Audit 403060

Criteria Management is responsible for establishing and maintaining effective internal control over financial reporting, including controls to ensure payroll transactions are properly authorized and supported. Per 2 CFR, Part 200.430(g), payroll charges must be supported by records and systems of internal controls that ensure accuracy, allowability, and proper cost allocation. Condition AIChE did not consistently maintain documented evidence of management approval for employee pay rate changes. While pay rate changes were entered into the payroll system and reflected in payroll records, documentation demonstrating formal approval was not retained in certain instances. Cause Approved pay rate documentation was not consistently retained in payroll records. Effect or Potential Effect The lack of approved pay rate documentation increases the risk of unauthorized salary adjustments and improper payroll expenditures and could result in unallowable costs being charged and non-compliance with grant requirements. Questioned Costs None. Context For 6 of 25 payroll samples, pay rate forms with documented approval were not available. Identification as a Repeat Finding This finding is not a repeat finding. Recommendation Management should implement procedures to ensure that documented approval of pay rate changes is consistently retained. Views of Responsible Officials Management will formally document the CEO and CFO approval of all pay rate changes. Although reviews were performed in 2025, formal approval documentation was not maintained.