Finding 46635 (2022-003)

Significant Deficiency Repeat Finding
Requirement
B
Questioned Costs
-
Year
2022
Accepted
2023-09-27
Audit: 41367
Organization: Klawock Cooperative Association (AK)
Auditor: Lisa Taylor CPA

AI Summary

  • Core Issue: There was a significant deficiency in compliance regarding payroll costs for the federal program 21.027, leading to potential overpayments due to conflicting timesheets for one employee.
  • Impacted Requirements: Costs charged must be adequately documented as per Title 2 U.S. Code Part 200.403(g); the lack of training and oversight contributed to this issue.
  • Recommended Follow-Up: Implement a single timesheet system to prevent duplicate payments and ensure accurate allocation of time across programs.

Finding Text

2022-003 Significant Deficiency in Compliance and Internal Control over Compliance ? Allowable Costs/Cost Principles Identification of federal programs: 21.027 Coronavirus State and Local Fiscal Recover Funds Criteria: Title 2 U.S. Code Part 200.403(g) requires that for costs charged to a federal program to be allowable, they must be adequately documented. Condition: Major federal programs 21.027 Coronavirus State and Local Fiscal Recovery Funds had payroll related costs charged to the program that potentially would be overpayment. One employee had two timesheets that represented two differing federal programs. Both timesheets resulted in a paycheck. Taken together these paychecks resulted in an overpayment of wages. Of the 72 paychecks sampled, 6 related to the one individual and duplicates were noted in each of the 6. The other employee paychecks did not have exceptions. Cause: Due to staffing shortages, the accounting staff was undertrained. Management oversight did not have adequate financial training. Effect or potential effect: Costs were charged to these programs that were unsupported in accordance with allowable cost principles. Questioned Costs: None ? The known and likely questioned costs were below the $25,000 reporting threshold and program materiality for both major federal programs. Context: 21.027 Coronavirus State and Local Fiscal Recovery Funds ? During my sample testing for allowable costs, I identified 6 out of 72 transactions (error rate of 8%) that had conflicting documentation to support the program cost. They were all isolated from payroll charges and specifically to one employee. Total payroll expenditures charged to the program was $295,466 out of $1,557,537 total expenditures. Program materiality was $77,877 (5% of total expenditures). The likely error was not material to the program, the internal controls which allowed the errors to occur should be corrected. Identification of Repeat Finding: 2021-002 Recommendations: I recommend the Association use one timesheet that allows time to be allocated between all programs which would eliminate the possibility of double time records and consequently the potential of duplicate payments. Views of Responsible Officials: Management agrees. Also see Corrective Action Plan.

Corrective Action Plan

2022-003 Significant Deficiency in Compliance and Internal Control over Compliance ? Allowable Costs/Cost Principles Name and Contact Person: Janelle Friday, Tribal Administrator Corrective Action: Klawock Cooperative Association will ensure that they implement policies and procedures to address internal control over payroll and redesign the timesheet. Proposed Completion Date: June 30, 2023

Categories

Allowable Costs / Cost Principles Internal Control / Segregation of Duties Reporting Significant Deficiency

Other Findings in this Audit

  • 46628 2022-005
    Significant Deficiency Repeat
  • 46629 2022-005
    Significant Deficiency Repeat
  • 46630 2022-005
    Significant Deficiency Repeat
  • 46631 2022-005
    Significant Deficiency Repeat
  • 46632 2022-005
    Significant Deficiency Repeat
  • 46633 2022-005
    Significant Deficiency Repeat
  • 46634 2022-004
    Significant Deficiency
  • 46636 2022-005
    Significant Deficiency Repeat
  • 47323 2022-005
    Significant Deficiency Repeat
  • 47324 2022-005
    Significant Deficiency Repeat
  • 623070 2022-005
    Significant Deficiency Repeat
  • 623071 2022-005
    Significant Deficiency Repeat
  • 623072 2022-005
    Significant Deficiency Repeat
  • 623073 2022-005
    Significant Deficiency Repeat
  • 623074 2022-005
    Significant Deficiency Repeat
  • 623075 2022-005
    Significant Deficiency Repeat
  • 623076 2022-004
    Significant Deficiency
  • 623077 2022-003
    Significant Deficiency Repeat
  • 623078 2022-005
    Significant Deficiency Repeat
  • 623765 2022-005
    Significant Deficiency Repeat
  • 623766 2022-005
    Significant Deficiency Repeat

Programs in Audit

ALN Program Name Expenditures
21.027 Coronavirus State and Local Fiscal Recovery Funds $1.56M
20.205 Highway Planning and Construction $935,936
14.862 Indian Community Development Block Grant Program $267,826
81.087 Renewable Energy Research and Development $175,237
15.022 Tribal Self-Governance $155,417
66.926 Indian Environmental General Assistance Program (gap) $109,910
15.156 Cooperative Landscape Conservation $65,770
97.047 Pre-Disaster Mitigation $54,278
21.019 Coronavirus Relief Fund $49,895
10.567 Food Distribution Program on Indian Reservations $34,681
93.047 Special Programs for the Aging_title Vi, Part A, Grants to Indian Tribes_part B, Grants to Native Hawaiians $13,656
93.054 National Family Caregiver Support, Title Vi, Part C, Grants to Indian Tribes and Native Hawaiians $3,412
93.053 Nutrition Services Incentive Program $1,611