Finding Text
2022-002 Improve Controls and Documentation Over Payroll Federal Agency: U.S. Department of Education Award Name: COVID-19 – Education Stabilization Fund AL Number(s): 84.425 Award Year: 2022 Compliance Requirement: Activities Allowed or Unallowed and Allowable Costs/Cost Principles Type of Finding Compliance Internal Control over Compliance – Material Weakness Criteria or Specific Requirement In accordance with 2 CFR § 200.430 and program requirements for the Education Stabilization Fund, payroll costs charged to federal awards must be supported by appropriate documentation, such as approved pay rates. Costs must relate to approved activities, be allowable under the grant, and be supported by the City’s payroll records. Additionally, for transfers or allocations of payroll costs, documentation of the transfer or allocation to the federal grant must be maintained. Condition and Context During our testing of 22 payroll transactions charged to the ESSER grant, pay rate documentation supporting the amounts charged to the grant was not provided for 16 employees. Further, for 10 employees receiving summer enrichment stipends, the City was unable to provide evidence of the balance transfer of stipend costs to the ESSER grant. Cause The City did not maintain or was unable to provide the required payroll documentation, such as pay rates, and did not retain evidence of payroll balance transfers or allocations to the ESSER grant for summer enrichment stipends. This indicates a lack of effective internal controls over payroll documentation and grant cost allocations. Effect or Potential Effect Without supporting documentation for pay rates, there is an increased risk that amounts charged to the grant may be incorrect or unallowable. Failure to document transfers or allocations to the grant could result in improper charging of costs, questioned costs, or noncompliance with federal regulations. Questioned Costs Due to the condition noted, we were unable to determine if the costs charged to the grant were allowable. AL Number(s) Name of Federal Program or Cluster Questioned Costs 84.425 COVID-19 – Education Stabilization Fund $31,493 Recommendation The City should develop and implement policies and procedures to ensure that documentation supporting pay rates and payroll allocations is retained and readily available for all grant-funded employees. The City should also ensure that all transfers and allocations of payroll costs to federal grants are properly documented, reviewed, and approved. Views of Responsible Official and Planned Corrective Action Management’s corrective action plan is included at the end of this report after the Schedule of Prior Year Findings.