Finding Text
Reference: 2024-001
U.S. Department of Health and Human Services
Pass-through entities: NYS Office of Addiction Services and Supports
Block Grant for Prevention and Treatment of Substance Abuse 93.959
Program Year: April 1, 2023 – March 31, 2024 and April 1, 2024 – June 30, 2025
Criteria:
In accordance with the Code of Federal Regulations Part 200.430(g) - Standards for
Documentation of Personnel Expenses, charges to Federal awards for salaries and
wages must be based upon records that accurately reflect the work performed
including support for the distribution of the employees’ salary or wages among
specific activities or cost objectives if the employee works on more than one Federal
award, a Federal award and non-Federal award, an indirect cost activity and a direct
cost activity or a combination thereof. Budget estimates alone do not qualify as
support for charges to Federal awards.
The internal controls environment should dictate the necessity for documenting,
retaining and monitoring the time and effort by program and/or service of each
employee. This is critical to ensure payroll charges are accurate and reasonable
when allocated across different funding sources.
Cause/Condition:
Management charges payroll to different funding sources based on budgeted figures
and does not consider actual time and effort through periodic tracking and
monitoring. The internal control process was not effective in accounting recording
payroll to appropriate grants.
Questioned Costs:
Indeterminable due to systemic deficiency and lack of comprehensive documentation
to support the allocation of salary or wages.
Effect:
The Organization was not in compliance with the Code of Federal Regulations Part
200.420(g) – Standards for Documentation of Personnel Costs. Without internal
controls that require precise records of time and effort of employees, discrepancies
can arise that jeopardize funding compliance and audit accuracy, ultimately affecting
budget allocations and financial planning, as well as increasing risk for the
occurrence of non-compliance with Federal regulations.
Context:
All payroll salaries, wages and related payroll costs associated with employees who
perform or work within more than one program and/or service, or participate in
indirect cost activities is potentially appliable.
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Recommendation:
We recommend that management design an internal control process for employees
to periodically record time and effort spent by program, service and intended funding
source (including Federal awards). Such records should be accumulated and used
in determining the allocation of payroll for those employees. Documentation should
be retained and periodically monitored for reasonableness and accuracy.
Management’s Response:
Management will implement periodic time studies throughout contract durations to
support accurate allocation of personnel costs. Staff will be reminded of relevant
compliance requirements, and internal processes will be adjusted as needed. We will
continue to monitor this area and document efforts to ensure ongoing alignment with
applicable regulations.