Finding Text
III. Federal Award Findings and Questioned Costs
Finding 2023-001: Certification over payroll cost allocation
Federal Grantor U.S. Department of Health and Human Services
Pass-Through Grantor Illinois Department of Human Services
Federal Assistance Listing Number ALN: 93.667
Program Title Social Services Block Grant
Contract Number FSCWJ00302
Award Year 2022-2023
Criteria
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 be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. 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 non-federal entity's system of internal controls includes processes to review after-the-fact interim charges made to a federal award based on budget estimates. All necessary adjustment must be made such that the final amount charged to the federal award is accurate, allowable, and properly allocated.
Condition
Envision Unlimited allocated staff salaries and related fringe benefits to the federal program based on budgeted estimates which were determined before the services were performed. There was no employee certification or documented review of actual time and effort incurred for the payroll costs charged to the grant at the time audit procedures were performed. Subsequently, in December 2023, employee certifications were obtained and reviewed by supervisors for all grant payroll costs charged during the award year and were provided to the auditors.
Cause
Program directors at Envision Unlimited assert that they are aware of time and effort allocated to this federal program and that informal reviews take place to ensure that actual time and effort incurred does not differ from that which was budgeted and allocated in advance. However, internal controls were not in place to formally certify and document reviews to provide evidence of this process.
Effect
No adjustments were determined to be necessary. However, insufficient internal controls over time and effort reporting, such as the lack of employee certification or documented review of actual time and effort incurred for the payroll costs charged to the grant, could result in noncompliance with federal regulations and the loss of future federal funding.
Questions Costs:No questioned costs were identified.
Repeat Finding No
Recommendation
We recommend that a system be put in place to allow employees whose salaries and related fringe benefits are allocated to federal programs to certify that their actual time and effort does not differ from that which was budgeted and allocated to the program, in advance. This self-certification should be reviewed by and approved by the employees’ direct supervisor to assert that the time and effort allocated is accurate. These certifications and their reviews should take place on, at least, a quarterly basis and be completed in a timely fashion following the end of the related quarter.
Views of Responsible Officials
Management is in agreement with this finding. See corrective action plan.