Finding Text
Finding Reference Number: SA2022-004 Documenting Payroll Costs Charged to Grant
Assistance Listing Numbers: 20.507
Assistance Listing Title: COVID-19 – Federal Transit Cluster - Formula Grants
(Urbanized Area Formula Program)
Name of Federal Agency: Department of Transportation
Federal Award Identification Number: CA-2019-111-01, CA-2020-141-00
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 two 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 City started allocating a portion of those employee payroll costs in fourth quarter of fiscal year 2022 (all other employees are fully charged to the program) and the City reviews the estimates periodically to ensure they were supported and did not need adjustment, there is no formal documentation of the review and conclusions reached. City staff did indicate that the allocations charged are much less than the actual time spent on the program, but again, no documentation was available.
Cause: We understand that grant program staff were not aware of the payroll documentation requirement.
Effect: The City is not in compliance with the payroll documentation requirements set forth in 2 CFR Part 200.430(i).
Questioned Costs: We question costs in the amount of $11,820, representing the total amount of payroll charged to the grant for the two employees during fiscal year 2022.
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 federal transit program and all federal grant programs.
View of Responsible Officials and Planned Corrective Actions: Please see Corrective Action Plan separately prepared by the City.