Finding Text
2023-004: Lack of Payroll Documentation
Federal Departments: Department of Health and Human Services
Assistance Listing #: 93.612 and 93.939
Internal Controls Significant Deficiency
Category of Finding – Allowable Costs/ Cost Principles
Criteria – 2 CFR § 200.430 requires that compensation for individual employees be reasonable for the services rendered, be consistently applied to both federal and non-federal activities, follows all of the Organizations written policies, and is adequately documented. Adequately documented as defined by the standard requires the charges must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated.
Condition – During our audit, we noticed multiple employees' approved pay rates were not retained or did not agree with the actual amount paid and recorded in accounting system.
Cause – Procedure in place was not followed to ensure that all wage rates get approvals and are documented in employee personnel files.
Effect – Employees may be paid using an inappropriate rate or using a rate that is disputed by the employee or employer. Salaries or wages may be overcharged or undercharged to grant if pay rates are not documented.
Context – A nonstatistical sample of 30 payroll transactions were selected for testing. Employee’s actual pay rate did not agree or was not supported by approved pay rate for 19 transactions.
Recommendation – We recommend the management review personnel files to ensure all required documentation is retained and accurate. We also recommend management review and update policies and procedures to ensure responsibilities are clear and future files are complete.
Auditee’s comments and response – Management will review policies and procedures to ensure information is complete and up-to-date.
Responsible party for corrective action: Sharon Day, Executive Director
Repeat finding – No