Audit 393954

Material Weakness in Internal Controls Over Compliance and Noncompliance: Payroll Federal program: Award Number: Federal Agency: Compliance Requirement: Questioned Costs: FAL 84.010A Title I Grants to Local Educational Agencies (Title I, Part A of the ESEA) None U.S. Department of Education Allowable Costs N/A Criteria: In accordance with 2 CFR, §200.430(i)(1) Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Condition: For 1 out of 40 payroll transactions tested, Title I funds were being utilized for wages that did not meet the allowable cost criteria defined by the grant. Cause: The School’s control environment failed to detect and correct payroll errors in a timely manner, allowing wages for ineligible activities to be charged against the Title I program. Effect: There is an increased risk that employee compensation will be charged to grants for unallowable activities. Recommendation: To help ensure that charges to payroll expenses are accurately allocated to the grants for which they are reimbursable, the School should implement internal control policies and procedures that require regular review of employees whose work activity deviates from initial budget estimates.