Finding 1224783 (2025-001)

Finding 2025-001 – Allowable Cost Principles – Payroll Evidence of Review (Significant Deficiency in Internal Control over Compliance) Criteria – In accordance with the Uniform Guidance 2 CFR 200.303 regarding internal controls, the Agency must establish and maintain effective internal control over the federal award that provides reasonable assurance that the Agency is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Additionally, per 2 CFR 200.430(i) “Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed… These records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated.” Condition/context – Out of the total population of payroll transactions charged to this program, we selected a sample of forty (40) transactions using a random sampling methodology and noted three (3) instances where employee timecards did not have evidence of review or approval by the appropriate director or supervisor of the program in the system. We understand that the payroll process is designed to move forward even if approval is not documented in the system. Effect – Without proper internal controls over timecards, there is an increased likelihood that payroll costs charged to the federal program are incorrect. While timecard review/approval was not documented for 3 samples, based on testing performed, the related payroll was allowable per the grant. Cause – There appears to be inadequate internal controls and/or documentation of controls over review and approval of timecards, to ensure time is accurately reported and ultimately payroll costs are properly charged to the program. Repeat finding – This is not a repeat finding. Recommendation – The Agency should reexamine its processes and controls over payroll. This may also include providing additional training on the importance and relevance of accurate timecards and their impact with compliance requirements. Views of responsible officials – The responsible officials acknowledge the finding, concur with the recommendation and are actively working with the Human Resource Department to implement the program identified within the associated corrective action plan.