Finding Text
Finding 2023-003: Significant Deficiency in Internal Control over Compliance: Approval of Non-Typical Payroll Expenditures
Information on the Federal Program: Assistance Listing Number 16.526 - Office on Violence Against Women: Technical Assistance Initiative, award number: 2018-TA-AX-K002
Criteria: 2 CFR 200.3030 of Subpart D, “Post Federal Award Requirements Standards for Financial Program Management,” of the Uniform Guidance requires a nonfederal entity to establish and maintain effective internal control over the federal award that provides reasonable assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award, including Activities Allowed or Unallowed and Allowable Costs and Cost Principles.
Condition: Processes and procedures in place to approve expenditures did not include approval of expenses for vacation payouts outside of the vacation policy.
Cause: The Organization paid out vacation for a terminated employee. This did not agree with the Organization’s vacation policy and documented approval of the decision was not available.
Effect or Potential Effect: Unallowable costs or activities could be charged to federal grants.
Questioned Costs: None
Context: As of the date of testing, documented approval was not available for one of forty items selected ($5,015 of $106,184 expenses tested).
Repeat finding: No.
Recommendation: We recommend the Organization follow its policies and document any deviations therefrom. We also recommend documenting approval of all expenses charged to federal grants.
Planned Corrective Action: During 2023, vacation was paid out for a terminated employee. This payment did not agree with the organization’s vacation policy and documented approval of the decision was not available.
Involuntary terminations at MIWSAC are rare. In the case of the terminated employee, vacation was paid out as though the termination was a voluntary resignation. This error was an oversight during payroll processing.
As a result of this finding, the current policies & procedures surrounding payout of earned, unused vacation will be reviewed at an upcoming Circle Keepers meeting. Any approved changes to the policy will be documented in the Employee Handbook and distributed to all employees.
This corrective action will be completed no later than September 30, 2024