Finding Text
Assistance Listing: 66.957 Greenhouse Gas Reduction Fund: National Clean Investment Fund and 66.959 Greenhouse Gas Reduction Fund: Solar for All Finding No. 2025-004: Significant Deficiency in Controls over Documenting Time Sheet Reviews Condition: During testing of payroll transactions for the SFA and GGRF programs, controls related to timesheet reviews and payroll processing were not consistently performed or documented. Specifically, for the SFA program, all eleven (11) payroll transactions tested ($32,607) lacked documented evidence of timesheet review. For the GGRF program, two (2) out of nine (9) payroll transactions tested ($6,490) did not include documented evidence of timesheet review. In addition, payroll was processed without a formal secondary review after preparation by the Director of People and prior to submission through third-party service provider. While management indicated that reviews were performed, supporting documentation was not consistently retained, and a formalized process to evidence such review was not in place. Criteria: In accordance with Uniform Guidance (2 CFR 200.303 and 200.430), entities are required to maintain effective internal controls over payroll processes. This includes maintaining appropriate supporting documentation (such as timesheets), performing, and documenting supervisory review of payroll and time records, and ensuring that payroll costs charged to federal awards are accurate, allowable, and properly approved. Cause: These conditions appear to result from insufficiently formalized review control procedures and inconsistent documentation retention practices, particularly during and following system transitions. Additionally, payroll review and approval protocols were not clearly defined or consistently applied. Effect or Potential Effect: The absence of consistently documented review controls over timesheets and payroll processing limits the ability to verify the accuracy, completeness, and allowability of payroll costs. This increases the risk that errors or unsupported payroll charges could occur and not be identified in a timely manner, which may result in noncompliance with applicable federal requirements. Questioned Costs: None Perspective Information: While control deviations were noted in the areas of timesheet review and payroll processing, the exceptions identified were limited to the sample tested and were primarily related to documentation and consistency of control execution rather than evidence of pervasive or intentional noncompliance. Management indicated that reviews were performed; however, documentation to support these reviews was not consistently retained. Strengthening documentation practices and formalizing control procedures will enhance transparency, support compliance with Uniform Guidance requirements, and improve the organization’s ability to demonstrate effective internal control over payroll-related expenditures charged to federal programs. Identification of Repeat Finding: Not applicable since this is a new finding. Recommendation: We recommend that management enhance payroll controls by requiring documented supervisory review and approval of all timesheets prior to payroll processing, implementing a formal secondary review of payroll registers before submission, and formalizing payroll policies and procedures. These procedures should clearly define roles, responsibilities, and documentation requirements to support consistent application and evidence of control performance. Views of Responsible Officials: Management agrees with the finding. While timesheet and payroll reviews were performed, documentation of these reviews was not consistently retained, and a formal secondary review of payroll prior to processing was not in place. Management has implemented corrective actions, including establishing a formal, documented review process for timesheets and payroll prior to disbursement. Reviews will be performed within a centralized system or documented workflow to ensure audit evidence is retained. Additionally, a secondary review control has been implemented requiring independent approval of payroll before submission through Paylocity. Management will incorporate these procedures into standard operating practices and monitor compliance to ensure controls are consistently applied across programs.