Finding Text
Finding No. 2023-003: Internal Control over Payroll – Significant Deficiency in Internal Control over Compliance
U.S. Agency for International Development, USAID Foreign Assistant for Programs Overseas, Assistance Listing Number 98.001.
Criteria
Section 200.405 of the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) indicates that a cost is allocable to a particular federal award if the goods or services involved are chargeable or assignable to that federal award or cost objective in accordance with relative benefits received. This standard is met, among other things, if the cost charged is incurred specifically for the federal award. Also, under cost principles established by 2 CFR Section 200.430, charges to federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable and properly allocated and be incorporated into the official records of the non-Federal entity.
Context
During our testing of payroll expenditures, we noted an instance for one employee where the time worked on the award did not have support to document that the payroll expenditure was properly approved and an instance where a bonus was awarded to an employee, where the allocation for time worked on the federal award for the specific pay period was used as the allocable base for the overall bonus instead of the period to which the bonus was related. The total amount recorded to the grant related to this was $2,563.
Cause
There was a breakdown in internal control where one employee’s timesheet was not reviewed by their supervisor. Also, when reviewing the allocable charges to the federal award, there was a breakdown in internal control when preparing the allocation for the pro-rated salary charges incurred related to the federal award.
Effect
The amount charged to the federal award was not properly authorized. If the compensation costs allocated to the grant cannot be supported in accordance with the Uniform Guidance, the granting agency could determine that these costs are not allowable.
Questioned Costs
The amount did not exceed $25,000 and therefore is not required to be reported.
Recommendation
The Organization’s program staff and management should ensure that the amounts charged to the federal award are properly approved and accurate. Monthly reconciliation of all expenses, including of salaries charged to program versus actual hours incurred should be performed timely.
Views of Responsible Officials and Planned Corrective Actions
See Corrective Action Plan