Finding Text
Finding 2024-009 Pass-Through Entity: Federated States of Micronesia National Government Federal Agency: U.S. Department of Education Assistance Listing: 84.027 Special Education – Grants to States (IDEA, Part B) Federal Award No.: H027A230005 Area: Allowable Costs/Cost Principles Questioned Costs: $4,165 Criteria: Under 2 CFR 200.403, costs must be necessary, reasonable, allocable, and adequately documented. Under 2 CFR 200.430(g), salary and wage charges must be based on records that accurately reflect work performed. 2 CFR 200.441 establishes that expenditures for fines related to the violation of laws or regulations are generally unallowable unless specifically required by the award or approved in writing by the awarding agency. Condition: 1) For 5 (8%) of 60 nonpayroll transactions tested, from a sample totaling $79,617 and a population totaling $951,629, the State either (a) did not provide sufficient financial or programmatic support to establish allowability or (b) charged a cost that was unallowable under 2 CFR 200.441, as follows: 2) For 9 (15%) of 60 payroll transactions tested, from a sample totaling $28,999 and a population totaling $951,629, the State either (a) did not provide timekeeping documentation supporting compensation, taxes, and fringe benefits or (b) reported full regular hours while the time export showed leave and no approved leave request was provided, as follows: Condition: (continued) 3) Of the payroll transactions tested and cited above, we noted that personnel action forms or contracts were unavailable for two employees, and authorized direct-deposit forms were unavailable for three employees. Cause: Documentation-retention and review controls at the State Treasury and responsible departments were not operating effectively, and personnel did not understand or consider 2 CFR 200.441. • For Conditions 1(a), 2(a), and 2(b), disbursement and timekeeping documentation was not consistently filed and retained. • For Condition 1(b), personnel did not consistently understand or apply 2 CFR 200.441. • For Conditions 3(a) and 3(b), personnel-record retention controls were not operating effectively. Effect: The State did not comply with applicable allowable-cost and compensation requirements. Unsupported or unallowable expenditures constitute known questioned costs of $4,165. Likely questioned costs exceeded $25,000 based on projection of the sample results. Recommendation: The State should strengthen document-retention, payroll reconciliation, and personnel-authorization controls and incorporate review of entertainment-cost restrictions into preapproval and payment checklists and periodically monitor compliance. Identification as a Repeat Finding: 2023-006 View of Responsible Officials: The State’s response and corrective action plan addressing this finding is included in the accompanying corrective action plan.