Finding Text
Condition
The School received funding under various grants during the year that were recorded as ESSER II and ESSER III. During our tests of compliance, it came to our attention that $83,398 of payroll costs charged to the ESSER II were also charged to ESSER III.
Additionally, there were 9 of out 40 instances where costs were charged to the grant for hours that were not paid to the employee (unpaid leave). There was also 1 instance out of 40, where management was unable to provide the approved payrate for an employee selected for testing.
Criteria
Per the Uniform Guidance, the School must maintain an adequate system of internal control over financial reporting in order to initiate, authorize, record, process and report financial data reliably in accordance with generally accepted accounting principles.
In accordance with 2 CFR 200.430: (i) Standards for Documentation of Personnel Expenses (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.
Cause
The School does not have adequate internal controls to document that adequacy of personnel expenses charged to its Federal programs and did not have a process to ensure costs charged to its Federal programs are not duplicated.
Effect
Unallowed non-payroll and payroll costs could be charged to Federal programs.
Recommendation
We recommend the School implement procedures to ensure only allowable costs incurred are charged to its Federal programs.
Questioned Costs
Unknown - $83,398 from sampled testing.
Managements Response
Management agrees with the finding. See Schedule of Correction Action Plans.
Auditor’s Conclusion:
Finding remains as stated.