Finding Text
2025-002 ALN 14.850 – Public Housing Operating Fund – Allowable Costs – Bonus/Incentive Payments Condition and Criteria: Amounts reported as bonus/incentive disbursements were not included in the payroll system; therefore, they were not subjected to related federal, state, and local withholding taxes. Internal controls should be in place that require approvals for additions, deletions, and any periodic changes to payroll related amounts. Correct employee payroll information ensures that the proper amount of withholdings are submitted in accordance with IRS regulations. Amount of Questioned Costs: None Context: The Authority was unable to provide necessary documentation needed to verify amounts reported as bonus/incentive disbursements were not included in the payroll system; therefore, H&P was not able to determine if they were subjected to related federal, state, and local withholding taxes. Cause: The Authority’s internal controls lacked proper oversight to ensure policies and procedures over employee bonuses/incentives and payroll withholding amounts and/or payroll adjustments were being followed. As a result, incorrect amounts could be submitted to taxing agencies. Effect or Potential Effect: Fines and/or penalties may be imposed by taxing agencies if inaccurate amounts are withheld and submitted. Auditor’s Recommendation: Procedures should be implemented requiring Board of Commissioners approval for changes made to employee wages and the related withholding amounts to ensure amounts remitted to taxing agencies are correct. Grantee Response: Management acknowledges the finding and will follow the auditor’s recommendation.