FAC Explorer

Finding 403818 (2022-003)

Material Weakness Repeat Finding
Requirement
A
Questioned Costs
-
Year
2022
Accepted
2024-06-28
Audit: 310733
Organization: Jft Recovery and Veterans Support Services (PA)
Auditor: Hamilton & Musser PC

AI Summary

  • Core Issue: The Organization lacks formal policies for payroll, leading to unapproved pay rates and insufficient review processes.
  • Impacted Requirements: This violates CFR 200.430, which mandates that payroll costs must be reasonable and follow established organizational policies.
  • Recommended Follow-Up: Establish and document approved pay rates in Board Minutes and implement a second-level review of payroll reports before processing.

Finding Text

#2022-003 – Material Weakness – Activities Allowed or Unallowed Opioid STR Grant ALN 93.788 Block Grants for Prevention and Treatment of Substance Abuse 93.959 Criteria The Office of Management and Budget issuance of the Code of Federal Regulations (CFR) specifically states uniform administrative requirements, cost principles, and audit requirements for federal awards. In accordance with CFR 200.430, payroll costs charged to the program are allowable when: the total compensation paid to individual employees is reasonable according to the work performed on the program and the compensation is in accordance with the established policies of the organization. Condition During the audit we noted the Organization does not have established policies and procedures over payroll. We noted that while the Organization has established hourly and salary pay rates, these rates are not formally established and approved by the Organization’s Board. Cause The cause is a lack of a proper control structure that requires Board approval of pay rates and salaries. The Organization also does not have a process in place to ensure that payroll reports are properly reviewed and approved by a second independent reviewer prior to submission to the payroll company for processing. Effect The potential effects of not having formally approved pay rates and not having payroll reports reviewed by a second level prior to payroll processing is the potential for errors and overcharging of grants. Questioned Costs None Perspective Information We reviewed a sample of reports filed with the Pennsylvania Department of Military and Veterans Affairs and the Drug and Alcohol Program. We examined the payroll for each employee charged to the grants for a total of 284 samples. The finding represents the unsupported costs noted from this review. Identification as a repeat finding A similar issue was noted in prior year finding #2021-003. Recommendation We recommend that the Organization begin to formally establish and approve employee pay rates and salaries at Official Board Meetings and that these rates are documented in the Board Minutes. The Organization should also implement procedures to include a second level review of the payroll report for accuracy and completeness prior to submission for payment.

Corrective Action Plan

JFT does have all the board minutes on file. However, because we were a small agency, salary rates were not often changed. Additionally, all salary rates and changes were always driven by the ability to obtain the funding needed. Since we were small and there was not always a lot to discuss with the board our board only met twice a year. Therefore, all salary was discussed with the board president, then taken to the board. Unfortunately, there is no formal documentation at this time. As of 2023 our board now meets quarterly. Therefore, the following policy will be included in the fiscal manual: the JFT board of directors will hold a public meeting quarterly. All matters of pay rates and salaries will be approved at the start of each grant cycle. State and county grants will be discussed prior to the July 1 start dates, all federal grants will be discussed prior to October 1. Any changes in salary must be approved by the board and documented in official board minutes. All board minutes will be placed in a locked file in the Fiscal Coordinator’s office.

Categories

Allowable Costs / Cost Principles

Other Findings in this Audit

  • 403816 2022-001
    Material Weakness Repeat
  • 403817 2022-002
    Material Weakness Repeat
  • 403819 2022-004
    Material Weakness Repeat
  • 403820 2022-005
    Material Weakness Repeat
  • 403821 2022-006
    Material Weakness Repeat
  • 403822 2022-007
    Significant Deficiency Repeat
  • 403823 2022-001
    Material Weakness Repeat
  • 403824 2022-002
    Material Weakness Repeat
  • 403825 2022-003
    Material Weakness Repeat
  • 403826 2022-004
    Material Weakness Repeat
  • 403827 2022-005
    Material Weakness Repeat
  • 403828 2022-006
    Material Weakness Repeat
  • 403829 2022-007
    Significant Deficiency Repeat
  • 980258 2022-001
    Material Weakness Repeat
  • 980259 2022-002
    Material Weakness Repeat
  • 980260 2022-003
    Material Weakness Repeat
  • 980261 2022-004
    Material Weakness Repeat
  • 980262 2022-005
    Material Weakness Repeat
  • 980263 2022-006
    Material Weakness Repeat
  • 980264 2022-007
    Significant Deficiency Repeat
  • 980265 2022-001
    Material Weakness Repeat
  • 980266 2022-002
    Material Weakness Repeat
  • 980267 2022-003
    Material Weakness Repeat
  • 980268 2022-004
    Material Weakness Repeat
  • 980269 2022-005
    Material Weakness Repeat
  • 980270 2022-006
    Material Weakness Repeat
  • 980271 2022-007
    Significant Deficiency Repeat

Programs in Audit

ALN Program Name Expenditures
93.788 Opioid Str $1.16M
93.959 Block Grants for Prevention and Treatment of Substance Abuse $615,643