Finding 390129 (2022-003)

(2022-003) Allowable Costs Federal Agency: U.S. Department of Treasury CFDA No.: 21.027 Federal Program: Coronavirus State and Local Fiscal Recovery Funds Federal Award Year: 2022 Control Category: Allowable Costs Questioned Costs: $118,513 Condition The Center charged payroll expenses to the program based an allocation and did not adjust the charges to reconcile to actual time documents per employee timesheets. Criteria 2 CFR 200.430(i), Standards for Documentation of Personnel Expenses, states, in part: “Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed…” Charges must “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;…” And “budget estimates (i.e., estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards.” Cause The Center's calculation of payroll charged to the grant is not reconciled to the actual hours reported by the employee on their individual timesheet. Effect Payroll costs charged to the program were greater than amounts supported by the documentation Questioned Costs There were questioned costs in the amount of $19,688 for the sample selected, which was extrapolated to $118,513 when the error rate was applied to the personnel costs not tested. Recommendation We recommend that the Center charge time to the program based on actual hours worked per the employees' timesheets. Management Response Personnel costs will be charged to the program based on actual time recorded in the organization’s case management software. Hours will be audited quarterly to ensure accuracy and completeness. The Center notes that the grantor, the State Bar of California, never requested the Center to charge payroll expenses to the program based on actual time documents, nor had they ever noted this discrepancy during their periodic audits of the program.