Audit 377430

Finding 2025-001 Payroll Allocation Documentation – Significant Deficiency in Internal Control over Allowable Costs/Cost Principles Identification of the Federal Program Assistance Listing Number 87.371 - US Department of Education Passed through the State of Alaska Department of Education and Early Development -Comprehensive Literacy Development Year – 2024/2025 Criteria or Specific Requirement The Uniform Guidance in 2 CFR Section 200.303, Internal Controls requires that nonfederal entities receiving federal awards establish and maintain internal control designed to reasonably ensure compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition During our testing of disbursements, we noted the following exceptions: • 6 of the 6 payroll expenditures sampled did not have adequate support for the expense that was recorded to the special revenue fund. The total expense was supported by timesheets and personnel action forms, but the percentage of the total expense charged to the grant did not have adequate documentation that was reviewed and approved. Cause Internal control process for retaining documentation of review and approval over payroll expenditure allocation was not followed. Effect or potential effect Payroll expenses may not be properly supported by reviewed and approved documentation. Questioned Costs None noted. Context For the testwork for allowable activities over the Comprehensive Literacy Development program, we noted 6 out of 6 payroll expenditures selected for testwork did not have documentation that was reviewed supporting the allocation of the time charged to the program. Repeat finding Not a repeat finding. Recommendation We recommend that the District comply with the requirements of 2 CFR section 200.303 and establish proper retention of the review and approval of the payroll allocation between each fund. Views of responsible officials To ensure payroll costs charged to multiple federal funds are properly reviewed, approved, and documented in compliance with federal, state, and institutional regulations. This procedure ensures transparency, accuracy, and appropriate record retention. Reviews allocation documents; ensures proper coding.