Finding Text
Finding 2021-008 – Compliance and Internal Control Over Allowable Costs - Payroll Processing (Material Weakness)
Federal Program 14.231 Emergency Solutions Grant
Condition: We noted that the Agency did not have a formal process to ensure that payroll costs charged to federal
programs are based on actual time worked. Payroll charges were allocated using estimates or predetermined
percentages, without periodic certifications or time and effort documentation to support the allocations.
Criteria: Charges to federal awards for salaries and wages must be based on records that accurately reflect the work
performed and must support the distribution of the employee’s activity among federal awards and other activities.
Documentation should include after-the-fact records and reasonable assurance that charges are accurate, allowable, and
properly allocated.
Cause: The Agency had not implemented adequate internal controls or documentation procedures to ensure compliance
with federal payroll allocation requirements. This may have been due to lack of training, oversight, or formal written
policies.
Effect: Inaccurate or unsupported payroll allocations may result in unallowable costs being charged to federal programs.
This increases the risk of questioned costs and noncompliance with federal grant requirements.
Questioned Costs: $2,819
Recommendation: We recommend that the Agency implement a formal payroll allocation process that includes time and
effort reporting or certifications for employees working on federal programs. Management should ensure payroll charges
are supported by documentation that accurately reflects actual work performed and periodically review allocations for
accuracy.
Management’s Response: See Corrective Action Plan.