Finding Text
Finding 2021-008 Lack of Internal Controls Over Activities Allowed or Unallowed and Allowable Costs/Costs Principles Federal Agencies: U.S. Department of the Treasury Federal Programs: Coronavirus Relief Fund (CRF) and Coronavirus State and Local Fiscal Recovery Funds (CSLFRF), respectively CFDA Numbers: 21.019 and 21.027, respectively Award Number: SLT0591/0845/1405 and SLFRP2520/4520, respectively Award Year: 2020 and 2021, respectively Type of Finding: Material weakness in internal control over compliance and material noncompliance. Criteria: Per 2 CFR part 200.430, personnel expenses recorded into a federal program must be based on records that accurately reflect the work performed. Hourly employees should be paid for hours worked and documented through a system of internal controls which provides reasonable assurance that the charges are accurate, allowable and properly allocated. Internal controls procedures should be in place to ensure that all cash disbursements and payroll transactions are adequately supported by documentation, approved with accurate account coding on the approval form, retained for support either in the vendor, employee, or program file. Condition and Context: During our testing of payroll transactions charged to the CRF program, the Community did not provide documentation of approved pay rates for any of the 10 paychecks reviewed. The Community also did not provide any supporting documentation or justification for a journal entry moving payroll costs into the CRF program. During our testing of payroll transactions charged to the CSLFRF program, the Community did not provide documentation of approved pay rates for either of the 2 paychecks reviewed. Cause: Lack of internal controls over payroll transactions. Effect: Lack of internal control over payroll transactions poses the risk that the Community will expend federal funds for non-grant purposes or that employees will be paid and incorrect rate. Questioned costs: Actual and likely questioned costs are estimated to be below the reporting threshold of $25,000. Repeat finding: This is a repeat of Finding 2020-009; therefore, we believe this to be a systemic issue. Recommendation: We recommend that management implement policies and procedures to ensure that all paychecks are supported by an approved pay rate, hours worked agree to the hours paid, are accurately calculated and recorded in the general ledger and retained for records for the program. Management Response: Management agrees with this finding, see Corrective Action Plan.