Finding Text
Criteria: In accordance with 2 CFR Section 200.431.8(d), fringe benefits may be assigned to cost objectives by identifying specific benefits to specific individuals or by allocating on the basis of entity-wide salaries and wages of the employees receiving the benefits. When the allocation method is used, separate allocations must be made to selective groupings of employees, unless the non-Federal entity demonstrates that costs in relationships to salaries and wages do not differ significantly for different groups of employees.
Condition: During our testing of fringe benefits expenses, we noted that all 242 sampled transactions did not have adequate supporting documentation. Charges to the Federal award for fringe benefits were based on an anticipated fringe benefit cost, for which the Corporation did not maintain an assignment of cost objectives calculation and its related requirements.
Cause: The Corporation did not have formal process and policies to demonstrate adherence to the fringe benefits cost objectives of 2 CFR Section 200.431.8(d).
Effect or Potential Effect: We were unable to determine whether charges to Federal awards for fringe benefits reflect specific time worked or amounts allocated to specific Federal programs, even though the charges are not in excess of amounts approved for the grant period.
Questioned costs: Unknown
Context: We selected 242 fringe benefit transactions charged to the Federal programs to test controls over allowable costs. Each fringe benefit transaction was calculated by applying a fringe benefit cost rate to actual salaries and wages of each employee tested. The fringe benefit cost rate was based on anticipated fringe benefit cost rate which was neither supported by an actual calculation nor analysis of the related group of employees used in such calculation. This is a condition identified per review of the Corporation’s compliance with specified requirements using a statistically valid sample.
Repeat finding: This is a repeat finding from prior year. This was reported as finding 2021-006 in the 2021 report.
Recommendation: We recommend the Corporation develop and incorporate internal controls and policies to demonstrate adherence to the fringe benefits cost objectives of 2 CFR Section 200.431.8(d).
View of Responsible Officials: Due to turnover of several key financial executives and personnel, the Corporation did not maintain evidence of assignment of cost objectives calculations.