Finding Text
Federal Agencies: Department of Housing and Urban Development
Federal Assistance Listing Numbers: 14.267
Program: Continuum of Care Program
Award/Pass-Through Entity Identifying Numbers: 202212-01122, 202212-01115, DA-202212-01187,
202210-00966, DA-202212-01319
Criteria: The Uniform Guidance in 2 CFR §200.303 requires that non-Federal entities receiving
Federal awards (i.e., auditee management) establish and maintain internal control designed to
reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of
the Federal award.
Per 2 CFR §200.430 Compensation- Personal Services:
“Standards for Documentation of Personnel Expenses (1) 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 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
(vi) [Reserved]
(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.
(viii) Budget estimates (i.e., estimates determined before the services are performed) alone do
not qualify as support for charges to Federal awards, but may be used for interim accounting
purposes, provided that:
(A) The system for establishing the estimates produces reasonable approximations of the
activity actually performed;
(B) Significant changes in the corresponding work activity (as defined by the non-Federal
entity’s written policies) are identified and entered into the records in a timely
manner. Short-term (such as one or two months) fluctuation between workload
categories need not be considered as long as the distribution of salaries and wages
is reasonable over the longer term; and
(C) The non-Federal entity’s system of internal controls includes processes to review
after-the-fact interim charges made to a Federal award based on budget estimates.
All necessary adjustment must be made such that the final amount charged to the
Federal award is accurate, allowable, and properly allocated.”
Condition: We noted that LifeWire allocated administrative payroll expenditures to Continuum of
Care during 2023 based on budget allocation rates. There were no procedures in place to determine
if a true-up was necessary from allocated costs. 27 timesheets were tested during the audit, of
which five were charged based on budgets for the grant.
Cause: LifeWire did not have policies and procedures in place to review and reconcile the estimated
amounts of payroll expenditures charged to Continuum of Care to the actual expenditures incurred.
Effect or Potential Effect: Without adequate controls in place to ensure costs based on budgeted
allocations are reasonable and reconcile to the actual time spent on the program, LifeWire could
incorrectly charge expenditures to the federal program, or not request appropriate reimbursement
LifeWire is entitle to under the terms of the grant.
Questioned Costs: Below reporting threshold.
Context: This is a condition identified per review of LifeWire’s compliance with specified requirements
not using a statistically valid sample. Payroll costs for administrative staff selected for testing totaled
$1,185. Total payroll costs for the Continuum of Care grants in 2023 were $294,002. Any payroll costs
not adequately supported by time and effort reports are considered questioned costs.
Identification as a Repeat Finding: Not a repeat finding.
Recommendation: We recommend that LifeWire implement policies and procedures to review for
any necessary budget to actual adjustments, and we recommend that sufficient documentation be
maintained to support any adjustments made as required by 2 CFR §200.430.
Views of Responsible Officials: Management agrees with the finding. Management has modified
policies and procedures to ensure staff time allocated to the grant is properly reviewed and
approved.