Christian Community ActionNon-Profit

2022 ? 001 Federal Agency: U.S. Department of Housing and Urban Development Federal Program Title: Emergency Shelter Grant Program Assistance Listing Number: 14.231 Pass-Through Agency: United Way of Denton County, Texas Department of Housing and Community Affairs, and City of Denton Pass-Through Number(s): 42206070025, 42216070024, 44206070041, and 43206070082 Type of Finding: Significant Deficiency in Internal Control over Compliance and Other Matters Criteria or specific requirement: Under the Uniform Guidance, the Organization's records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Condition: While the Organization has controls in place such as Program Director review of employee grant hours per time sheets, approval of employee wage rates, and Accounting Department review of total payroll costs allocated to the grant, there was a lack of review of the methodology used to calculate the wage rate per hour charged to the Emergency Shelter Grant as well as a lack of review of the calculation that was used to apply total salaries under the program to certain grants. Questioned costs: None Context: The following errors were noted in allowable cost testing over payroll: 1. Though employee wage rates tested were properly reviewed and approved, on two of the fourteen payroll testing selections for the audit, the hourly rate used to calculate the payroll costs for the grant was not the correct rate. The rates that were used were the approved pay rates prior to a raise. We note the rate was lower than the approved rate resulting in no questioned costs. Further, we note that all wage rates selected for testing were properly reviewed and approved by the Organization. 2. One employee left the organization mid-month. The organization used the prior month's timesheet to calculate the employee's payroll to the grant resulting in incorrect hours being used. However, the Organization did not apply the full potential pay related to the Emergency Shelter Grant Program for the month resulting in no questioned costs. 3. Beginning in February 2022, the Organization started using an average wage rate allocation as a good faith effort to incorporate PTO and 403b costs, rather than using only the actual approved wage rate and hours directly worked on the grant (i.e. the Organization previously did not charge PTO and other benefits that it is allowed to charge). The method of calculating the rate per hour resulted in differences between the amounts paid to employees versus what was applied to the Emergency Shelter Grant Program. As noted above, the Organization did not apply the full potential pay related to the Emergency Shelter Grant Program each month resulting in no questioned costs and no material noncompliance. Cause: Lack of review of the method of calculating the rate per hour used to charge wages to the grant as well as a lack of review of the calculation that was used to apply total salaries under the program to applicable grants. Effect: Inaccurate capturing of costs charged to grant. Repeat Finding: No Recommendation: The organization should establish a process for review of the calculation of the rate per hour used to charge wages to the grant as well as a process for review of the calculation that is used to apply total salaries under the program to applicable grants. Views of responsible officials: There is no disagreement with the audit finding.