Finding 397015 (2023-001)

Significant Deficiency
Requirement
B
Questioned Costs
-
Year
2023
Accepted
2024-05-16

AI Summary

  • Core Issue: Payroll costs were charged to grants based on budgeted amounts rather than actual work performed, leading to potential overcharges.
  • Impacted Requirements: This violates 2 CFR 200.430, which mandates accurate records for salary and wage charges to federal awards.
  • Recommended Follow-Up: Implement updated policies and require timesheets or equivalent documentation to ensure payroll costs reflect actual work, with reviews by both employee and supervisor.

Finding Text

Budgeted personnel costs charged to program instead actual costs (significant deficiency) Cluster: Not applicable Sponsoring Agency : U.S. Department of Housing and Urban Development Award Name: Community Development Block Grants/State's Program and Non-entitlement Grants in Hawaii Award Number: B-20-DW-25-0001 Assistance Listing Number: 14.228 Award Year: FY 2021 Pass-through entity: Massachusetts Department of Housing and Community Development Criteria: "According to 2 CFR 200.430, 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 control 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 (for IHE, this per the IHE's definition of IBS); (iv) Encompass 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 (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." Condition: The Organization allocates payroll to grants based on budgeted time and effort. During our testing, we noted that 100% of the Director of Grants Management & Compliance's salary was allocated to the program without a timesheet or other equivalent documentation that support this allocation. Cause: The Organization does not have updated polices/procedures and sufficient internal controls in place over compliance of time and effort. Effect: Payroll charges allocated to grants based on budgeted time and effort can result in federal reimbursements that are not reflective of actual time and effort working on a grant. Payroll costs may be overcharged to the grant. Questioned Cost: Undetermined Recommendation: We recommend that policies and procedures be implemented to ensure payroll costs are charged to grants based on actual costs. We recommend the Organization start using timesheets or other equivalent documentation to ensure payroll costs charged to federal programs are based on records of actual work performed. Such records should be reviewed and certified by the employee and supervisor prior allocation of payroll costs. Management's Views and Corrective Action Plan: Management's response is included in "Management's View and Corrective Action Plan" at the end of this report after the schedule of findings and questioned cost

Corrective Action Plan

The Organization will implement policies and procedures to ensure payroll costs charged to federal programs are based on timesheets that reflect the actual work performed. The timesheets will be signed by employees and approved by a supervisor prior to allocation of payroll cost to the federal program.Effective April 26, 2024 – all staff will submit timesheets for the two week period ending on April 26, 2024 and will continue to do so. Anticipated Completion date - April 26,2024 Responsible Contact Person -Joe Diamond, Executive Director

Categories

Allowable Costs / Cost Principles

Other Findings in this Audit

  • 973457 2023-001
    Significant Deficiency

Programs in Audit

ALN Program Name Expenditures
14.228 Community Development Block Grants/state's Program and Non-Entitlement Grants in Hawaii $2.72M
93.569 Community Services Block Grant $558,798
21.009 Volunteer Income Tax Assistance (vita) Matching Grant Program $220,000
93.647 Social Services Research and Demonstration $50,631