Audit 386342

Payroll testing and internal controls. Programs: Elementary & Secondary School Emergency Relief II (ESSER), ALN #84.425D Elementary & Secondary School Emergency Relief III ARP (ESSER) ALN #84.425U Elementary & Secondary School Emergency Relief Homeless Children and Youth ARP (ESSER) ALN #84.425W Title I Grants to Local Educational Agencies, ALN #84.010 Special Education Cluster, ALN #84.027; 84.027X; 84.173; 84.173X Compliance Requirement: Allowable Costs/Cost Principles Repeat Finding: None Criteria: The school district is charged with developing controls around payroll expenditures that will provide authorization of pay through school board approval and the existence of time and attendance records. The district should also have controls, including policies and procedures, that will ensure compliance with the record-keeping requirements of the federal wage and hour law. Condition: We noted the following items while testing payroll expenditures: 1. The District does not approve all employees on an annual basis. All employees should be approved by the school board annually, including compensation amount, and listed in minutes. Context: Internal control procedures were tested for payroll in the major federal funds and other nonmajor federal funds if included in the sample. Cause: The district did not have proper controls in place to ensure all employees were properly approved by the board. Effect: Not being able to verify an employee’s pay could result in underpaying or overpaying an employee according to their contract and board approval. Questioned Costs: None Recommendation: We recommend the district implement internal controls to ensure all employees are properly board approved, including the detail of annualized amounts for noncertified employees and salary amounts for all certified employees, and included in official board minutes. Response: Please refer to the Auditee’s Corrective Action Plan beginning on page 83.