Finding Text
2023-002: Significant Deficiency – Activities Allowed or Unallowed and Allowable Costs and Cost Principles Program: Special Education Cluster (IDEA) (ALN 84.027 and 84.173) – United States Department of Education – Virginia Department of Education; Federal Award Year 2023
Criteria: Office of Management and Budget's (OMB) Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, Subtitle A, Chapter II, Part 200, Subpart E – Cost Principles Subsection 200.430 – Compensation – Personal Services subsection (i) – Standards for Documentation of Personnel Expenses Subsection (1) states:
Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must:
(i) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated;
(ii) Be incorporated into the official records of the non-Federal entity;
(iii) Reasonably reflect the total activity for which the employee is compensated by the non-Federal entity, not exceeding 100% of compensated activities (for IHE, this per the IHE's definition of IBS);
(iv) Encompass federally assisted and all other activities compensated by the non-Federal entity on an integrated basis, but may include the use of subsidiary records as defined in the non-Federal entity's written policy;
(v) Comply with the established accounting policies and practices of the non-Federal entity (see paragraph (h)(1)(ii) above for treatment of incidental work for IHEs); and
(vi) Reserved
(vii) 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; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two (2) or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity.”
Condition: Of the sixty (60) employees selected for testing, two (2) employees did not have time and effort verification forms on file. Consequently, there was no documentation to support that the employee met the allowable costs compliance requirement.
Cause: School employees and administrators did not adhere to time and effort verification policies and procedures.
Effect: Noncompliance may result in action by the grantor.
Questioned Costs: $63,468 known questioned costs from a sample of personnel costs of $2,364,249 and a population approximating $8,100,000. Our testing of non-personnel costs approximating $173,000 from a population approximating $501,000 noted no internal control or compliance findings.
Recommendation: The School Board should maintain time and effort verification forms for personal expenses paid using federal grants.
Views of Responsible Officials and Planned Corrective Action: The School Board agrees with the finding and is implementing procedures to correct this finding, which is further discussed in the attached corrective action plan.