Finding Text
Finding 2022-004--Allowable Costs/Cost Principles--Significant Deficiency Federal Agency: U.S. Department of Housing and Urban Development Federal Programs: ALN 14.231 ? Emergency Solutions Grant Program Passed Through: New York State Office of Temporary and Disability Assistance City of Troy, New York City of Albany Community Development Agency CARES of NY, Inc. Unity House of Troy, Inc. ALN 14.267 ? Continuum of Care Grant Program Grant Period: Year ended December 31, 2022 Condition: The Organization did not maintain contemporaneous documentation to support the allocation of payroll and related expenses to individual programs. Criteria: Internal controls should be in place to ensure that the allocation of payroll and related expenses is based on detailed contemporaneous documentation that supports the allocation of payroll and related expenses to individual programs. In accordance with the Uniform Guidance section 200.430, charges to federal awards must be based on records that accurately reflect the work performed and include support for the distribution of time the employees work on one or more federal award. In addition, budget estimates (i.e., estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards. Cause: The Organization?s time records record the amount of time worked per day, but do not break time spend on individual programs. The contracted accountant who was responsible for detailed allocation analysis spreadsheets that had traditionally been maintained left unexpectedly, and those records were unable to be reproduced. In addition, there was a lack of oversight to detect this in a timely manner. The Organization allocated payroll to programs based on the contract supported budget. Context: We selected a sample of 40 payroll disbursements to test internal controls. The sample was not considered to be statistically significant. The condition was noted in all of the sampled items. Effect: The current conditions create opportunity for misstatements or unallowable costs to be recorded, whether due to fraud or error, and potentially not be prevented, detected, or corrected, in a timely manner. For transactions related to federal grants, without proper documentation, costs may be disallowed. Questioned Costs: None. Repeat Finding: Yes Recommendation: The Organization should put in place policies and procedures necessary to maintain detailed contemporaneous documentation supporting the allocation of payroll and related expenses to individual programs in a manner that accurately reflects the work performed. Views of Responsible Officials and Planned Corrective Actions: The Executive Director worked with the Director of Grants and Finance to review and revise the agency?s accounting policies and procures. To ensure proper oversight, all procedures and reports will be reviewed by the Board?s Finance Committee, followed by a final review and approval of the Full Board of Directors of Joseph?s House & Shelter. One project of note was a collaborative effort undertaken by the Executive Director, a new Director of HR and Administration, the Human Resources Manager, and the Director of Grants and Finance to roll out a more detailed time keeping system that is used to track employee time spent per program. This data is then subsequently directly coded and uploaded into the accounting software. This process ensures on an ongoing basis that the allocation of payroll and related expenses will accurately reflect the work being performed and has significantly improved timely and precise grant claims. This was implemented in Q2 2023.