Finding Text
Finding No. 2022-002 ? Allocation of Payroll Costs to Government Grant Programs Federal Agency: Department of Education Federal Program: 84.235F Rehabilitation Services Demonstration and Training Program Type of Finding: Material Weakness in Internal Control over Compliance Material Weakness in Internal Control over Financial Reporting Finding: Internal control processes over compliance did not ensure all payroll and labor costs were allocated in a consistent manner to grant programs. Criteria: Per guidance: 2 CFR 200.430, (i) Standards for Documentation of Personnel Expenses, (1) Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Condition and context: The Organization paid bonuses to employees and allocated those costs to the federal and other government grant programs based upon criteria other than time and effort for actual work performed. These costs were allocated without obtaining a certification of the bonus allocation from staff members. Internal controls were not properly designed to allocate one-time payroll costs in accordance with the requirements of the Uniform Guidance. Sample Size and Population: Sampling was not applicable to this finding. Cause: The Organization?s internal controls over bi-monthly payroll allocation were not applied to bonus allocations. Effect: Payroll cost allocations not based on actual time and effort expended can result in unallowable costs charged to federal and other government grant programs. Questioned Costs: $5,000 Recommendation: Management and those charged with governance should consider increasing the controls around the allocation of payroll costs to ensure allocation is made based upon actual time and effort expended, and that a certification of time allocations is obtained from all employees in a timely and consistent manner, including one-time payroll bonuses and any time allocated to programs which is not eligible for reimbursement. Views of Management and Corrective Action Plan: Management?s response is reported in the ?Corrective Action Plan? at the end of this report. Contact Person: Ginger Kwan, Executive Director