Finding Text
Finding Number: 2023-001
Federal Agency: U.S. Department of Housing and Urban Development
ALN: 14.157
Compliance Requirement: Special Test and Provisions – Use of Project Funds-Payroll Activities
Criteria – The Uniform Guidance in 2 CFR Section 200.303, Internal Controls, requires that non-federal
entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to
reasonably ensure compliance with Federal statutes, regulations, and the terms and conditions of the Federal
award.
Additionally, salaries and wages charged to Federal awards are subject to the standards of documentation as
described by 2 CFR Section 200.430(i) and must be based on records that accurately reflect the work
performed. These records must:
• Be incorporated into the organization’s official records:
• Reasonable reflects the total activity for which the employee is compensated across all grant-related
and non-grant-related activities (100% effort) and
• Support the distribution of employee salary across multiple activities or cost objectives.
Condition – For ALN 14.157, we sampled and selected 25 out of 173 payroll expenditures and noted six
(6) instances where timesheets were not available for review.
Questioned Cost – $9,172
Context – This is a condition identified per review of The Project’s compliance with the specified
requirements using a statistically valid sample. The total payroll expenditure charged to the program in fiscal
year 2023 is $203,516. The total amount sampled is $24,219. The known amount of the exceptions is $9,172.
Effect – The Project is not in compliance with he stated provision. Failure to properly review and support
expenditures can result in noncompliance with laws and regulations along with loss of funding.
Cause – Timesheets appear to have been misfiled and were not available for review upon request.
Recommendation – Management should ensure timesheets are properly filed and be available for review
upon request.
Views of Responsible Officials – Timesheets were misfiled by a new employee responsible for sorting and
filing timesheets. Several employee folders were searched for misplaced timesheets, and some were found;
However, the six missing timesheets were not found. This program is physically located in St. Thomas, and
the original timesheets arrive at the administrative office about a week after the payroll is processed. A faxed
copy of the original timesheets is used for review before processing payroll. Going forward, time sheet sorting
and filing by new employees will be monitored more closely for proper sorting and filing