Finding Text
FEDERAL AWARD FINDINGS AND QUESTIONED COSTS (Continued) Compliance and Internal Control over Compliance Finding Inaccurate Payroll Charges Due to Timesheet Discrepancies (Significant Deficiency) AL Number and Title: 84.362A - Native Hawaiian Education Program Award Number: S362A200024-22 Award Period: October 1, 2022 - September 30, 2024 Federal Agency: Department of Education Criteria: Under 2 CFR § 200.430(g)(1)(i), charges to federal awards for salaries and wages must be based on records that accurately reflect work performed and must be supported by a system of internal controls that provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Condition: During our testing of compliance and internal controls over compliance for Activities Allowed or Unallowed and Allowable Costs/Cost Principles, we selected a haphazard sample of 20 payroll disbursements. We noted discrepancies between employee timesheets and corresponding payroll registers for two disbursements, as follows: • For the pay period ending September 2, 2023, the employee’s approved timesheet indicated 44 hours, while the payroll register indicated 45 hours charged to the program. • For the pay period ending December 23, 2023, the employee’s approved timesheet indicated 42.62 hours, while the payroll register indicated 54.54 hours charged to the program. Cause: The discrepancies between the timesheet and payroll register hours appear to have resulted from manual data entry errors during payroll processing. Effect: The lack of adequate review procedures increases the risk that payroll charges to the program may not be based on accurate and approved time documentation. Although the extrapolated error identified during testing was below the $25,000 threshold for reporting questioned costs under 2 CFR §200.516(a)(3), the control deficiency represents a significant deficiency in internal control over compliance. Repeat Finding? No Recommendation: We recommend that the Organization implement a review and reconciliation process to ensure that hours recorded in payroll registers agree to approved timesheets before payroll is processed and charges are allocated to federal programs. Views of Responsible Officials and Planned Corrective Action: Mana Maoli agrees with the finding and the recommendation. See Part V, Corrective Action Plan.