Finding Text
Criteria: Generally accepted accounting principles in the United States (GAAP) requires entities to establish and maintain effective internal controls over financial reporting to ensure accurate financial reports. A good system of internal controls requires contemporaneous timesheets be maintained for all employees and the timesheets should be signed by both the employee and the supervisor. Condition and Context: A payroll test was performed that encompassed all employees for two calendar months. Of the 137 timesheets selected for testing, 12 did not include the supervisor’s signature and 2 timesheets had hours that did not agree to the hours included on the payroll register. Cause: Management has represented that the supervisor was away and did not have access to the timekeeping system to approve the timesheets and gave verbal approval. Management has also represented that any hours submitted on the timesheet after the due date would not be included in the payroll. Effect: The approval by the supervisor was not able to be verified through the timekeeping system and the employees were not paid for hours worked as they missed the timesheet submission deadline. Auditor’s Recommendation: We recommend that management work with the supervisors to ensure they are approving the timesheets through the timekeeping system for documentation purposes or appoint an alternate approver in the absence of the assigned supervisor. Verbal approval is not an acceptable way of approving timesheets. We also recommend training for employees to ensure the timesheet hours are submitted timely. Views of Responsible Officials and Planned Corrective Actions: Employees are now notified when timesheets are due and are made aware of the processing deadline. Going forward, if a manger is taking time off, they will assign another manager to approve timesheets in their absence and this will be documented. Employees will also receive training from the payroll company applications.