Colorado Village Collaborative

Federal Agency: U.S. Department of Treasury Federal Program and Assistance Listing Number: Coronavirus State and Local Fiscal Recover Funds, 21.027 2024-002: Controls over Payroll Allowable Costs – Material Weakness in Internal Control over Compliance Criteria and Condition: According to Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (the Uniform Guidance), section 200.430, 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. Budget estimates alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that the system for establishing the estimates produces reasonable approximations of the activity actually performed; significant changes in the corresponding work activity are identified and entered into the records in a timely manner; and the non-Federal entity’s system of internal controls includes processes to review after-the-fact interim charges based on budget estimates. Proof of these employees' approved compensation and job title is required to ensure their roles are allowable under the grant. Timesheets provided to support payroll charges did not accurately support the payroll expenses charged to the grants. Also, approval of the timesheets was not evident by the documentation provided. Finally, documentation supporting approval of each employee’s compensation was not maintained and provided to support the accuracy of employee compensation. Cause: During 2024, CVC’s management team underwent significant turnover, including the top finance officer, who represents the entire accounting department, as well as the HR director. Documentation was not maintained or could not be located to support payroll expenses allocated to the federal program. Effect and Context: When adequate support is not obtained and used to support the amount charged to the federal program, there is a risk that unsupported or inaccurate costs are being charged to the federal program. Questioned Costs: Payroll costs charged to the awards total $2,570,558. Recommendation: We recommend proper control activities should be implemented to allow for a consistent, accurate, and allowable method to support distribution of personnel charges to federal programs. Documentation should be properly maintained in the organization’s records. Views of responsible officials and planned corrective actions: CVC management will implement a process to perform timely review of salary expense charged to federal awards, and retain records by pay period, and any pay rate and title changes, as support for expenditures charged to federal awards.