Finding Text
Corporation for National and Community Services
Assistance Listing Numbers 94.006 – AmeriCorps State and National
Compliance and Significant Deficiency over Activities Allowed or Unallowed and Allowable
Costs/Cost Principle (Payroll)
Repeat Finding: No
Condition:
The Organization was unable to provide applicable payroll documentation for the period August
1, 2022 through July 31, 2023 in order to validate compliance and internal controls over Activities
Allowed and Allowable Costs/Cost Principles as it relates to payroll charges to the Federal grant.
Management charged payroll to the program based on budget.
Criteria:
The Uniform Guidance requires that non-Federal entities receiving Federal awards establish and
maintain internal controls designed to reasonably ensure compliance with Federal statutes,
regulations, and terms and conditions of the Federal award.
The characteristics of internal controls are presented in the context of the components of internal
controls discussed in Internal Control-Integrated Framework (COSO Report), published by the
Committee of Sponsoring Organizations of the Treadway Commission. The COSO Report
provides a framework for organizations to design, implement, and evaluate control that will
facilitate compliance with the requirements of Federal laws, regulations, and program compliance
requirements.
Per AmeriCorps general terms and conditions, the recipient must maintain financial management
systems that comply with 2 CFR § 200.302(b). The recipient’s financial management systems must
be capable of distinguishing expenditures attributable to this award from expenditures not
attributable to this award. The systems must be able to identify costs by program year and by
budget category, and to differentiate between direct and indirect costs. For all recipient’s financial
management requirements and responsibilities, refer to Subparts D and E of 2 CFR Part 200.
Per 2 CFR section 200.430(a)(3)(i):
(a) General. Compensation for personal services includes all remuneration, paid currently or
accrued, for services of employees rendered during the period of performance under the
Federal award, including but not necessarily limited to wages and salaries. Compensation for
personal services may also include fringe benefits which are addressed in §200.431
Compensation—fringe benefits. Costs of compensation are allowable to the extent that they
satisfy the specific requirements of this part, and that the total compensation for individual
employees:
(1) Is reasonable for the services rendered and conforms to the established written policy of
the non-Federal entity consistently applied to both Federal and non-Federal activities.
(2) Follows an appointment made in accordance with a non-Federal entity's laws and/or rules
or written policies and meets the requirements of Federal statute, where applicable; and
(3) 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:
(i) Be supported by a system of internal controls which provides reasonable assurance that
the charges are accurate, allowable, and properly allocated; (ii) Be incorporated into the
official records of the non-Federal entity; (iii) Reasonably reflect the total activity for
which the employee is compensated by the non-Federal entity, not exceeding 100% of
compensated activities; (iv) Encompass both federally assisted and all other activities
compensated by the non-Federal entity on an integrated basis, but may include the use of
subsidiary records as defined in the non-Federal entity’s written policy; (v) Comply with
the established accounting policies and practices of the non-Federal entity; and (vi)
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.
Cause:
The Organization did not have adequate controls over the time and effort process, therefore
recording and retention of supporting documentation was not properly adhered to in accordance
with Uniform Guidance.
Effect or Potential Effect:
Salaries and wages were not properly supported by a system of internal controls which provides
reasonable assurance that the charges are accurate, allowable, and properly allocated. Salary and
wage charges were not able to be reconciled to the time distribution records.
Questioned Costs:
Unknown.
Recommendation:
We recommend that the Organization implement policies and procedures to track, calculate and
document adjustments from budget salary charges to actual after-the-fact charges that should be
charged to the Federal award based on the employee time distribution records. This needs to be
performed at least on an annual basis.