Finding Text
U.S. Department of Agriculture
Federal Financial Assistance Listing # 10.565 All Awards
Federal Financial Assistance Listing # 10.568 All Awards
Food Distribution Cluster
Activities Allowed/Unallowed and Allowable Costs/Cost Principles
Significant Deficiency in Internal Control over Compliance
Criteria – 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and conditions of the federal award.
Condition – As part of our audit, multiple payroll allocation errors were identified. It was determined that some errors resulted in overallocation of costs while others in underallocation of costs.
Cause – No formal review of the allocations were completed before or after each payroll. This resulted in incorrect amounts being allocated to the programs.
Effect – The failure to adequately review payroll allocations resulted in incorrect charges to the program.
Questioned Costs – None Reported.
Context/Sampling – A nonstatistical sample of 8 pay periods out of a population of 26 pay periods were selected for testing. 8 pay periods had an error.
Repeat Finding from Prior Year(s) – Yes, Finding 2023-006.
Recommendation – It is recommended that the Organization implement processes and controls to ensure that payroll allocations are reviewed and approved with each payroll processed.
Views of Responsible Officials – Management agrees with the finding.