Finding Text
Criteria: Payroll transactions are in conformance with 2 CFR part 200. The Payroll charge is supported by personnel activity reports e.g., payroll journals, payroll cash requirements, time and attendance records, and salary distribution reports for nonprofit organizations.
Condition: During our testing of Payroll, we noted Project terminated payroll service with QuickBooks as of the last payroll period ending 4/25/2021 and utilized a manual payroll and the payroll services from ADP for the remainder of the 2021 calendar year. The payroll cost for the period 7/1/2021 through 12/44/2021 was recorded basis on the bank debits. Therefore, the payroll cost was not allocated in the Project’s books and records by account number & description per HUD’s Chart of Accounts but was recorded as Payroll Expenses-$7,543.98, Taxes-$30,366.02, & Wages -$81,958.66 totaling $119,868.66 of unallocated payroll.
Also, the Project could not provide ADP payroll reports for the payroll period in question. To correct this, we utilized the payroll period ending 4/25/2021 to estimate the allocation of the payroll cost from 7/2021 through 12/24/2021 and 12/31/2021 accrued payroll and taxes.
Effect: The Project could not provide personnel activity reports for the period 7/2021 through 12/22/2021 and 12/31/2021 accrual payroll and taxes and payroll cost per the books and records cannot be reconciled to the quarterly Form 941 Federal Employment Tax Returns.
Cause Due to the turnover of Management Agent personnel, the Project’s personnel activity reports were unavailable for examination purposes.
Recommendation: We recommend that Project contact ADP to obtain the missing personnel report for the period 7/1/2021 through 3/31/2022.