Finding 390157 (2023-002)

Significant Deficiency
Requirement
B
Questioned Costs
-
Year
2023
Accepted
2024-03-29
Audit: 301060
Organization: City of Daly City (CA)

AI Summary

  • Core Issue: Payroll costs for three employees were charged based on a flat percentage rather than actual hours worked, violating federal documentation requirements.
  • Impacted Requirements: Non-compliance with 2 CFR Part 200.430(i), which mandates accurate payroll records reflecting actual work performed.
  • Recommended Follow-Up: Implement procedures to ensure payroll documentation aligns with federal requirements for all grant programs.

Finding Text

Finding Reference Number: SA2023-002 Documenting Payroll Costs Charged to Grant Assistance Listing Number: 14.218 Assistance Listing Title: Community Development Block Grant – Entitlement Grants COVID-19 - Community Development Block Grants/Entitlement Grants-CV Federal Agency: Department of Housing and Urban Development Federal Award Identification Number: B-22-MC-06-0010 COVID-19 - B-20-MW-06-0010 Criteria: 2 CFR Part 200.430(i), “Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards” requires that grantees adhere to the following, “Payroll systems must be based on records that accurately reflect the work performed” and “be supported by a system of internal controls that provides reasonable assurances that charges are accurate, allowable, and properly allocated...” The payroll records must be a part of the official record, reflect the employee’s total activity and show if the specific activity of the person is being paid by more than one federal award. Section 200.430(i)(viii) indicates that budget estimates (i.e., estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that the system for establishing the estimates produces reasonable approximations of the activity actually performed, among other requirements. Condition: We noted that the payroll costs for three employees were charged to the program based on a flat rate percentage of the payroll and benefits costs, rather than based on the actual hours worked. Although we understand the housing staff periodically reviews the estimates to ensure they were supported and did not need adjustment, there is no formal documentation of the review and conclusions reached. City staff did provide us with the annual timesheet reconciliation worksheets for two of the employees that showed that on average over fiscal year 2023, the employees spent more actual time than was allocated via the flat percentage rate to the grant program. Effect: The City is not in compliance with the payroll documentation requirements set forth in 2 CFR Part 200.430(i). Cause: We understand that grant program staff were not aware of the payroll documentation requirement. Recommendation: The City should establish procedures to ensure that payroll costs charged to the program are documented in accordance with 2 CFR Part 200.430 for the CDBG program and all federal grant programs. View of Responsible Officials and Planned Corrective Actions: Please see Corrective Action Plan separately prepared by the City.

Corrective Action Plan

Finding Reference Number: SA2023-002 Documenting Payroll Costs Charged to Grant Assistance Listing Number: 14.218 Assistance Listing Title: Community Development Block Grant – Entitlement Grants COVID-19 - Community Development Block Grants/Entitlement Grants-CV Federal Agency: Department of Housing and Urban Development Federal Award Identification Number: B-22-MC-06-0010 COVID-19 - B-20-MW-06-0010 • Fiscal Year of Initial Finding: 2023 • Name(s) of the contact person: Betsy ZoBell, Housing and Community Development Manager • Corrective Action Plan: ECD staff will perform periodic review of estimates to confirm that payroll allocations are supported by timesheet documentation of actual hours worked. • Anticipated Completion Date: 06/30/24

Categories

Allowable Costs / Cost Principles Internal Control / Segregation of Duties

Other Findings in this Audit

  • 390155 2023-001
    Significant Deficiency Repeat
  • 390156 2023-001
    Significant Deficiency Repeat
  • 390158 2023-002
    Significant Deficiency
  • 390159 2023-003
    Significant Deficiency
  • 390160 2023-003
    Significant Deficiency
  • 966597 2023-001
    Significant Deficiency Repeat
  • 966598 2023-001
    Significant Deficiency Repeat
  • 966599 2023-002
    Significant Deficiency
  • 966600 2023-002
    Significant Deficiency
  • 966601 2023-003
    Significant Deficiency
  • 966602 2023-003
    Significant Deficiency

Programs in Audit

ALN Program Name Expenditures
14.218 Community Development Block Grants/entitlement Grants $706,471
97.036 Disaster Grants - Public Assistance (presidentially Declared Disasters) $313,948
93.045 Special Programs for the Aging_title Iii, Part C_nutrition Services $182,120
14.239 Home Investment Partnerships Program $126,888
20.205 Highway Planning and Construction $102,586
21.027 Coronavirus State and Local Fiscal Recovery Funds $96,575
16.922 Equitable Sharing Program $74,282
93.053 Nutrition Services Incentive Program $51,698
16.738 Edward Byrne Memorial Justice Assistance Grant Program $37,722
10.576 Senior Farmers Market Nutrition Program $6,500