Finding Text
Finding 2022-004: Allocation of Employee Benefit Expenses. Information on the federal program: Assistance Listing Number 17.268 - H1-B Job Training Grant, U.S. Department of Labor, Employment Training Administration. Award number: HG-34352-20-60-A-53. Compliance requirements: Allowable Costs/Cost Principles, Reporting. Type of finding: Material Noncompliance, Material Weakness. Condition: Employee benefit costs were charged to the grant using a fixed percentage rate that did not accurately reflect the actual cost of the employee benefits. Effect or potential effect: The fixed percentage rate used to charge employee benefits did not accurately reflect the actual cost incurred and resulted in incorrect reporting of expense to the federal agency. Cause: Lack of appropriate policies and reconciliation procedures. Criteria: Uniform Guidance 2 CFR 200.302 (b)(3) requires records to identify adequately the source and application of funds for federally funded activities. These records must be supported by source documentation. Context: We tested 100% of the employee benefits charged to the grant totaling $135,884 and noted that the source documentation did not support the total amount billed, the procedures identified overbilling of benefits in the amount of $7,356. Management was able to provide additional allowable costs to replace the overbilling. Questioned costs: None. Recommendations: We recommend management charge actual employee benefits incurred to the grant. We recommend management implement policies and procedures related to reconciliation processes each payroll to ensure that only supportable charges are billed to the grant. Views of the responsible officials and planned corrective actions: AJAC Directors have developed and implemented policies and procedures to appropriately allocate employee benefits. The new policies and procedures align the employee benefit expense with the wage allocations at the employee level.