Finding Text
Criteria 2 CFR section 200.430(i), Standards for Documentation of Personnel Expenses, requires: “ (1) Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (ii) Be incorporated into the official records of the non-Federal entity; (iii) Reasonably reflect the total activity for which the employee is compensated by the non-Federal entity, not exceeding 100% of compensated activities; (iv) Encompass both federally assisted and all other activities compensated by the non-Federal entity on an integrated basis, but may include the use of subsidiary records as defined in the non-Federal entity's written policy; (v) Comply with the established accounting policies and practices of the non-Federal entity; (vi) [Reserved] (vii) Support the distribution of the employee's salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity.” Condition As part of our compliance review over payroll expenditures, we selected samples of payroll expenditures charged to the program and reviewed the supporting documents to ascertain if they were allowable per program regulations, accurately charged to the program, and appropriately supported in accordance with 2 CFR section 200.430(i). Title I: During our review of a sample of thirty (30) payroll expenditures, we noted the following exceptions: 1. One (1) employee’s timesheet reflected an inconsistency between the hours submitted and the records in SAP. The SAP recorded fifty-four (54) regular work hours instead of the accurate sixty (60) regular work hours. The six (6) hours variance was incorrectly classified as full pay illness instead of regular time pay. The District subsequently corrected this discrepancy. 2. One (1) timesheet amounting to $613 was not signed by the employee and contained a supervisor’s signature that was obtained after the submission deadline. Perkins: During our review of a sample of thirty (30) payroll expenditures, we identified three (3) timesheets contained supervisor’s signatures that were obtained after the submission deadline. The total amount of payroll expenditures associated with these exceptions was $20,067. Cause and Effect The discrepancies occurred due to inadequate review and verification of employee timesheets prior to payroll processing, as well as a lack of timely completion of required authorization signatures. Failure to ensure the accuracy and completeness of timesheet records increases the risk of payroll misstatements, improper classification of labor costs, and potential noncompliance with internal control and documentation requirements under Federal grant regulations. Questioned Costs There were no questioned costs identified as a result of the discrepancy in hours reported, as there was no difference in the amount of pay between regular time pay and full pay illness. Likewise, there were no questioned costs related to the missing or untimely signatures on timesheets, as the payroll costs incurred were still considered allowable under the respective programs (Title I and Perkins), despite the timing and documentation issues. Recommendation We recommend that the District strengthen and reinforce internal controls over the preparation, review, and approval of employee timesheets to ensure the accuracy and completeness of payroll records. This should include implementing procedures to reconcile timesheet data with system records (e.g., SAP) prior to payroll processing, ensuring that hours worked and pay classifications are correctly reported. In addition, the District should enforce policies requiring all timesheets to be signed by employees and approved by supervisors prior to the submission deadline. The review and approval process should be adequately documented to provide evidence of compliance with established payroll and Federal grant requirements.