Finding Text
Federal Agency: U.S. Department of Treasury
Federal Program: CDFI Equitable Recovery Program (ERP)
Assistance Listing Numbers: 21.033
Federal Award Identification Number and Year: 22ERP061482 – 2023
Award Period: January 1, 2023 – December 31, 2023
Type of Finding:
Material weakness in Internal Control over Compliance
Compliance - Other Matter
Criteria or Specific Requirement: Standards for documentation of personnel expenses are defined in the federal regulations under 2 CFR section 200.430(i) which state “charges to federal awards for salaries and wages must be based on records that accurately reflect the work performed”. This requires federal grant recipients to have “a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated”.
Condition: Lack of documented time and effort reporting for employee time/ wages charged to the federal grant.
Questioned Costs: None
Context: Of the twenty-six payroll transactions tested, all lacked after-the-fact time and effort documentation to adequately support management’s allocation of wages to the federal grant. We noted all employees tested were full-time salaried employees and a portion of those wages were charged to the ERP award. Additionally, loan records indicated these employees were involved in underwriting, originating, or providing ongoing technical assistance for ERP funded loans as well as other ERP qualifying loans.
Cause: Management did not have a system in place to track time and effort in order to demonstrate the allocation of wages and benefits by grant. Management believed their payroll register alone adequately supported the wages charged given the employees position and role within the organization.
Effect: Without after-the-fact documentation People Trust is not meeting the federal regulations around time and effort. Therefore, it’s possible the allocation of the employees time is not accurate.
Repeat Finding: No
Recommendation: We recommend management develop procedures requiring employees to track their time and effort by grant. Another individual should periodically review and approve these time and effort records before the reimbursement request is sent to the funding agency.
Views of Responsible Officials: There is no disagreement with the audit finding.