Finding Text
Finding 2023-004 Internal Control Over Allowable Activities/Allowable Costs – Payroll Expenditures
Identification of the Federal Programs:
Assistance Listing Number: 20.507
Assistance Listing Title: Federal Transit Cluster
Federal Agency: U.S. Department of Transportation
Pass-Through Entity: N/A
Federal Award Identification Number: CA-2017-149-00; CA-90-Z085-00; CA-90-Y974-00; CA -2019-
033-00; CA -90-Y900-00; CA-2020-177-00; CA-2021-169-01;
CA-2022-041-00; CA-2021-075-00
Criteria or Specific Requirement (Including Statutory, Regulatory, or Other Citation):
In accordance with 2 CFR §200.303 Internal Controls, the non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
Under §200.302 Financial Management, (b) (3) Records that identify adequately the source and application of funds for federally-funded activities. These records must contain information pertaining to Federal awards, authorizations, financial obligations, unobligated balances, assets, expenditures, income and interest and be supported by source documentation.
Under §200.430(i) Standards for Documentation of Personnel Expenses (1) Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (ii) Be incorporated into the official records of the non-Federal entity.
Condition:
During the audit, we reviewed payroll period ended September 24, 2022, December 17, 2022, February 25, 2023, and April 22, 2023. Except for the payroll period ended April 22, 2023, we could not verify if the Bus Operators’ and all other Federal Transit employee’s timecards were approved by their supervisors. The timecard reports were uploaded from the time entry system to the payroll module by the supervisors; however, there were no records on who reviewed the timecard reports or who completed the upload of the timecard reports to the payroll module.
Cause:
Although the City has been working on implementing the necessary approvals, these efforts had not taken full effect for the most part of the fiscal year 2023 until April 2023.
Effect or Potential Effect:
Without review or approval of time cards, inaccurate payroll expenditures could be charged to the federal programs.
Questioned Costs:
None noted.
Context:
See condition above for the context of the finding.
Identification as a Repeat Finding, If Applicable:
2022-007.
Recommendation:
We recommend that the City ensure the full implementation and consistent application of the established timecard approval policies for all Federal Transit employees and strengthen its monitoring mechanisms to verify that supervisors review and approve timecards for every payroll period, ensuring compliance with the policies throughout the entire fiscal year.
Views of Responsible Officials:
The City has implemented the recommendation first contained in 2022-007. There is a process in place where supervisor review and approval of timesheets is completed and documented. That process continues and will be in place for the entirety of the fiscal year ending June 30, 2024.