Asian American Civic Association, Inc.Non-Profit

Condition: One pay period requested for reimbursement exceeded the payroll that was paid to the employee by $783 as the request was prepared based on the employee’s time sheet, not based on the payroll paid. Criteria: Federal funds should be expended only for allowable activities and allowable costs. Cause: Ineffective oversight over the preparation of requests for reimbursement. Effect: Although not material, the grant was billed for a non-allowable activity and a non-allowable cost, which could be disallowed. Recommendation: Closer attention should be paid when preparing the requests for reimbursement to ensure only allowable expenses are being included in the request. A secondary review of the request and supporting documentation should be performed by someone other than the preparer. Views of Responsible Officials and Planned Corrective Actions: We acknowledge the lack of oversight in preparing the reimbursement request, which resulted in an amount exceeding the payroll paid to the employee. This issue arose due to reliance on timesheet data without reconciling it with actual payroll disbursements. A detailed checklist will be introduced to ensure all requests for reimbursement match supporting payroll documentation. This checklist will include a reconciliation step for timesheet data and payroll disbursement records. Staff involved in grant management and reimbursement preparation will receive additional instruction on federal compliance requirements, with a focus on allowable costs and activities.

Condition: For one pay period, the hours entered into the payroll system for an employee were less than the hours per their time sheet. Criteria: In accordance with the procedures established by AACA, payroll is to be reviewed by both the Director of Finance and CEO. Cause: Controls were not implemented and errors are going undetected / unnoticed. Effect: The employee was underpaid. Also, the incorrect amount was requested for reimbursement. Recommendation: Closer attention should be paid when performing the review of payroll to ensure that all employee hours and dollars are accurate and in agreement with the supporting documentation (ie. employee time sheets). Also, the employee should be retroactively paid. Views of Responsible Officials and Planned Corrective Actions: We recognize the error in payroll hours and acknowledge the need for stricter review procedures. The underpaid employee has already received retroactive compensation in the pay period ending August 30, 2024 to rectify the error. A secondary review process will be implemented which will involve a designated staff member reconciling hours recorded on timesheets with the payroll system entries before final approval. Staff involved in payroll processing will be reminded on the importance of accuracy and the potential implications of errors. This will include step-by-step instructions for validating payroll entries.

Condition: Payroll incurred prior to the effective date of the grant was charged to the program and requested for reimbursement. Criteria: Per the terms of the grant agreement, AACA is authorized to commence services and incur costs as of the beginning effective date of the grant. Cause: Payroll was requested for reimbursement based on the date it was paid, rather than the period it was incurred. Effect: The grant was billed for a non-allowable activity and a non- allowable cost, which may be disallowed. Context: A sample of 20 payroll expenditures charged to the grant totaling $166,000 were selected from a population totaling $175,472. The test found 1 expenditure that was not in compliance resulting in questioned costs of $8,300. Our sample was a statistically valid sample. Recommendation: Closer attention should be paid to the incurred date versus the paid date to ensure only activities and costs incurred in the grant period are charged to the program and requested for reimbursement. Views of Responsible Officials and Planned Corrective Actions: AACA agrees with the finding and the recommendation will be implemented.

Condition: Per employee time sheets, the payroll allocated to this program for the pay periods selected, was less than the payroll charged to the program and requested for reimbursement. Criteria: Federal funds should be expended only for allowable activities and allowable costs. Cause: Employee time sheets are not being completed correctly or adjusted upon review to reflect the accurate department / program allocation of hours worked. Effect: There was no documentation to support the amounts charged to this department / program and requested for reimbursement under this grant. The grant was billed for a non-allowable activity and a non-allowable cost, which could be disallowed. Context: A sub-sample of 19 payroll expenditures charged to the grant totaling $30,931 were selected from a population totaling $175,472. The test found 13 expenditures that were not in compliance resulting in questioned costs of $14,353. Our sample was a statistically valid sample. Recommendation: Closer attention should be paid when summarizing and reviewing employee time sheets to ensure they accurately reflect the allocation of hours worked. Adjustments should be made as needed and the employee should be notified of any changes. In addition, grants should only be billed for actual payroll allocated as documented on the time sheet. This will ensure the proper charging of payroll to departments / programs and reduce the risk of billing for a non-allowable activity or a non-allowable cost. Views of Responsible Officials and Planned Corrective Actions: AACA agrees with the finding and the recommendations will be implemented.

Grant / Contract Requests for Reimbursement Condition: Payroll incurred prior to the effective date of the grant was charged to the program and requested for reimbursement. Criteria: Internal controls should be in place to ensure only costs incurred in the grant period be requested for reimbursement. Cause: Controls were not implemented. Effect: Amounts not allowed per grant terms were improperly requested for reimbursement. Recommendation: Closer attention should be paid when preparing requests for reimbursement to ensure only allowable expenses are being included in the request. In addition, expenses should always be posted as of the date incurred, not as of the date paid. This will ensure expenses are posted to the proper period and will assist with the preparation of the requests for reimbursement. Views of Responsible Officials and Planned Corrective Actions: AACA agrees with the finding and the recommendation will be implemented.

Employee Time Sheets Condition: Employee time sheets do not accurately reflect the allocation of their hours among departments / programs. Criteria: Time sheets are accurately prepared by the employee or adjusted upon management's review. Cause: Controls were not implemented. Effect: There is no documentation to support the amounts charged to a department / program and requested for reimbursement under a grant. Recommendation: Closer attention should be paid when summarizing and reviewing employee time sheets to ensure it accurately reflects the allocation of hours worked. Adjustments should be made as needed and the employee should be notified of any changes. This will ensure the proper charging of payroll to departments / programs and requested for reimbursement is accurate and properly documented. Views of Responsible Officials and Planned Corrective Actions: AACA agrees with the finding and the recommendation will be implemented.