National Center on Institutions and Alternatives, Inc.

Condition: The established review process for time and effort reporting was not consistently followed as supervisor approval of time and effort reporting was not documented. Additionally, for the grants tested, there were instances of total hours worked per time and effort reporting that did not reconcile to approved timesheets. Criteria: Time and effort reporting should be certified by both employees and supervisors and reconciled to timesheets in the payroll system. Cause: NCIA did not fully enforce policies and procedures related to proper reconciliation and documentation of the time and effort reporting process. Effect: Time and effort reporting contained errors in total hours, and allocation of hours worked to grants could be incorrect. Recommendation: NCIA should consistently enforce established procedures proper reconciliation and documentation of the time and effort reporting process to ensure hours are properly allocated to the appropriate grant.

Condition: For the grant tested, there were instances of errors in both the calculation and application of wage and expense allocations. Criteria: The calculation and application of how wage and expenses are applied to grant should be reviewed to limit the potential of errors. Cause: NCIA did not properly review and reconcile the supporting schedules for allocation expenditures to grants.   Effect: Certain wage and non-labor expenditures were incorrectly allocated. Recommendation: NCIA should establish controls to review and reconcile supporting allocation schedules prior to such amounts being recorded in NCIA's accounting records.

2022-002 Employee Time sheets and Time and Effort Reporting Condition: Employees working on federal grants complete time and effort reports, on at least a monthly basis, noting the hours performed across NCIA?s federal programs. For some tested employees, a time and effort report showing hours worked could not be provided. In addition, time is billed monthly based on the monthly time and effort report, but adjustments are not always made when pay periods cross over multiple months. Criteria: All employees should record time to support the allocation on their time and effort reports, noting the hours worked across the various functions of their employment responsibilities. These reports should also be recorded on a pay period basis. Cause: NCIA did not fully enforce policies and procedures requiring employee hourly reporting. Effect: Payroll costs could be incorrectly allocated. Recommendation: NCIA should establish procedures to ensure all employees prepare weekly time sheets, noting the work performed during the week. Such time sheets should be properly reviewed and approved by supervisory staff and provided to the accounting team through NCIA?s payroll system to be used as a basis for allocating payroll costs. Additionally, time and effort reports and grant billing should be completed and reconciled each pay period.

2022-003 Independent Contractors Condition: Contractors provide NCIA with detailed invoices noting the work performed during the period being billed. In addition, contractors execute time and effort reports similar to employees as noted in finding 2022-002. In some cases, the final allocation to grants was not consistent with the detail reported on contractor billing invoices and of time and effort reports. Criteria: Contractor costs should be charged to NCIA?s federal programs consistent with the invoices prepared and/or time and effort reports provided by the contractor. Cause: NCIA did not maintain policies and procedures to properly review and reconcile contractor invoices to time and effort reporting. Effect: Contractor costs could be incorrectly allocated. Recommendation: NCIA should establish procedures to ensure proper review and approval of all invoices received prior to such amounts being recorded in NCIA?s accounting records.

2022-004 Fringe Benefits Condition: During part of the year under audit, NCIA charged fringe benefits to federal awards using a fixed rate of 21%. Criteria: NCIA should regularly calculate its actual fringe benefit rates and make timely adjustments to amounts billed under federal awards. Cause: NCIA did not maintain policies and procedures to properly review and update fringe benefit rates for part of the year under audit. Effect: Fringe benefit costs could be incorrectly billed. Recommendation: NCIA should use actual payroll amounts and allocate costs based on the percentage of employees time spent on grant related work.

2021-003 Contract Approval Process Condition: NCIA billed under federal grant awards without regard for the matching requirements contained in the contracts. Criteria: All contracts should be properly executed with agreed-upon terms prior to any amounts being billed. Cause: NCIA received verbal commitments from funders that were not properly confirmed in a written contract. Effect: NCIA could be denied funding for costs incurred. Identification of Whether the Audit Finding Is a Repeat of a Finding in the Immediately Prior Audit: A similar finding was reported in the prior year's audit as Finding 2020-003. Recommendation: NCIA should establish procedures to ensure all customer arrangements are properly reviewed and confirmed through executed contracts.

2021-004 Employee Timesheets and Time and Effort Reporting Condition: Employees working on federal grants complete time and effort reports, on at least a monthly basis, notating the percentage of effort performed across NCIA?s federal programs. Salaried employees do not complete timesheets and hourly employees prepare timesheets only noting total hours worked, with no identification of the program under which services are performed. In addition, time and effort reports appear to be prepared consistently every month, with no adjustments for changes in employees day to day work activities. Criteria: All employees should maintain timesheets, noting the hours worked across the various functions of their employment responsibilities. These timesheets should be the basis for allocating payroll costs across NCIA?s programs. Cause: NCIA did not maintain policies and procedures requiring employee timesheets. Effect: Payroll costs could be incorrectly allocated. Recommendation: NCIA should establish procedures to ensure all employees prepare weekly timesheets, noting the work performed during the week. Such timesheets should be properly reviewed and approved by supervisory staff and provided to the accounting team through NCIA?s payroll system to be used as a basis for allocating payroll costs.

2021-005 Independent Contractors Condition: Contractors provide NCIA with detailed invoices noting the work performed during the period being billed. In addition, contractors execute time and effort reports similar to employees as noted in finding 2021-004. Time and effort percentages were not consistent with hours reported on contractor billing invoices. Criteria: Contractor costs should be charged to NCIA?s federal programs consistent with the invoices prepared and provided by the contractor. Cause: NCIA did not maintain policies and procedures to properly review and reconcile contractor invoices to time and effort reporting. Effect: Contractor costs could be incorrectly allocated. Recommendation: NCIA should establish procedures to ensure proper review and approval of all invoices received prior to such amounts being recorded in NCIA?s accounting records.

2021-006 Fringe Benefits Condition: NCIA charges fringe benefits to federal awards using a fixed rate of 23%. Criteria: NCIA should regularly calculate its actual fringe benefit rates and make timely adjustments to amounts billed under federal awards. Cause: NCIA did not maintain policies and procedures to properly review and update fringe benefit rates. Effect: Fringe benefit costs could be incorrectly billed. Recommendation: NCIA should establish procedures to ensure regular review and modifications of fringe benefit rates.