Finding Text
Program: Emergency Solutions Grant Assistance Listing No.: 14.231 Federal Agency: Department of Housing and Urban Development Pass-Through Agency: State of California and City of Salinas Federal Award Year: FY21-22 Compliance Requirement: Activities Allowed or Unallowed; Allowable Costs/Cost Principles Questioned Cost: $755 Repeat Finding: Yes Condition: The Agency did not maintain adequate documentation to support several direct costs charged to federal awards. In particular, invoices, receipts, or other required supporting documentation were missing or incomplete, resulting in an inability to substantiate the direct costs claimed for reimbursement. Criteria: Direct costs charged to federal awards must be supported by proper documentation, such as invoices, purchase orders, payroll records, and timesheets. These expenses must be allowable, allocable, and reasonable in accordance with the terms of the federal award and the Agency’s established policies. Cause: The Agency lacked a consistent process for tracking and retaining documentation for direct costs related to federal awards, leading to missing or incomplete supporting records for certain expenses. Effect: The absence of adequate supporting documentation for direct costs exposes the Agency to the risk of noncompliance with federal regulations, which could result in disallowed costs. Additionally, this could impact the Agency’s ability to accurately report expenses and potentially jeopardize future funding. Recommendation: We recommend the Agency implement procedures to ensure that all direct costs charged to federal awards are supported by proper documentation and retained in accordance with Uniform Guidance. This includes regularly reviewing and reconciling supporting records to ensure compliance with federal regulations and organizational policies. Management’s Response: See Corrective Action Plan.