Finding Text
Condition:
The costs charged to the Federal award were not adequately documented. As a result, there was a
delay in completing the Uniform Grant Guidance audit. Additional time and analysis was required to accumulate the direct costs that were charged to the major Federal program. Although the Organization was able to provide sufficient support for the personnel cost charged to the program, it was not documented or maintained prior to the start of the audit.
Criteria:
In accordance with 2 CFR §200.303: The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.
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 Organization did not have a system of internal control, to track the costs allocated to the Federal, which provides reasonable assurance that the charges are accurate, allowable, and properly allocated during the period the costs were incurred. Effect:
Expenditures reported to the Federal government could be unallowable/disallowed and subject to return.
Questioned Costs:
Unknown.
Recommendation:
We recommend the Organization establish and implement controls to maintain compliance with reporting requirements in accordance with Uniform Grant Guidance and ensure personnel receive appropriate training for handling programs that are Federally funded.
Auditee Response and Corrective Action Plan:
Refer to the schedule of corrective action plans.
Auditor’s Conclusion:
Finding remains as stated.