Audit 15530

Criteria – Uniform Guidance (2 CFR 200 section 200.303) requires that grantees maintain effective internal controls over the federal awards that provide reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and terms and conditions of the federal award. Condition – During our walkthrough and review of the payroll process, we identified that payroll registers and/or similar reports are not reviewed by another qualified employee at HistoriCorps® after the payroll information has been entered into the processing system and prior to the payroll disbursement to employees. In addition, new employees may be entered by the employee processing payroll. Cause – Our walkthrough of HistoriCorps®’s payroll process identified a lack of segregation of duties and/or other mitigating internal controls such as a review of payroll prior to disbursement. Effect – This deficiency in internal controls may potentially cause errors or issues for HistoriCorps®. HistoriCorps® accounting personnel have the ability to add/remove employees and processes payroll in the payroll system without mitigating controls prior to the disbursement to employees. A secondary review by a qualified person prior to the direct deposit or disbursement would create a mitigating control. Because HistoriCorps® is an organization with limited resources and personnel, proper segregation of duties may not always be practical. Repeat Finding – No. Recommendation – We recommend that HistoriCorps® perform a risk assessment of internal controls over payroll and other processes (if needed) to identify key controls related to payroll processing and disbursements. A secondary review by the director or other qualified personnel to address this finding.

Criteria – Uniform Guidance (2 CFR 200 section 200.303) requires that grantees maintain effective internal controls over the federal awards that provide reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and terms and conditions of the federal award. Condition – During our walkthrough and review of the payroll process, we identified that payroll registers and/or similar reports are not reviewed by another qualified employee at HistoriCorps® after the payroll information has been entered into the processing system and prior to the payroll disbursement to employees. In addition, new employees may be entered by the employee processing payroll. Cause – Our walkthrough of HistoriCorps®’s payroll process identified a lack of segregation of duties and/or other mitigating internal controls such as a review of payroll prior to disbursement. Effect – This deficiency in internal controls may potentially cause errors or issues for HistoriCorps®. HistoriCorps® accounting personnel have the ability to add/remove employees and processes payroll in the payroll system without mitigating controls prior to the disbursement to employees. A secondary review by a qualified person prior to the direct deposit or disbursement would create a mitigating control. Because HistoriCorps® is an organization with limited resources and personnel, proper segregation of duties may not always be practical. Repeat Finding – No. Recommendation – We recommend that HistoriCorps® perform a risk assessment of internal controls over payroll and other processes (if needed) to identify key controls related to payroll processing and disbursements. A secondary review by the director or other qualified personnel to address this finding.