Finding 2023-006 Lack of Internal Control over Activities allowed or Unallowed and Allowable Costs/Cost Principles
Federal Agency: U.S. Department of Transportation / U.S. Department of the Treasury
Federal Program: Tribal Transportation Program / Coronavirus State and Local Fiscal Recovery Fund
Assistance Listing Number: 20.205/21.027
Award Number: 693JG41830026K600AK0053 / None
Award Years: 2017 / 2021
Type of Finding: Material weakness in internal control over compliance and material noncompliance.
Criteria: Adequate internal control over payroll transactions should be in place to ensure that personnel files are complete with all necessary documentation, which includes proof of approved pay rates, documentation of where payroll expense should be coded, and support for optional deductions. Employees should complete timesheets that agree to the paystub that has been reviewed by a supervisor and signed by both the employee and supervisor. Additionally, all expenditure transactions should be supported by adequate documentation.
Condition and Context: We selected a sample of 21 payroll transactions for the program. Out of those transactions, we did not receive supporting documentation for one of the transactions. We found several deficiencies in internal controls over compliance. One transaction we were only provided with the paystub. We noted that on 7 of the transactions, although there was a completed timesheet, there was no documentation to indicate that the timesheet was reviewed and approved by an authorized person. We noted that we were not provided with adequate documentation to support an authorized payrate on 5 of the 21 transactions. Additionally, we reviewed a sample of 9 expenditure transactions. Out of the 9 transactions, we did not receive supporting documentation for 2 of the transactions.
During our testing of expenses for CSLFRF, we selected a sample of payroll and nonpayroll trasnactions. We were unable to receive support for 2 of the 23 nonpayroll transactions. Additionally, we were unable to review support that 4 general assistance applications were adeqately approved. Although the application was provided to us, they were missing signatures that the application had been reviewed and approved.
Cause: Lack of internal controls over activities allowed or unallowed and allowable costs/cost principles.
Effect: The lack of supporting documentation allows for the potential for misstatement of expenditures due to employees being paid incorrectly and lack of documentation of timesheets and approved wages. Lack of supporting documentation for expenditures could lead to unallowed costs being charged to the program.
Questioned Costs: Actual and likely questioned costs are estimated to be below the reporting threshold of $25,000. Based on the auditors’ review of pay rates, all employees were being paid a reasonable amount based on their position and the auditors’ experience with similar entities. Additionally, transactions without adequate support were under the threshold.
Repeat Finding: This is a repeat of Finding 2022-011 and since it is a repeat finding, we believe this to be a systemic issue.
Recommendation: We recommend the Association adhere to their internal control policies to ensure accurate reporting of payroll transactions.
Management’s Response: Management agrees with this finding. See Corrective Action Plan.
Finding 2023-006 Lack of Internal Control over Activities allowed or Unallowed and Allowable Costs/Cost Principles
Federal Agency: U.S. Department of Transportation / U.S. Department of the Treasury
Federal Program: Tribal Transportation Program / Coronavirus State and Local Fiscal Recovery Fund
Assistance Listing Number: 20.205/21.027
Award Number: 693JG41830026K600AK0053 / None
Award Years: 2017 / 2021
Type of Finding: Material weakness in internal control over compliance and material noncompliance.
Criteria: Adequate internal control over payroll transactions should be in place to ensure that personnel files are complete with all necessary documentation, which includes proof of approved pay rates, documentation of where payroll expense should be coded, and support for optional deductions. Employees should complete timesheets that agree to the paystub that has been reviewed by a supervisor and signed by both the employee and supervisor. Additionally, all expenditure transactions should be supported by adequate documentation.
Condition and Context: We selected a sample of 21 payroll transactions for the program. Out of those transactions, we did not receive supporting documentation for one of the transactions. We found several deficiencies in internal controls over compliance. One transaction we were only provided with the paystub. We noted that on 7 of the transactions, although there was a completed timesheet, there was no documentation to indicate that the timesheet was reviewed and approved by an authorized person. We noted that we were not provided with adequate documentation to support an authorized payrate on 5 of the 21 transactions. Additionally, we reviewed a sample of 9 expenditure transactions. Out of the 9 transactions, we did not receive supporting documentation for 2 of the transactions.
During our testing of expenses for CSLFRF, we selected a sample of payroll and nonpayroll trasnactions. We were unable to receive support for 2 of the 23 nonpayroll transactions. Additionally, we were unable to review support that 4 general assistance applications were adeqately approved. Although the application was provided to us, they were missing signatures that the application had been reviewed and approved.
Cause: Lack of internal controls over activities allowed or unallowed and allowable costs/cost principles.
Effect: The lack of supporting documentation allows for the potential for misstatement of expenditures due to employees being paid incorrectly and lack of documentation of timesheets and approved wages. Lack of supporting documentation for expenditures could lead to unallowed costs being charged to the program.
Questioned Costs: Actual and likely questioned costs are estimated to be below the reporting threshold of $25,000. Based on the auditors’ review of pay rates, all employees were being paid a reasonable amount based on their position and the auditors’ experience with similar entities. Additionally, transactions without adequate support were under the threshold.
Repeat Finding: This is a repeat of Finding 2022-011 and since it is a repeat finding, we believe this to be a systemic issue.
Recommendation: We recommend the Association adhere to their internal control policies to ensure accurate reporting of payroll transactions.
Management’s Response: Management agrees with this finding. See Corrective Action Plan.
Finding 2023-006 Lack of Internal Control over Activities allowed or Unallowed and Allowable Costs/Cost Principles
Federal Agency: U.S. Department of Transportation / U.S. Department of the Treasury
Federal Program: Tribal Transportation Program / Coronavirus State and Local Fiscal Recovery Fund
Assistance Listing Number: 20.205/21.027
Award Number: 693JG41830026K600AK0053 / None
Award Years: 2017 / 2021
Type of Finding: Material weakness in internal control over compliance and material noncompliance.
Criteria: Adequate internal control over payroll transactions should be in place to ensure that personnel files are complete with all necessary documentation, which includes proof of approved pay rates, documentation of where payroll expense should be coded, and support for optional deductions. Employees should complete timesheets that agree to the paystub that has been reviewed by a supervisor and signed by both the employee and supervisor. Additionally, all expenditure transactions should be supported by adequate documentation.
Condition and Context: We selected a sample of 21 payroll transactions for the program. Out of those transactions, we did not receive supporting documentation for one of the transactions. We found several deficiencies in internal controls over compliance. One transaction we were only provided with the paystub. We noted that on 7 of the transactions, although there was a completed timesheet, there was no documentation to indicate that the timesheet was reviewed and approved by an authorized person. We noted that we were not provided with adequate documentation to support an authorized payrate on 5 of the 21 transactions. Additionally, we reviewed a sample of 9 expenditure transactions. Out of the 9 transactions, we did not receive supporting documentation for 2 of the transactions.
During our testing of expenses for CSLFRF, we selected a sample of payroll and nonpayroll trasnactions. We were unable to receive support for 2 of the 23 nonpayroll transactions. Additionally, we were unable to review support that 4 general assistance applications were adeqately approved. Although the application was provided to us, they were missing signatures that the application had been reviewed and approved.
Cause: Lack of internal controls over activities allowed or unallowed and allowable costs/cost principles.
Effect: The lack of supporting documentation allows for the potential for misstatement of expenditures due to employees being paid incorrectly and lack of documentation of timesheets and approved wages. Lack of supporting documentation for expenditures could lead to unallowed costs being charged to the program.
Questioned Costs: Actual and likely questioned costs are estimated to be below the reporting threshold of $25,000. Based on the auditors’ review of pay rates, all employees were being paid a reasonable amount based on their position and the auditors’ experience with similar entities. Additionally, transactions without adequate support were under the threshold.
Repeat Finding: This is a repeat of Finding 2022-011 and since it is a repeat finding, we believe this to be a systemic issue.
Recommendation: We recommend the Association adhere to their internal control policies to ensure accurate reporting of payroll transactions.
Management’s Response: Management agrees with this finding. See Corrective Action Plan.
Finding 2023-006 Lack of Internal Control over Activities allowed or Unallowed and Allowable Costs/Cost Principles
Federal Agency: U.S. Department of Transportation / U.S. Department of the Treasury
Federal Program: Tribal Transportation Program / Coronavirus State and Local Fiscal Recovery Fund
Assistance Listing Number: 20.205/21.027
Award Number: 693JG41830026K600AK0053 / None
Award Years: 2017 / 2021
Type of Finding: Material weakness in internal control over compliance and material noncompliance.
Criteria: Adequate internal control over payroll transactions should be in place to ensure that personnel files are complete with all necessary documentation, which includes proof of approved pay rates, documentation of where payroll expense should be coded, and support for optional deductions. Employees should complete timesheets that agree to the paystub that has been reviewed by a supervisor and signed by both the employee and supervisor. Additionally, all expenditure transactions should be supported by adequate documentation.
Condition and Context: We selected a sample of 21 payroll transactions for the program. Out of those transactions, we did not receive supporting documentation for one of the transactions. We found several deficiencies in internal controls over compliance. One transaction we were only provided with the paystub. We noted that on 7 of the transactions, although there was a completed timesheet, there was no documentation to indicate that the timesheet was reviewed and approved by an authorized person. We noted that we were not provided with adequate documentation to support an authorized payrate on 5 of the 21 transactions. Additionally, we reviewed a sample of 9 expenditure transactions. Out of the 9 transactions, we did not receive supporting documentation for 2 of the transactions.
During our testing of expenses for CSLFRF, we selected a sample of payroll and nonpayroll trasnactions. We were unable to receive support for 2 of the 23 nonpayroll transactions. Additionally, we were unable to review support that 4 general assistance applications were adeqately approved. Although the application was provided to us, they were missing signatures that the application had been reviewed and approved.
Cause: Lack of internal controls over activities allowed or unallowed and allowable costs/cost principles.
Effect: The lack of supporting documentation allows for the potential for misstatement of expenditures due to employees being paid incorrectly and lack of documentation of timesheets and approved wages. Lack of supporting documentation for expenditures could lead to unallowed costs being charged to the program.
Questioned Costs: Actual and likely questioned costs are estimated to be below the reporting threshold of $25,000. Based on the auditors’ review of pay rates, all employees were being paid a reasonable amount based on their position and the auditors’ experience with similar entities. Additionally, transactions without adequate support were under the threshold.
Repeat Finding: This is a repeat of Finding 2022-011 and since it is a repeat finding, we believe this to be a systemic issue.
Recommendation: We recommend the Association adhere to their internal control policies to ensure accurate reporting of payroll transactions.
Management’s Response: Management agrees with this finding. See Corrective Action Plan.