CORRECTIVE ACTION PLAN
January 22, 2024
U.S. Department of Education
Richmond Area Multi-Services, Inc. (RAMS) respectfully submits the following corrective action plan for the year ended June 30, 2023
Name and address of independent public accounting firm:
Lindquist, von Husen & Joyce, LLP
301 Howard Street
Suite 850
San Francisco, CA 94105
Audit period:
July 1, 2022 to June 30, 2023
The findings from the December 20, 2023 schedule of findings and questioned costs are discussed below. The findings are numbered consistently with the numbers in the schedule.
FINDING - FEDERAL AWARD PROGRAMS AUDIT
CA DEPARTMENT OF REHABILITATION
Finding no. 2023-001: Allowable Cost
Criteria:
Title 2 U.S. Code Part 200.430(i)(1)(vii) requires that there is documentation of personnel expenses charged to the grant, including support to reflect the distribution of the employee’s salary or wages among specific activities or cost objectives if the employee works on more than one award.
Condition:
Certain salary amounts billed to the grant were incorrectly allocated, hence overstating the salary billed to the grant. One employee’s salary was allocated 25% to the major program (AL #84.126) from their date of hire in April 2023. Through June 2023, whereas the allocation should have been 2.5% resulting in a $3, 227 over-charge. Another employee hired in June 2023 worked 80.23% for the same major program, but the program was billed for 100% of their salary, resulting in $865 over-charge.
Cause:
RAMS miscalculated the salary amount that should be charged to the grant which caused the overstatement of their cost-reimbursement billing due to using incorrect time allocation.
Effect:
Salary costs charged to the program that were unsupported in accordance with allowable cost principles.
Questioned Costs:
The total amount of salary tested during the audit was $66,576, representing approximately 10% of salary charges to the major program. The amount of questioned costs identified above in relation to the total amount sampled was 6.15%
Auditor’s Recommendation:
RAMS should consider creating appropriate procedure to monitor salary allocation calculations and ensure that all costs billed are supported by adequate documentation.
Action Taken:
Subsequent to year-end, RAMS changed its billing procedure to prevent over-billing or inaccurate allocation of payroll costs by adapting a cost allocation method based on the actual hours reported by employee and not the estimated ours used in preparation of the budget. On July 24, 2023, the program manager, division director, billing specialist and finance manage met to review and implement new billing procedure. The effective date of this change was July 1, 2023.
If the U.S. Department of Education has questions regarding this plan, please call Eduard Agajanian at 408-394-8778.
Sincerely yours,
Eduard Agajanian, CFO
Richmond Area Multi-Services, Inc.