FAC Explorer

Finding 1240567 (2022-003)

Material Weakness Repeat Finding
Requirement
AB
Questioned Costs
-
Year
2022
Accepted
2026-10-15
Audit: 414987
Organization: NUNAKAUYARMIUT TRIBE (AK)
Auditor: ALTMAN ROGERS & CO

AI Summary

  • Core Issue: There is a significant lack of internal controls over payroll processes, leading to potential inaccuracies in employee payments and misallocation of costs.
  • Impacted Requirements: Compliance with 2 CFR 200.430 is not being met, as payroll transactions lack necessary documentation and approvals.
  • Recommended Follow-Up: Strengthen payroll controls by ensuring all transactions are reviewed and approved, and that employee timesheets and personnel files are properly maintained.

Finding Text

Finding 2022-003 Lack of Internal Control Over Activities Allowed or Unallowed and Allowable Costs/Cost Principles Federal Agency: U.S. Department of Transportation Federal Program: National Infrastructure Investment- TIGER Project Assistance Listing Number: 20.933 Award Numbers: 693JJ32040006 Award Year: 2020 Type of Finding: Material weakness in internal control over compliance and material noncompliance. Criteria: Internal control procedures should be in place to ensure the payroll accounting system is maintained to be able to accurately record payroll transactions. Payroll transactions should be supported by approved pay rates. 2 CFR 200.430 Requires charges for services and wages coded to federal awards to be based on records that accurately reflect the work performed. Internal controls over the payroll system should provide reasonable assurance that transactions are properly approved, accurate, and properly allocated. Condition and Context: Auditors reviewed a random sample of 25 transactions from the program’s payroll population. During our testing of internal controls over payroll we noted that a majority transactions tested lacked the necessary payroll documentation, approved timesheet with supervisor’s approval, approval of the rate of pay for employees. Cause: Lack of internal controls over the payroll internal control system and employee personnel file. Effect: Lack of internal controls over payroll could result in incorrect amounts being paid to employees and the improper allocation of payroll expenses charged to grants, increasing the risk of unallowable activities. Questioned Costs: Actual and likely questioned costs amounted to $570,459 in payroll expenditures related to the federal award. Repeat Finding: This is a repeat of finding 2021-002, and determined to be a systemic issue. Recommendation: The Council should strengthen internal controls over the payroll accounting system. Transactions should be reviewed and approved by supervisors for amount and coding. Timesheets should be totaled and signed by both employee and supervisor. Personnel files should be periodically reviewed to ensure that all employees have adequate payroll documentation with their current approved pay rates and deductions. Management’s Response: Management concurs with this finding. See corrective action plan.

Corrective Action Plan

Finding 2022-003 Lack of Internal Control Over Activities Allowed or Unallowed and Allowable Costs/Cost Principles Name of Contact Person: Dora Mathew, Tribal executive Director Mary Carl, Tribal Financial Officer Corrective Action Plan: Nunakauyarmiut Tribe concurs with the finding and has implemented additional controls over expenditures charged to federal transportation awards. Payroll and other costs charged to transportation programs must be supported by documentation demonstrating the relationship of the expenditure to the applicable project or federal award. Employee time charged to transportation projects must reflect actual work performed and be supported by approved time and payroll documentation. Finance will reconcile transportation program expenditures to the general ledger, approved award budget, and supporting documentation. Costs that cannot be adequately supported or determined to be allocable to the applicable transportation award will not remain charged to that award. The Tribe will maintain supporting documentation for payroll, purchases, contracts, invoices, travel, and other expenditures associated with transportation awards to provide an adequate audit trail and demonstrate compliance with applicable award requirements. Proposed Completion Date: September 30, 2026.

Categories

Allowable Costs / Cost Principles

Other Findings in this Audit

  • 1240563 2022-004
    Material Weakness Repeat
  • 1240564 2022-005
    Material Weakness Repeat
  • 1240565 2022-007
    Material Weakness Repeat
  • 1240566 2022-006
    Material Weakness Repeat
  • 1240568 2022-004
    Material Weakness Repeat
  • 1240569 2022-005
    Material Weakness Repeat
  • 1240570 2022-002
    Material Weakness Repeat
  • 1240571 2022-004
    Material Weakness Repeat
  • 1240572 2022-005
    Material Weakness Repeat

Programs in Audit

ALN Program Name Expenditures
21.027 CORONAVIRUS STATE AND LOCAL FISCAL RECOVERY FUNDS $1.09M
14.862 INDIAN COMMUNITY DEVELOPMENT BLOCK GRANT PROGRAM $1.03M
20.933 NATIONAL INFRASTRUCTURE INVESTMENTS $841,315
84.356 ALASKA NATIVE EDUCATIONAL PROGRAMS $343,787
15.030 INDIAN LAW ENFORCEMENT $186,438
15.020 AID TO TRIBAL GOVERNMENTS $115,310
66.926 INDIAN ENVIRONMENTAL GENERAL ASSISTANCE PROGRAM (GAP) $95,310
15.141 INDIAN HOUSING ASSISTANCE $67,313
15.024 INDIAN SELF-DETERMINATION CONTRACT SUPPORT $54,538
16.710 PUBLIC SAFETY PARTNERSHIP AND COMMUNITY POLICING GRANTS $36,997
20.205 HIGHWAY PLANNING AND CONSTRUCTION $31,149
93.587 PROMOTE THE SURVIVAL AND CONTINUING VITALITY OF NATIVE AMERICAN LANGUAGES $10,400
15.021 CONSOLIDATED TRIBAL GOVERNMENT $7,809
15.130 INDIAN EDUCATION ASSISTANCE TO SCHOOLS $416