Finding Text
Finding 2023-002: Special Education Cluster Semi-Annual Certification Procedures
U.S. Department of Education
Pass-through agency: Michigan Department of Education
Assistance Listing Numbers: 84.027A, 84.027X, 84.173A and 84.173X
Award numbers: 220450 21-22, 230493 22-23, 230450 22-23, COVID-19 221280 21-22, 220460 21-22, 230460 22-23 and COVID-19 221285 21-22
Award year ends: June 30, 2023, September 30, 2023 and September 30, 2024
Specific Requirement: Allowable Costs/Cost Principles
Criteria: Section 200.430 of the Cost Principles of the Title 2 U.S. Code of Federal Regulations (CFR) Part 200—Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) requires charges to federal award for salaries and wages to be based on records that accurately reflect the work performed. These records must (1) be supported by a system of internal controls which provide reasonable assurance that charges are accurate, allowable and properly allocated, (2) reasonably reflect total activity for which the employee is compensated, (3) encompass both federally assisted and all other activities compensated by the entity, (4) support the distribution of the employee’s wages among specific cost objectives if the employee works on more than one federal award, (5) be reconciled with payroll budget estimates with necessary adjustments made to accounting records to ensure that excess costs are not charged to federal programs. Appendix B to 2 CFR, Part 225—Selected Items of Cost indicates that where employees are expected to work solely on a single Federal award or cost objective, charges for their salaries and wages will be supported by periodic certifications that the employees worked solely on that program for the period covered by the certification. These certifications will be prepared at least semi-annually and will be signed by the employee or supervisory official having first-hand knowledge of the work performed by the employee.
Questioned Costs: None.
Condition: During our detailed testing of time-and-effort reporting for the Special Education Cluster programs, we noted that semi-annual certifications were prepared to comply with federal time and effort requirements. However, the reports were not timely prepared or timely reviewed by the program supervisors with documented approval.
Context: Eighteen employees working in the federal program were eligible for semi-annual certifications because their payroll costs were fully allocated to a single federal program or cost objective. Separate semi-annual certifications were prepared for each eligible employee for each six-month period during the fiscal year. While all certifications contained the proper components, including documented supervisor approval, they were not prepared timely as the forms for fourteen employees were completed and certified at least two-and-a-half or three-and-a-half months after the six-month period ending dates. Additionally, both semi-annual certifications for four employees were approved during the audit process. The sample was not a statistically valid sample.
Effect: Failure to timely and properly prepare and review time-and-effort reporting could allow improper payroll expenses to be charged to the School District’s federal programs. As a result, payroll compensation and fringe benefits charged for these employees could be disallowed, or there could be missed opportunities for reimbursement.
Cause: The School District program personnel did not timely review and approve the federal requirements for time-and-effort reporting semi-annual certifications. As a result, semi-annual certifications were not reviewed and approved for these employees during the required timeframes.
Repeat Finding: This is not a repeat finding.
Recommendation: The School District should provide training to educate all employees working in federal programs of the requirements for documenting personnel expenses under Uniform Grant Guidance, and the School District should require proper time-and-effort documentation to be timely reviewed and approved by the appropriate program supervisor.
Views of Responsible Officials: The School District agrees with this finding.