Finding Text
2023-002 – Activities Allowed or Unallowed and Allowable Costs/Cost Principles – Material Weakness in Internal Controls over Compliance and Material Noncompliance
Department of Education
Federal Assistance Listing Number: 84.031
Federal Program Name: Higher Education Institutional Aid
Federal Award Number: P031S210057, P031S170020, P031C210038
Award Year: 2022-23, 2021-22
Criteria – Compensation costs are allowable to the extent they satisfy requirements of 2 CFR section 200.430, and the total compensation for individual employees is determined and supported as provided in 2 CFR section 200.430(i), including charges to Federal awards for salaries and wages be based on records that accurately reflect the work performed.
Condition/context – A sample of 17 employees out of a population of 32 employees whose compensation was charged to the awards was selected. Of the 17 samples selected we found 10 employees who either had no records to support the actual allocation of time that was charged to each award or the amount allocated to the award did not agree to the time and effort reporting. The personnel action form that is completed upon hire indicated the allocation of time worked in some instances, however in accordance with 2 CFR section 200.430 (i)(1)(viii) estimates determined before the services are performed do not qualify as support for charges to Federal awards.
Our sample was not, and was not intended to be, statistically valid.
Questioned costs – Undeterminable
Cause/effect – The University does not have the proper controls in place to ensure time and effort reporting is completed or completed accurately. The lack of records supporting the actual allocation of time charged increases the risk of unallowable compensation costs being charged to the federal award.
Repeat finding – Yes, 2022-002
Recommendation – We recommend the University implement an internal control policy that requires employees whose compensation is charged to a federal award complete time and effort reporting to accurately reflect the work performed on each federal award and ensure supporting documentation is maintained for those who do charge time and agrees to amount allocated to the award.
Views of responsible officials and planned corrective actions – Heritage University will implement a new internal control policy that requires employees whose compensation is charged to federal awards to complete time and effort to accurately reflect the work performed on each federal award. Heritage University is using the time and effort forms to allocate the correct hours to each federal award during the payroll process period. Each pay period an employee must fill out the time and effort to show actual hours worked. The form is signed by the employee and supervisor before turning it in to the payroll department. An email will be sent out to all employees outlining the new process required by employees whose hours are charged to a federal award.