Finding 1507 (2022-001)

Material Weakness Repeat Finding
Requirement
A
Questioned Costs
$1
Year
2022
Accepted
2023-11-09

AI Summary

  • Core Issue: Employees were charged more to contracts than their actual salaries due to improper allocation of payroll costs.
  • Impacted Requirements: Expense allocations must not exceed total salary amounts; significant turnover in fiscal staff contributed to errors.
  • Recommended Follow-Up: Implement a unified allocation process and clarify staff duties to ensure accurate expense tracking and prevent overbilling.

Finding Text

Condition - During the fiscal year ended June 30, 2021, several employees whose salaries were charged to multiple contracts were charged in total in excess of their total salary amount. This was primarily due to adding a portion of employees salaries to new contracts, while not removing a corresponding amount from the other contracts. Criteria - The allocation of expenses, including salaries, to multiple contracts should not result in a total amount charged to contracts, which exceeds the totoal amount of the expense or salary. Cause - The organization had significant turnover within its fiscal staff, with several controllers and bookkeepers, including multiple temporary staff, during 2020, 2021 and 2022. The numerous persons involved, often for a short time, led to staff members being uncertain as to all of the steps necessary in the allocation process. In addition, a separate allocation calculation is done for each contract which also contributed to the condition, allowing the calculation for one contract to be completed without making the necessary adjustments to other contracts. Effect - The payroll costs charged to contracts for several employee exceeded their actual cost. Recommendation - As part of its fiscal policies, the organization should consider listing the prioritized duties of each member of the fiscal staff, including the calculations of allocating costs. The allocation calculation should be done in one steps covering the allocation to all contracts. This will enable fiscal staff to see and be sure that all expenses are charged to contracts to the fullest extent allowable, and to be certain that expenses are not overbilled to contracts. Management Response - As of June 2021, the organization has hired a controller with years of experience with government accounting, as well as a qualified bookkeeper, thus it expects that allocations will be properly calculated. Current Status - The organization anticipates that the newly hired controller and bookkeeper will add continuity and stability to the fiscal staff and processes, correcting the expense allocation issues and elimate excess amounts being charged to contracts. The fiscal staff has developed a standard worksheet to calculate and better track the allocations. However, as that was not implement for the entire fiscal year, there are some additional questioned costs in the fiscal year ended June 30, 2022 pertaining to this issue. No questioned costs in 2022 pertained to either major program. The organization has prepared a $24,617 payment for the repayment of the prior year questioned cost. Awaiting confirmation of where the payment is to be sent to. Questioned Costs 2021 = $24,617.Questioned Costs in 2022 = $3,174.

Corrective Action Plan

RE: Pennsylvania Community Real Estate Corporation Corrective Action Plan Dear Sir or Madam: Pennsylvania Community Real Estate Corporation (PCRC) has taken action to address the issues identified by Snyder, Daitz and Company, 1617 John F Kennedy Blvd, Suite 720, Philadelphia, PA 19103. The information below outlines the actions that will be taken by PCRC staff. The findings shown below, were derived from the August 11, 2022 schedule of findings and questioned cost found by the auditor. The findings are numbered consistent with the numbers assigned in the schedule of findings. #2022-001 Payroll cost allocation calculations. Condition: During the fiscal year ended June 30, 2021, several employees whose salaries were charged to multiple contracts were charged in total in excess of their total salary amount. This was primarily due to the adding of a portion of employees salaries to new contracts while not removing a corresponding amount from other contracts. Cause: The organization had significant turnover within its fiscal staff, with several Controllers and bookkeepers, including numerous temporary staff during 2020 and 2021. The numerous persons involved, often for a short period of time, led to staff members being uncertain as to all of the steps necessary in the allocation process. In addition, a separate allocation calculation is done for each contract which also contributed to the condition, allowing the calculation for one contract to be completed without making the necessary adjustments to other contracts. Recommendation: As part of its fiscal policies, the organization should consider listing the prioritized duties of each member of the fiscal staff, including the calculations of allocating costs. The allocation calculation should be done in one step covering the allocation to all contracts. This will enable fiscal staff to see and be sure that all expenses are fully charged to contracts allowable, and to be certain that expenses are not overbilled to contracts. Action Taken: A detailed spreadsheet has been created to list monthly salary cost billed for each employee. This will prevent duplicate billing. FY22 update. This has been completed effective July 2022.

Categories

Questioned Costs Allowable Costs / Cost Principles

Other Findings in this Audit

  • 577949 2022-001
    Material Weakness Repeat

Programs in Audit

ALN Program Name Expenditures
14.241 Housing Opportunities for Persons with Aids $2.92M
14.267 Continuum of Care Program $1.41M
14.218 Community Development Block Grants/entitlement Grants $249,000
21.019 Coronavirus Relief Fund $157,966
21.020 Community Development Financial Institutions Program $70,000