Finding Text
FINDING 2023-003 - Block Grants for Prevention and Treatment of Substance Abuse - Assistance Listing No. 93.959; Grant Period - For the year ended June 30, 2023
Condition: The Organization does not have a formal system of approval over the payroll process when exceptions to the standard payroll transactions occur. In addition the Organization does not have consistent procedures in place to require employees to report additional payroll occurrences outside of the normal hourly commitment on the weekly timecards.
Criteria: The Organization has multiple instances of additional payments to employees above and beyond the standard hourly or salary commitment. In addition, the Organization requires all non-exempt employees to enter hours worked into the timecard entry system. A formal payroll approval process would provide verification that these exceptions to the employee's payroll is documented and approved. In addition, complete timecard entry for all hours worked would provide documentation of authorization to the specific employee for additional payments.
Cause: The system of controls over the payroll process did not operate properly to allow for the Organization to provide timecards and/or authorization of extra payroll payments in addition to approved hourly or salary rates for 19 of 267 items selected for testing as part of the payroll testwork performed.
Effect: The Organization's did not have the controls in place to provide verification of payroll exceptions for various employees.
Recommendation: The Organization's internal control system over the payroll process should be modified to include formal approval of any payroll payments outside of the standard hourly or salary commitment. The Organization should modify the internal control system over payroll to require all hours worked by non-exempt employees to be entered into the time card entry system. All employees should be adequately trained on these internal control procedures over the payroll process.
Views of Responsible Officials and Planned Corrective Actions: The Organization has established procedures to require formal approval of any payroll payments outside of the standard hourly or salary commitments. Documentation to support such payments shall be retained with the bi-weekly payroll files. All hours worked by non-exempt employees shall be entered into the time card entry system and approved by the employee’s supervisor.