Finding 485087 (2023-005)

Federal Agency: U.S. Department of Treasury CFDA No.: 14.218 Federal Program: Community Development Block Grants/Entitlement Grants Federal Award Year: 2023 Control Category: Allowable Costs Questioned Costs: $2,316 Condition The City charged CDBG payroll expenses to the program based a timesheet allocation and did not adjust the charges to reconcile to actual time incurred per employee timesheets. Criteria 2 CFR 200.430(i), Standards for Documentation of Personnel Expenses, states, in part: “Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed…” Charges must “support the distribution of the employee's salary or wages among specific activities or cost objectives if the employee works on more than one Federal award;…” And “budget estimates (i.e., estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards.” Cause The City's payroll system charges time for employees each pay period based on an allocation rather than actual hours documented on the employee’s timesheet. Effect Payroll costs charged to the program were greater than amounts supported by the documentation. Questioned Costs There were questioned costs in the amount of $2,316. Recommendation We recommend that the City charge time to the program based on actual hours worked per the employees' timesheets. Management’s Response Regarding Corrective Action Taken or Planned Management acknowledges the importance of ensuring that payroll costs charged to the program are consistent between the payroll system and the employee’s timesheet. The City continues to monitor its internal control process to ensure thorough review procedures are being followed. Timesheets are reviewed, bi-weekly, by payroll and adjusted to reflect actual hours as they relate to a specific activity. The City was able to hire a permanent accountant hiring who will provide additional oversight of these processes ensuring that hours worked are both reported correctly on the timesheets and are following the funding allocations that are approved by the grant.