FAC Explorer

Finding 418490 (2022-001)

- Repeat Finding
Requirement
BJ
Questioned Costs
$1
Year
2022
Accepted
2023-09-28
Audit: 312191
Organization: City of Seattle (WA)
Auditor: Office of the Washington State Auditor

AI Summary

  • Core Issue: The City charged payroll costs to the CDBG program without proper documentation, leading to questioned costs totaling $6,883.
  • Impacted Requirements: Federal regulations require accurate records for payroll expenditures, which were not met due to preapproved timesheets lacking employee verification.
  • Recommended Follow-up: Strengthen internal controls for payroll documentation and consult with the grantor about potential repayment of questioned costs.

Finding Text

2022-001 The City charged payroll-related expenditures that lacked supportto the Community Development Block Grants/Entitlement Grantsprogram.Assistance Listing Number and Title: 14.218 Community DevelopmentBlock Grants/Entitlement Grants14.218 ? COVID-19 CommunityDevelopment BlockGrants/Entitlement GrantsFederal Grantor Name: U.S. Department of Housing andUrban DevelopmentFederal Award/Contract Number: B17MC530005, B18MC530005,B20MC530005, B21MC530005,B22MC530005, COVID-191153014Pass-through Entity Name: N/APass-through Award/ContractNumber:N/AKnown Questioned Cost Amount: $6,883Prior Year Audit Finding: Yes, Finding 2021-001BackgroundThe City spent $5,605,767 in Community Development Block Grants/EntitlementGrants (CDBG) funds in 2022. The purpose of CDBG is to help provide decent andaffordable housing, particularly for people with moderate, low, and very lowincomes. Funds also help recipients implement strategies for achieving an adequatesupply of decent housing and providing a suitable living environment and expandedeconomic opportunities for people with low incomes.The City may use these grant funds for its program administrative costs. Federalregulations state that personnel expenditures must be supported and recipients mustprovide reasonable assurance that the charges are accurate, allowable, and properly allocated. Further, records must support the distribution of an employee?s salaryand wages among specific activities or cost objectives if the employee works onmore than one federal award. The City must base charges to federal awards forsalaries and wages on records that accurately reflect the work employees haveperformed.Description of ConditionDuring the audit period, the City charged salary and wage expenditures to theCDBG program based on records that did not accurately reflect the work employeeshad performed.Supervisors in the Office of Housing and employees in the Parks and RecreationDepartment preapproved timesheets. Because the timesheets were preapproved orlacked evidence of employee approval, the City could not provide evidence that thetimesheets accurately reflected each employee?s actual time worked in the program.Cause of ConditionOffice of Housing:Department staff and management said that timesheets were approved early so thatpayroll staff had time to validate timesheet coding before the City closed the systemfor processing.Parks and Recreation Department:Department staff and management said that sometimes an employee willpreapprove their timesheet to give the supervisor more time for review.Effect of Condition and Questioned CostsFederal regulations require the State Auditor?s Office to report known questionedcosts when likely questioned costs are greater than $25,000 for each type ofcompliance requirement. We question costs when we find the City has not compliedwith grant regulations and/or when it does not have adequate documentation tosupport expenditures.We identified the following transactions that were not properly supported:? Using a statistical sampling method, we selected 28 payroll transactions inthe Office of Housing, Human Services Department, and Parks andRecreation Department. We identified four payroll charges totaling $1,919in known questioned costs in the Office of Housing and Parks and Recreation Department. Based on the projection of our statistical sample,we identified an additional $55,501 in estimated overpayments.? Using a statistical sampling method, we selected 28 payroll transactionspaid with program income expenditures. We identified five payroll chargestotaling $1,151 in known questioned costs. Based on the projection of ourstatistical sample, we identified an additional $30,916 in estimatedoverpayments.? Using a non-statistical sample, we found 11 of 22 timesheets paid withprogram income were pre-approved resulting in known questioned costs of$3,813. Based on the projection of our sample, we identified an additional$36,916 in estimated overpayments.RecommendationWe recommend the City strengthen internal controls to ensure all the payrollrelatedexpenditures it charges to the CDBG program are only for allowableactivities, are accurate, properly allocated, and comply with the cost principles setforth in 2 CFR 200 Subpart E. We further recommend the City consult with thegrantor to determine whether it needs to repay the questioned costs.City?s ResponseHSD Response:HSD as the CDBG administrator, in collaboration with its contracted consultantsupport TDA consulting, will complete the following steps to support the resolutionof this finding associated with the pre-approval of timesheets within the Office ofHousing, and the Department of Parks and Recreation.HSD will conduct a thorough review of all existing MOAs with our recipients toensure that the language pertaining to pre-approved timesheets is clear, consistent,and aligned with federal and state regulations. HSD will also assure staffresponsible for administering CBDG funds and other federal funds are oriented tofederal requirements regarding the pre-approval of timesheets and will emphasizethe importance of adhering to the requirements outlined in the MOAs. HSD willencourage its city partners receiving these funds to work with the City-WideAccounting team to adopt standardized procedures for the approval,documentation, and tracking of timesheets. Office of Housing Response:The Office of Housing will change its timesheet review procedures in order toensure manager sign-off happens no sooner than the close of business on the finalday of the pay period. Current procedure is for the Office Housing Accountant tosend an email reminding all managers to sign-off on timesheets; effective 10/1/23this message will add the specific reminder that all employees funded by federalgrant revenues should not have their timesheets approved until after all hours havebeen worked.Parks and Recreation Response:Moving forward, Seattle Parks and Recreation (SPR) will follow the City-WideAccounting guidance provided on June 6th, 2023 which requires employees to notsubmit timesheets earlier than the federally grant-funded work is performed.SPR department leadership have immediately notified the CDBG managementteam to re-emphasize the requirement. In addition, the SPR payroll team will alsoprovide a reminder of the requirement for all SPR staff for each payroll cycle. TheSPR executive team will continue to monitor compliance relating to thisrecommendation.Auditor?s RemarksWe thank the City for its response and consideration in this matter and the steps itis taking to address this issue. We will review the status of the City?s correctiveaction during our next audit.Applicable Laws and RegulationsTitle 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform AdministrativeRequirements, Cost Principles, and Audit Requirements for Federal Awards(Uniform Guidance), section 516, Audit findings, establishes reportingrequirements for audit findings.Title 2 CFR Part 200, Uniform Guidance, Subpart E, Cost Principles, establishesrequirements for determining allowable costs and supporting costs allocated tofederal programs.

Categories

Questioned Costs Allowable Costs / Cost Principles Reporting Subrecipient Monitoring HUD Housing Programs Program Income

Other Findings in this Audit

  • 418478 2022-003
    Significant Deficiency
  • 418479 2022-001
    - Repeat
  • 418480 2022-001
    - Repeat
  • 418481 2022-001
    - Repeat
  • 418482 2022-001
    - Repeat
  • 418483 2022-001
    - Repeat
  • 418484 2022-001
    - Repeat
  • 418485 2022-003
    Significant Deficiency
  • 418486 2022-001
    - Repeat
  • 418487 2022-001
    - Repeat
  • 418488 2022-001
    - Repeat
  • 418489 2022-001
    - Repeat
  • 418491 2022-001
    - Repeat
  • 418492 2022-001
    - Repeat
  • 418493 2022-002
    Material Weakness Repeat
  • 418494 2022-002
    Material Weakness Repeat
  • 418495 2022-002
    Material Weakness Repeat
  • 418496 2022-002
    Material Weakness Repeat
  • 418497 2022-002
    Material Weakness Repeat
  • 418498 2022-002
    Material Weakness Repeat
  • 418499 2022-002
    Material Weakness Repeat
  • 418500 2022-002
    Material Weakness Repeat
  • 418501 2022-002
    Material Weakness Repeat
  • 418502 2022-002
    Material Weakness Repeat
  • 418503 2022-002
    Material Weakness Repeat
  • 418504 2022-002
    Material Weakness Repeat
  • 418505 2022-002
    Material Weakness Repeat
  • 994920 2022-003
    Significant Deficiency
  • 994921 2022-001
    - Repeat
  • 994922 2022-001
    - Repeat
  • 994923 2022-001
    - Repeat
  • 994924 2022-001
    - Repeat
  • 994925 2022-001
    - Repeat
  • 994926 2022-001
    - Repeat
  • 994927 2022-003
    Significant Deficiency
  • 994928 2022-001
    - Repeat
  • 994929 2022-001
    - Repeat
  • 994930 2022-001
    - Repeat
  • 994931 2022-001
    - Repeat
  • 994932 2022-001
    - Repeat
  • 994933 2022-001
    - Repeat
  • 994934 2022-001
    - Repeat
  • 994935 2022-002
    Material Weakness Repeat
  • 994936 2022-002
    Material Weakness Repeat
  • 994937 2022-002
    Material Weakness Repeat
  • 994938 2022-002
    Material Weakness Repeat
  • 994939 2022-002
    Material Weakness Repeat
  • 994940 2022-002
    Material Weakness Repeat
  • 994941 2022-002
    Material Weakness Repeat
  • 994942 2022-002
    Material Weakness Repeat
  • 994943 2022-002
    Material Weakness Repeat
  • 994944 2022-002
    Material Weakness Repeat
  • 994945 2022-002
    Material Weakness Repeat
  • 994946 2022-002
    Material Weakness Repeat
  • 994947 2022-002
    Material Weakness Repeat

Programs in Audit

ALN Program Name Expenditures
66.458 Clean Water State Revolving Fund $8.07M
21.023 Covid 19 - Emergency Rental Assistance Program $3.73M
97.047 Bric: Building Resilient Infrastructure and Communities $2.10M
97.039 Hazard Mitigation Grant $1.37M
20.200 Highway Research and Development Program $1.32M
59.075 Covid 19 - Shuttered Venue Operators Grant Program $1.19M
10.558 Child and Adult Care Food Program $898,758
16.543 Missing Children's Assistance $707,467
14.231 Covid 19 - Emergency Solutions Grant Program $662,249
16.560 National Institute of Justice Research, Evaluation, and Development Project Grants $631,992
14.881 Moving to Work Demonstration Program $533,333
97.091 Homeland Security Biowatch Program $488,576
93.778 Medical Assistance Program $443,689
16.922 Equitable Sharing Program $420,424
10.559 Summer Food Service Program for Children $316,968
97.106 Securing the Cities Program $315,181
21.016 Equitable Sharing $295,231
16.838 Comprehensive Opioid, Stimulant, and Other Substances Use Program $263,540
84.047 Trio Upward Bound $229,868
14.239 Home Investment Partnerships Program $219,966
93.631 Developmental Disabilities Projects of National Significance $205,758
93.568 Low-Income Home Energy Assistance $188,098
93.569 Community Services Block Grant $181,812
16.582 Crime Victim Assistance/discretionary Grants $181,138
11.438 Pacific Coast Salmon Recovery Pacific Salmon Treaty Program $176,014
93.045 Special Programs for the Aging, Title Iii, Part C, Nutrition Services $170,962
14.218 Covid 19 - Community Development Block Grants/entitlement Grants $150,404
93.052 National Family Caregiver Support, Title Iii, Part E $143,382
97.042 Emergency Management Performance Grants $141,320
93.052 Covid 19 - National Family Caregiver Support, Title Iii, Part E $134,250
16.738 Edward Byrne Memorial Justice Assistance Grant Program $132,582
93.053 Nutrition Services Incentive Program $127,624
97.067 Homeland Security Grant Program $113,826
20.616 National Priority Safety Programs $110,138
14.241 Covid 19 - Housing Opportunities for Persons with Aids $106,646
93.048 Special Programs for the Aging, Title Iv, and Title Ii, Discretionary Projects $87,676
21.027 Covid 19 - Coronavirus State and Local Fiscal Recovery Funds $86,921
16.034 Covid 19 - Coronavirus Emergency Supplemental Funding Program $82,725
16.590 Grants to Encourage Arrest Policies and Enforcement of Protection Orders Program $81,124
93.044 Covid 19 - Special Programs for the Aging, Title Iii, Part B, Grants for Supportive Services and Senior Centers $63,693
14.267 Continuum of Care Program $61,816
16.320 Services for Trafficking Victims $59,634
20.507 Covid 19 - Federal Transit Formula Grants $59,618
97.044 Assistance to Firefighters Grant $51,428
97.056 Port Security Grant Program $49,644
93.043 Special Programs for the Aging, Title Iii, Part D, Disease Prevention and Health Promotion Services $49,378
20.703 Interagency Hazardous Materials Public Sector Training and Planning Grants $42,184
97.036 Disaster Grants - Public Assistance (presidentially Declared Disasters) $35,461
93.969 Pphf Geriatric Education Centers $31,693
20.507 Federal Transit Formula Grants $29,297
97.036 Covid 19 - Disaster Grants - Public Assistance (presidentially Declared Disasters) $23,392
16.575 Crime Victim Assistance $20,759
20.500 Federal Transit Capital Investment Grants $20,034
45.310 Grants to States $9,085
14.218 Community Development Block Grants/entitlement Grants $8,219
45.024 Promotion of the Arts Grants to Organizations and Individuals $7,100
10.576 Senior Farmers Market Nutrition Program $6,627
16.710 Public Safety Partnership and Community Policing Grants $6,392
20.600 State and Community Highway Safety $5,695
14.241 Housing Opportunities for Persons with Aids $4,294
15.916 Outdoor Recreation Acquisition, Development and Planning $2,840
20.205 Highway Planning and Construction $1,921
93.044 Special Programs for the Aging, Title Iii, Part B, Grants for Supportive Services and Senior Centers $1,596
20.525 State of Good Repair Grants Program $1,280
93.041 Special Programs for the Aging, Title Vii, Chapter 3, Programs for Prevention of Elder Abuse, Neglect, and Exploitation $666