Finding 375834 (2021-004)

Significant Deficiency

Requirement

Questioned Costs

Year

2021

Accepted

2024-03-13

Audit: 294918

Organization: California Asian Pacific Chamber of Commerce (CA)

Auditor: Richardson & Company LLP

AI Summary

Core Issue: Payroll costs are manually allocated to grant projects using spreadsheets, increasing the risk of errors.
Impacted Requirements: This practice violates 2 CFR 200.400, which mandates proper documentation and allocation of costs to ensure they are not reimbursed from multiple sources.
Recommended Follow-Up: Implement automated timesheets or conduct time studies to accurately track and support payroll cost allocations.

Finding Text

Finding 2021-004: Significant Deficiency – Grant Claim Support Federal grantor: Department of Commerce Condition: The allocation of payroll costs to programs are done manually using spreadsheets instead of done based on entity-wide timesheets. Criteria: Under 2 CFR 200.400, direct cost allocation principles state that if a cost benefits two or more projects or activities in proportions that can be determined without undue effort or cost, the cost must be allocated to the projects based on the proportional benefit. If a cost benefits two or more projects or activities in proportions that cannot be determined because of the interrelationship of the work involved, then the costs may be allocated or transferred to benefitted projects on any reasonable documented basis. Further, a cost may not be assigned to a Federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the Federal award as an indirect cost. Costs are required to be adequately documented. Cause: The Chamber is not able to readily determine the amount of payroll costs billable to the grants. Effect: The approach of manually allocating payroll costs to grant projects leaves room for error, and makes it difficult to determine that costs are not being reimbursed by more than one source. Recommendation: The Chamber needs to prepare time studies or require employees to prepare timesheets on an automated system to support the payroll costs allocated to programs. Management’s Response: Management’s response to the finding is discussed in the Corrective Action Plan.

Corrective Action Plan

Description of Finding: The allocation of payroll costs to programs are done manually instead of done based on entity-wide timesheets Statement of Concurrence or Nonconcurrence: The California Asian Pacific Chamber of Commerce (CalAsian) agrees with the finding. Corrective Action: The ERP system will include electronic timesheets for daily charging to specific grants, as well as more visibility into the proper separation of direct, indirect, and unallowable costs per the CFR. An indirect cost pool allocation structure will be designed and implemented to properly allocate the allowable indirect costs to each work effort. Detailed paper timesheets will be provided in the interim for all employees to ensure compliance with the requirements and provide proper support for all grant costs. Monthly reviews by the Project Directors/Managers plus Accounting will be performed to identify any potential cost charging issues and corrective action(s) required. Name of Contact Person: Ryan Fong, Director of Finance, 916-446-7883, rfong@calasiancc.org Susan Wright, Controller, 256-689-7055, swright@calasiancc.org Pat Fong Kushida, President & CEO, 916-446-7883, patfongkushida@calasiancc.org Projected Completion Date: March 2024 for detailed paper timesheets, December 2024 for ERP system

Other Findings in this Audit

375831 2021-001

Material Weakness
375832 2021-002

Material Weakness
375833 2021-003

Material Weakness
952273 2021-001

Material Weakness
952274 2021-002

Material Weakness
952275 2021-003

Material Weakness
952276 2021-004

Significant Deficiency

Programs in Audit

ALN	Program Name	Expenditures
11.802	Minority Business Resource Development	$352,881
20.910	Assistance to Small and Disadvantaged Businesses	$133,758
11.805	Mbda Business Center	$107,993