Finding Text
Finding 2024- 007 – Timecard Approval Controls – Payroll Charge to Federal Grant, Significant Deficiency Federal award agency: US Department of Transportation Federal Transit Administration Program name and ALN: Federal Transit Cluster ALN 20.507 Federal Transit Formula Grants, ALN 20.525 State of Good Repair Grants Federal award identification number: IL-2017-028-00, IL-2018-024-00, IL-2019-022-01, IL-2021-050-00, IL-2022-005-01, IL-2022-032-00, IL-2023-036-01, IL-2024-025-00 Federal award year: 2017, 2018, 2019, 2022, 2023, 2024 Criteria: The Uniform Guidance requires non‑Federal entities to establish and maintain effective internal control over Federal awards that provides reasonable assurance that the entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award (2 CFR §200.303). In addition, payroll costs charged to Federal awards must be adequately supported and properly authorized to ensure that only allowable and accurate costs are charged (2 CFR §200.430(i)). Condition: During testing of payroll transactions charged to the Federal program, RSM identified instances in which employee timecards were not supported by evidence of timely supervisory review and approval. Specifically, for certain timecards tested, approval either could not be substantiated, occurred after fiscal year end, or lacked documentation evidencing the date of approval. Cause: Management did not consistently maintain documentation evidencing timely supervisory review and approval of employee timecards charged to Federal grants. Additionally, monitoring controls over the timeliness of timecard approvals were not sufficient to ensure compliance with established payroll control procedures. Effect or potential effect: Without timely supervisory approval of timecards, there is an increased risk that unallowable, inaccurate, or improperly allocated payroll costs could be charged to Federal awards. Questioned costs: None noted. Context: 16 control exceptions out of 60 selections. The sample was not intended to be, and was not, a statistically valid sample. Recommendation: RSM recommends that management strengthen internal controls over payroll charged to Federal grants by ensuring that all employee timecards are reviewed and approved by supervisors in a timely manner and that documentation evidencing the approval date is retained. Management should also implement periodic monitoring to verify compliance with timecard approval requirements. Views of responsible officials: Management acknowledges the finding and agrees that remediation is necessary. Management will implement the recommendations that it has defined within the corrective action plan required by Title 2 CFR 200.511(c) executed on April 16, 2026.