Finding 499185 (2023-001)

CONDITION 2023-01 THE ORGANIZATION USED A DETAILED METHOD FOR TRACKING AND ALLOCATING WAGES AND RELATED EXPENSES INCURRED BY INDIVIDUALS WHO WORK ACROSS MULTIPLE LOCATIONS. DURING OUR TESTING OF BUILD, LEARN, GROWTH STABILIZATION CLAIMS, WE IDENTIFIED INACCURACIES IN THE ALLOCATION OF THESE EXPENSES DUE TO ERRORS IN THE UNDERLYING SPREADSHEETS, INCLUDING INCORRECT FORMULAS AND MISUNDERSTANDINGS RELATED TO PROPER ALLOCATION METHODOLOGY. CRITERIA ACCORDING TO THE UNIFORM GUIDANCE (2 CFR PART 200), ENTITIES MUST MAINTAIN EFFECTIVE INTERNAL CONTROLS OVER COMPLIANCE WITH APPLICABLE LAWS, REGULATIONS, AND PROGRAM REQUIREMENTS. ACCURATE FINANCIAL REPORTING AND ALLOCATION METHODOLOGIES ARE ESSENTIAL TO ENSURE COMPLIANCE WITH FEDERAL REQUIREMENTS AND TO REFLECT THE TRUE USE OF FUNDS. EFFECT THE INACCURACIES IN THE ALLOCATION OF WAGES AND RELATED EXPENSES COULD RESULT IN MISSTATEMENTS IN FINANCIAL REPORTING AND POTENTIALLY VIOLATE COMPLIANCE REQUIREMENTS FOR THE PROGRAM. IF NOT CORRECTED, THESE ISSUES COULD LEAD TO MISALLOCATION OF COSTS AND RESULTING IN POTENTIAL QUESTIONED COSTS DURING FUTURE AUDITS. CAUSE THE ORGANIZATION’S DETAILED METHOD FOR TRACKING AND ALLOCATING WAGES AND RELATED EXPENSES INCURRED COMBINED WITH THE USE OF SPREADSHEETS AND FORMULAS THAT WERE NOT APPROPRIATELY REVIEWED CONTRIBUTED TO THE ERRORS IN WAGE AND EXPENSE ALLOCATION. ADDITIONALLY, THE LACK OF A CLEAR UNDERSTANDING OF THE ALLOCATION REQUIREMENTS FOR EMPLOYEES WORKING ACROSS MULTIPLE LOCATIONS LED TO INCORRECT ASSUMPTIONS ABOUT HOW TO ALLOCATE WAGES. RECOMMENDATION WE RECOMMEND THAT THE ORGANIZATION SIMPLIFY ITS METHODOLOGY FOR TRACKING AND ALLOCATING WAGES AND RELATED EXPENSES TO ENHANCE CLARITY AND REDUCE THE POTENTIAL FOR ERRORS. WE ALSO RECOMMEND HAVING THE SPREADSHEET FORMULAS BE REGULARLY REVIEWED TO IDENTIFY IF CALCULATIONS OR ALLOCATIONS ARE INCORRECT. VIEWS OF RESPONSIBLE OFFICIALS THE ORGANIZATION CONCURS WITH THE CONDITION.