Finding Text
2022-002 ? Internal Control over Compliance and Compliance with Activities Allowed or Unallowed and Allowable Costs/Cost Principles Information on Federal Program(s) - Department of Education Assistance Listing Number: 84.351 Assistance Listing Name: Arts in Education National Program Grant Award Numbers: S351A220001 Award Period: October 4, 2021 to April 30, 2023 Criteria or Specific Requirement ? The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. In addition, per 2 CFR Section 200.403, ?Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. (c) Be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non-Federal entity. (d) Be accorded consistent treatment. A cost may not be assigned to a Federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the Federal award as an indirect cost. (e) Be determined in accordance with generally accepted accounting principles (GAAP), except, for state and local governments and Indian tribes only, as otherwise provided for in this part. (f) Not be included as a cost or used to meet cost sharing or matching requirements of any other federally-financed program in either the current or a prior period. (g) Be adequately documented. (h) Cost must be incurred during the approved budget period. The Federal awarding agency is authorized, at its discretion, to waive prior written approvals to carry forward unobligated balances to subsequent budget periods pursuant to ? 200.308(e)(3).? Condition ? During our test work of 40 payroll samples, totaling $44,233.99, selected to test the Activities Allowed or Unallowed and Allowable Costs/Cost Principles compliance requirements, we noted two instances for the same employee for which the employee received compensation at a higher rate than the employee?s approved salary letter that was maintained in the personnel file. For the two samples selected, the employee received a total of $13.45 in compensation in excess of the approved amount per personnel file. Cause ? The Center is not adhering to their internal process to ensure all approved salary information was maintained in the personnel file. Effect or Potential Effect ? Without adequate internal controls in place to ensure costs are properly verified and supported, the Center could incorrectly charge expenditures to the federal program. Questioned Costs - Known questioned costs totaled $13.45 and likely questioned costs totaled $1,876. The likely questioned costs were determined by management through examination of the total salary charged to the federal program for the employee who received compensation in excess of the approved amount per personnel file. Context ? This is a condition based on testing of the Center?s compliance. The prevalence of the finding is detailed in the condition section above. The samples were selected using a non-statistical method. Repeat Finding ? N/A Recommendation - We recommend management ensure the Center strengthen their internal process to ensure that employee salary information recorded in the payroll system are approved and supported by salary documentation in the personnel file. Views of Responsible Officials ? The Center?s management agrees with the finding and will strengthen the internal control surrounding the activities allowed or unallowed and allowable costs and will ensure the adequate documentation is in place. See the Center?s corrective action for more details.