Finding Text
Finding 2022-011 Lack of Internal Control over Activities allowed or Unallowed and Allowable Costs/Cost Principles Federal Agency: U.S. Department of Transportation Federal Program: Tribal Transportation Program Assistance Listing Number: 20.205 Award Number: 693JG41830026K600AK0053 Award Years: 2017 Type of Finding: Material weakness in internal control over compliance and material noncompliance. Criteria: Adequate internal control over payroll transactions should be in place to ensure that personnel files are complete with all necessary documentation, which includes proof of approved pay rates, documentation of where payroll expense should be coded, and support for optional deductions. Employees should complete timesheets that agree to the paystub that has been reviewed by a supervisor and signed by both the employee and supervisor. Condition and Context: We selected a sample of 22 payroll transactions for the program. Out of those transactions, we did not receive supporting documentation for one of the transactions. Additionally, we noted that two transactions did not have approved pay rates, one transaction did not have proper supervisor approval, and one transaction found an employee was paid an incorrect rate. Cause: Lack of internal controls over payroll transactions charged to the program. Effect: The lack of supporting documentation allows for the potential for misstatement of expenditures due to employees being paid incorrectly and lack of documentation of timesheets and approved wages. Questioned Costs: Actual and likely questioned costs estimated to be below the reporting threshold of $25,000. Based on the auditors? review of pay rates, all employees were being paid a reasonable amount based on their position and the auditors? experience with similar entities. Repeat Finding: This is a repeat of Finding 2021-008 and since it is a repeat finding, we believe this to be a systemic issue. Recommendation: We recommend the Association adhere to their internal control policies to ensure accurate reporting of payroll transactions. Management?s Response: Management agrees with this finding. See Corrective Action Plan.