Audit 374237

Criteria: Accurate documentation and retention of records are vital parts of Centers’ internal controls to ensure there are no misstatements contained within the financial statements from inaccuracies within the payroll process. Condition: During our testing of internal controls over the payroll charged to the grant, we noted that management was unable to provide evidence of authorized wages that matched the rate per the payroll register for three separate employees. Additionally, management was unable to provide three W-4s and two I-9s. Context: We noted through testing of payroll disbursements that three employees out of eleven sampled did not have an authorized wage rate form that could be produced. Cause: We noted that the payroll and hiring process is a very manual/paper-based process. Along with turnover in the department/delay in the audit, some documents were not able to be located. Effect: During the audit we noted that proper documentation was not retained to validate sampled payroll transactions. This could lead to a potential misstatement within the financial statements. Repeat Finding: No Recommendation: We recommend that management ensures that there is documented approval for all employees’ current pay rates and that a copy of all employees’ work documents (I-9, W4, background checks) are kept on file in line with the Centers’ policies. Views of Responsible Officials: Please refer to NorthEast Treatment Centers, Inc.’s Corrective Action Plan