Finding Text
2023-002 Improve Controls and Documentation Over Payroll Federal Agency: U.S. Department of Education Award Name: COVID-19 – Education Stabilization Fund (“ESSER Grant”) AL Number(s): 84.425 Award Year: 2022 Compliance Requirement: Activities Allowed or Unallowed and Allowable Costs/Cost Principles Type of Finding Compliance Internal Control over Compliance – Material Weakness Criteria or Specific Requirement In accordance with 2 CFR § 200.430 and program requirements for the Education Stabilization Fund, payroll costs charged to federal awards must be supported by appropriate documentation, such as approved pay rates. Costs must relate to approved activities, be allowable under the grant, and be supported by the City’s payroll records. Condition and Context During our testing of 28 payroll transactions charged to the ESSER grant, pay rate documentation supporting the amounts charged to the grant were not provided for 5 employees. Further, evidence of mid-year rate increases were unable to be provided for an additional 7 employees. Cause The City did not maintain or was unable to provide the required payroll documentation over pay rates and subsequent pay increases. This indicates a lack of effective internal controls over payroll documentation and grant cost allocations. Effect or Potential Effect Without supporting documentation for pay rates, there is an increased risk that amounts charged to the grant may be incorrect or unallowable. Questioned Costs Due to the condition noted, we were unable to determine if the costs charged to the grant were allowable. AL Number(s) Name of Federal Program or Cluster Questioned Costs 84.425 COVID-19 – Education Stabilization Fund $29,411 Identification as a Repeat Finding This is a repeat of finding 2022-002. Recommendation The City should develop and implement policies and procedures to ensure that documentation supporting pay rates and payroll allocations is retained and readily available for all grant-funded employees. Views of Responsible Official and Planned Corrective Action Management’s corrective action plan is included at the end of this report after the Schedule of Prior Year Findings.