Finding 1092415 (2024-001)

Criteria and Condition: In a cost reimbursement award, only costs incurred are allowed to be billed for reimbursement. NMLC billed for certain payroll tax costs that were not incurred. Context: Audit procedures identified multiple instances where payroll taxes were billed, even though those payroll taxes are limited to earned income thresholds. Cause: The employer portion of payroll taxes are billed as a flat fifteen percent above gross wages which does not consider certain payroll taxes that are limited to certain thresholds based on the individuals cumulative earned income. For example, federal and state unemployment taxes. Effect: NMLC overbilled for certain payroll taxes that were not incurred. Recommendation: NMLC should implement procedures to allow for tracking of actual payroll taxes incurred for labor charged to the award ensuring that only costs incurred are billed. Planned Corrective Action: We agree with this finding and will create and implement additional internal controls to allow for tracking of actual payroll taxes incurred for labor charged to the award ensuring that only costs incurred are billed. Anticipated Completion Date: January 31, 2025. Responsible Contact Person: Megan Keller, Director of Finance and Operations