Finding Text
2024-008: U.S. Department of Interior
Direct award and Pass-through Tahoe Resource Conservation District
Southern Nevada Public Land Management, 15.235
Allowable Costs/Cost Principles
Material Weakness in Internal Control over Compliance
Grant Award Number: Affects all awards under assistance listing 15.235 on the Schedule of Expenditures of Federal Awards.
Criteria: Title 2 U.S. Code of Federal Regulations (CFR) Part 200 Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) states that charges for salaries and wages must be based on records that accurately reflect the work performed. In part, the records must be supported by a system of internal control that provides reasonable assurance that the charges are accurate, allowable, and properly allocated.
Budget estimates alone do not qualify as support for charges to federal awards, but may be used for interim accounting purposes, provided that, in part, that the 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.
Title 2 U.S. Code of Federal Regulations (CFR) Part 200 Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) section 200.303 provides that non-federal entities must establish and maintain effect internal control 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: Labor rates charged to the federal award did not agree to underlying support of payroll costs. In addition, labor rates were not reviewed prior to being charged to the federal award.
Cause: Tahoe Douglas Fire Protection District (the District) did not have adequate internal controls to ensure payroll costs charged to the federal award were accurate.
Effect: Inaccurate payroll costs were charged to the federal award, which resulted in an underbilling of actual payroll costs.
Questioned Costs: None
Context/Sampling: A nonstatistical sample of 60 ($50,798) out of a population of 433 ($420,962) payroll expenditures at the District was selected for testing. We noted 24 payroll transactions did not agree to underlying support for the employees payroll and fringe rate. These 24 payroll transactions totaled $20,798 and were underbilled to the federal award by $422. In addition, the labor rates charged to the federal award were not reviewed on any of the 60 transactions.
Repeat Finding from Prior Year: No
Recommendation: We recommend the District enhance internal controls to ensure payroll costs charged to the federal award are accurate.
Views of Responsible Officials: Tahoe Douglas Fire Protection District agrees with this finding.