Finding Text
2023-005 - Significant Deficiency: Activities Allowed or Unallowable Costs/Cost Principles
Criteria: The Organization is required to have procedures in place to ensure that federal awards
are expended for allowable costs in accordance with Subpart E - Cost Principles of Uniform
Guidance. The CFR section 200.303 (i) states that, charges to Federal awards for salaries and
wages must be based on records that accurately reflect the work performed. These records must
be supported by a system of internal control which provides reasonable assurance that the
charges are accurate, allowable, and properly allocated.
Additionally, 2 CFR.200.303 requires nonfederal entities to, among other things, establish and
maintain effective internal control over the Federal award that provides reasonable assurance that
the non-Federal entity is managing the Federal award in compliance with Federal statutes,
regulations, and the terms and conditions of the Federal award.
Condition: During our testing of payroll costs, we noted that (1) the Organization’s
documentation of time and effort related to the Federal programs did not agree to personnel costs
charged to the Federal program (2) the Organization did not properly review and reconcile time
and effort records to payroll costs charged to the Federal grant to ensure amounts charged to the
grant were allowable costs.
Cause: Internal controls surrounding the tracking and review of payroll expenditures charged to
Federal programs were not properly implemented to detect and correct errors. Additionally, the
grant related payroll tracking was a manual process during 2023, therefore increasing the
possibility of error.
Effect: The Organization did not properly review and reconcile time and effort records to payroll
costs charged to the Federal grant to ensure amounts charged to the grant were allowable costs.
Questioned Costs: ALN 84.287 - $3,905
ALN 84.215J - $8,130
Recommendation: We recommend that management of the Organization review internal
controls and ensure they are properly designed and implemented to ensure that time records are
reviewed and reconciled to payroll expenditures being charged to the Federal program.
Views of Responsible Officials: Management agrees with this finding and their response is
included in the corrective action plan.