Finding 503559 (2023-003)

Significant Deficiency
Requirement
B
Questioned Costs
-
Year
2023
Accepted
2024-10-23

AI Summary

  • Core Issue: The Boys and Girls Club of Livingston County miscalculated employee wages, using overtime rates instead of base rates, leading to discrepancies totaling $23,871.
  • Impacted Requirements: Documentation standards for personnel expenses under Uniform Guidance were not met, increasing the risk of errors and fraud due to lack of internal controls.
  • Recommended Follow-Up: Implement a policy for employee review of reimbursement requests and receipts to ensure accuracy and compliance with reporting requirements.

Finding Text

Finding No. 2023-003: Twenty-First Century Community Learning Centers Grant Claim Support (Federal Assistance # 84.287) Type of Finding: Significant Deficiency in Internal Control over Major Programs Criteria: Uniform Guidance indicates that that standards for documentation of personnel expenses are such that charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. Condition: The Boys and Girls Club of Livingston County (the Organization) remits a variety of expense reimbursements to various agencies. We tested 26 bi-weekly timesheets and paystubs from 22 employees for the 12-month award period. We noted that for 5 employees the hourly rate during the 12-month period was incorrect. The Organization used the overtime rate instead of the base rate when calculating total wages. This caused a net discrepancy of $17,563 of total wages during the 12-month award period. We also noted that for one salaried employee the total wages for the 12-month period differed by $6,308. Cause: The Organization functions with a small number of office personnel therefore, the Organization is unable to have a review of the requested reimbursement performed. Effect: A lack of segregation of duties increases the risk that errors or fraud may occur and not be prevented or detected on a timely basis. Questioned Costs: None Repeat Finding: No Recommendation: We recommend the Organization implement a policy to have an employee review the requested reimbursements and corresponding receipts to ensure they agree. Management Response: As a small organization, with limited staffing, it was noted that the numbers were transposed when entered and the hourly rates were taken from the Payroll Report versus the paystub. Going forward with the CFO in place, all wages will be reported on-a-monthly basis utilized by the paystubs noting the wage rate changed. Noting that each grant has its own reporting requirements, the organization will provide a three-step verification that will include providing the CPA with the final verification of the monthly reports.

Corrective Action Plan

As a small organization, with limited staffing, it was noted that the numbers were transposed when entered and the hourly rates were taken from the Payroll Report versus the paystub. Going forward with the CFO in place, all wages will be reported on-a-monthly basis utilized by the paystubs noting the wage rate changed. Noting that each grant has its own reporting requirements, the organization will provide a three-step verification that will include providing the CPA with the final verification of the monthly reports. The CFO will prepare the reimbursement month, the CEO will verify and send to the CPA who will approve for submission to ensure accuracy of the reports. This additional verification will provide for an outside the organization review prior to submitting. An additional note is that the variances were not paid beyond what the grant allowed. The IL Alliance that manages the grant for the local organization has created a new tool to assist in the accuracy of the submissions which have been provided since January 1st which will eliminate most reimbursement discrepancies. For example, if the supplies budget line-item was $500.00 and the organization submitted $525.00 in receipts the tool being utilized will be highlighted in red and will not be reimbursed at $525.00, only the $500.00 allowed and this is through all the grants. No overage of dollars was received other than what the grant allowed even though the submission might have been less or more.If it was less, the IL Alliance reaches out to the organization for additional receipts. The Boys & Girls Club of Livingston County will ensure the numbers are more accurate in the reporting moving forward.

Categories

Internal Control / Segregation of Duties Cash Management Reporting Significant Deficiency

Other Findings in this Audit

  • 503556 2023-004
    Significant Deficiency
  • 503557 2023-005
    Significant Deficiency
  • 503558 2023-002
    Significant Deficiency
  • 1079998 2023-004
    Significant Deficiency
  • 1079999 2023-005
    Significant Deficiency
  • 1080000 2023-002
    Significant Deficiency
  • 1080001 2023-003
    Significant Deficiency

Programs in Audit

ALN Program Name Expenditures
84.287 Twenty-First Century Community Learning Centers $524,578
84.425 Education Stabilization Fund $277,580
93.558 Temporary Assistance for Needy Families $226,764
94.006 Americorps State and National 94.006 $84,572
16.726 Juvenile Mentoring Program $80,622
10.559 Summer Food Service Program for Children $24,807
10.558 Child and Adult Care Food Program $19,959