Finding Text
Opioid STR Grant ALN 93.788
Criteria
The Office of Management and Budget issuance of the Code of Federal Regulations (CFR) specifically states
uniform administrative requirements, cost principles, and audit requirements for federal awards.
CFR 200.430(i)(viii) states, “Budget estimates alone do not qualify as support for charges to Federal awards, but
may be used for interim accounting purposes, provided that: (A) the system for establishing the estimates produces
reasonable approximations of the activity actually performed; (B) significant changes in the corresponding work
activity are identified and entered into the records in a timely manner; and (C) the non-Federal entity’s system of
internal controls includes processes to review after-the-fact interim charges made to a Federal award based on
budget estimates. All necessary adjustment must be made such that the final amount charged to the Federal award
is accurate, allowable, and properly allocated.”
Condition
During the course of the audit, we noted that employee time charged to multiple programs was based on an
estimated percentage of time established at the beginning of the fiscal year. The methodology is allowable when
an after-the-fact review of the estimate is completed to ensure the federal award is charged the proper amount.
The Organization reviews and adjusts allocations annually but makes changes on a prospective basis.
Cause
The Organization’s internal controls do not include a process for adjustments to estimated percentages for
charging employee time.
Effect
The potential effects of not reconciling contemporaneous time and effort reporting to allocated payroll expenses
could include an over or understatement of salary expenses allocated to the federal grant.
Questioned Costs
None
Perspective Information
The finding noted related to four (4) pay periods tested where it was noted that no allocation based on actual time
spent on the grants was performed. It was noted that all employees tested were allocated 100% to the grant.
Identification as a repeat finding
There was a similar finding in the prior year.
Recommendation
We recommend the Organization develop a process to review the percentages used to charge employee time to
the Federal grants during the fiscal year and update accounting records accordingly. View of Responsible Official
Currently, the Organization’s CEO and the bookkeeper will review each grant’s funding details prior to the grant’s
fiscal year to determine how each employee’s salary percentages should be allocated according to the grant
contract. Throughout the fiscal year, the CEO and bookkeeper will meet regularly to review and incorporate any
new hires to determine how their salary is expected to be allocated. Additionally, the outsourced accountant will
review the allocations periodically throughout the year to ensure that it is being done properly. Over the next year,
as considered efficient, the Organization will implement a daily timesheet record, which requires each program
service employee to classify their daily time between federal grant programs. At the end of each week, staff
members will submit their timesheet to their supervisor. The supervisor will review each week’s daily timesheet
to confirm the staff are recognizing their activities properly. At the end of each month, the Organization’s
outsourced accountant, will review these timesheets and determine the proper allocation needed to record each
employee’s payroll activities in the accounting software by appropriate federal program. This process will allow
for the allocation of actuals to each federal program by the end of the month.