Finding Text
Finding Number: 2022-001
Repeat Finding: No
Type of Finding: Significant Deficiency
Description: Internal Control over Compliance related to Payroll Expenditures
Condition: Internal control procedures require officers of the organization, including the executive director, to review and approve payroll salary and rates prior to processing of payroll. The Organization identified certain payroll transactions that were not authorized and approved by the appropriate personnel.
Criteria: The Organization’s internal controls should be implemented to provide reasonable assurance that unauthorized transactions do not occur.
Cause: Procedures are in place for supervisory approval of documentation before payroll expenses are authorized for processing, however these were not followed for all transactions.
Effect: As a result, the Organization identified unauthorized payroll expenses for the year ended December 31, 2022.
Recommendation: The Organization has since implemented internal control processes and procedures to ensure compliance with payroll processing approvals. We recommend the maintenance of these procedures.