Audit 370066

2024-001 U.S. Department of Education, Education Stabilization Fund, Passed Through the State of Nevada Department of Education – Internal Controls System Over Allowable Costs and Allowed Activities Criteria: As defined in 2 CFR 200.303, auditee is required to maintain a system of internal control over compliance designed to provide reasonable assurance that federal award transactions executed are in compliance with the terms and conditions of the federal award. Funds utilized under the Education Stabilization Fund program are required to be expended on costs consistent with those outlined in 2 CRF 200 Subpart E – Cost Principles, and within the core service categories outlined in the grant agreement. Condition: For one pay period selected for testing, three of the thirteen employees charged to the grant did not have an approved Payroll Action Form which assigns the appropriate percentage of payroll and related expenses to be allocated to the grant. Context: Management failed to design and implement consistent internal controls to address the risk of improper payroll amounts being allocated to the grant. Cause: Internal controls over payroll allocations was not performed consistently to ensure all payroll allocations and related expenses were properly reviewed. Effect: Failure to design and implement controls over the approved payroll allocations could result in the grant being overcharged. Recommendations: We recommend management design and implement a system of internal controls whereby all employee time and expenses include the appropriate review and approval when included as part of the Organization’s Request for Reimbursement. Views of Responsible Officials and Planned Corrective Action: CORE, Powered by The Rogers Foundation has discontinued the use of the Payroll Action Forms for tracking labor allocations. As of August 2025, all grant-funded positions have been converted to hourly status, with time and effort now documented directly by employees through Paylocity, the Organization’s timekeeping system. Employees clock in and out and designate the appropriate labor allocations for each portion of their workday. Human Resources pulls the Paylocity timecard reports for all grant-funded positions for each pay period. These timecards undergo a documented, multi-level review and approval process: first by the Program Manager, then by the Grant Manager. Approved timecards are uploaded to a secure shared drive, where the Grant Accountant uses them to prepare Requests for Reimbursement (RFRs). Before submission, the Grant Manager performs a final review of all expenses and supporting documentation and provides written sign-off on the total amount. CORE, Powered by The Rogers Foundation has designed and implemented this documented, multi-level internal control system to ensure all payroll charges are properly authorized, supported, and retained prior to included in RFRs, thereby preventing recurrence of the issue identified in the audit.