Audit 370086

FINDING 2024-001 – Allowable Costs Payroll; Significant Deficiency in Internal Control over Compliance and Instance of Noncompliance Department of Commerce Assistance Listing Number: 11.307 Federal Program Name: Economic Adjustment Assistance Award Year: 2024 Criteria: Federal regulations and grant and contract conditions require that allowable costs be supported by supporting documentation. Condition: The Organization did not maintain supporting documentation (timecards, paystubs, and payrates) that directly tied back to the amount requested for reimbursement for payroll amounts charged to the grant. Context: During our testing of payroll, we noted that for all nine items in our sample, no supporting documents for the amount charged to the grant were maintained. Our sample was selected using a random methodology, rather than a statistical sampling methodology, from the 64-item population. Management calculated the total amount over-/under-billed based on actual payrates, pay stubs, and time charged to the grant. We reviewed this calculation and traced it to supporting documentation, noting that the total underbilled to the grant was $27,387. Cause: The finding and significant deficiency is due to lack of controls and no specific policy in place related to tying out payroll charged to the grant to supporting documentation. Repeat finding: No. Effect: Without centralized controls to monitor payroll charged to the grant, the amount submitted may not be accurate or supported. Questioned costs: None noted. Recommendation: We recommend the Organization design and implement controls to ensure that all payroll charged to the grant is based on actual hours worked. In addition, the Organization should maintain documentation of payroll and have procedures in place to track and record any allocated time. Views of responsible officials and planned corrective actions: Management agrees with the assessment and understands the importance of payroll. The Organization has designed and implemented controls to ensure that all payroll charged to the grant is tracked and supporting documents are maintained.

FINDING 2024-002 – Reporting; Significant Deficiency in Internal Control over Compliance and Instance of Noncompliance Department of Commerce Assistance Listing Number: 11.307 Federal Program Names: Economic Adjustment Assistance Award Years: 2024 Criteria: Federal regulations and grant and contract conditions require that applicable reports be filed timely. Condition and context: We noted the first quarterly performance report was not submitted in accordance with the award agreement timeframe. Questioned costs: None. Effect: Without centralized controls that include monitoring of reporting due dates reports are not submitted timely. Cause: This occurred because of a lack of controls to segregate the duties between the preparer of the reports and supporting documentation and a reviewer to ensure timely reporting. Repeat finding: No. Recommendation: We recommend the Organization implement a review control with someone separate then the preparer in the reporting process to identify any errors prior to submitting reports, maintain supporting documentation, and ensure timely submission. Views of responsible officials and planned corrective actions: Management agrees with the assessment and has implemented corrective action. The Organization has implemented a review and documentation control surrounding the timely submission of all financial reports, special reports, and performance reports. Additionally, report backup and proof of timely submission must be retained.