Finding 29512 (2022-002)

2022-002: Activities Allowed or Unallowed and Allowable Costs/Cost Principles: , No Time Studies, Proper Time Tracking, Time Allocation, and Time Reporting (Significant Deficiency) Federal program information: Funding agency: U.S. Department of Human Health and Services Title: HIV Emergency Relief Formula Grant ALN: 93.914 Funding agency: U.S. Department of Housing and Urban Development Title: Housing Opportunities for Persons With AIDS ALN: 14.241 Criteria: According to 2 CFR ?225, Appendix B, charges to federal awards for salaries and wages should be based on payrolls documented in accordance with generally accepted practices within the Organization and approved by a responsible official of the Organization. Further, charges for salaries and wages will be signed by the employee and supervisory official having firsthand knowledge of the work performed by the employee. Additionally, in accordance with 2 CFR 200.430(i)(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; II. Be incorporated into the official records of the non-Federal entity; III. Reasonably reflect the total activity for which the employee is compensated by the non-Federal entity, not exceeding 100% of compensated activities; IV. Encompass both Federally assisted and all other activities compensated by the non-Federal entity on an integrated basis, but may include the use of subsidiary records as defined in the non- Federal entity?s written policy; V. Comply with the established accounting policies and practices of the non-Federal entity; and VI. 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: We noted that PRC did not have controls in place to ensure that all payroll expenditures were properly supported per PRC?s policies and procedures. ? HIV Emergency Relief Formula Grant (ALN 93.914) - As per PRC's internal procedure manual, time sheets should be updated by both salaried and hourly employees; however, time cards for 22 samples could not be located. ? Housing Opportunities for Persons With AIDS (ALN 14.241) - For payroll samples selected for testing, we were unable to determine how payroll was tracked and charged for all of the employees who provide direct services related to this program. Cause: PRC did not follow its policies and procedures regarding the retention of payroll supporting documentation. Effect: Payroll related charges to the program are not supported. PRC is not in compliance with 2 CFR 200.430(i)(1) regarding documentation in support of salaries and wages charge to the federal program. Questioned Costs: Questioned costs were not determinable. Repeat finding: No Recommendation: We recommend that PRC implement control procedures to ensure that all payroll costs charged to the federal program are supported by documentation as required by 2 CFR 200.430(i)(1). Further, we recommend PRC to conduct and document semi-annual time studies to ensure that all staff time is allocated properly across all contracts and funding sources.