Finding Text
Finding No. 2023-001: Allowable Cost
Criteria:
Title 2 U.S. Code Part 200.430(i)(1)(vii) requires that there is documentation of personnel expenses charged to the grant, including support to reflect the distribution of the employee’s salary or wages among specific activities or cost objectives if the employee works on more than one award.
Condition:
Certain salary amounts billed to the grant were incorrectly allocated, hence overstating the salary billed to the grant. One employee’s salary was allocated 25% to the major program (AL # 84.126) from their date of hire in April 2023 Through June 2023, whereas the allocation should have been 2.5% resulting in a $3,227 over-charge. Another employee hired in June 2023 worked 80.23% for the same major program but the program was billed for 100% of their salary, resulting in a $865 over-charge.
Cause:
RAMS miscalculated the salary amount that should be charged to the grant which caused the overstatement of their cost-reimbursement billing due to using incorrect time allocations.
Effect:
Salary costs were charged to the program that were unsupported in accordance with allowable cost principles.
Questioned Costs:
Total questioned costs identified were $4,092.
Context:
The total amount of salary tested during our audit was $66,576, representing approximately 10% of salary charges to the major program. The amount of questioned costs identified above in relation to the total amount sampled was 6.15%.
Recommendation:
RAMS should consider creating appropriate procedures to monitor salary allocation calculations and ensure that all costs billed are supported by adequate documentation.
View of Responsible Officials:
Subsequent to year-end, RAMS changed its billing procedure to prevent over-billing or inaccurate allocation of payroll costs from happening again. On July 24, 2023, the program manager, divisional director, billing specialist and accounting personnel met to discuss RAMS' billing workflows and changed the procedures to assure that payroll cost allocations are based on the actual hours reported and not estimated allocations of hours recorded in ADP. The effective date of this change was July 1, 2023.