Finding Text
Criteria: The methodology for allocations must follow the requirements outlined in Subpart E, Cost Principles in Title 2 U.S. CFR Part 200, Uniform Guidance. The Uniform Guidance stipulates that allocations for payroll related expenses should be based on actual time spent on the grant program. In order for allocations to be tested, support for the allocation methodology needs to be maintained.
Condition: Payroll expenses are allocated to the federal grant based on an annual estimate of the time that will be spent on the grant. Support is not maintained for the testing of non-payroll indirect expenses. Indirect costs allocations are updated periodically depending on the balance remaining on grants and other factors. A copy of the allocations is not maintained.
Cause: The Organization uses a spreadsheet to calculate the allocations which is updated each quarter based off the remaining balance of grants and other factors. Each quarter’s spreadsheet is not saved. Additionally, the Organization’s timesheets are not broken down by program, so payroll expenses are not allocated based off actual time spent on the grant program.
Effect or Potential Effect: The federal grant could be overcharged, resulting in the Organization being required to return funds.
Context: Salaries and other payroll costs are allocated based off an annual estimate of time they will spend on the grant, not actual time spent on the grant program. Additionally, 33 out of the 40 non-payroll costs tested where indirect expenses whose allocations were not able to be tested because support is not maintained.
Recommendation: The Organization should have staff earmark their timesheets with the number of hours worked on each program. Additionally, we recommend that a copy of the allocation spreadsheet that is used be maintained each pay period so allocations can be supported.
Views of Responsible Official(s) and Planned Corrective Actions: See corrective action plan.