Columbia CountyLocal Government

Criteria or specific requirement: Uniform Guidance (2 CFR §200.430 – Compensation for Personal Services) requires that charges to federal awards for salaries and wages be supported by a system of internal controls that provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Personnel expenses must be supported by records that accurately reflect the work performed and must reasonably reflect the total activity for which the employee is compensated. These records must also be incorporated into the official records of the organization. Condition: During our testing of payroll expenditures charged to federal awards, we noted that the County does not maintain time sheets or equivalent documentation to support the allocation of personnel costs to federal programs. In addition, management does not perform a periodic review or “lookback” to compare budgeted payroll allocations to actual work performed to ensure that payroll costs charged to federal awards are reasonable and accurate. Context: No timesheets were available for any of the employees that charged time to the program as all employees are salaried and salaried employees are not required to complete a timesheet under the County’s current policy. Effect: Without supporting documentation and periodic reconciliation, there is an increased risk that payroll costs charged to federal awards may not accurately reflect work performed. This may result in unallowable or improperly allocated costs being charged to federal programs and could lead to questioned costs or noncompliance with federal requirements. Cause: The County does not have established procedures requiring employees to document time worked by funding source, nor has management implemented a formal review process to periodically reconcile budgeted payroll allocations to actual activity. Repeat finding: No. Recommendation: We recommend that management implement procedures to ensure compliance with Uniform Guidance requirements for personnel costs. These procedures should include: • Maintaining time sheets or equivalent documentation that supports the allocation of personnel costs across funding sources, and • Performing periodic reviews (lookbacks) comparing budgeted payroll allocations to actual work performed to ensure charges to federal awards are reasonable and properly supported. Views of responsible officials: Management agrees with the auditor recommendation.

Criteria or specific requirement: Uniform Guidance requires that entities maintain effective internal controls to ensure that reimbursement requests are accurate, supported by allowable expenditures, and consistent with amounts recorded in the accounting records. Condition: During our testing of reimbursement requests submitted to the federal awarding agency, we noted that the County did not have a documented review process over requests for reimbursement prior to submission. Additionally, amounts requested for reimbursement did not agree to the underlying expenses incurred and recorded in the accounting records. Context: Of the two requests for reimbursement tested, there was no review performed over the requests for reimbursement. For one of the items tested, we were unable to reconcile the amounts reported on the report to the schedule of expenditures of federal awards or the general ledger. Effect: Without adequate review and reconciliation procedures, there is an increased risk that reimbursement requests may include unsupported, inaccurate, or unallowable expenditures. Cause: During the year, there was a change in the Director of Transportation who is responsible for preparing the County’s request for reimbursements. The new Director of Transportation did not understand how to use the billing workbook or know how to make changes when new accounts were added or staffing changes occurred. Repeat finding: No. Recommendation: We recommend that management implement procedures to ensure reimbursement requests are reviewed and reconciled to supporting expenditure documentation prior to submission. These procedures should include verifying that amounts requested agree to allowable program expenditures recorded in the accounting records and documenting supervisory review and approval. Views of responsible officials: Management agrees with the auditor recommendation.

Criteria or specific requirement: 2 CFR §200.303 requires non-Federal entities to establish and maintain effective internal control over Federal awards that provides reasonable assurance that the entity is managing the award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Additionally, sound internal control practices (e.g., segregation of duties and independent review) should be in place over the preparation and posting of journal entries. Condition: During our testing of internal controls over the allocation of indirect costs, we noted that the County does not have adequate controls over the preparation and posting of journal entries to allocate indirect costs to the federal award. Specifically, we observed that journal entries are prepared and posted by the same individual without documented evidence of independent review or approval prior to posting. Context: Of the four indirect cost allocation journal entries tested, all were prepared, posted, and approved by the same individual. Effect: The lack of adequate internal controls over the allocation of indirect costs to the federal award increases the risk of errors or irregularities, including potential under or overcharged indirect costs to the federal award, that may not be prevented or detected in a timely manner. Cause: The condition appears to be the result of insufficient segregation of duties and a lack of formalized policies and procedures governing the review and approval of indirect costs charged to the federal award. Repeat finding: No. Recommendation: We recommend that management implement and document formal controls over the allocation of indirect costs, including: • Requiring independent review and approval of all indirect cost allocations prior to posting, • Establishing appropriate segregation of duties between preparation and posting functions when the indirect costs are allocated using a journal entry, and • Maintaining documentation evidencing review and approval. Views of responsible officials: Management agrees with the auditor recommendation.