Finding Text
Finding 2025-002 Finding 2025-002 is also a federal award finding and is required to be reported in accordance with the Uniform Guidance and State of New Jersey OMB Circular 15-08. Criteria: The Authority should maintain effective internal controls over payroll to ensure compensation paid to employees is properly authorized, accurately calculated, supported by appropriate documentation, and consistent with Board-approved salary schedules. Any deviations from approved compensation amounts should be formally approved and adequately documented. Condition: The Authority employs nine (9) employees. During detailed testing of one (1) employee selected from the payroll population, we noted that the compensation paid per payroll reports did not agree to the salary amount reflected in the Board-approved salary guide. Management was unable to provide supporting documentation or an explanation for the variance between the approved salary and the amount paid. Known Questioned Costs: Amount is below threshold of $25,000. Cause: The Authority lacked adequate controls to ensure that employee compensation is reviewed and reconciled to Board-authorized salary schedules. In addition, documentation supporting changes in compensation or deviations from approved salary amounts was not maintained in a manner sufficient to demonstrate proper authorization. Effect: Without adequate review and documentation of compensation amounts, there is an increased risk that payroll expenditures may be inaccurate, unauthorized, or inconsistent with Board-approved compensation levels, and that errors or irregularities may not be identified and corrected in a timely manner. Recommendation: We recommend that the Authority implement procedures to ensure employee compensation is periodically reconciled to Board-approved salary authorizations. Any changes to employee compensation should be formally approved, adequately documented, and maintained in personnel files. Management should also perform and document periodic supervisory reviews of payroll reports to verify that compensation paid agrees to authorized salary amounts.