Finding Text
(2023-002) Allowable Costs
Federal Agency: U.S. Department of Treasury
CFDA No.: 21.027
Federal Program: Coronavirus State and Local Fiscal Recovery Funds
Federal Award Year: 2023
Control Category: Allowable Costs
Questioned Costs: $371,621
Condition
The Center billed $852,359 to the State Bar of California for the above mentioned
grant during the year ended December 31, 2023. Of the total costs charged,
$694,940 was for payroll and benefit costs. The Center provided a detail of quarterly
expenses by employee that totaled $603,238, leaving $91,702 of questioned costs.
From the $603,238 of employee costs, we selected a sample of 20 individual payroll
expenses covering both grants and two quarters. We then obtained the employee’s
personnel action form and timesheet to determine if the time billed to the grant was
supported by the timesheet. In situations where the employee completed a
timesheet, we identified differences between what was allocated to the grant and
what was reported on the timesheet. For other employees, we noted that no
timesheet was retained to support the allocation.
Criteria
2 CFR 200.430(i), Standards for Documentation of Personnel Expenses, states, in
part:
“Charges to Federal awards for salaries and wages must be based on records that
accurately reflect the work performed…”
Charges 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;…”
And “budget estimates (i.e., estimates determined before the services are
performed) alone do not qualify as support for charges to Federal awards.”
Cause
The Center's calculation of payroll allocated to the grant is not reconciled to the
actual hours reported by the employee on their individual timesheet, and in many
cases no timesheet is maintained by the employee.
Effect
Payroll costs allocated to the program are not supported by the Center’s accounting
records.
Questioned Costs
We identified $52,780 of unsupported allocations to the grant from the sample
selected, which extrapolates to a possible error of $279,919. Additionally, as
previously reported, $91,702 of costs allocated to the grant were not supported by
the accounting records. The total questioned costs are $371,621. Per discussion with
Center staff, the State Bar of California does not require the payroll allocation to be
supported by evidence of actual time spent on the grant.
Recommendation
We recommend that the Center allocate time to the grants based on actual hours
worked per the employees' timesheets to comply with the federal guidelines.
Management Response
Beginning in March of 2024, when the Center received the 2022 Single Audit
findings, the Center has been charging personnel costs to the federal program based
on actual time recorded in the organization’s case management software. On a
quarterly basis, the Unit Heads, CFO, CEO/ED, and Chief Legal Program Officer
review the hours to ensure accuracy and completeness. Management notes that this
finding involved the period of time before the Center had submitted its Corrective
Action Plan (which was on March 28, 2024).