Finding 401299 (2021-002)

2021-002 U.S. Department of Housing and Urban Development, pass through Los Angeles Housing Services Authority, Emergency Solutions Grant – COVID recovery rehousing & emergency shelter program – ALN 14.231 Criteria: PART 200—UNIFORM ADMINISTRATIVE REQUIREMENTS, COST PRINCIPLES, AND AUDIT REQUIREMENTS FOR FEDERAL AWARDS, Section 200.430, (i) 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: (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. Condition: The Organization did not comply with these requirements at the bi-weekly payroll level. Effect of condition: At the bi-weekly payroll level, not all the documentation supporting the salary expense charged to the federal award for certain employees was maintained. Questioned Costs: The Organization has documentation to support the assertion that total salary expense allocated to federal awards for the year ended 2021, is, in aggregate, commensurate with the actual activity of employees. Hence there is no questioned cost. Context: During the year ended 2021 there were several personnel changes in connection with who was overseeing and performing the accounting at the Organization. Cause: Management believes this error was caused by management oversight. Repeat finding: This is not a repeat finding. Recommendation: The Organization should implement appropriate procedures to create and retain the documentation noted above supporting salary expense, at the bi-weekly payroll level, for each employee allocated to federal programs. View of responsible officials and planned corrective action: Management agrees that we do not always have documentation of allocation at the payroll level and with the turnover of staff in the accounting department during the year, it exacerbated the situation. However, we want to emphasize that our records accurately reflect the work performed for the total year basis. Further, we are currently putting a system in place to remediate the situation. This system is expected to provide documentation of allocation at a payroll level.