Finding Text
Federal Agency: United States Department of Housing and Urban Development Federal Program Name: CDBG Entitlement Grants Cluster: Community Development Block Grant (CDBG) Assistance Listing Number: 14.218 Federal Award Identification Number and Year: B-21-MC-06-0593; B-20-MC-06-0593; B-19-MC-06-0593; B-18-MC-06-0593; B-17-MC-06-0593; B-16-MC-06-0593; Award Years 2021, 2020, 2019, 2018, 2017, and 2016 Award Period: Fiscal Year 2021-2022 Type of Finding: ? Significant Deficiency in Internal Control over Compliance (Allowable Costs) ? Other Matter (Allowable Costs) Criteria or Specific Requirement: Allowable Costs: Uniform Guidance Title 2, Subtitle A, Chapter II, Part 200, Subpart E, ?200.430 allows for budget estimates for personal services to be used for interim accounting purposes provided, among other criteria, that ?The nonfederal 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 adjustments must be made such that the final amount charged to the federal award is accurate, allowable, and properly allocated.? Allowable Costs: Uniform Guidance Title 2, Subtitle A, Chapter II, Part 200, Subpart E, ?200.430 requires payroll records to 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 nonfederal 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. Condition: From July 2021 through September 2021, personal services charged were recorded for two employees based on budget to the program and an after-the-fact determination of personal services charged to the program was not conducted and adjustments, if necessary, were not recorded. In addition, The City corrected this matter beginning October 2021 and this finding did not apply from October 2021 through June 2022. In addition, in some cases, overtime charges occurred that were not supported by timesheets. Questioned Costs: The amount of known salaries and fringe benefits charged to the federal program that were based on budgeted percentages during the fiscal year 2021-2022 is $24,358. The amount of overtime charged to the federal program that was not supported by timesheets was $853. The likely amount of questioned costs for overtime charges cannot be determined since there are no records that accurately reflect the actual work performed. Context: Payroll and fringe benefits were charged based on budgeted percentages in 2 of 12 samples tested. There was a total of 4 pay periods where two employees' wages and fringe benefits were charged to the program based on budgeted percentages. Overtime was charged without a supporting timesheet in 2 out of 12 samples tested. Cause: The City received the comment in prior years and did not make changes for all employees for the fiscal year 2021-2022. Overtime charges that occurred without a timesheet was an error not identified or corrected through the internal control process. Effect: The amount of personal services charged to the federal award may be over or understated. Repeat Finding: Repeat of prior year finding number 2021-006. Recommendation: We recommend that personnel track their actual time spent working on the program (including all other hours worked) so that an after-the-fact adjustments can be made such that the final amount charged to the federal award is accurate, allowable, and properly allocated. This recommendation was implemented by the City beginning October 2021. We recommend that the City implement policies and procedures to review all charges to federal awards, including overtime, to verify amounts are supported by timesheets that are approved by appropriate supervisors.