Finding Text
Finding Type – Material noncompliance and material weakness in internal control over compliance.
Repeat Finding – No.
Federal Program(s) – U.S. Department of Education: Education Stabilization Fund (ALN 84.425); Passed through MDE; All project numbers.
Compliance Requirement – Allowable Costs/Cost Principles ‐ Payroll documentation.
Criteria – The Uniform Guidance requires the Academy to support payroll charged to federal cost objectives with adequate documentation in accordance with the Academy's payroll policies. Per the Academy's federal policies, the Academy is required to support payroll charges to federal cost objectives with adequate documentation including personnel activity reports or timesheets for those who split their time between multiple cost objectives.
Condition – Of the (8) payroll transactions selected for testing, the Academy was unable to provide documentation for (2) of those charges.
Cause / Effect – This condition appears to be the result of the Academy charging costs to federal programs that were not properly supported using allowable methods. As a result, the Academy does not have appropriate support for all payroll charges to the programs.
Questioned Costs – Known questioned costs ‐ $3,292; Likely questioned costs ‐ $67,713; Total questioned costs $71,005.
Recommendation – The Academy should limit payroll charged to federal programs to costs that are supported by documentation that is allowable under federal cost principles and its own policies and procedures.
Auditee Response – The Academy along with its new management company are reviewing, revising, and developing internal controls as necessary in order to comply with compliance requirements relevant to federal programs.