Finding 532 (2021-006)

Significant Deficiency
Requirement
ABH
Questioned Costs
$1
Year
2021
Accepted
2023-10-23

AI Summary

  • Core Issue: There are significant deficiencies in payroll controls, including missing approved timesheets and inadequate documentation for hours worked.
  • Impacted Requirements: Compliance with 2 CFR sections 200.303 and 200.430, which mandate effective internal controls and accurate records for salary charges to federal awards.
  • Recommended Follow-up: Strengthen payroll documentation processes and ensure consistent adherence to established controls to prevent questioned costs and potential repayment to the funding agency.

Finding Text

2021‐006 – Deficiencies in Activities Allowed, Allowable Costs, and Period of Performance Controls over Compliance with Payroll – Significant Deficiency Federal Program Information Funding Agency: U.S. Department of Commerce, Minority Business Development Agency Federal Award Agreement Number: Not Applicable Award Year: 2021 Title: MBDA Business Center CFDA Number: 11.805 Pass‐through Agency: Not Applicable, Direct Program Pass‐through Identification Number: Not Applicable, Direct Program Condition ‐ During our review of payroll related transactions, the following were noted  For 5 of the 40 payroll transactions tested, the employee did not have an approved timesheet or time and effort available for the pay period.  For 3 of the 40 payroll transactions tested, no timesheet or other record of hours worked was available to support hours paid for the pay period.  For 1 of the 40 payroll transactions tested, employee was not paid for all hours worked on timesheet. Criteria – 2 CFR section 200.303 – Internal Controls of the Uniform Guidance states that the nonfederal entity must: (a) Establish and maintain effective internal controls over 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. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Per 2 CFR section 200.430 – Compensation – personal services, paragraph (i) Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. Questioned Costs –$1,010 Effect ‐ The Entity may unintentionally expense employee’s salary out of the federal grant that does not qualify or under/over compensate what is applicable for the work performed by that employee. This could lead to questioned costs and repayment of funds to the Grantor agency. Cause ‐ The Entity does not have proper controls in place to verify that documentation was maintained to indicate the employees’ time paid under the federal grant. Controls were put in place during the year but were not consistently followed.

Corrective Action Plan

Deficiencies in Activities Allowed, Allowable Costs, and Period of Performance Controls over compliance with Payroll - Significant Deficiency Recommendation: The auditor recommends that the Entity implement controls for documenting and retaining information to indicate the Entity follows the requirements over 2 CFR section 200.430(i), and that alll pay rates be reviewed for approval and propriety. Action Taken: EPHCC will implement additional controls to ensure the following: 1. All employees must submit an approved timesheet or time and effort for each pay period. 2. All payroll transactions for staff from staffing agencies need to be reviewed by the accounting manager to ensure invoice has correct rate and that staff is paid for all hours worked on timesheet. 3. Upon hiring staff from staffing agencies, EPHCC shall document and retain information that all pay rates are reviewed byt the CEO for approval and propriety. Responsible Official: Chief Financial Officer, Lizabeth Romero Timeline for Implementation: Effective by May 2023

Categories

Questioned Costs Allowable Costs / Cost Principles Period of Performance Significant Deficiency Matching / Level of Effort / Earmarking Internal Control / Segregation of Duties

Other Findings in this Audit

  • 530 2021-004
    Significant Deficiency
  • 531 2021-005
    Significant Deficiency
  • 533 2021-007
    Significant Deficiency
  • 534 2021-004
    Significant Deficiency
  • 535 2021-005
    Significant Deficiency
  • 536 2021-006
    Significant Deficiency
  • 537 2021-007
    Significant Deficiency
  • 538 2021-004
    Significant Deficiency
  • 539 2021-005
    Significant Deficiency
  • 540 2021-006
    Significant Deficiency
  • 541 2021-007
    Significant Deficiency
  • 576972 2021-004
    Significant Deficiency
  • 576973 2021-005
    Significant Deficiency
  • 576974 2021-006
    Significant Deficiency
  • 576975 2021-007
    Significant Deficiency
  • 576976 2021-004
    Significant Deficiency
  • 576977 2021-005
    Significant Deficiency
  • 576978 2021-006
    Significant Deficiency
  • 576979 2021-007
    Significant Deficiency
  • 576980 2021-004
    Significant Deficiency
  • 576981 2021-005
    Significant Deficiency
  • 576982 2021-006
    Significant Deficiency
  • 576983 2021-007
    Significant Deficiency

Programs in Audit

ALN Program Name Expenditures
11.805 Mbda Business Center $314,663
59.043 Covid-19: Women's Business Ownership Assistance $223,422
11.805 Minority Business Resource Development: Minority Women's Enterprise Diversity Center $172,581
59.043 Women's Business Ownership Assistance $141,049
11.805 Covid-19: Mbda Business Center $122,710