Finding Text
Reportable Finding Considered a Significant Deficiency and Noncompliance Finding – Allowable Costs/Cost Principles – Payroll Documentation Agency: U.S. Department of State, Bureau of Population, Refugees, and Migration (PRM) Program: U.S. Refugee Admissions Program ALN# 19.510 Grant Number: SPRMCO25CA0026, SPRMCO25CA0028, and SPRMCO24CA0337 Program Year: 2025 Criteria: 2 CFR §200.430(i) requires charges to federal awards for salaries and wages to be supported by records that accurately reflect the work performed and be incorporated into the entity’s system of internal control, which provides reasonable assurance that charges are accurate, allowable, and properly allocated. Condition: During testing of payroll transactions charged to the PRM programs, we noted that although employees completed timesheets, the timesheets did not contain evidence of supervisory review or approval. Based on discussions with management, supervisor review was performed informally; however, no documented approval, such as a signature, electronic approval, or other evidence of review, was retained. Cause: The Organization did not have a formalized process requiring documented supervisory approval of timesheets during the audit period. As a result, review activities were not consistently evidenced and retained. Effect: Without documented supervisory review, the Organization cannot demonstrate that time charged to federal awards was reviewed for accuracy, allowability, and proper allocation. This increases the risk that payroll costs charged to federal awards may be inaccurate or unsupported. Questioned costs: None Perspective: Statistical sampling was not used; however, a nonstatistical sampling approach was applied in accordance with AICPA guidance. This condition was identified in payroll testing and appears to be systemic, as management indicated documented timesheet approvals were not required during the period under audit. Repeat finding: This is not a repeat finding. Recommendation: We recommend that management implement and maintain a formal timesheet approval process requiring supervisors to review and approve employee timesheets electronically or in writing before payroll is processed. Documentation of the approval should be retained to support payroll costs charged to federal awards. Management’s response (unaudited): See Corrective Action Plan