Finding Text
2021-008- Incorrect Payrate and Hours Worked (SD)
Federal Program Title:
Federal Catalog Number:
Federal Agency:
Pass-Through Entity:
Federal Award Number and Year:
Category of Finding:
Community Development Block GranUEntitlement Grants
14.218
U.S. Department of Housing and Urban Development
No applicable
B-19-MC-06-0515 - 2019
Allowable CosUCost 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: During our audit, we found one instance where the employee's timecard did not reflect the
number of hours worked for CDBG and another instance where the employee's payrate did not agree to
the payrate stated on the personnel action form (PA 101 ).
Cause: For the exception related to timecard: The City was unable to provide the timecard that showed
the hours worked by the employee by program/fund.
For the exception related to payrate: 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: Over or understatement of costs charged to the program.
Questioned Cost: None
Context: One exception related to timecard and another exception related to payrate were found, out
of 20 items selected.
Statistical Sampling Validity: Samples are haphazardly selected.
Repeat of a Prior-Year Finding: No
Recommendation: We recommend the City improve procedures to ensure completeness and accuracy
of payroll costs charged to federal programs.
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. The payroll policy will
also be updated to require that timecards be updated with supervisor signature if changes are made
to change allocation to another fund.
Planned Implementation Date: June 30, 2024
Responsible Person(s): City Controller