Finding Text
2023-004 Controls over Payroll Allowable Costs – Significant Deficiency in Internal Control over Compliance Criteria and Condition: According to Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (the Uniform Guidance), section 200.430, charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Budget estimates alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that the system for establishing the estimates produces reasonable approximations of the activity actually performed; significant changes in the corresponding work activity are identified and entered into the records in a timely manner; and the non-Federal entity’s system of internal controls includes processes to review after-the-fact interim charges based on budget estimates. Admin and support personnel salaries or wages for the Twenty-First Century Community Learning Centers program were based on budget estimates as documented in the approved grant budget for personnel costs and fringe benefit costs. However, there was no evidence of an after-the-fact review to determine that the distribution accurately reflected the work performed by the employee. Salaries for the Child Care and Development Block Grants were not tracked as to which were applied to the stipend received. Cause: For three months selected for testing of two of the programs of the Twenty-First Century Community Learning Centers the labor allocation reports provided did not match what was billed per the billing tracker reports. The YMCA received a stipend that could be used for multiple purposes, including salaries, for the Child Care and Development Block Grants, however no tracking was done on which salaries were applied to those stipends. Effect and Context: When adequate support is not obtained and used to support the amount charged to the federal program or supported by an after-the-fact review, there is a risk that unsupported or inaccurate costs are being charged to the federal program. Questioned Costs: Payroll costs charged to the awards total $726,247. Recommendation: We recommend proper control activities should be implemented to allow for a consistent, accurate, and allowable method to support distribution of personnel charges to federal programs. If management elects to continue to allocate personnel charged based on a budget estimate, the after-the-fact review should be properly documented. Views of responsible officials and planned corrective actions: YMCA management will implement a process to perform timely review of salary expense charged to federal awards, and retain records by pay period as support for expenditures charged to federal awards.