CORRECTIVE ACTION PLAN
Finding 2023-001 - Controls Over Payroll Expenditures (Material Weakness)
Criteria: 2 CFR 200.403 establishes principles and standards for determining costs for federal awards carried out through grants, cost reimbursement contracts, and other agreements with state and local governments. To be allowable, under federal awards, cost must meet certain criteria:
a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles.
b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items.
c) Be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non-Federal entity.
d) Be accorded consistent treatment. A cost may not be assigned to a Federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the Federal award as an indirect cost.
e) Be determined in accordance with generally accepted accounting principles (GAAP), except, for state and local governments and Indian tribes only, as otherwise provided for in this part.
f) Not be included as a cost or used to meet cost sharing or matching requirements of any other federally financed program in either the current or a prior period.
g) Be adequately documented.
h) Cost must be incurred during the approved budget period.
Additionally, 2 CFR 200.303 indicates that non-Federal Entities receiving Federal awards must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations and terms and conditions of the Federal award.
The Corporation should have controls in place to document that salaries and overtime paid with federal funds were allowable. Timecards supporting hours worked should be approved and pay rates reviewed.
Context: A summary of allowable charges for the grant was prepared for submission. Within a sample of 45, we noted that 25 timecards did not have a documented review.
Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding. The Transportation Department provides a spreadsheet that details time operators work by route. This process is used to align FTA funding streams with routes driven. The spreadsheet is kept by the Transportation Manager and reviewed by the Director of Transportation. These two positions approve time prior to submitting it for processing.
The Gary Public Transportation Corporation management had hoped to get its payroll provider to provide a solution to this particular timesheet approval matter. However, the complexity of these timesheets made a resolve too complicated for reasonable implementation. So, a simple solution has been devised. The Transportation Manager and Director shall sign off on a document to stating their review and approval of those timesheets.