Finding Text
Federal Agency: U.S. Department of Justice
Federal Program and Assistance Listing Number: Juvenile Mentoring Program, 16.726
Identification Number: 15PJDP-22-AG-04915-MENT
Grant Period: October 1, 2022 – December 31, 2023
2023-002 Allowable Costs/Cost Principles – Material Weakness in Internal Control over Compliance
Criteria and Condition: According to Title 2 U.S Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (the Uniform Guidance), section 200.430, charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Budget estimates alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that the system for establishing the estimates produces reasonable approximations of the activity actually performed; significant changes in the corresponding work activity are identified and entered into the records in a timely manner; and the non-Federal entity’s system of internal controls includes processes to review after-the-fact interim charges based on budget estimates. All personnel salary or wages through July 2023 were based on budget estimates as documented in the approved grant budget for personnel costs and fringe benefit costs related to the OJ5 grant. However, there was no evidence of an after-the-fact review to determine that the distribution accurately reflected the work performed by the employee.
Cause: For all employees who charged time to the grant, BBBSC requires that timesheets be completed with each pay-period that support the disbursement of the wages. However, from October 2022 through July 2023, BBBSC was using the budgeted personnel costs and fringe benefit costs to request reimbursements related to the OJ5 grant. Instead of basing the requests on actual time incurred related to the grant, BBBSC was using the percentage of time from the budget and multiplying it by the total compensation for each pay period for each employee allocated to the grant.
Effect: When adequate support is not obtained and used to support the amount charged to the federal program or supported by an after-the-fact review, there is a risk that unsupported or inaccurate costs are being charged to the federal program.
Context: When evaluating internal controls for OJ5 grant personnel expenses, it was determined that management used budgeted amounts for the majority of the year’s reimbursement requests, instead of actual costs.
Questioned Costs: Known questioned costs total $286,676.
Identification of Repeat Findings: This is not a repeat finding.
Recommendation: Proper control activities should be implemented to allow for a consistent, accurate, and allowable method to support distribution of personnel charges to federal programs. If management elects to continue to allocate personnel charged based on a budget estimate, the after-the-fact review should be properly documented.
Views of Responsible Officials and Planned Corrective Actions: As of August 2023, BBBSC implemented controls that properly support the distribution of personnel charges in accordance with the Uniform Guidance and employees’ salaries charged to the grant are based on actual costs incurred. Further, these charges are reviewed by the Director of Finance before federal reimbursements are requested.