Finding 502346 (2021-001)

1. Finding Number 2021-001 (Material Weakness - ASSISTANCE LISTING #93.498) Department of Health and Human Services Grant number N/A Grant period 1/1/2020 through 12/31/2021 Condition: Out of 40 transactions selected for testing, 4 selections were payroll transactions that lacked proper employee and management approval of the effective pay rate and one selection was a rental payment that did not have a supporting lease agreement. Criteria: Evidence of proper approval from the employee and management approval of pay rates should be retained to ensure appropriate compensation. Proper retention of disbursement documentation should be maintained to support any transactions. Cause: The internal control process of documenting approved pay rates and all vendor agreements is not being fully completed causing a shortfall in record retention. Effect: Without documented approval, it is possible an employee may not be paid at the proper rate and an unauthorized disbursement may have occurred. Context: A haphazardly selected sample of 40 transactions totaling $263,717 was selected for audit from a population of $1,727,097. The testing found that 5 transactions did not have appropriate supporting documentation. The known questioned costs related to this issue totaled approximately $1,040. The sample was not statistically valid. Recommendation: Establish policies and procedures to ensure proper retention of transaction documentation and internal control review. Management’s Response: Policies and procedures have been established to properly meet the recommendation.