Finding Text
Finding 2022-003: Time Tracking and Payroll Allocations
Information on the Federal Programs: Assistance Listing Number 98.001
Criteria: Title 2 U.S. Code of Federal Regulations (CFR) Part 200, paragraph 430 “Compensation – personal services” requires that charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed, and that these records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Additionally, these records must comply with established accounting policies and practices of the non-Federal entity.
Condition: During our internal control testwork over payroll, we noted employee timesheets were completed based on time incurred by class (project) codes however, the amounts recorded in the general ledger did not agree to the timesheet allocations. Management recorded the allocations based on donors’ budgets and/or management's estimates.
Cause: Astraea charges time incurred based on donors' budgets and/or management's estimates.
Context: Astraea’s time-recording system does not capture the actual level of effort per program. The issue is deemed to be systemic in nature.
Effect: The current system does not allow Astraea to accurately track and charge salaries and wages to its various programs. As a result, Astraea could inadvertently mischarge salaries and wages to those programs.
Questioned Costs: Undetermined.
Identification as a Repeat Finding: Yes - Finding 2021-004.
Recommendation: We recommend Astraea ensure each employee completes a timesheet that pertains to each payroll period and the timesheet documents the allocation of time worked on departments and projects. Furthermore, the finance department should prepare and maintain a reconciliation between the program allocations (as documented in the approved timesheets) and the general ledger in order to ensure a full and accurate audit trail of payroll expenditures.