Finding 503794 (2023-003)

Material Weakness
Requirement
AB
Questioned Costs
$1
Year
2023
Accepted
2024-10-28
Audit: 326064
Organization: Greenheart International (IL)

AI Summary

  • Core Issue: Inadequate internal controls and documentation for personnel expenses led to questioned costs totaling approximately $783,145.
  • Impacted Requirements: Failure to comply with A-102 Common Rule and 2 CFR 200.302 regarding proper recordkeeping and segregation of duties.
  • Recommended Follow-Up: Enhance policies to ensure personnel expenses are supported by source documentation and implement a timecard system for accurate tracking.

Finding Text

U.S. Department of State Professional & Cultural Exchange Programs Assistance Listing #19.415 Finding 2023-003 Material Weakness, Material Noncompliance – Allowable Costs/Activities Criteria: The A-102 Common Rule requires that non-Federal entities receiving Federal awards establish and maintain internal control designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. Adequate segregation of duties provided between performance, review, and recordkeeping of a task is a control activity which will reasonably ensure compliance with Federal laws, regulations, and program requirements. 2 CFR 200.302 requires that non-federal entities must maintain records that identify adequately the source and application of funds for federally funded activities and be supported by source documentation. Condition: Internal control could not be readily substantiated for the allocation percentages applied to personnel expenses. Source documentation could not be readily substantiated for personnel expenses charged to the program and time actually worked. Questioned Costs: Personnel expenses charged to the FLEX and YES awards were approximately $464,332 and $318,813 respectively, for a total of approximately $783,145. Context: Review of personnel expenses and the allocation percentages applied could not be readily substantiated. Effect: By not maintaining adequate and consistent documentation of review and source documentation, the Organization may not be able to readily prevent, detect, and correct potential errors in allowable costs/activities. Therefore, the Organization may be incorrectly reimbursed for expenditures under the program requirements. Cause: Current processes do not include maintaining adequate review and source documentation to support personnel. Recommendation: The Organization should improve policies & procedures to ensure that personnel expenses are adequately supported by source documentation and documentation is readily available. Management’s Response: Management considers this resolved as of August 2024. Greenheart is in the process of establishing a timecard system for all staff who work on grants and have their time allocated to a grant. Investing in hour tracking within the payroll system will ensure that personnel allocations are accurate and approved by management. In the meantime, in early 2024, the Grants Director worked directly with payroll and department leaders to review and update the list of personnel who are working on the grant. This was a documented process.

Corrective Action Plan

2023-003 Name of Contact Person: Matthew Roy Corrective Action: Greenheart is in the process of establishing a timecard system for all staff who work on grants and have their time allocated to a grant. In the meantime, in early 2024, the Grants Director worked directly with payroll and department leaders to review and update the list of personnel who are working on the grant. This was a documented process. Proposed Completion Date: Management considers this finding resolved as of August 2024.

Categories

Questioned Costs Allowable Costs / Cost Principles Internal Control / Segregation of Duties Material Weakness Matching / Level of Effort / Earmarking

Other Findings in this Audit

  • 503792 2023-001
    Material Weakness Repeat
  • 503793 2023-002
    Significant Deficiency
  • 503795 2023-004
    Material Weakness
  • 503796 2023-001
    Material Weakness Repeat
  • 503797 2023-002
    Significant Deficiency
  • 503798 2023-003
    Material Weakness
  • 503799 2023-004
    Material Weakness
  • 1080234 2023-001
    Material Weakness Repeat
  • 1080235 2023-002
    Significant Deficiency
  • 1080236 2023-003
    Material Weakness
  • 1080237 2023-004
    Material Weakness
  • 1080238 2023-001
    Material Weakness Repeat
  • 1080239 2023-002
    Significant Deficiency
  • 1080240 2023-003
    Material Weakness
  • 1080241 2023-004
    Material Weakness

Programs in Audit

ALN Program Name Expenditures
19.415 Professional and Cultural Exchange Programs - Citizen Exchanges $554,775