Finding Text
FINDING 2024-001 – Allowable Costs Payroll; Significant Deficiency in Internal Control over Compliance and Instance of Noncompliance Department of Commerce Assistance Listing Number: 11.307 Federal Program Name: Economic Adjustment Assistance Award Year: 2024 Criteria: Federal regulations and grant and contract conditions require that allowable costs be supported by supporting documentation. Condition: The Organization did not maintain supporting documentation (timecards, paystubs, and payrates) that directly tied back to the amount requested for reimbursement for payroll amounts charged to the grant. Context: During our testing of payroll, we noted that for all nine items in our sample, no supporting documents for the amount charged to the grant were maintained. Our sample was selected using a random methodology, rather than a statistical sampling methodology, from the 64-item population. Management calculated the total amount over-/under-billed based on actual payrates, pay stubs, and time charged to the grant. We reviewed this calculation and traced it to supporting documentation, noting that the total underbilled to the grant was $27,387. Cause: The finding and significant deficiency is due to lack of controls and no specific policy in place related to tying out payroll charged to the grant to supporting documentation. Repeat finding: No. Effect: Without centralized controls to monitor payroll charged to the grant, the amount submitted may not be accurate or supported. Questioned costs: None noted. Recommendation: We recommend the Organization design and implement controls to ensure that all payroll charged to the grant is based on actual hours worked. In addition, the Organization should maintain documentation of payroll and have procedures in place to track and record any allocated time. Views of responsible officials and planned corrective actions: Management agrees with the assessment and understands the importance of payroll. The Organization has designed and implemented controls to ensure that all payroll charged to the grant is tracked and supporting documents are maintained.