Finding 2024-053 – Activities Allowed or Unallowed and Allowable Costs/Cost Principles (Payroll Documentation) Auditor's Summary of the Finding The auditors concluded that the Nevada Division of Emergency Management (DEM) did not maintain sufficient documentation to support the allocation of employe...
Finding 2024-053 – Activities Allowed or Unallowed and Allowable Costs/Cost Principles (Payroll Documentation) Auditor's Summary of the Finding The auditors concluded that the Nevada Division of Emergency Management (DEM) did not maintain sufficient documentation to support the allocation of employee salaries and wages charged to the Homeland Security Grant Program. Specifically, documentation supporting payroll distributions was not available for all sampled payroll transactions, resulting in questioned payroll costs. The auditors recommended that DEM strengthen internal controls to ensure documentation supporting the distribution of employee salaries and wages is maintained. OEM Response The Nevada Office of Emergency Management (OEM), formerly the Nevada Division of Emergency Management (DEM) during the FY 2024 audit period, agrees that documentation supporting payroll distributions should be consistently maintained and readily available to demonstrate compliance with applicable federal requirements. During the audit period, DEM maintained internal controls over payroll administration that included supervisory approval of employee payroll, salary certifications validating payroll distributions, and fiscal review of personnel costs charged to Homeland Security Grant Program awards. Salary certifications were used to verify that payroll distributions accurately reflected work performed and supported the allocation of personnel costs to applicable federal awards. The audit identified that salary certifications and supporting documentation for certain sampled payroll transactions were not available during the audit. While OEM believes these documentation deficiencies did not indicate that payroll costs were improperly charged to the grant, the absence of complete documentation for the sampled transactions limited DEM's ability to demonstrate compliance with the documentation requirements of 2 C.F.R. § 200.430. Corrective Action Planned OEM has revised its Internal Control Manual to strengthen documentation and retention requirements for personnel costs charged to federal awards. The revised Personnel and Payroll section formally requires salary certifications, payroll documentation, maintenance of personnel records, and grant-specific payroll documentation. The Grant Management section incorporates these documentation requirements into the administration of federal awards to ensure supporting records are retained as part of the official grant file. OEM will continue to use salary certifications to validate payroll distributions and will implement additional management oversight to ensure certifications and supporting payroll documentation are consistently completed, retained, and readily available for monitoring and audit purposes. These enhancements reinforce existing payroll controls while improving documentation retention and demonstrating compliance with 2 C.F.R. § 200.430. Responsible Official(s) • Jared Franco, Chief Fiscal Officer • Judith Lyman, Budget Officer Anticipated Completion Date Implemented through the 2026 Internal Control Manual. Revised documentation and record retention procedures are currently in effect and will be applied to all active and future Homeland Security Grant Program awards.