FAC Explorer

Finding 522765 (2023-012)

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Requirement
B
Questioned Costs
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Year
2023
Accepted
2025-02-12
Audit: 342154
Organization: City of Flint (MI)
Auditor: Rehmann Robson LLC

AI Summary

  • Core Issue: The City lacks proper internal controls for accurately allocating payroll costs to federal grants, leading to discrepancies in reported amounts.
  • Impacted Requirements: Compliance with 2 CFR § 200.430(g)(1)(vi) is at risk, as salary charges must reflect actual work performed and be supported by accurate records.
  • Recommended Follow-Up: The City should establish and implement robust internal controls to ensure payroll allocations align with documented support to prevent future noncompliance.

Finding Text

2023-012– Support for Payroll Allocations Finding Type. Immaterial Noncompliance/Significant Deficiency in Internal Controls over Compliance (Allowable Costs/Cost Principles). Program. Community Block Grants/Entitlement Grants; U.S. Department of Housing and Urban Development; Assistance Listing Number 14.218; All awards. Criteria. Per 2 CFR § 200.430(g)(1)(vi), Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must support the distribution of the employee's salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity." Condition. During testing it was noted that the actual amounts charged to the grant were initially charged using the allocation rates from the previous pay period, and subsequently adjusted to the proper amount through a manual journal entry. When factoring in the amounts of the journal entries, the amount charged to the grant still differed from the support provided for 3 items of the 29 tested. Cause. The City does not have the proper internal controls in place to ensure that all allocations of personnel cost are allocated according to the support retained. Effect. The City is exposed to an increased risk that future noncompliance could occur and not be prevented or detected by the City's internal controls. Questioned Costs. No costs were required to be questioned as a result of this finding inasmuch as the amount of likely questioned cost did not exceed the required threshold. Recommendation. We recommend that the City implement necessary internal controls to ensure that all allocations of personnel cost are allocated according to the support retained. View of Responsible Officials. The City will implement the necessary internal controls to ensure the policy for compliance is followed and documented.

Corrective Action Plan

2023-012– Support for Payroll Allocations Finding Type. Immaterial Noncompliance/Significant Deficiency in Internal Control Over Compliance (Allowable Costs/Cost Principles). Program. Community Block Grants/Entitlement Grants; U.S. Department of Housing and Urban Development; Assistance Listing Number 14.218; All awards. Auditor Description of Condition and Effect: During testing it was noted that the actual amounts charged to the grant were initially charged using the allocation rates from the previous pay period, and subsequently adjusted to the proper amount through a manual journal entry. When factoring in the amounts of the journal entries, the amount charged to the grant still differed from the support provided for 3 items of the 29 tested. The City is exposed to an increased risk that future noncompliance could occur and not be prevented or detected by the City's internal controls. Auditor Recommendation: We recommend that the City implement necessary internal controls to ensure that all allocations of personnel cost are allocated according to the support retained. Corrective Action: The City will implement the necessary internal controls to ensure the policy for compliance is followed and documented. Responsible Person: Phillip Moore, Chief Financial Anticipated Completion Date: January 22, 2025

Categories

Allowable Costs / Cost Principles

Other Findings in this Audit

Programs in Audit

ALN Program Name Expenditures
21.027 Coronavirus State and Local Fiscal Recovery Funds $13.57M
66.458 Clean Water State Revolving Fund $10.78M
14.889 Choice Neighborhoods Implementation Grants $2.66M
93.243 Substance Abuse and Mental Health Services Projects of Regional and National Significance $851,204
11.307 Economic Adjustment Assistance $733,317
59.077 Community Navigator Pilot Program $434,085
14.218 Community Development Block Grants/entitlement Grants $348,860
14.231 Emergency Solutions Grant Program $308,013
16.833 National Sexual Assault Kit Initiative $282,433
66.468 Drinking Water State Revolving Fund $161,805
14.900 Lead Hazard Reduction Grant Program $153,669
16.045 Community-Based Violence Intervention and Prevention Initiative $65,587
93.197 Childhood Lead Poisoning Prevention Projects, State and Local Childhood Lead Poisoning Prevention and Surveillance of Blood Lead Levels in Children $17,260
16.738 Edward Byrne Memorial Justice Assistance Grant Program $15,542
14.239 Home Investment Partnerships Program $9,505
16.034 Coronavirus Emergency Supplemental Funding Program $3,125
32.011 Affordable Connectivity Outreach Grant Program $2,183