Finding Text
AL title: Workforce Innovation and Opportunity Act (WIOA Cluster) Name of federal agency: Department of Labor Name of pass-through entity: California Employment Development Department Repeat finding: Yes Criteria: Under the Uniform Guidance, specifically 2 CFR 200.430, charges to Federal awards for compensation must be supported by a system of internal control which provides reasonable assurance that costs are allocated appropriately and accurately. Per 2 CFR §200.403, allowable costs must be "necessary, reasonable, and adequately documented." Additionally, 2 CFR §200.302(b)(3) requires non_x0002_Federal entities to maintain records that sufficiently detail financial transactions to support Federal expenditures. Condition: During our testing of payments charged to the federal major program, we noted that employee timesheets lacked evidence of review and approval. Certain employees charged to the grant did not prepare timesheets and a separate tracking system was used. Federal regulations require that expenditures charged to Federal awards be properly reviewed, approved, and documented to ensure allowability and compliance with grant terms. Cause: The Federal program was new to the organization and controls over the program had not been fully established. Turnover in the accounting department contributed to the lack of resources for tracking these costs. Effect: Management provided documentation on personnel costs allocated to the program, but was unable to provide evidence of review. Lack of review increases the risk of unauthorized or unallowable costs being charged to the Federal award, potentially leading to questioned costs and noncompliance with Federal grant requirements. Context: This issue applied to approximately 50% of the compensation costs charged to the grant expenditures. Management performed time studies on some of the employees whose costs were shared among programs, and the local granting organization did not cite this as a finding in their review of their subrecipient's activities. Questioned cost: Unable to be determined. Recommendation: Management should review the requirements of CFR 200.430 and ensure that current processes, whether digital or hard-copy driven, are consistent with the requirements of the Uniform Guidance. In addition, management should consider adding additional staff to its accounting and/or grants management team. Views of responsible officials: The Organization has made significant progress in strengthening its timekeeping processes, as described in finding number 2025-002. This program ended in March 2025, and therefore management was unable to complete full remediation of the processes before completion of the grant.