Finding 967250 (2023-004)

2023-004 Improve Time and Effort Documentation Federal Agency: U.S. Department of Housing and Urban Development Cluster/Program: Community Development Block Grants/Entitlement Cluster Award Name: Community Development Block Grants/Entitlement AL Number(s): 14.218 Award Year: 2023 Compliance Requirement: Allowable Costs/Cost Principles Type of Finding Internal Control over Compliance – Significant DeficiencyCriteria or Specific Requirement Grantees must provide reasonable assurance that Federal awards are expended only for allowable activities and that the costs of goods and services charged to Federal awards are allowable and in accordance with the applicable cost principles. An employee whose salary is paid in part from federal grant funds and in part from other revenue sources must maintain time and effort distribution records, such as activity reports or timesheets, that document the portion of time spent working on tasks related to the federal grant program and time spent on programs supported by the other revenue sources. Management is also responsible for establishing and maintaining effective internal control over compliance with federal requirements that have a direct and material effect on a federal program. A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. Condition and Context During our audit, we tested a sample of payroll disbursements in order to determine if adequate time and effort records were maintained and to determine if internal controls over the maintenance of time and effort documentation were followed. As a result of our testing, we determined that time and effort certifications for salaried individuals paid in part from federal grant funds and in part from other revenue sources for the period under audit were not properly approved. Effect or Potential Effect Internal controls over time and effort documentation were not followed. There is a risk that amounts charged to federal awards may not be allowable or in accordance with applicable cost principles. Cause Weaknesses in the operation of controls. Identification as Repeat Finding As identified in Section IV, the Schedule of Prior Year Findings, this is a repeat of finding 2022- 004. Recommendation The Planning Department should address the weaknesses in internal controls noted above in order to provide reasonable assurance that federal awards are expended only for allowable activities, and that the costs services charged to federal awards are allowable and in accordance with the applicable cost principles.Views of Responsible Official and Planned Corrective Action Management’s views and corrective action plan is included at the end of this report after the summary schedule of prior year audit findings and status.