Washington Gorge Action ProgramsNon-Profit

2023-002 – Allowable Costs/Cost Principles Material Weakness in Internal Control over Compliance and Instance of Material Noncompliance Criteria: Uniform Guidance section 200.430(i) indicates that the standards for documentation of personnel expenses are such that (1) Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must:(i) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated;(ii) Be incorporated into the official records of the non-Federal entity and (iii) Reasonably reflect the total activity for which the employee is compensated by the non-Federal entity, not exceeding 100% of compensated activities. Condition: The Organization maintains a spreadsheet outside of the accounting software to allocate salaries and wages, benefits, and payroll taxes to each federal cost center/grant. Entry into the spreadsheet is done manually and is based on actual time and effort for each pay period by employee. Results of the spreadsheet are used to record payroll allocation journal entries into the accounting system. This spreadsheet was updated at the beginning of 2023. In updating the spreadsheet, there was an error in the way the payroll tax expense was being manually entered. This resulted in certain payroll tax expenses being included in both gross wages expense and taxes and benefit expense. This resulted in federal grant requests for reimbursement being overstated and the excess expense being unallowable. The Organization had insufficient controls over the federal grant compliance process to detect and correct errors in the requests for reimbursement before submission. Context: The Organization failed to follow required federal allowable cost/cost principles across multiple federal programs. Cause: Management did not maintain internal controls sufficient to prevent or detect material noncompliance with federal grant awards. Repeat Finding: No Effect: The Organization was not in compliance with allowable costs/cost principles in accordance with the Uniform Guidance. This finding impacts all of the Organization’s federal awards. Known Questioned Costs: See table below