Finding Text
Finding 2024-002: Timesheets and Payroll Registers
Information on the Federal Program: 59.059
Criteria or Specific Requirement (Including Statutory, Regulatory, or Other Citation): Title 2 U.S. Code of Federal Regulations (CFR) Part 200, paragraph 430 “Compensation – personal services” requires that charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed, and that these records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Additionally, these records must comply with established accounting policies and practices of the non-Federal entity.
Condition: We noted 4 instances of timesheets that had no supervisory review and approval. We also noted 5 pay periods where payroll registers had no supervisory review and approval.
Cause: The Organization’s current policies require both the employee and supervisor to sign the timesheet. Throughout the year, these policies were not followed, or were not followed consistently by the Organization employees, and management failed to adequately enforce its policies.
Effect or Potential Effect: The Organization could inadvertently mischarge salaries and wages to its various programs.
Questioned Costs: None noted.
Context: 4 out of 21 samples tested did not have documented review or approval of timesheets and 5 out of 21 payroll registers tested did not have documented review or approval. Our audit work in this area consisted of a random sample selection of payroll periods and employees. We consider our sample to be representative of the population, and thus, is a statistically valid sample.
Identification as a Repeat Finding, if Applicable: Not applicable.
Recommendation: We recommend that the Organization strengthen its internal controls by ensuring that all timesheets are reviewed and approved by the employees' direct supervisors before being submitted for payroll processing. Additionally, we recommend that the payroll register be reviewed and approved by an appropriate individual (e.g., the finance manager or another supervisory official) to ensure that payroll costs charged to the Federal award are accurate and complete. A formal policy should be adopted, and monitoring procedures should be implemented to ensure compliance with Federal regulations for time and effort reporting.