Finding Text
Finding 2024-002 – Allowable costs – payroll
Assistance Listing #: 93.243
Criteria: In accordance with the Uniform Guidance’s compensation requirements (2 CFR 200.430), payroll systems must be based on records that accurately reflect the work performed and supported by a system of internal controls that provides reasonable assurances that charges are accurate; allowable and reasonable; and properly allocated.
The Uniform Guidance allows for use of budget estimates on an interim basis. When using budget estimates on an interim basis, grantees must reconcile estimates against actual time or effort on a regular basis to ensure that estimates conform to actual staff activity. Grantees must make adjustments in the payroll distribution to align with actual time.
Condition: During fiscal year 2024, the Organization charged payroll costs to the federal award programs using a set percentage based on budget and not based on employee’s actual time or effort amongst various programs.
Cause: Management was made aware that using budget estimates was not allowed without further reconciliation against actual time or effort activities during the fiscal year 2022 audit which was completed in April 2024. Management has not yet implemented changes to its internal processes to address the identified issue.
Effect: The salary costs charged to the federal programs may have been under or over reported based on the actual level of effort.
Questioned Costs: N/A
Repeat Finding: Yes
Recommendation: We recommend the Organization make changes overall its timekeeping processes to ensure that payroll costs accurately reflect the work performed and if budget estimates are utilized, that they are reconciled and trued up on a consistent basis.
Response: The Organization is acting upon different guidance it has received. As of the date this audit is released, the contract this finding addresses is currently scheduled to end on 08/30/2025. NFFCMH will continue our current practice through the end of the current contract, and will review any potential change to same with any renewal of this contract.