UNAVCO, INC.

Criteria or Specific Requirement: 2 CFR 200.430(i) states that 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. These records must reasonably reflect the total activity for which the employee is compensated and support the distribution of the employee's salary or wages among specific activities or cost objectives if the employee works on more than one federal award; a federal award and nonfederal award; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. Condition: For the first eight months of Fiscal Year 2020, personnel documentation did not support the actual time and effort for exempt, salary employees who work hours in excess of the standard 40-hour week. Context: During our Fiscal Year 2018 audit, we noted that for exempt employees who work more than 40 hours a week, time and effort records reflect a 40-hour work week on their timesheet, and there is no internal record of how the actual, excess hours worked are allocated on a pro rata basis to a 40-hour work week on the timesheet. While this was identified in the Fiscal Year 2018 audit, the resolution required an information technology solution that required time to implement. The resolution was implemented in September 2020; as such, a portion of the year was not in compliance. Questioned Costs: No questioned costs. Cause: When the issue was first discovered, UNAVCO noted the UNAVCO ERP system, Dynamics uses an allocator to charge an employee?s time and wages across the different subledger projects that an employee codes time to for a given pay period. During this allocation, Dynamics multiplies them employees approved hourly rate by the hours charged to a specific project in order to allocate the expenses accurately across multiple projects. The hours on an exempt employee?s timecard must be limited to 40 hours per week; otherwise, Dynamics would over-charge wage expenses to various projects. The exempt employees allocated their actual time to projects on a pro rata basis to a 40-hour work week and then submit their timesheet for approval. There is no documentation for the actual hours work and the methodology used to allocate the time into a 40-hour work week. In the current year, UNAVCO identified and implemented process system changes to rectify the issue noted. The process change was implemented in September 2020; thus, a portion of the year was not in compliance. Effect: Time and effort records for the months of January 2020 ? August 2020 do not support the work that was actually performed. Repeat Finding: Yes. Recommendation: UNAVCO should continuously monitor its payroll system and processes to ensure actual effort worked for all exempt employees is being properly captured. Views of Responsible Officials and Planned Corrective Actions: UNAVCO agrees with the finding. See the Corrective Action Plan for management?s response.

Criteria or Specific Requirement: (1) 2 CFR 200.430(i) states that 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. These records must reasonably reflect the total activity for which the employee is compensated and support the distribution of the employee's salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. (2) 2 CFR 200.430(i) states that budget estimates alone do not qualify as support for charges to federal awards but may be used for interim purposes provided there is an after-the-fact review of employee's actual hours worked during the reporting for identifying and correcting significant changes. Condition (1) Personnel documentation does not support the actual time and effort for exempt, salary employees who work hours in excess of the standard 40 hour week. (2) Personnel submit timecards on Thursday that include projected hours for Friday, but there is not control documentation certifying the projected time input on the time card was accurate. Context (1) Per review of the time and effort sheets during our allowable cost payroll testing, we noted that exempt employees who work more than 40 hours a week, distribute their hours to reflect a 40-hour work week on their timesheet, and there is no internal record of how the actual, excess hours worked are allocated on a pro-rata basis to a 40-hour work week on the timesheet. (2) In our discussions with management, we noted that there is no formal certification process for the projected Friday time and effort subsequent to inputting the time into the time card. The current process relies on the employee to submit an email to payroll and management if the time that was actually worked differed from the projected time input into the time card. Questioned Costs: No questioned Costs. Cause: In the prior year, UNAVCO noted the following: (1) The UNAVCO ERP system, Dynamics uses an allocator to charge an employee?s time and wages across the different sub ledger projects that an employee codes time to for a given pay period. During this allocation, Dynamics multiplies them employees approved hourly rate by the hours charged to a specific project in order to allocate the expenses accurately across multiple projects. The hours on an exempt employee?s timecard must be limited to 40 per week otherwise Dynamics would over-charge wage expenses to various projects. The exempt employees allocated their actual time to projects on a pro-rata basis to a 40 hour work week and then submit their timesheet for approval. There is no documentation for the actual hours work and the methodology used to allocate the time into a 40 hour work week. (2) UNAVCO utilizes the third party TriNet for payroll services. TriNet requires a timecard submittal deadline of Tuesday 10:00AM, and in order to give supervisors and management adequate time to review and submit timecards, UNAVCO requires timecards to be completed and reviewed by the end of the day on Thursday. This process requires employees to project their hours for Friday. During the current fiscal year under audit, UNAVCO began investigating process system changes to best rectify the findings noted. This analysis was still underway at the date of our report. Effect: (1) Time and effort records do not support the work that was actually performed. (2) Without certification of the projected Friday hours, there is a risk that actual time and effort is not being accurately recorded to the research and development grants. Repeat Finding: Yes. Recommendation: (1) We recommend that UNAVCO continue to review its payroll system and processes to determine a cost effective manner to capture and document actual effort worked for all exempt employees to support time and effort allocated to federal projects. In addition, while reviewing these processes, UNAVCO should identify a cost-effective manner to verify that estimates reported to the time keeping system are later verified or updated based upon actual effort. (2) We recommend that UNAVCO implement a process for employees and supervisors to certify the projected time entered into timecards, in order to document that projected Friday hours are accurate, and provide a record of changes that are made to reflect actual time. Views of Responsible Officials and Planned Corrective Actions: UNAVCO agrees with the finding, and see the Corrective Action Plan for management?s response.

Criteria or Specific Requirement: 2 CFR 200.309 states that a non-Federal entity may charge to the Federal award only allowable costs incurred during the period of performance. The period of performance means the time during which the non-Federal entity may incur new obligations to carry out the work authorized under the Federal award. The Federal awarding agency or pass-through entity must include start and end dates of the period of performance in the Federal award. Condition: Wages were allocated and charged to the grant prior to the start of the period of performance. Context: During our testing of the period of performance sample, we noted one hour of time being charged to grant project for work performed in February of 2019 when the period of performance for the grant being tested began on May 1, 2019. Questioned Costs: $54.44 Cause: During the grant project reconciliation and review process, labor costs were moved from a closed award to the successor award. The labor that was moved to the successor award was incurred in February 2019 prior to the period of performance start for the successor award on May 1, 2019. Effect: Costs were incurred prior to the period of performance start, triggering noncompliance with CFR 200.309. Repeat Finding: No. Recommendation: We recommends that UNAVCO implement a checklist or an additional step to the grant project review when a transfer from one grant to another grant is to occur. This checklist should ensure: 1) Costs are allowable and directly apply to the new project being transferred to. 2) Costs are within the period of performance outlined in the federal grant agreement. 3) Approval of a supervisor or management of the transfer has been documented. Views of Responsible Officials and Planned Corrective Actions: UNAVCO agrees with the finding, and see the Corrective Action Plan for management?s response.

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