Finding Text
Criteria: According to 2 CFR Part 200.403, to be allowable under federal awards, costs must be adequately documented, be necessary and reasonable for the performance of the federal award, and be allocable thereto under the principles in 2 CFR Part 200, Subpart E. Additionally, according to 2 CFR Part 200.430, charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed, be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated, and comply with established accounting policies and practices of the entity. Condition: Accurate and complete records to support disbursements were not maintained for the program. We specifically noted the following: ? SFRC is currently allocating payroll costs to the program based on budget estimates. There is not a process in place to compare the budget estimates to actual time and effort to ensure that budget estimates are accurate. ? For two of 16 payroll disbursements tested, the wages paid to the employee (used as the basis for the amount allocated to the program) did not agree with the payroll register for the selected pay period. ? For three of three non-payroll disbursements tested, the amount allocated to the program did not agree to the amount paid to the vendor. Context: 16 of 16 payroll transactions tested were allocated to the program based on budget estimates. Two of 16 payroll disbursements and three of three non-payroll disbursements did not agree with source documentation. Questioned Costs: $505 Cause: SFRC has not developed a process to compare the budget estimates to actual time and effort to ensure that budget estimates are accurate. Additionally, there was not adequate review of reimbursement requests to ensure that payroll and non-payroll disbursements agree with source documentation Effect: SFRC may not be able to demonstrate that costs charged to federal programs are allowable. Auditor?s Recommendation: SFRC should implement a process of comparing actual time and effort of employees to SFRC?s budget estimates at least bi-annually. Alternatively, SFRC could require employees to report their actual daily time on federal awards to ensure amounts charged are accurate and properly allocated. Additionally, SFRC should implement a review process of reimbursement requests to ensure that disbursements agree with source documentation. Management?s Response: Management is implementing a job/cost time and labor system as part of the current Paylocity system currently in place. This new time tracking system will allow individuals working directly on contracts to record time spent on grants on their individual weekly timecards. This system will allow management to report time spent by person by contract within our current payroll and financial system. This enhancement will not be in place until January 2023. In the meantime, management has formalized a quarterly manual review process to document actual time spent per employee per contract along with any needed adjustments to allocation percentages.