Finding Text
2023-004 - Allowable Costs/Cost Principles – Payroll Documentation
Finding Type. Immaterial noncompliance; Significant Deficiency in Internal Controls over Compliance
Program. WIOA Cluster; U.S. Department of Labor; Southeast Michigan Community Alliance and W.E. Upjohn Institute; Assistance Listing Numbers 17.258, 17.259, and 17.278; All award numbers.
Criteria. The Uniform Guidance requires the Organization to support payroll charged to federal cost objectives with adequate documentation in accordance with the Organization's payroll policies. Per the Organization's federal policies, the Organization is required to support payroll charges to federal cost objectives with adequate documentation including timesheets for those who split their time between multiple cost objectives.
Condition. Of the 40 payroll transactions selected for testing, one instance lacked documentation that complied with the Organization's policies and there were two instances where the documentation did not agree with the amounts charged to the program (all related to the same employee).
Cause. This condition appears to be the result of the Organization charging costs to the program that were not properly supported using allowable methods and/or the costs charged to the program did not agree to the underlying support.
Effect. As a result of this condition, the Organization does not have appropriate payroll support for three of the transactions charged to the grant.
Questioned Costs. The total charges included in our sample that were not supported by allowable documentation amounted to $1,147.
Recommendation. We recommend the Organization 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.
View of Responsible Official. Management concurs with this finding. During the implementation of the new payroll system, corrections were made to the data from the timecards in question. No supporting documentation for those corrections were found. Procedures have been put in place to ensure any corrections to timecard data is approved by management and has supporting documentation. This procedure was implemented during fiscal year 2024.
Responsible Official. Finance Director
Expected Completion Date. June 30, 2024