Finding Text
Program: Coronavirus State and Local Fiscal Recovery Funds
Federal Financial Assistance Listing No.: 21.027
Federal Agency: U.S. Department of Treasury
Passed-through: California Department of Finance
Award Number and Year: CSLFRF
Compliance Requirement: Allowable Costs
Type of Finding: Material Weakness in Internal Control over Compliance, Instance of Noncompliance
Criteria:
2 CFR 200.430(g)(vii) states that budget estimates alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that: a) the system for establishing the estimates produces reasonable approximations of the activity performed; b) significant changes in the related work activity (as defined by the recipient’s written policies) are promptly identified and entered in to the records, and c) the recipient’s system of internal controls includes processes to perform periodic after-the-fact reviews of interim charges made to a Federal award based on budget estimates. All necessary adjustments must be made so that the final amount charged to the Federal award is accurate, allowable, and properly allocated.
Condition:
We found that although the City charged 50% of the budgeted amount of an employees compensation to the program, the City did not perform a lookback to ensure that only 50% of the employees actual compensation was charged to the program.
Cause:
The City did not have procedures in place to perform a lookback of budgeted costs charged to grant programs.
Effect:
The City overcharged the program by the excess of the budgeted costs against the actual costs.
Questioned Costs:
None reported.
Context/Sampling:
We selected 100% of the City’s payroll costs of the program.
Repeat Finding from Prior Year(s):
No.
Recommendation:
We recommend that the City establish procedures to perform a lookback of budgeted expenditures charged to grants.
Views of Responsible Officials:
Management agrees with the finding. See separate corrective action plan.