Finding Text
Criteria: The requirements for documentation of personnel expenses are contained in 2 CFR section 200.430 (i). Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. The records must meet certain identified guidelines within 2 CFR section 200.430 (i). Condition: Board records did not comply with 2 CFR section 200.430 (i) (vii) or (viii) which is detailed below: (vii) 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.
(viii) 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:
(A) The system for establishing the estimates produces reasonable approximations of the activity actually performed;
(B) Significant changes in the corresponding work activity (as defined by the non-Federal entity's written policies) are identified and entered into the records in a timely manner. Short term (such as one or two months) fluctuation between workload categories need not be considered as long as the distribution of salaries and wages is reasonable over the longer term; and
(C) 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.Cause/Effect: The Board did not have records that complied with guidelines for entries that moved salary costs totaling $175,585 to this program. Additionally, the Board did not have a system in place that provided support for the allocation that was used for certain employee personnel costs during the year.
Auditor's Recommendation: The Board should implement procedures so that the allocation of personnel costs is supported by data that has been tracked internally.
Management Response: The Board agrees with this recommendation and will review internal procedures relating to data that will support the allocation of personnel costs.