Finding Text
2022-003 Department of Justice and State of South Dakota Department of Public Safety CFDA #16.575, 2022-COMBO-00022, 2022-COMBO-00011 Crime Victim Assistance Allowable Costs, Allowable Activities, and Matching Significant Deficiency in Internal Control over Compliance Criteria: The Organization is required to have procedures in place to ensure that federal awards are expended only for allowable costs in accordance with Subpart E ? Cost Principles of the Uniform Guidance. Allowable costs are supported by appropriate documentation and correctly charged as to account, amount, and period. 2 CFR 200.430(i) establishes requirements for documentation of personnel expenses. 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition: Our testing over expenditures noted the following items: - Three instances in which hours used to allocate payroll to the grant differed from actual hours worked and paid, resulting in deficiencies in allowable costs, allowable activities, and matching. - One instance in which hours used to allocate payroll to the grant differed from actual hours worked and paid, resulting in deficiencies in allowable costs and allowable activities only. - One instance identified over non-payroll expenditures in which costs were charged to the grant at the time paid rather than period of service, resulting in in deficiencies in allowable costs, allowable activities, and matching. Cause: Tracking of grant-related payroll is a manual process which increases the likelihood of error. Additionally, costs were charged to the program at the time the expenditure was paid rather than over the period of service. Effect: The Organization?s controls did not detect nor correct the errors identified, which results in a reasonable possibility that the Organization could submit disallowed costs under the federal awards. Questioned Costs: No questioned costs over $25,000. Context/Sampling: A nonstatistical sample of 60 payroll transactions were selected for allowable costs and allowable activities testing, which accounted for $45,235 out of $789,604 of payroll transactions. Of those payroll transactions 18 were also tested for matching which accounted for $2,360 out of $36,064 match payroll transactions. A nonstatistical sample of 16 non-payroll transactions out of 59 total transactions for allowable costs and allowable activities were selected for testing, which accounted for $8,680 of $24,213 of non-payroll transactions. One of those items was selected for matching testing which accounted for $139 of $159 of match expenditures. Repeat Finding from Prior Year(s): Yes, Finding 2021-002 Recommendation: We recommend management continue to review the process over tracking payroll related to federal programs and consider incorporating a secondary review of any manual spreadsheets or consider if the payroll can be allocated directly within the payroll system. Views of Responsible Officials: Management is in agreement.