Finding Text
Finding 2022-005 Federal agency: U.S. Department of Education Federal program name: Special Education Cluster Assistance Listing Number: 84.027 and 84.173 Federal Award Identification Number and Year: H027A220087, H173A190086, 2022 Pass-Through Agency: Minnesota Department of Education Pass-Through Number: H027A190087, H173A180086 Award Period: Fiscal year 2022 Type of Finding: Material Weakness in Internal Control over Compliance Criteria or specific requirement: 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, (iv) Encompass both 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 (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 or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. (viii) Budget estimates (i.e., estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that: (A) The system for establishing the estimates produces reasonable approximations of the activity actually performed; (B) Significant changes in the corresponding work activity (as defined by the non-Federal entity's written policies) are identified and entered into the records in a timely manner. Short term (such as one or two months) fluctuation between workload categories need not be considered as long as the distribution of salaries and wages is reasonable over the longer term; and (C) The non-Federal entity's system of internal controls includes processes to review after-the-fact interim charges made to a Federal awards based on budget estimates. All necessary adjustment must be made such that the final amount charged to the Federal award is accurate, allowable, and properly allocated. Condition: During our testing of a sample of payroll transactions charged to the grant we noted not all transactions were supported by properly approved documentation. Questioned Costs: ALN 84.027? Known $2,884 Context: Of a sample of 40 payroll disbursement charged to the grant we noted one disbursement which was not properly supported by time and effort documentation and one disbursement where documentation of the approval of the rate paid was not provided. Cause: The District was not documenting time and effort for this individual as their wages were initially coded to FIN 161 during the year. The District thought the special education department would be tracking time and effort but the special education department only determined who should be tracked based on the finance code that the employee was coded to for payroll. The employee paid an incorrect amount was paid a wage of $25, which has historically been what interpreters are paid, however there was no documentation available to show that amount was approved. Effect: The District was not in compliance with time and effort documentation requirements of the Uniform Guidance. Repeat Finding: No Recommendation: We recommend the District reviews its procedures for charging wages and benefits to federal grants to ensure all are properly supported by time and effort documentation. Views of responsible officials: There is no disagreement with the finding.