Finding Text
Criteria Payroll costs charged to Federal awards must be allowable, allocable, and supported by records that accurately reflect the work performed, in accordance with 2 CFR 200.430(i). Non-Federal entities are required to establish and maintain effective internal controls to provide reasonable assurance that payroll charges comply with Federal requirements. Specific requirements for Research and Development involve ensuring payroll costs were reasonable and necessary for performance of the R&D effort identified in the applicable award. Condition The College’s documented control design requires review and approval of employee timesheets (hourly employees) or effort percentage reports (salaried employees) by the Principal Investigator (PI) or an immediate supervisor to evidence that time charged to R&D awards reflects actual work performed. However, this control was not operating effectively, as 18 out of the 40 samples selected lacked evidence of required review. Cause The condition occurred because the College’s designed control requiring PI or direct supervisor review of employee timesheets or effort percentage reports was not operating effectively in practice. While the control was intended to be performed through the Kronos timekeeping system, system and workflow limitations prevented consistent requirement of PI or supervisor approvals within the system during the audit period. Additionally, the College did not have compensating procedures in place to detect or remediate missing required approvals when Kronos approval evidence was not obtained. As a result, the control was not consistently operating for employees charging time to R&D awards. Possible Asserted Affect The lack of Principal Investigator (PI) or supervisor review of timesheets increases the risk that payroll costs charged to Federal Awards may not be supported or reflect actual work performed on the sponsored projects. This condition may result in noncompliance with 2 CFR 200.430(i) and limits the College’s ability to demonstrate that payroll expenditures charged to Federal awards were incurred for allowable activities and in accordance with the terms and conditions of the awards. Questioned Costs No questioned costs were identified. Statistical Sampling The sample was not intended to be, and was not a statistically valid sample. Repeat Finding The conditions found do not constitute a repeat finding from the prior year. Recommendation We recommend that the College ensure consistent documentation of PI or supervisor review of employee timesheets and/or effort percentage reports charged to Federal R&D awards by formalizing procedures and configuring the timekeeping system to require and retain evidence of approval. The College should also implement monitoring controls to identify missing approvals and ensure compliance with Federal award requirements. Views of Responsible Officials The identified conditions related to timesheets for hourly student employees. To mitigate the risk of missing approval documentation for payroll charged to Federal R&D awards, the College is formalizing procedures requiring PI or supervisor review of applicable timesheets, configuring the approval workflow in Workday to require and retain evidence of approval, and implementing periodic monitoring to identify and correct missing approvals. These corrective actions are being implemented in fiscal year 2026.