Finding Text
2021-003- Incorrect Payrates {SD)
Federal Program Title:
Federal Catalog Number:
Federal Agency:
Pass-Through Entity:
Federal Award Number and Year:
Category of Finding:
Section 8 Housing Choice Vouchers
14.871
U.S. Department of Housing and Urban Development
Not applicable
CA-071 - 2021
Allowable Costs/Cost Principles
Criteria: Title 2, Subtitle A, Chapter II, Part 200, General Provisions for Selected Items of Cost, Section
200.430, Compensation - Personal Services requires that costs of compensation are allowable to the
extent that they satisfy specific requirements which in include that the total compensation of individual
employees is determined and supported as provided in the Standards for Documentation of Personnel
Expenses. The said standards require charges to Federal awards for salaries and wages must be based
on records that must be supported by a system of internal control which provides reasonable assurance
that the charges are accurate, allowable, and properly allocated.
Condition: The City uses personnel action forms (PA 101) to document the approved payrates of City
employees. During our audit, we noted that the payrates used to determine the amounts claimed for
payroll costs associated with the program were lower than what was reflected in the PA 101 form.
Cause: The City approved retroactive pay increases for employees and the pay increases were
processed as lump sum adjustments. The payroll records prior to the approval of the retroactive pay
were not adjusted to reflect the change. The program costs were not adjusted either.
Effect or Potential Effect: The City missed the opportunity to claim higher payroll costs to the program.
Questioned Cost: None.
Context: Six instances of incorrect payrates were found out of 20 sample items. Since the costs claimed
were lower than what they should have been, no questioned cost is reported.
Statistical Sampling Validity: Samples are haphazardly selected.
Repeat of a Prior-Year Finding: No
Recommendation: We recommend the City improve procedures to ensure that payrate changes are
approved timely and payroll costs charged to the grant are also adjusted whenever payrate changes are
approved.
Management Response and Corrective Action Plan
City's Response: The City concurs with the recommendation.
Corrective Action Plan: The general accounting policy will be updated for the accountant to check
the payroll register to accrue retroactive pay changes to the correct period.
Planned Implementation Date: June 30, 2024
Responsible Person(s): City Controller