Finding 1222656 (2024-001)

Assistance Listing Number: 93.558 Name of Federal Program or Cluster: Temporary Assistance for Needy Families (TANF) Name of Federal Agency: Department of Health and Human Services Name of Pass-Through Entity: Virginia Department of Social Services Pass-Through Entity Identifying Number: BEN-21-029 Award Period: July 1, 2023 through June 30, 2024 Criteria or Specific Requirement: 2 CFR 200.430 requires salary and benefit charges to be based on records that accurately reflect work performed. Condition and Context: UCM did not maintain effective internal controls to ensure that payroll and employee benefits charged to the federal award were allowable. Auditor tested 100% of personnel and related benefits charged to the federal award. Specific issues included:  Payroll costs – time and effort reporting o No internal controls existed over time-and-effort reporting for 2 out of 12 employees charged to the federal award. o Required after-the-fact documentation of actual time worked was not maintained. Retroactive time and effort certifications were received during audit for 10 out of 12 employees who worked within the program.  Employee benefits – lack of controls and overcharging o There were no internal controls to ensure that employee benefits charged to the award reflected actual costs incurred. o UCM charged budgeted benefit amounts, which were greater than actual costs. Cause: UCM lacked formal written policies and procedures governing time and effort reporting, employee benefit allocations, and documentation standards. Significant management personnel turnover resulted in inadequate federal grant knowledge and inconsistent application of Uniform Guidance requirements. Effect or Potential Effect: Unallowable, unsupported, or inaccurately allocated costs were charged to the federal award. UCM may be required to repay federal funds and implement corrective actions. Questioned Costs: Questioned costs include the 2 out of 12 unsupported time and effort costs, excess employee benefits than actual allocable to the employees within the program, and 10% de minimis charged on the questioned costs. Payroll: $15,037 Employee benefits: 77,118 Indirect overcharge on above questioned costs: 9,216 Total known questioned costs: $101,371 Recommendation: UCM should develop and implement comprehensive written policies and procedures addressing time and effort, employee benefits, payroll allocations, and documentation standards. Staff responsible for grant accounting should receive Uniform Guidance training. Views of Responsible Officials: Management acknowledges the finding and will work to implement appropriate corrective actions to address the deficiency and improve compliance going forward.