Finding Text
#2024‐002 – Significant Deficiency – Activities Allowed or Unallowed, Allowable Costs/Cost Principles
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 states, “Charges to Federal Awards for salaries and wages must be based on records that accurately
reflect the work performed. These records must be supported by a system of internal control which provides
reasonable assurance that the charges are accurate, allowable, and properly allocated.”
Condition
During the course of the audit, we noted there was no documented review and approval of employee
timesheets or the allocation methodology used to allocate salaries to the federal awards.
Cause
The Organization has made a reasonable effort to design proper controls, but has faced challenges in
implementing them effectively, due to growth across multiple locations and frequent turnover.
Effect
The potential effects of not documenting the review and approval of the payroll allocation methodology could
include an over or understatement of salary expenses allocated to the federal grants. A lack of proper approval
of employee timesheets could result in ghost employees on the Organization’s payroll or overpayment of hours
and rates.
Questioned Costs
None
Perspective Information
The finding noted related to eighteen (18) employees whose time that was allocated between multiple
programs based on test work performed for four (4) pay periods. Approval of employee timesheets was noted
for payroll subsequent to May 15th, 2024, however, similar review and approval of the payroll allocation
methodology was not noted subsequent to May 15th, 2024.
Identification as a repeat finding
A similar issue was noted in prior year findings #2023‐001 and #2023‐002.
Recommendation
We recommend having written documentation of the review and approval of the payroll allocation
methodology on file, along with documentation of approval to support any modifications to this methodology
occurring throughout the year. We recommend having documented review and approval of employee
timesheets and biweekly payrolls by the appropriate supervisor/management.
View of Responsible Official
(This was implemented at the end of the 22/23 Audit, however, that audit was completed after the beginning of
the next fiscal year. Therefore, the timing overlapped, and the changes implemented were not yet evident at the
beginning of the new fiscal year.) Currently, based on the capacity of the Organization’s staffing pool, the most
efficient and effective means of review and reconciliation of cash disbursements and payroll is the
Organization’s Board Chair and CEO reviewing the cash disbursements and payroll every two weeks, prior to
payments being made. The Organization’s Director of Operations forwards the Board Chair and CEO a listing of
cash disbursements and payroll due with the suggested payments. The Board Chair and CEO each will ask
questions and formally “approve” or “disapprove” each transaction, prior to any disbursements. Once reviewed,
the CEO will return the reviewed materials to the Director of Operations with the amounts to pay. Also, the
Organization’s outsourced accountant will review and approve each monthly bank reconciliation and bank
statement for all Organizational accounts, as well as the monthly credit card statements. The outsourced
accountant does not have the ability to access the monthly bank statements or make purchases.