jurisdiction: US

text: b"APPALACHIAN REGIONAL COMMISSION\n OFFICE OF INSPECTOR GENERAL\n AUDIT OF GRANT AWARD\n Upper Cumberland Development District\n Cookeville, Tennessee\n\n\n\n\n Final Report Number: 13-12\n Project Number: TN-710 A\n April 2013\n\n\n\n\n Prepared by\n Leon Snead & Company, P.C.\n\x0c\x0c TABLE OF CONTENTS\n\n\n\nBackground .........................................................................................................................................1\n\nObjectives, Scope & Methodology .....................................................................................................1\n\nResults of Audit ..................................................................................................................................2\n\nFinding and Recommendation ............................................................................................................3\n\n Timesheets .....................................................................................................................................3\n\nAppendix I \xe2\x80\x93 Grantee Response .........................................................................................................4\n\n\n\n\n i\n\x0cBackground\n\nLeon Snead & Company, P.C. completed an audit of grant number TN-710A awarded by the\nAppalachian Regional Commission (ARC) to the Upper Cumberland Development District\n(UCDD). The audit was made at the request of the ARC, Office of the Inspector General, to\nassist the office in its oversight of ARC grant funds.\n\nThe Tennessee General Assembly established the UCDD in 1968 to serve as an economic\ndevelopment resource for the Upper Cumberland region with an overall mission to improve the\nquality of life throughout the Upper Cumberland area. UCDD accomplishes its mission through\nmyriad programs and projects designed to meet the needs of the region. UCDD operates housing\nprograms for low-income and other underserved populations; helps local governments and\ncommunities plan and prioritize transportation projects; helps families rearing relative children;\noffers numerous services designed for older adults and adults with disabilities; and writes grants\nfor infrastructure, environmental assistance, and parks and greenways. UCDD also works with\nthe local arts community and administers programs and projects designed to protect, preserve\nand promote the unmatched cultural and natural resources of the region.\n\nThe ARC grant awards provide funding to assist UCDD in establishing and expanding economic\ndevelopment service in its service area that are deemed to be useful and pertinent to the\naccomplishment of the objectives and purposes of Section 302 of the Appalachian Regional\nDevelopment Act of 1965. For each of the most recent three years, the annual grant award\nprovided approximately $125,257 in ARC funds and required non-federal matching\ncontributions of $125,257 in 2010, $87,668 in 2011 and $41,753 in 2012 to support UCDD in\ncarrying out its planned economic development activities.\n\nObjectives, Scope & Methodology\n\nThe review objectives were to determine whether: (1) program funds were managed in\naccordance with the ARC and federal grant terms and requirements; (2) grant funds were\nexpended as provided for in the approved budget; (3) internal grant guidelines and best practices,\nincluding program (internal) controls, were appropriate and operating effectively; (4) accounting\nand reporting requirements were implemented in accordance with generally accepted accounting\nprinciples (or other applicable accounting and reporting requirements); and (5) the goals and\nobjectives of the grant were met.\n\nWe reviewed the documentation provided and interviewed UCDD personnel to obtain an overall\nunderstanding of the project activities, the accounting system, and the operating procedures. We\nreviewed financial and other required reports to determine whether they were properly supported\nand submitted in accordance with the requirements. We reviewed a sample of expenditures\ncharged to the project to determine whether the charges were properly supported and allowable.\nIn that regard, we focused the testing on the expenditures for the period January 1, 2010 to\nDecember 31, 2012. The recorded expenditures for grants TN-710A-C40, C41 and C42 during\nthe period totaled $635,834. We reviewed UCDD\xe2\x80\x99s administrative procedures and related\ninternal controls to determine if they were adequate to administer the grant funds. In addition,\n\n\n\n\n 1\n\x0cwe reviewed the most recent financial statements audit report (including the related report on\ninternal controls) to determine whether there were any issues that impacted the ARC grant\n\nThe primary criteria used in performing the audit were the specific grant terms and requirements,\napplicable Office of Management and Budget Circulars, and relevant parts of the ARC Code.\nThe audit was performed in accordance with the Government Auditing Standards. The fieldwork\nwas performed during the period of March 11-15, 2013, including on-site work at the UCDD\noffice in Cookeville, Tennessee. The audit results were discussed with the UCDD finance\ndirector at the conclusion of the on-site visit.\n\nResults of Audit\n\nOverall, UCDD\xe2\x80\x99s financial management and administrative procedures and related internal\ncontrols were adequate to manage the funds provided under the ARC grants reviewed. The costs\ntested were considered reasonable and supported. In addition, the records and reports indicated\nthat the tasks required by the grant agreement were met. However, we identified an issue\nregarding the reporting of employee time on timesheets that requires corrective action. This\nissue and our recommended corrective action are discussed in the Finding and Recommendation\nsection of the report. UCDD officials agreed that all timesheets should show the project/program\ncharge code and information that reflects an employee\xe2\x80\x99s work during the timesheet period.\n\n\n\n\n 2\n\x0c FINDING AND RECOMMENDATION\n\nTimesheets\n\nUCDD did not have controls in place to ensure that employee timesheets identify the projects that\nthe employee worked on during the reporting period. As a result, we identified nine instances\nwhere all of the time shown on the timesheets was charged to the ARC grant, but the records\nindicated that the employees also worked on other projects during the reporting period.\n\nWe were informed that UCDD follows the guidance provided by the State of Tennessee in\nmanaging its grants. The policies and procedures are contained in a document entitled,\n\xe2\x80\x9cAccounting and Financial Reporting for Not-For-Profit Recipients of Grant Funds in Tennessee\xe2\x80\x9d.\nThe guidance relating to employee timesheets states, \xe2\x80\x9c\xe2\x80\xa6The organization must maintain reliable\ntime records for each employee for each pay period based on actual detailed time reports or other\nafter-the-fact determination of the actual activity of the employee. Maintenance of detailed staff\ntime records is essential for reliable financial reporting and a specific requirement of OMB\nCircular A-122 and the numerous GAAP for nonprofit organization\xe2\x80\xa6.\xe2\x80\x9d\n\nWe reviewed 26 timesheets for five employees whose labor costs were charged to the ARC grant\nfor the months of December 2010, December 2011 and July 2012, to determine if the timesheets\nwere properly prepared, signed by the employee, and properly approved. Nine timesheets for two\nemployees did not contain detail showing the project/program the employees were assigned. We\ndetermined from UCDD\xe2\x80\x99s Cost Allocation Plans that the two employees worked on two projects\nduring fiscal years 2010 to 2013 and that their salaries were split between the ARC project and\nanother project.\n\n\nRecommendation\n\nPrior to receipt of any additional federal funding, UCDD should implement procedures to ensure\nthat all employee timesheets show the project/program charge code or sufficient detail to reflect\nthe assignment the employee is working on during the timesheet period.\n\nGrantee Comments\n\nConcur. Management agrees with the recommendation provided and effective immediately\nemployees will be required to provide detailed program descriptions to reflect work assignments.\nTimesheets will be reviewed by supervisors to ensure compliance.\n\nAuditor's Comment\n\nThe grantee's response is sufficient to resolve the recommendation.\n\n\n\n\n 3\n\x0c Appendix I\n\n\n\n\nGrantee Response\n\n\n\n\n 4\n\x0c\x0c Finding and Recommendation\n\nTimesheets\n\nUCDD did not have controls in place to ensure that employee timesheets identify the projects that\nthe employee worked on during the reporting period. As a result, we identified nine instances\nwhere all of the time shown on the timesheets was charged to the ARC grant, but the records\nindicated that the employees also worked on other projects during the reporting period.\n\nWe were informed that UCDD follows the guidance provided by the State of Tennessee in\nmanaging its grants. The policies and procedures are contained in a document entitled,\n\xe2\x80\x9cAccounting and Financial Reporting for Not-For-Profit Recipients of Grant Funds in Tennessee\xe2\x80\x9d.\nThe guidance relating to employee timesheets states, \xe2\x80\x9c\xe2\x80\xa6The organization must maintain reliable\ntime records for each employee for each pay period based on actual detailed time reports or other\nafter-the-fact determination of the actual activity of the employee. Maintenance of detailed staff\ntime records is essential for reliable financial reporting and a specific requirement of OMB\nCircular A-122 and the numerous GAAP for nonprofit organization\xe2\x80\xa6.\xe2\x80\x9d\n\nWe reviewed 26 timesheets for five employees whose labor costs were charged to the ARC grant\nfor the months of December 2010, December 2011 and July 2012, to determine if the timesheets\nwere properly prepared, signed by the employee, and properly approved. Nine timesheets for two\nemployees did not contain detail showing the project/program the employees were assigned. We\ndetermined from UCDD\xe2\x80\x99s Cost Allocation Plans that the two employees worked on two projects\nduring fiscal years 2010 to 2013 and that their salaries were split between the ARC project and\nanother project.\n\nAt the exit conference, UCDD staff agreed that all timesheets should show the project/program\ncharge code and information that reflects an employee\xe2\x80\x99s work during the timesheet period.\n\nRecommendation\n\nPrior to receipt of any additional federal funding, UCDD should implement procedures to ensure\nthat all employee timesheets show the project/program charge code or sufficient detail to reflect\nthe assignment the employee is working on during the timesheet period.\n\n\nResponse\n\nConcur. Management agrees with the recommendation provided and effective immediately\nemployees will be required to provide detailed program descriptions to reflect work assignments.\nTimesheets will be reviewed by supervisors to ensure compliance.\n\x0c"