Finding Text
Condition: We identified salary expenses for one employee applied to one housing grant tested that were not authorized in the grant budget.
Criteria: As required by 2 CFR section 200.430, the Center must meet the following mandatory standards:
(1) Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must:
(i) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated;
(iii) Reasonably reflect the total activity for which the employee is compensated by the non-Federal entity, not exceeding 100% of compensated activities;
(vii) 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.
Cause: The Center retained a third-party accounting firm to perform accounting functions in 2022, due to staff turnover during the fiscal year. As a result, this salary was not correctly allocated to the proper grant.
Effect: Claiming salaries that were not authorized in the grant budget may lead to costs that are disallowed under the grant agreement.
Recommendation: We recommend that the Center implement a training program for personnel responsible for cost allocation, establish stronger internal controls to verify cost allocation accuracy, and conduct a comprehensive review to identify and correct any misallocations.
Views of Responsible Officials and Planned Corrective Actions: The Center agrees that the salary expense for that one employee was not correctly allocated and has provided a corrective action plan. Prior to this finding, in April 2023, the Center had already implemented internal controls and processes regarding allocation of salaries to specific grants, which should prevent this this type of finding going forward.