Finding Text
Finding 2025-001 – Allowability and Period of Performance Information of the federal program: Federal Grantor: United States Department of Homeland Security Assistance Listing No.: 97.036, Disaster Grants – Public Assistance (Presidentially Declared Disasters) Criteria or specific requirement (including statutory, regulatory or other citation): Section 200.303 of the Uniform Guidance states the following regarding internal control: “The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).” Condition: The timekeeping system used by management did not require timecards to be reviewed and approved. Further, there was no process in place to review wage rates to ensure they were reasonable. Cause: Management had not implemented adequate internal control procedures to require supervisory review and approval of timecards or verification of wage rates. Effect or potential effect: The absence of supervisory review and verification controls increases the risk that unallowable payroll costs could be charged to the award, that inaccurate or unsupported labor costs could be reported, and that noncompliance with Federal requirements could occur. Questioned costs: None Context: The population consisted of $6,727,441 of salaries expense. A sample of 40 items was selected, and all 40 items contained exceptions related to the absence of review and approval of timecards and the lack of review of pay rates for reasonableness. Identification as a repeat finding, if applicable: This finding is not a repeat finding. Recommendation: Management should implement and document internal control procedures to ensure all timecards are independently reviewed and approved by supervisors and that wage rates charged to the award are reviewed for reasonableness. Controls should operate consistently and be designed to prevent and detect errors or unsupported charges. Views of responsible officials: Management concurs with the finding and has developed a plan to correct the finding.