Finding Text
2022-001 Noncompliance and Internal Controls over Compliance with Cost Principles ? Compensation ? 93.569 Criteria ? 2 CFR 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, ?200.430(i)(1)(viii) states 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 award 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 and Context ? Audit procedures revealed that there was a lack of clear documentation to support the actual hours that were allocated or expensed to each agreement. Cause ? The Association?s internal policy states all time entries are to reflect the time actually spent performing assigned duties on each job. In practice, the Association records payroll expenses by award based on an estimate with a set number of hours allocated per week to each award. Actual payroll hours expensed to the grant were not tracked. Effect ? The Association was not in compliance with financial management standards for maintaining payroll expenditure supporting documentation. Questioned Costs ? None Recommendations ? Management should strengthen their processes, controls, and review over payroll recording and documentation to ensure compliance with Uniform Administrative Requirements, as well as their own time entry policies. Views of Responsible Officials and Planned Corrective Actions ? Senior management has reviewed the Association?s policies for payroll time with the full management team. The Association will continue to use an estimate for payroll hours expensed to awards, but will also record or track actual hours and consider the need for a subsequent adjustment.