Finding 57931 (2022-003)

Finding 2022-003 (Significant Deficiency) AL# 97.036: Disaster Grants ? Public Assistance (Presidentially Declared Disasters), Passed Thru the Oklahoma Department of Emergency Management, U.S. Department of Homeland Security, Award # PA-06-OK-PW-00187, 2022 Condition: There were three instances in which an employee?s pay rate used in calculating payroll expense was the current pay rate and not the pay rate in effect at the time the work was performed. Criteria: 2 CFR 200.403(g) states that costs must be adequately documented. Questioned Costs: Unknown Context: The total amount of expenditures for this federal assistance listing number is $19,546,051 which consists of 7 different grants crossing over 3 different city departments. This error occurred in only one department and one grant which had payroll costs totaling $677,863. A portion of these costs used updated pay rates, instead of pay rates active at the time of service which caused some individual pay dates to be overcharged to the grant. The sample size was determined based upon guidelines provided by the AICPA which is not a statistically valid sample. Cause: Employees received pay increases between the time the service was performed and when costs were identified as being covered by the disaster grant. The pay rate used was the pay rate for those employees at the time the expenditures were identified. Effect: Not properly identifying the appropriate pay rates used in determining payroll expenses may cause the federal program to be overcharged. Recommendation: We recommend when identifying payroll expenditures to be charged to disaster grants that a second review is done to ensure pay rates used to determine payroll expenses are the pay rates in effect at the time the employee provided the service. Views of Responsible Officials (Unaudited): The Parks and Recreation Department will immediately implement a process where the Parks & Grounds Superintendent (or designee) will review employee pay information that administrative staff prepares for entry into the federal grant website ensuring that it is properly formatted and accurately reflects the pay at the time the work was performed. Also, a procedure will be added to the FEMA section of the City's Grants Manual to include a second review to verify that the pay rates being used to determine payroll expenses are the rates that were in effect at the time the service was provided.