Finding Text
2023-003 – Allowable Costs/Cost Principles – Internal Control over Payroll Expenditures
Identification of the Federal Program:
Assistance Listing Number: 14.231
Assistance Listing Title: Emergency Solutions Grant Program
Federal Agency: U.S. Department of Housing and Urban Development
Pass-Through Entity: N/A
Federal Award Identification Number: E-20-MW-06-0026, E-21-MC-06-0026, E-22-MC-06-0026
Assistance Listing Number: 14.218
Assistance Listing Title: Community Development Block Grants-Entitlement Grants Cluster
Federal Agency: U.S. Department of Housing and Urban Development
Pass-Through Entity: N/A
Federal Award Identification Number: B-20-MW-06-0026, B-21-MC-06-0026, B-22-MC-06-0026,
B-23-MC-06-0026 Program Income
Criteria or Specific Requirement (Including Statutory, Regulatory, or Other Citation):
Total salaries charged to Federal awards (including extra service pay) are subject to the Standards of
Documentation as described by 2 CFR §200.430(i). Per this section, salaries and wages charged to Federal awards
must be based on records that accurately reflect the work performed. These records must:
- Be incorporated into the organization’s official records;
- Reasonably reflect the total activity for which the employee is compensating across all grant related and
non-grant related activities (100% effort);
- Support the distribution of employee salary across multiple activities or cost objectives (for example,
effort spent on multiple federal awards, spent on general/or administrative activities, vacation, sick leave,
leave without pay, etc.); and
- Utilize an "after-the-fact" review of the employee’s actual hours worked during the reporting period for
identifying and correcting significant changes (as defined by the organization’s written policies).
Condition:
Emergency Solutions Grant Program
The City was unable to locate and provide the timesheets for (2) out of eleven (11) samples tested with Payroll
Cost allocated to the Program. Within the overall population of a hundred and five (105) lines of ESG and ESGCV
payroll charges, the City also had four (4) unsupported employee benefits charged to the program has benefit
charged to program.
Community Development Block Grants-Entitlement Grants Cluster
Payroll costs for eighteen (18) out of forty (40) samples tested were allocated to programs were not supported by
approved time samples or updated cost allocation methods/plan, nor were they reconciled to actual time spent on
the various programs.
Cause: The City did not adhere to its established policies and procedures for verifying that employee compensation
charged to federal programs was supported by contemporaneous time records or an after-the-fact distribution of
actual time and effort spent on federal program activities. Additionally, a thorough review and reconciliation of
payroll time entries and postings from the old financial system (HTE) to the new financial system (MUNIS) was
not conducted, resulting in the failure to preserve supporting documentation, such as timesheets, during the
transition process.
Effect or Potential Effect:
The City did not comply with the program’s requirements for allowable costs. There is an increased risk that
employees’ compensation charged to the program may not have represented an actual time and effort expended
on the program’s activities.
Questioned Costs:
None.
Context:
See condition above for the context of the finding.
Identification as a Repeat Finding, If Applicable:
Not applicable.
Recommendation:
We recommend that the City enhance its internal controls over payroll processes by implementing policies and
procedures that ensure employee compensation charged to federal programs is supported by contemporaneous or
after-the-fact documentation of actual time and effort spent on federal program activities. Additionally, all
supporting documentation should be properly saved.
Views of Responsible Officials:
Management concurs with the finding.