Finding Text
2025-001. Allowable Costs/Cost Principles United States Department of Housing and Urban Development Continuum of Care Program ALN: 14.267 Criteria: Uniform Guidance 2 CFR 200.430, covers standards for documentation of compensation-personal services. Charges to federal awards for salaries and wages must be based on records that accurately reflect the work performed and time spent. These records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Furthermore, these records should support the distribution of the employee’s salary or wages among specific activities or cost objectives if the employee works on more than one federal award; a federal award and non-federal award; an indirect cost activity and a direct cost activity; two or more indirect activities, which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. Condition: The Organization implemented procedures during the current year whereby expected payroll allocations are prepared by the Director of Finance and subsequently reviewed and signed by employees. However, the documentation maintained does not sufficiently demonstrate that employees' final payroll allocations were determined based upon a documented after-the-fact evaluation of the activities actually performed during the applicable period. The signed allocation records generally reflect the predetermined or expected allocation of employee time, and the employee certification does not specifically document that the allocation was evaluated against actual activities performed. Cause: The Organization's payroll allocation process continues to utilize expected employee activity as the basis for allocating payroll among programs. Although employees review and sign the allocation records, the Organization has not established a sufficiently documented process demonstrating that expected allocations are periodically compared with actual employee activity and adjusted as necessary. Effect: Without sufficient documentation of the after-the-fact review of expected payroll allocations, the Organization may not be able to demonstrate that compensation charged to federal awards accurately reflects work performed and is properly allocated among applicable programs and funding sources. Identification of a Repeat Finding: This is a repeat finding from the prior year, 2024-002. The Organization has implemented corrective measures during the current year; however, additional procedures are necessary to fully address the prior-year finding. Questioned Costs: Dollar amount undetermined. Recommendation: The Organization should further strengthen its payroll allocation procedures by documenting the after-the-fact review of expected payroll allocations. Employee certifications should clearly indicate that, after completion of the applicable reporting period, the employee reviewed the allocation in relation to activities actually performed and communicated any necessary adjustments prior to finalization of the payroll allocation. Evidence of adjustments identified through this review should be retained as part of the Organization's payroll allocation documentation. Views of Responsible Officials of Auditee: The Organization agrees with the finding and will maintain documentation supporting employees' after-the-fact review of payroll allocations to ensure that amounts charged to federal awards reasonably reflect actual activities performed. Any necessary adjustments identified through this review will be documented.