Lumina Alliance

Finding 2023-001: Cost Allocation Plan Documentation (Significant Deficiency) Condition: The Organization uses a Cost Allocation Plan to allocate certain shared direct costs between federal programs. This is specifically allowed by CalOES, the state department that administers the Organization’s Crime Victim Assistance and Family Violence Prevention and Services grants. According to CalOES guidance, shared costs may be allocated based on percentage of time spent on each grant (for payroll costs) or percentage of use (for regular operating expenses). Although the Organization maintains and follows a written Cost Allocation Plan, there is a lack of sufficient calculation documentation to support the amounts allocated between grants under the Plan. Additionally, certain aspects of the Plan itself are vague and could be clarified to allow for more efficient and accurate allocations. Criteria: The OMB requires that costs allocated to federal awards be calculated in conformity with generally accepted accounting principles and be given consistent accounting treatment within and between accounting periods. Cause and Effect: There are no questioned costs as a result of this deficiency. However, without a clearly defined Cost Allocation Plan, shared direct costs may not be allocated appropriately or consistently between federal programs and accounting periods. Without sufficient calculation documentation to support allocations, the Organization may not recognize errors or potential improvements within their methodology. Recommendation: We recommend that the Organization review its current Cost Allocation Plan and ensure that it includes sufficient detail to enable staff to allocate shared direct costs appropriately between all federally funded programs. Specifically, given the number and significance of the CalOES grants that the Organization manages, we recommend that the Organization consider allocating costs by individual grant, rather than by overall program type. We also recommend that client implement procedures to ensure that clear calculation documentation is maintained for every invoice or paycheck that gets allocated across multiple programs. Views of Responsible Officials and Planned Corrective Actions: The Organization agrees with the finding and related recommendations and intends to implement them going forward.

U.S. Department of Justice Crime Victim Assistance - CFDA Number 16.575 Finding 2019-100: Timecard Tracking and Support (Significant Deficiency) Condition: During our audit over this program we found several instances in which the time charged to the grant was greater than the hours worked on the grant, per the employee?s timecard. For the specific employees identified, the Organization is allocating the expenses as a percent of total hours and pay rather than allocating the expenses based on direct hours worked on the program. In addition, the Organization utilizes manual excel spreadsheets to allocate time to grants based on the functional time sheets. However, for a few employees selected in the current year, we noted that the spreadsheets, as applicable to each employee, were incorrectly including vacation, sick, and holiday hours twice in the allocation calculation. Therefore, the amount allocated to certain grants was either over or understated slightly due to the formula error in several pay periods. Per additional discussions with the Organization and review of grant budgets, it was noted that none of the employees questioned had expenses charged to the program greater than the allowable budget. Therefore, the expenses are not deemed to be questioned costs. Criteria: The Organization is required to have proper support for all costs charged to grants and programs, including personnel charges. Cause: While the Organization is properly utilizing functional timesheets to track employee expenses and is allocating such expenses to the grants, the Organization did not follow procedures to verify that calculations and formulas were accurate. Effect: While it was determined that the expenses were not questioned costs, the manual excel spreadsheets utilized by the Organization contain formula errors that may affect grant reporting in future periods. Recommendation: The Organization should ensure that any manual spreadsheets and calculations used to allocate grant expenses, based on employee functional timesheets, are accurate. We recommend that the Organization review how they are allocating payroll costs to the grant in order to simplify and more properly allocate these costs utilizing the new payroll tracking software implemented at the end of 2019. Views of Responsible Officials and Planned Corrective Actions: The agency has made a number of updates since the close of fiscal year 2019 that mitigate and address this finding. In August of 2019 the agency switched to a new payroll provider and electronic timekeeping system. The agency had previously used paper timecards and Excel spreadsheets to allocate payroll costs to grants. With the switch to electronic timecards, almost all hourly staff began direct billing their time to specific grants. After the switch to electronic billing, a number of salaried and administrative staff were still not direct billing / allocating their time to grants. In early 2020 the agency began direct billing and allocation for all staff. With this change salaried staff switched from general timecards to functional timecards. Lastly, finance staff reviewed and rebuilt the one remaining spreadsheet that is used to allocate vacation, sick, holiday and training time. The reconstructed spreadsheet is designed to automatically perform the required calculations and allocations after downloading the necessary data from the agency?s payroll provider, drastically limiting the opportunity for human error.

Finding 2019-200: Reporting of the Schedule of Expenditures of Federal Awards (SEFA) (Significant Deficiency) Condition: During our audit of the major program, a current year expenditure was selected from the Organization?s QuickBooks file for testwork. Per discussions with Organization management, it was determined that the expense was intended to be charged to the grant with a budget modification; therefore, it was recorded in the QuickBooks file as a grant expenditure. However, the modification was not completed by the Organization in time for the expense to be invoiced to the grant. Therefore, the expenditure was deemed to not be allowable and was correctly not submitted to the grant for reimbursement when the reimbursement request was submitted after June 30, 2019. Per additional discussions with the Organization, their current procedures are to record any allowable expenses to the grants within the QuickBooks file. Subsequently, when they close out a grant (after the end of the performance period), the Organization will reverse any unallowable or un-invoiced items along with any over-budgeted expenditures. As part of this process, the expenditures are journaled out of the grant and into the Organization?s unrestricted funds and/or other grants for which the expenditures are deemed to be allowable. As a result of this finding, the Organization reviewed their expenditures at year end for all of their grants, making sure that the SEFA was properly reflecting expenditures that were charged to the grant. While these adjustments to the SEFA were not material to the financial statements, the Organization should make sure they are able to properly calculate these expenditures at year end as well as at the end of the performance period. Criteria: The Organization is required to accurately report the Schedule of Expenditures of Federal Awards as of year-end, regardless of when the period of performance ends for a grant. Cause: While the Organization is properly identifying expenditures that are initially deemed to be allowable under the grant, closing entries are being performed, often subsequent to year-end, to reverse any unallowable grant expenditures. Effect: The effect of this process, and the continuous movement of expenditures between grants and unrestricted funds, is that the Organization has difficulty in determining their yearly expenditures as of June 30, 2019 in order to properly report the Schedule of Expenditures of Federal Awards. Recommendation: We recommend that the Organization establish policies and procedures to streamline the recording of federal expenditures throughout the year which will allow them to properly calculate their federal expenditures for reporting at the end of the year. Views of Responsible Officials and Planned Corrective Actions: The agency changed our procedure for invoices and modifications. Now grant invoices and QuickBooks files are not adjusted until the modification is approved by our grantor. We are also making any necessary adjustments to our QuickBooks file on the same transaction date as the original entry ? in the case of this transaction, the adjustment would have been dated 6/30/19 and properly included in the year-end financials.

GSA_MIGRATION