistent with policies and procedures that apply uniformly to both federally financed and other activities of the recipient or subrecipient. (d) Be accorded consistent treatment. For example, a cost must not be assigned to a Federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the Federal award as an indirect cost. (e) Be determined in accordance with generally accepted accounting principles (GAAP), except, for State and local governments and Indian Tribes only, as otherwise provided for in this part. (f) Not be included as a cost or used to meet cost sharing requirements of any other federally financed program in either the current or a prior period. See § 200.306(b). (g) Be adequately documented. See §§ 200.300 through 200.309.” STATEMENT OF CONDITION As part of our payroll audit procedures for TANF, we selected a sample of twenty-five (25) employees to evaluate internal controls and compliance with payroll transactions. ADSEF was unable to identify the personnel files of one (1) employee. This employee was certified by ADSEF as not being assigned to ADSEF. The employee was included in GL200 (payroll register). Additionally, we found discrepancies between the change report and the information from the last payroll of June 2024 for one (1) employee. QUESTIONED COSTS The salary paid to the employee during the fiscal year that were charged to the TANF program totalized $77,517.29. PERSPECTIVE INFORMATION This deficiency is systemic. The failure to maintain copies of employee files violates state and Federal regulations and prevents the validation of wages paid with Federal funds. The sampling was a statistically valid sample. STATEMENT OF CAUSE ADSEF does not maintain appropriate internal controls over employee records, as required by state and Federal regulations. If an employee was transferred to another agency, a copy of their personnel file must be retained for audit purposes and other requests from either the Federal or state government. POSSIBLE ASSERTED EFFECT Because we cannot review employee records, we cannot verify that the employee actually worked for the program for which their salary was assigned. This results in questionable costs. Deficiencies in employee record control prevent effective monitoring of salaries charged to Federal programs and compliance with state and Federal regulations. IDENTIFICATION OF REPEAT FINDING No reported as prior audit finding. RECOMMENDATIONS We recommend that ADSEF investigate why one employees were assigned to the Agency through RUM without a corresponding personnel file to support their payroll. Regarding the deceased employee, they should identify and locate their file. Additionally, we recommend establishing internal control processes that require verifying each payroll against the updated employee roster and monitoring employee files against payroll and employee rosters.