Finding 1229680 (2024-002)

Pay Rate Approval Federal Program: Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027 U.S. Department of the Treasury Significant Deficiency - Internal Control over Compliance Criteria – Management should ensure that documentation is maintained for internal control procedures. Condition – During testing of pay rate approvals, we noted that pay rate approvals from the beginning of the audit period were not available. Context – The program tested was paying for activity from 2021 through 2024. The Organization changed vendors for HR services during the audit period. While the control procedures had been performed, they were no longer documented for the full period. Effect – The Organization was unable to document the performance of the full internal controls over the payroll process. Cause – The Organization changed vendors for HR services during the audit period. During that change, the documentation from the previous HR service provider was not maintained. Identification as a repeat finding – N/A Recommendation – Management should ensure that copies of documentation of key controls are kept internally. Views of Responsible Officials and Planned Corrective Actions – For the transactions where a signed approval could not be produced, the approved pay rates are reflected in the payroll system and the related positions and salaries were included in the funder-approved grant budgets, and management believes the control operated as intended. The original documentation for the oldest items was not retained through prior HR and payroll system changes and is no longer available. Corrective action is already implemented: all pay-rate changes now require a signed Employee Status Change Form approved by the employee's manager and the HR representative, with Board approval for CEO compensation, before payroll is finalized, and we maintain a complete, audit-ready document set going forward.