Finding Text
Finding No.: 2022-004 Federal Agency: U.S. Department of the Treasury Pass-Through Entity: CNMI Government Assistance Listings Program: 21.027 Coronavirus State and Local Fiscal Recovery Funds Federal Award Nos.: CNMI22027 Area: Activities Allowed or Unallowed Questioned Costs: $20,000 Criteria: In accordance with 31 CFR Part 35 (Treasury?s Final Rule), recipients may use payments from Program funds to provide premium pay for essential workers if each eligible worker falls into one of three categories: 1) The worker?s pay is below the wage threshold, 2) the worker is not exempt from the FSLA overtime provisions, or 3) the recipient has submitted a written justification to Treasury (or to the pass-through entity). Essential worker is defined as those employees who face greater risk of exposure due to the pandemic and those workers who continue to bear the risk of maintaining the ongoing operation of vital facilities and services. Condition: Tests of twenty-five expenditures, aggregating $1,067,404 of a population of $1,962,016, noted that for four (or 16%), premium pay was paid to employees not deemed essential workers, as follows: "See Schedule of Findings and Questioned Costs for chart/table" Cause: CPA did not adhere to the essential worker requirements based on the Treasury?s Final Rule. Effect: CPA is in noncompliance with activities allowed or unallowed. Recommendation: Prior to expending federal funds from a pass-through entity, responsible personnel should read the terms and conditions of the subrecipient agreement and seek guidance, if necessary, on the use of the funds. Views of Responsible Officials: CPA?s Corrective Action Plan provides a detailed rationale for disagreement with this finding. Auditor response: When CPA received the subrecipient terms and conditions in May 2022, which included ??ensuring compliance with US Treasury?s rules and guidelines found in the Act and the Final Rule,? CPA should have reassessed the premium pay expenditures for compliance.