Finding Text
2023-001 Lack of Documentation to Support Distribution of Wages (Material Weakness)
Federal Agency: Department of Education
Pass-through Agency: New Hampshire Department of Education
Cluster/Program: Education Stabilization Fund
Assistance Listing Number: 84.425U
Passed-through Identification: #20221232
Compliance Requirement: Activities Allowed or Unallowed and Allowable Costs/Cost Principles
Type of Finding:
Internal Control over Compliance – Material Weakness
Material Noncompliance
Criteria or Specific Requirement: Federal regulations 2 CFR 200.303 states, the School District, as a recipient of Federal funds, must establish and maintain effective internal controls over the Federal award 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.
In addition, under 2 CFR 200.430, it states that charges to federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must (1) be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated, (2) be incorporated into the official records of the non-Federal entity, (3) reasonably reflect the total activity for which the employee is compensated by the non-Federal entity, not exceeding 100% of compensated activities, and (4) support the distribution of the employee’s salary or wages among specific activities or cost objectives if the employee works on more than one Federal award or a federal award and non-Federal award.
Condition: During our review of payroll expenditures charged to the grant, we noted that one employee who worked solely on a single federal program did not have a completed semi-annual certification on file to support the time and effort charged to the grant. As required by 2 CFR 200.430, charges to federal awards for salaries must be supported by documentation that accurately reflects the work performed. For employees working 100% on a single federal program, this requirement is typically met through semi-annual certifications.
Cause: Administrative oversight, turnover of internal staffing.
Effect: By not obtaining a completed semi-annual certification for an employee working solely on a federal program, the School District did not comply with federal requirements under 2 CFR 200.430. This lack of documentation diminishes the School District’s ability to demonstrate that salary costs charged to the grant were accurate, allowable, and properly supported, potentially placing the $27,615 in questioned costs at risk of disallowance.
Questioned Costs: $27,615
Repeat Finding: No
Recommendation: We recommend that the School District implement procedures to ensure that semi-annual certifications are completed and retained for all employees whose salaries are charged 100% to a single federal program. These certifications should be signed by the employee or a supervisory official with firsthand knowledge of the work performed and maintained as part of the School District’s official records to support compliance with 2 CFR 200.430.
Views of Responsible Officials: Management’s views and corrective action plan is included at the end of this report.