Finding Text
2025-003 – INTERNAL CONTROLS OVER PAYROLL AND BENEFITS ALLOCATIONS Federal Agency: U.S. Department of Justice Federal Program: Victim of Crimes Act (VOCA) Assistance Listing Number(s): 16.575 Pass-through Agency: Michigan Department of Health and Human Services Grant Number(s): E20252997, E20254232, and E20252320 Condition: The Organization utilized PARs to allocate employee time between programs. During the payroll testing some minor variances were noted between the hours reported on the PARs and the hours recorded in the payroll system. Additionally, some minor variances were noted in charges for benefits compared to supporting documents. Criteria: Organizations must have proper internal control over allocations regarding salaries and wages and fringe benefits. In addition, allocations must be based on records that accurately reflect the work performed. It is the Organization’s procedure to utilize personnel activity reports (PARs) for its records to accurately reflect the work performed. Cause: Due to limited staffing, the Organization does not have a procedure in place to review manual inputs into the accounting system. Effect: The Organization did not follow proper internal controls due to reported hours having minor differences compared to actual timesheets and fringe benefits not matching supporting documentation. Questioned Costs: Not applicable. Perspective: Of the sixty (60) transactions selected for review, twelve (12) had errors in total hours, hours allocations, or benefit allocations. Repeat Finding: No. Recommendation: The Organization should have a review process to ensure the payroll system matches the PARs and benefits match the supporting documents. Views of Responsible Officials: Management agrees with the finding. See separate Corrective Action Plan.