Finding 384143 (2023-001)

Significant Deficiency 2023-001. Payroll (Allowable Costs/Cost Principles) United States Department of Education, Passed-through New York State Department of Education: Title I Grants to Local Educational Agencies ALN: 84.010A English Language Acquisition State Grants ALN: 84.365 Education Stabilization Funds (ESF) COVID-19: American Rescue Plan – Elementary and Secondary School Emergency Relief (ARP ESSER) ALN: 84.425U Criteria: Salaries and wages charged to Federal awards must be supported by documentation prescribed by the Uniform Guidance at Subpart I, 2 CFR §200.430. Condition: Subpart I, 2 CFR §200.430 of the Uniform Guidance requires that charges to “Federal awards for salaries and wages must be based on records that accurately reflect the work performed.” The documentation should support the distribution of the employee’s compensation among specific activities if the employee works on more than one Federal award, or a Federal award and non-Federal award. The preparation of personnel activity reports (PARs) or periodic certifications or the equivalent is the most effective way to comply with this requirement. During the current year, it was noted that in some instances, the District PAR forms were either not available, or did not accurately reflect the allocation or the grant that the employee was charged to in order to comply with Subpart I, 2 CFR §200.430. Cause: Employee PAR forms should accurately reflect the time and effort, as described in Subpart I, 2 CFR §200.430, to support salaries, and other forms of compensation charged to a federal program. During our audit testing, we noted that some PAR forms, maintained by the Payroll Department, were not on file for certain employees, there were a few instances of PAR forms not indicating the correct federal program that the employee was charged to, and there were some instances where the PAR form allocation of payroll was not correctly charged to the specific federal grant. See Context below for more specifics. Effect: Noncompliance could result in the incorrect amount for services rendered being charged to the Federal awards. Questioned Costs: None reported. Context: For the Education Stabilization Funds (ESF) grant, based on a total payroll population size of sixty-eight (68) employees, an audit sample of eleven (11) employees was selected based on a higher risk assessment of 15%. Of the eleven (11) employees sampled, we noted that two (2) employees did not have PAR forms on file, and three (3) employees PAR forms did not have the ESF federal program on them to indicate that the employee was charged to the ESF grant, and two (2) employees PAR forms indicated certain allocations to be charged to another grant; however, these allocation amounts were charged to the ESF grant. For the Title I grant, based on a total population size of thirty-eight (38) employees, an audit sample of four (4) employees was selected based on a lower risk assessment of 10%. Of the four (4) samples selected, we noted that two (2) employee’s PARs did not have the Title I program on them to indicate that the employee was charged to the Title I grant. For the English Language Acquisition State Grants, based on a total population of five (5) employees, an audit sample of one (1) employee was selected based on a lower risk assessment of 10%. On that sample selection of one (1), we noted that the employee’s PAR did not have the English Language Acquisition State Grants program on it to indicate that the employee was charged to that grant. Recommendation: The District should prepare the appropriate documentation to support salaries and wages determined by services performed that are charged to Federal awards in accordance with the requirements of the Uniform Guidance at Subpart I, 2 CFR §200.430. In addition, the District should ensure that all PAR forms properly reflect the grant that the employee is charged to in order to support the request for reimbursement under that grant. Views of Responsible Officials of Auditee: The District will properly review and maintain the federal personnel activity reports to ensure the employee’s salary, or other form of compensation, is correctly coded to the grant and the form accurately reflects the federal program in which the employee’s earnings were allocated to support the compliance with Subpart I, 2 CFR §200.430.