Finding Text
Compliance and Significant Deficiency in Internal Control over compliance with Allowable Costs
U.S. Department of Housing and Urban Development
Direct Program
Program Name: Continuum of Care
AL#: 14.267
Condition: In several instances, personnel activity reports (PAR) did not sufficiently document the activity of the individual working in the COC program. Dates noted on the PAR did not agree to the pay period on the time sheets, although they were signed by the preparer and the supervisor as being correct.
Criteria: Per 24 CFR Section 200.340 requires that 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;
(ii) Be incorporated into the official records of the non-Federal entity;
(iii) Reasonably reflect the total activity for which the employee is compensated by the non-Federal entity, not exceeding 100% of compensated activities;
(iv) Encompass federally-assisted and all other activities compensated by the non-Federal entity on an integrated basis, but may include the use of subsidiary records as defined in the non-Federal entity's written policy;
(v) Comply with the established accounting policies and practices of the non-Federal entity
(vii) 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 non-Federal 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.
Additionally, HUD specifically requires the detail contained in a Personnel Activity Report (PAR)
Context: Our review of the payroll time sheets and related PAR’s found that in multiple instances the time period of the time sheets and the PAR reports did not match. Excel files are being used as templates and are written over each week, however dating is not changed. The reports are submitted and signed by the preparer and review as being true and correct. The dating issue was not an isolated instance.
Cause: The Organization uses an excel document to prepare time sheets and PAR. The individual preparing the document is not updating the dates as the template is being completed. The reviewer appears to be verifying hours and departments worked in but is not verifying the dating and the totals shown in the PAR as compared to the time sheet.
Effect: The Organization is not in compliance with the requirements of the Continuum of Care program. Recommendation: We recommend that written procedures addressing internal controls with respect to time sheet and PAR preparation requirements including proper documentation of the services provided and approval be implemented to ensure that the Organization is in compliance at all times.
View of Responsible
Officials: Mental Health Association in Orange County Inc.’s (MHA) management concurs with this finding. The Organization is in the process of implementing procedures to ensure that compliance is maintained in the future. Please refer to the corrective action plan on pages 13 - 14.