Finding Text
2022-001: Internal Control Over Grant Reporting Federal Grantor: U.S. Department of Labor Pass-Through Grantor: Central Workforce Development Board Federal Assistance Listing Number: 17.258, 17.259, 17.278 Program Title: WIOA Cluster Pass-through Entity Identifying Number: 10-09-09-20C, 10-09-09-21C Award Year: 2020 and 2021 Questioned Costs: $34,867 Criteria: 2 CFR 200.303 states that non-federal entities must ?Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.? 2 CFR 200.403 states that ?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?(e) Be determined in accordance with generally accepted accounting principles (GAAP)?(g) Be adequately documented.? Condition: The organization does not have adequate procedures in place to reconcile costs claimed for reimbursement on reports submitted to the grantor with actual costs incurred by the organization. The organization maintains monthly Payment Trackers which record the payment of non-staff payroll related costs and are submitted to the Central Workforce Development Board (CWDB) for reimbursement on a weekly basis. The organization also maintains monthly Staff Billing Worksheets and CPR reports which report staff payroll and benefit costs and are submitted to the (CWDB) for reimbursement on a monthly basis. These reports are kept outside of the general ledger accounting system, which is maintained on the cash basis and is reconciled to the bank statements on a monthly basis. However, there is no process in place to reconcile these spreadsheets to the general ledger to ensure the accuracy of the reports and the costs being claimed for reimbursement. During our audit, we noted the following discrepancies between the spreadsheets and the general ledger: ? The organization charged $45,738 of accrued vacation costs through reporting on the monthly staff billing worksheets. However, when staff use their accrued vacation, these costs are reported as part of the salary expenses on the staff billing worksheets, so accrued vacation expenses are reported when they are earned and when they are used. ? The organization charged $173 of expenses for participant work experience workers compensation insurance on the Payment Trackers. However, the Payment Trackers also reported the workers compensation insurance policy premiums when paid. The policy covers work experience participants. ? The organization did not reduce health insurance premiums reported on the monthly staff billing worksheets for $9,433 of employee withholdings for the employee portion of health insurance. ? The organization charged $2,655 of costs on the monthly Payment Trackers for three checks that were subsequently voided in the general ledger but no adjustment was made on the Trackers to remove the costs. ? In addition to the above costs which were charged to the grant in error, there were $23,132 of allowable costs incurred by the organization noted in the general ledger that were not reported on either the Payment Trackers or staff billing worksheets for reimbursement. Cause: The spreadsheets which are submitted to the CWDB for reimbursement do not use a double entry general ledger accounting system as their basis, and there is not a sufficient process in place to reconcile the spreadsheets to the general ledger to ensure the completeness and accuracy of grant expenditures being reported for reimbursement. Effect: The lack of a sufficient process for reconciling the spreadsheets to the general ledger resulted in several discrepancies between the amounts of grant expenditures reported and costs actually incurred by the organization. Recommendation: We recommend that the organization implement procedures to reconcile the grant reporting spreadsheets and the general ledger from the accounting system to ensure that the expenditures being reported to the grantor are complete and accurate.