Finding Text
Criteria or Specific Requirement – Management is required to ensure that there are sufficient internal controls in place over payroll costs charged to the program. This includes internal controls that ensure that all supporting documentation is retained to demonstrate compliance.
Conditions – Documentation supporting employee costs charged to the both major programs was unavailable or incomplete.
Context – During our testing of allowable costs and activities for the Child Care and Development Block Grant, we selected twenty-seven journal entries for payroll testing. The Organization provided us detail listings for each of the twenty-seven journal entries which included employees and charges that supported the journal entry and we were able to make sub selections to the employee level. For each employee selected, we were able to verify the validity of the employee. However, we were not able to validate the approved rate of pay.
During our testing of allowable costs and activities, for the SLFRF grants we selected two journal entries for payroll testing. The Organization provided us detail listings for each of the two journal entries which included employees and charges that supported the journal entry and we were able to make sub selections to the employee level. For each employee selected, we were able to verify the validity of the employee. However, for one of the selections which was charged to the SLFRF pass-through grant from Laramie County, WY, we were not able to validate the approved rate of pay.
Cause – For periods for which payroll records were not available, the Organization was using a different payroll process system. As a result, such records could no longer be accessed.
Effect – Complete documentation to support certain payroll transactions was not available. We were able to verify the existence of the employee. We were also able to verify that the amounts charged were reasonable based on the nature of the program as well as subsequent activity. As a result, we considered the total costs charged to the program to be reasonable. However, internal controls were not in place related to the proper retention of records.