Finding 1226445 (2026-001)

2026-001 Significant Deficiency – Payroll Reimbursement Criteria and Condition: Payroll should be submitted for reimbursement based on actual qualified expenses. During compliance testing for allowable cost/allowable activities, it was determined that for part of the year expense reimbursements were being submitted based on an established budget and not actual expenditures. Context: Internal control deficiency over grant compliance was identified. Cause: Management did not have controls in place to detect the error for part of fiscal year 2026. Effect: The control deficiency identified that there could be unallowable payroll costs when the budget was compared to the actual payroll. The budget needed to revised to cover actual payroll costs. Management revised the budget to verify they still had qualified expenditures to support reimbursements received. Recommendation: Establish a system of controls to check reimbursement requests prior to submission and verify submissions match actual payroll records. Views of Responsible Officials and Planned Corrective Action: We agree with the finding as noted. The CFO corrected the Federal Draw schedule to identify the payroll used each pay period for the draw request. The schedule shows the replacement of termed staff and a countdown of available grant dollars per staff. This report balances the Federal Draw schedule every pay period.