Finding Text
Finding: 2024-005: Payroll Allocation. Federal Programs - Continuum of Care. Federal Financial Assistance Listing - 14.267. Federal Award Numbers - OK0024L6I021111, OK0024L6I022113, OK0024L6I022212, OK0024L6I022213, OK0024L6I022214, OK0024L6I022215, OK0024L6I022316. Federal Agencies - Department of Housing and Urban Development. Pass-through Entities - City of Oklahoma City and the City of Norman. Allowable Activities or Unallowed, Allowable Costs/Cost Principles. Material Weakness in Internal Control over Compliance and Material Noncompliance. Criteria: Per Uniform Guidance (2 CFR 200.403) as it relates to federal grants: Except where otherwise authorized by statute, costs must meet the following general criteria in order 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 nonfederal entity; d) Be accorded consistent treatment. A cost may 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 or matching requirements of any other federally financed program in either the current or a prior period; g) Be adequately documented; h) Cost must be incurred during the approved budget period. 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition: Hope could not readily provide the appropriate documentation to support the allocations of compensation applicable to the referenced programs for actual time worked, or to support the drawdown from grant funding. Cause: Management did not have procedures and controls in place to ensure allocated payroll was for time-and-effort applied to the award and ensure time was not allocated across multiple awards. Effect or Potential Effect: We were unable to determine whether the payroll costs allocated to the federal awards were allowable due to the lack of systematic application of payroll allocations to time and effort of the employees. Questioned Costs: 262,125. Context: Total allocated salaries and fringe benefits equal 262,125. None of the amounts were able to be supported by records that accurately reflect the work performed. Repeat Finding from Prior Year: No. Recommendation: Controls should be put in place to ensure that expenditures of program funds for payroll expense are reviewed and approved by program management and are properly allocated based on time and activities worked consistent with the grant requirements. Additionally, level of effort requirements as made known in grant contracts should be substantiated by payroll allocation or other records. Views of Responsible Officials: Management's response is included in the corrective action plan.