Finding Text
Finding Number: 2022-001 Finding Type: Federal award finding Federal Assistance Listing No.: 64.033 Program Name: VA Supportive Services for Veteran Families Program Federal Agency: U.S. Department of Veterans Affairs Pass-Through Entity: Transition Projects, Inc. Grant Number: SSVF 19-ZZ-127 Federal Award Year: 2022 through 2023 Control Deficiency Type: Material weakness over compliance Instance of Noncompliance: Yes Compliance Requirement: Allowable costs/cost principles Questioned Costs: None Repeat Finding: No Criteria: In accordance with Title 38, U.S. Code of Federal Regulations, Part 62, Supportive Services for Veteran Families Program, the determination of allowable costs must be made in accordance with the applicable Federal Cost Principles set forth in 2 CFR Part 200. Title 2, U.S. Code of Federal Regulations, Part 200, Uniform Administrative Requirements, Costs Principles, and Audit Requirements for Federal Awards, Subpart E ? Cost Principles, states that payroll costs charged to a federal award must be supported by a system of internal controls which provides reasonable assurance that time charges are accurate, allowable, and properly allocated, and support the distribution of the employee?s salary among specific activities or costs objectives, if the employee works on projects supported by more than one Federal award or a Federal award and a non-Federal award. Condition: During our testing of payroll expenses charged to the major program, we noted the organization lacked a system of internal controls to provide reasonable assurance related to the accuracy of salaries charged to the major program grant for employees working on projects supported by multiple funding sources. Cause: Due in part to a transition in payroll and timekeeping systems during the year ended December 31, 2022, there was a lack of accurate timekeeping for employees who work on multiple projects, funded by both Federal and non-Federal sources. Effect: The distribution of employees? salaries among specific activities did not fully comply with the cost principles specified in the Federal Regulations. Questioned Costs: No known or likely questioned costs greater than $25,000. Audit Recommendation: We recommend that the organization implement the necessary procedures to ensure compensation costs are charged to federal awards based on a fair and equitable distribution method that is adequately documented and in accordance with Federal Regulations. Management?s Response: As noted by our auditors, Metropolitan Public Defender (MPD) made a payroll system transition in 2022, shifting from Paychex/UKG to ADP Workforce Now in September. At the time, there was a vacancy in the Accounting Manager position, and the agency also lacked a Payroll Specialist, leaving the accounting team short-staffed and without appropriate expertise during the design and deployment of the new system. This created a series of challenges that took some months to resolve. In December 2022, MPD hired an experienced Payroll Specialist, and in April 2023, the agency brought on a new Controller. As of April 15, 2023, all staff report hours through ADP Workforce Now timecards for each pay period. Codes for active grants, as well as MPD?s unrestricted general fund, are programmed into a custom field in ADP. Staff who work across multiple projects select a grant code for each timecard entry. Timecards are approved by the employee and then reviewed and approved by a supervisor prior to payroll processing. Based on timecard entries, the ADP software produces a general journal entry allocating wage and payroll tax cost to each grant and to the agency?s unrestricted general fund, and this entry is added to MPD?s accounting system after each pay cycle.