Finding Text
Significant deficiency in internal controls over compliance related to allowable costs. Federal Agencies: Department of Treasury Program Titles: Coronavirus State and Local Fiscal Recovery Fund Assistance Listing Numbers: 21.027 Award Numbers: HCS-23-AR-2110-048, EL-23-AR-47-048, EL-23-AR-49-353, and SLFRP0194. Project Period: November 1, 2021 - June 30, 2025 Criteria Under 2 CFR § 200.303, a nonfederal entity is required to establish, document, and maintain effective internal control over federal awards that provides reasonable assurance that the entity is managing federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition/Context for Evaluation During the audit for the year ending June 30, 2025, it was noted that the Agency did not consistently have manager review and approval for employee timesheets during a period of six months. The employees were signing the timesheets, but the control for the manager review and approval was not followed. Cause The Agency had switched payroll systems during that time and there was an expectation that there would be a change in the review process. The updated control was determined not to be effective and the Agency switched back to manual review and approval of timesheets. However, due to employee turnover in the finance department, this switch back to the original control did not occur timely, leading to a lapse in control activities. Effect or Potential Effect The Agency did not apply their stated controls over allowable costs during a six-month period. Questioned Costs Not applicable. Repeat Finding Yes, see finding 2024-003. Recommendation We recommend that the Agency strengthen monitoring over its allowable costs to ensure manager review and approval of employee timesheets is performed consistently and timely throughout the year. Views of Responsible Officials of Auditee Management concurs with the finding and has provided the accompanying management corrective action.