Finding Text
2022-003 National Endowment for the Arts Promotion of the Arts Partnership Agreements, 45.025 Allowable Activities and Costs and Period of Performance Material Weakness in Internal Control over Compliance and Noncompliance Grant Award Number: Affects all grant awards under assistance listing 45.025 on the Schedule of Expenditures of Federal Awards Criteria: The Organization?s internal control structure should be designed to properly follow the allocation methodology for employees? pay to each grant, in accordance with the policy established by the Organization. Condition: The Organization has an internal control system designed to detect or prevent improper allocation of employees pay to grants in a timely manner in accordance with their established policy, but the controls did not operate as designed in certain instances. Cause: The Organization has a process for allocating employee wages based on hours worked, however, the retroactive adjustment to employee pay, bonus allocation for one employee, and one pay period for one employee did not follow this process. The controls in place did not operate as designed and failed to detect errors in the allocation of employee pay to the grants. Effect: Employees had some of their pay allocated improperly and not in accordance with the policy established. Questioned Costs: None reported. Context/Sampling: A nonstatistical sample of six employees out of 27 was selected for testing, which accounted for $249,558 of $2,212,036 of federal program expenditures. Five of the six employees tested did not have the retroactive pay increases allocated or calculated properly, one employee had an error in bonus allocation, and one employee had an error in the calculation of payroll allocated for one pay period. The errors are estimated to be approximately $5,385 over the sample. Repeat Finding from Prior Year: No Recommendation: We recommend that management develop a more extensive review over timesheet allocation to ensure pay is properly allocated to each grant in accordance with the policy established by the Organization. Views of Responsible Officials: Management agrees with this finding.