Audit 395504

Finding Number: 2025‐001 Repeat Finding: No Program Names/Assistance Listing Titles: Assistance Listing Numbers: Federal Award Numbers: Questioned Costs: Title I Grants to Local Educational Agencies 84.010 S010A240003 N/A Forest Service Schools and Roads Cluster 10.665 N/A N/A Federal Agencies: U.S. Department of Education, U.S. Department of Agriculture Pass‐Through Agencies: Arizona Department of Education, Navajo County Type of Finding: Noncompliance, Significant Deficiency Compliance Requirement: Allowable Costs/Cost Principles Criteria Management is responsible for establishing and maintaining internal controls over payroll. In addition under 2 CFR 200.430, management is responsible for maintaining documentation to support all salary and wage payments to employees. Condition The District lacked proper internal controls over payroll including maintaining adequate supporting documentation. Cause The District did not establish adequate controls over the processing of payroll expenses. Effect The District could not adequately support payments for employee payroll expenses. Context During our review of payroll, we noted the following:  For three of 50 payroll records reviewed, employee pay could not be recalculated.  For four of 50 payroll records reviewed, the employee's contract salary could not be agreed to the annual distribution report, resulting in a net overpayment of $2,101.  For two of 50 payroll records reviewed, time and effort documentation was not maintained.  For four of 50 payroll records reviewed, the timesheet was not signed by the supervisor, employee, or both to indicate approval.  For five of 50 payroll records reviewed, the District was unable to provide supporting documentation for election of prorated compensation.  For 11 of 50 payroll records reviewed, the Governing Board approval of the employee contract was not provided. The sample was not intended to be, and was not, a statistically valid sample. Recommendation The District should enhance its internal control procedures over payroll to ensure that all employee payroll expenses are correct and supported. Views of Responsible Officials See Corrective Action Plan.