Finding Text
Finding 2024-001 – Lack of Documentation in Personnel Files
Material Weakness
Criteria – Management is responsible for establishing and maintaining internal controls over the payroll process, including maintaining proper documentation in personnel files. Uniform Guidance specifically require adequate documentation of pay rates, benefit elections, time allocations, proof of ongoing qualification, etc. to provide reasonable assurance that the amounts paid and deducted are accurate, allowable, and properly allocated.
Condition – During our audit, we noted that pay rates for employees were not documented in a consistent, systematic manner. Additionally, we noted that there was missing evidence of recent training, program allocation documentation, and recent annual performance evaluations.
Cause – The Organization’s policies and procedure around maintaining personnel file documentation were not followed by the Human Resources department.
Context – The number of deviations noted below for personnel file testing are as follows:
• Missing approved payrate letters for 7 of 18 employees selected.
• 14 of the 18 employees selected did not have signed and dated performance evaluations.
Effect – Effects could include:
• Employees may be paid using an inappropriate rate or using a rate that is disputed by the employee or employer.
• Salaries or wages may be overcharged or undercharged to grants if the proper program allocation is not documented.
• Management cannot develop expectations or standards for the program if employee performance is not being reviewed timely.
Recommendation – We recommend that the Organization implement policies and procedures around maintaining and reviewing personnel files to ensure consistent and appropriate documentation for approvals of all pay rates and performance evaluations in individual personnel files to ensure that all wage rate approvals are documented in employee personnel files and performance evaluations are performed and documented.
Auditee's comments and response – Management has reviewed the current practice for approval of raises and are implementing a new payroll system that will have authorizations built into the software which will correct this issue.
Responsible party for corrective action: Laura Straw, Director of Finance and Morcine Scott-Warren, Deputy Director of HR and DEI.
Repeat Finding: Yes, 2023-004