Legal Services Corporation 09.744060 Basic Field Grant Grant Period: 1/1/2025 – 12/31/2025 Contract Number: 744060 U.S Department of Justice 16.575 Victims of Crime Act Grant Periods: 10/1/24-9/30/25 and 10/1/25 – 9/30/26 Contract Number: 4055105; 4055106 Supreme Court of Texas Basic Civil Legal Services Program Grant Period: 9/1/2023 – 8/31/2026 Contract Number: 26030 2025-001 Internal Controls over Compliance - Allowable Activities and Costs – Payroll (Significant Deficiency) Recommendation: We recommend the Organization review its timekeeping policies and procedures to ensure time sheets are retained for all payroll transactions to support the allocation of compensation between cost objectives and that these are provided timely to the Director of Finance to reconcile the allocation of personnel costs charged on the time sheets to the budget estimates used to bill grantors. This should be done in conjunction with monthly or quarterly billings (or other determined regular interval), at fiscal year-end, and at the end of the grant year (if different from the Organization’s fiscal year). Corrective Action: • AVDA will revise and formally approve its written timekeeping and payroll-allocation procedures. Every employee whose compensation is charged in whole or in part to a grant must submit a complete and accurate timesheet for each pay period. • Timesheets will reflect actual activity and identify the appropriate program, grant, or cost objective. Budget estimates will not serve as final support for payroll charges unless permitted by the applicable award and reconciled to actual activity. • Each employee and the employee's supervisor will approve the timesheet by the established deadline. Finance will maintain an exception log for late, missing, incomplete, or corrected timesheets and will follow up before grant billing or reimbursement requests are finalized. • The Finance Department will complete and retain a payroll-compliance checklist for each pay period. Payroll costs lacking required support or approval will not be charged to a grant and will remain charged to unrestricted funds unless and until adequate documentation is obtained and reviewed. • The Director of Finance will update employee pay rates and grant allocations promptly after each compensation, funding, or assignment change. Finance will verify current pay rates before grant billing and will document the review. • At least monthly, the Director of Finance will reconcile payroll-allocation records to the payroll register and general ledger. The reconciliation will confirm that employee allocations do not exceed 100 percent, rates agree with actual payroll, charges are supported by approved timesheets, and charges do not exceed applicable grant budgets. • A reviewer who did not prepare the reconciliation will document review and approval. The CEO will document review of organizational payroll. Payroll information relating to the CEO will be reviewed under the Board-approved process for executive compensation and payroll oversight. • Management will provide and document training for employees, supervisors, and Finance personnel regarding timekeeping, payroll allocation, allowable-cost requirements, approvals, and record retention. • AVDA will maintain timesheets, approvals, payroll registers, reconciliations, exception logs, and supporting allocation records in a centralized electronic location consistent with federal and grant-specific retention requirements. Responsible Parties: - Lisa Mikosh, Director of Finance - Marcello Gonzalez, Bookkeeper - Maisha Colter, CEO Date to be Corrected: December 31, 2026