Finding Text
Finding 2022-008 Lack of Internal Control over Activities Allowed or Unallowed and Allowable Costs/Cost Principles - Payroll
Federal Agencies: U.S. Department of the Treasury, U.S. Department of the Interior, and US Department of Housing and Urban Development
Federal Programs: Coronavirus State and Local Fiscal Recovery Fund (ARPA), Bureau of Indian Affairs Compact (BIA Compact), NAHASDA
Assistance Listing Numbers: 21.027, 15.022, and 14.867 respectively
Award Numbers: SLFRP1627 and SLFRP5070 (ARPA), GT-OSGT043-16 (BIA Compact), 55-IT0211860 and 20BV0211860 (NAHASDA)
Award Years: 2021 (ARPA), 2022 (BIA Compact), 2022 (NAHASDA)
Type of Finding: Material weakness in internal control over compliance and material noncompliance.
Criteria: Adequate internal control over payroll transactions should be in place to ensure that personnel files are complete with all necessary documentation, which includes proof of approved pay rates.
Condition and Context: During our testing of payroll transactions, we noted 22 out of a sample of 62 payroll transactions, across the three major federal programs referenced above, which lacked necessary documentation to support management’s approval of employee pay rates.
Cause: Lack of internal control over activities allowed or unallowed and allowable costs/cost principles payroll transactions, specifically related to personnel files.
Effect: The lack of supporting documentation or approval for rates of pay allows for the potential for misstatement of expenditures or for employees to have incorrect rates of pay.
Questioned Costs: The amount of known or likely questioned costs, if any, could not be determined.
Repeat Finding: Yes, this is a repeat of finding 2021-006. Since it is a repeat finding we believe this to be a systematic issue.
Recommendation: We recommend the Council adheres to its internal control policies to ensure accurate reporting of payroll transactions.
Management’s Response: Management concurs with the finding. See Corrective Action Plan.