Finding Text
Federal Agency: Department of Treasury
Assistance Listing Number and Title: 21.027 – Coronavirus State and Local Fiscal Recovery Funds
Funding Year(s): 2023-2026
Criteria: Per 2 CFR §200, Subpart E, charges to Federal awards must be adequately documented and incurred during the approved budget period, amongst other factors. Per 2 CFR §200.430(i), Compensation - personal services, Standards for Documentation of Personnel Expenses, charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. Among other requirements, these records must:
• Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated;
• Reasonably reflect the total activity for which the employee is compensated by the non-Federal entity, not exceeding 100% of compensated activities;
• Encompass both federally assisted and all other activities compensated by the non-Federal entity on an integrated basis; and
• 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.
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 award recipient’s system of internal controls includes processes to review after-the-fact interim charges made to a Federal awards based on budget estimates, and that all necessary adjustments be made such that the final amount charged to the Federal award is accurate, allowable, and properly allocated.
Condition: For this program, there was no evidence that actual employee time was tracked, reviewed and approved, or that the actual time spent was used as a basis for allocating personnel charges to the grant. In addition, there was no evidence that actual incurred expenditures were used as a basis for allocating indirect costs to the grant using the negotiated indirect cost rate.
Questioned Costs: $132,823 (total employee salaries, wages and benefits charged to the program) and $40,427 (total indirect costs charged to the program in excess of actual incurred expenditures to the program)
Context: For our direct labor and indirect costs allowable costs samples, Army management indicated that all 7 direct labor expenditure selections totaling $13,819 and indirect costs of $79,252 were allocated to the program based on budgeted percentages. Army management also indicated that there was no evidence that a subsequent review of budget estimates was performed for all of the selections.
Cause: Current policies and procedures do not require documented timekeeping by employees working on the grant program, which is appropriately reviewed, approved and used as a basis for charges to the grant.
Effect: Personnel and indirect costs charged to federal awards without appropriate documentation may be subject to disallowance.
Repeat Finding: Yes – Finding 2022-02.
Recommendation: Policies and procedures should be implemented to ensure that employee timekeeping, the salary and wage allocations to the grant, and allocation of indirect costs are charged to the grant using an appropriate base, are appropriately documented and accurately reflect the work performed.
Views of Responsible Officials: Management notes the details of this finding and the resulting material weakness. Management will enact processes outlined in our Corrective Action Plan to correct this deficiency in the future.