Employee & Family Resources, Inc.

Finding 2024-001: Proper Support for Payroll Cost Allocations Federal Program: Block Grants for Prevention and Treatment of Substance Abuse, 93.959 Federal Agency: U.S Department of Health and Human Services Pass-Through Entity: United Community Services, Inc. Criteria: According to 2 CFR 200.430(i), 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 that provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Condition: During our audit, we noted that payroll costs for employees working on the Block Grants for Prevention and Treatment of Substance Abuse grants were not charged based on actual hours worked. Instead, payroll was allocated using budgeted estimates with several subsequent adjustments to those allocations to reflect what they believed to be actual time spent on grant- related activities. Cause: The Organization relied on predetermined salary allocations rather than allocating based on the time and effort reporting system that tracks actual hours worked on federal programs as some employees were not properly coding time worked by grant on their time sheets. Effect: Payroll costs charged to the grant may not accurately reflect the time employees spent on grant- related activities, leading to potential unallowable costs and noncompliance with federal regulations. Questioned Costs: Not determined. Recommendation: We recommend that the Organization utilize the time and effort reporting system that ensures payroll costs are charged to federal awards based on actual hours worked and to train employees to properly code their hours. If actual hours are not used, management should review and adjust salary allocations periodically to align with documented time records.Views of Responsible Officials: Additional and ongoing training on entering time will be done with employees. Additional and ongoing training on reviewing and approving time will be done with supervisors. An additional level of checking will be done each month by someone other than the supervisor. Additional reporting capabilities are being programmed into Employee & Family Resources, Inc.'s time keeping system to help with this.