Finding Text
Finding Type. Immaterial Noncompliance/Significant Deficiency in Internal Controls over Compliance (Allowable Costs/Cost Principles).
Program. Education Stabilization Fund; U.S. Department of Education; Assistance Listing Number 84.425; Passed through Michigan Department of Education (MDE); Project numbers 213782-2223 and 213713-2122.
Criteria. Section 200.430(i)(1) of the Uniform Grant Guidance states that; Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (ii) Be incorporated into the official records of the non-Federal entity; (iii) Reasonably reflect the total activity for which the employee is compensated by the non-Federal entity, not exceeding 100% of compensated activities; (iv) Encompass both federally assisted and all other activities compensated by the non-Federal entity on an integrated basis, but may include the use of subsidiary records as defined in the non-Federal entity’s written policy; (v) Comply with the established accounting policies and practices of the non-Federal entity; and (vii) 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; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity.
Condition. During testing of payroll disbursements, it was noted that: 1) no documentation was found to support the $50.00 per run summer bus driver rate or the $500 stipend bonus paid to summer bus drivers, and 2) Two of the contracts selected were pro-rated for late start (total hours expected) and for number of pay periods spread). The amounts were eventually recalculated with available documents, but the initial calculation of the pro-ration was not retained by management.
Cause. The cause of this condition appears to be that the former business manager did not take due care in making sure that documentation existed to support the salaries and wages being charged to the program.
Effect. Certain of the District's federal expenditures were not documented in accordance with the Uniform Guidance.
Questioned Costs. No costs were required to be questioned based on our testing.
Recommendation. We recommend that the District staff in charge of payroll administration familiarize themselves with the documentation requirements of the Uniform Guidance and retain supporting documentation to support the payroll costs charged to federal awards.
View of Responsible Officials. We concur with the audit assessment regarding this matter.