Finding 478375 (2023-005)

Material Weakness
Requirement
AB
Questioned Costs
-
Year
2023
Accepted
2024-07-12
Audit: 315062
Organization: City of Santa Fe (NM)

AI Summary

  • Core Issue: Lack of proper approval on payroll timesheets, with 10 out of 45 tested missing Manager/Supervisor sign-off.
  • Impacted Requirements: Non-compliance with federal regulations requiring effective internal controls and adequate documentation for allowable costs.
  • Recommended Follow-up: Implement stricter procedures to ensure all payroll transactions receive necessary approvals to prevent payment errors.

Finding Text

2023‐005 – Activities Allowed, Allowable Costs over Payroll (Material Weakness over Internal Controls over Compliance) Federal Program Information Federal Award Title and ALN: Airport Improvement Program, 20.106 Federal Awarding Agency: Department of Transportation, Federal Aviation Administration Federal Award ID Number: SAF‐SWG‐3‐35‐0037‐057‐2021 Federal Award Year: 2023 Condition: During our review of payroll related transactions, 10 out of 45 timesheets tested did not include appropriate approval by the Manager/Supervisor. Criteria: Per Title 2 US Code of Federal Regulations Part 200.303a, non‐federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non‐Federal entities is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Per Title 2 US Code of Federal Regulations Part 200.403g, costs must be adequately documented to be allowable under Federal awards. Cause: The City is not following procedures to ensure the appropriate approvals are being conducted on all payroll transactions. Questioned Cost: None. Effect: The City may unintentionally overpay or underpay employees during their fiscal year.

Corrective Action Plan

Recommendation: The auditor recommends the City strengthen the controls in place to provide assurance that proper review occurs on all transactions. The City’s review/oversight should be designed to ensure that items missing approvals do not move forward in the payroll process. Action Taken: The City agrees with this finding. In FY22 the Payroll Division started sending out a bi‐weekly payroll reminder with tips and guidance for managers and supervisors. In FY24 the Finance Director and the Payroll Officer began working with the City Manager’s Office to strengthen enforcement of policies and procedures to ensure that appropriate approvals are conducted on all payroll transactions. City Leadership, Department Directors, and Senior Staff have been directed frequently at weekly Senior Staff meetings to ensure that proper review and approval occurs on all employee timesheets. The Payroll Officer continues to send reminder emails every pay period with instructions about how to review and approve timesheets in the Munis system, and the Payroll Division provides training as requested by Department staff. During CY24 the City plans to implement an upgrade of the UKG Kronos timekeeping system. The new UKG Dimensions system will offer additional functionality and the ability to interface directly with the Munis ERP system. Additionally, the Payroll Division will develop training on timecard approval and add this information to the bi‐weekly correspondence about timesheet approval deadlines. The Finance Director and Payroll Officer will also work with the City Manager and HR to address repeat noncompliance with disciplinary action. Further, we will work with HR and IT to ensure that all timecards have a backup approver in the event of a supervisor’s absence. The Finance Director and the Payroll Officer will work with the City Manager’s Office to develop a process whereby items missing required approvals are resolved prior to payroll running. The City is in the process of identifying a vendor to contract with Airport to assist with federal compliance and provide training to Airport staff on relevant Uniform Guidance requirements. The vendor’s scope of work will include helping with developing and documenting policies and standard opera􀆟ng procedures, including procedures for Airport payroll approvals. In CY24 the City will provide Uniform Guidance training to staff which will include internal controls related to activities allowed and allowable costs over payroll. Due Date of Completion: December 31, 2024 Responsible Official: Emily Oster - Finance Director, James Harries - Airport Manager, Melanie Sharpe - Payroll Officer, Grants Manager (in recruitment), Bernadette Salazar - Human Resources, Eric Candelaria - Information Technology & Telecommunications, and all Airport Supervisors and Managers

Categories

Allowable Costs / Cost Principles Material Weakness Internal Control / Segregation of Duties

Other Findings in this Audit

  • 478374 2023-004
    Material Weakness
  • 478376 2023-006
    Material Weakness
  • 478377 2023-007
    Material Weakness Repeat
  • 478378 2023-004
    Material Weakness
  • 478379 2023-005
    Material Weakness
  • 478380 2023-006
    Material Weakness
  • 478381 2023-007
    Material Weakness Repeat
  • 478382 2023-004
    Material Weakness
  • 478383 2023-005
    Material Weakness
  • 478384 2023-006
    Material Weakness
  • 478385 2023-007
    Material Weakness Repeat
  • 478386 2023-004
    Material Weakness
  • 478387 2023-005
    Material Weakness
  • 478388 2023-006
    Material Weakness
  • 478389 2023-007
    Material Weakness Repeat
  • 1054816 2023-004
    Material Weakness
  • 1054817 2023-005
    Material Weakness
  • 1054818 2023-006
    Material Weakness
  • 1054819 2023-007
    Material Weakness Repeat
  • 1054820 2023-004
    Material Weakness
  • 1054821 2023-005
    Material Weakness
  • 1054822 2023-006
    Material Weakness
  • 1054823 2023-007
    Material Weakness Repeat
  • 1054824 2023-004
    Material Weakness
  • 1054825 2023-005
    Material Weakness
  • 1054826 2023-006
    Material Weakness
  • 1054827 2023-007
    Material Weakness Repeat
  • 1054828 2023-004
    Material Weakness
  • 1054829 2023-005
    Material Weakness
  • 1054830 2023-006
    Material Weakness
  • 1054831 2023-007
    Material Weakness Repeat

Programs in Audit

ALN Program Name Expenditures
21.027 Covid-19: Coronavirus State and Local Fiscal Recovery Funds $3.12M
14.218 Community Development Block Grants/entitlement Grants $1.32M
20.106 Airport Improvement Program #54 $850,534
20.505 Metropolitan Transportation Planning and State and Non-Metropolitan Planning and Research $348,239
97.036 Disaster Grants - Public Assistance (presidentially Declared Disasters) $273,667
97.067 Homeland Security Grant Program $239,056
20.106 Airport Improvement Program #51 $234,351
14.218 Covid-19: Community Development Block Grants/entitlement Grants $223,455
20.205 Highway Planning and Construction $147,490
93.053 Nutrition Services Incentive Program $109,484
93.045 Special Programs for the Aging_title Iii, Part C-1_nutrition Services $94,043
93.788 Opioid Str $84,307
93.044 Special Programs for the Aging_title Iii, Part B_grants for Supportive Services and Senior Centers $48,568
93.045 Special Programs for the Aging_title Iii, Part C-2_nutrition Services $43,840
20.106 Airport Improvement Program #52 $42,035
94.002 Retired and Senior Volunteer Program $40,861
20.608 Minimum Penalties for Repeat Offenders for Driving While Intoxicated $35,431
94.011 Foster Grandparent Program $34,773
20.703 Interagency Hazardous Materials Public Sector Training and Planning Grants $32,059
93.052 National Family Caregiver Support, Title Iii, Part E $29,101
20.106 Airport Improvement Program #53 $27,360
45.024 Promotion of the Arts_grants to Organizations and Individuals $15,000
93.052 Covid-19: National Family Caregiver Support, Title Iii, Part E Arpa $14,972
97.042 Emergency Management Performance Grants $3,249