Finding Text
Finding No.: 2021-011
Federal Agency: U.S. Department of Education
AL Program: 84.047A TRIO Upward Bound
Federal Award No.: P047A171556-21
Area: Allowable Costs/Cost Principles
Questioned Costs: $7,018
Criteria: Federal program expenditures should be necessary and reasonable for the performance of the Federal award in accordance with allowable costs/cost principles requirements and be adequately documented.
Conditions:
1. For seventeen (or 71%) of twenty-four items, aggregating $17,796 of $185,064 in payroll total expenditures, deficiencies were noted, as follows:
For item #s 1 through 8, employees were paid at a higher rate with no approved revised employee contract or pay increment memorandum on file to substantiate the higher rate paid to employees.
For item #s 8 through 12, there were no approved timesheet on file to substantiate the actual number of hours worked. Further, for item # 12, there was no approved employment contract on file.
For item #s 13 through 16, we noted discrepancy in the number of credits paid which is based on employment contract against the number of equivalent credits assigned to instructors per approved memorandum.
Item # 17 pertains to salary advance for which there was inadequate documentation as to approval of advance made.
2. For one (or 6%) of sixteen items, aggregating $50,464 of $128,947 in total non-payroll expenditures, the item amounting to $2,185 (Check # 1033875) pertains to the purchase of office equipment for which no vendor invoice and receiving report was on file.
Cause: The College lacks adequate internal controls over compliance with applicable federal regulations relating to allowable costs/cost principles, specifically, obtaining and retaining sufficient documentation to support all transactions.
Effect: The College is in noncompliance with applicable allowable costs/cost principles requirements. Accordingly, questioned costs of $7,018 result because the projected questioned costs exceed the $25,000 threshold. For Condition # 1, item #s 1 through 7, only $403 is included in the total questioned costs, which relates to the difference between the unsupported higher rate paid and the approved rate. Further, for Condition # 1, item #s 13 through 16, only $1,641 is included in the total questioned costs, which relates to the dollar amount of difference in the number of credits paid between employment contract and approved memorandum.
Recommendation: College management should improve internal control policies and strengthen controls requiring obtaining and retaining sufficient documentation to support all transactions.
Views of Auditee and Corrective Action Plan: The College partially agrees with the finding and provides details in its Corrective Action Plan.