Finding 547304 (2024-003)

Payroll testing and internal controls. Programs: COVID-19 – Elementary & Secondary School Emergency Relief I, II, and Pre-K (ESSER), ALN #84.425D COVID-19 – Elementary & Secondary School Emergency Relief III ARP (ESSER) ALN #84.425U COVID-19 – Elementary & Secondary School Emergency Relief Homeless and Youth ARP (ESSER) ALN #84.425W Compliance Requirement: Allowable Costs/Cost Principles Repeat Finding: None Criteria: The school district is charged with developing controls around payroll expenditures that will provide authorization of pay through school board approval and the existence of time and attendance records. The district should also have controls, including policies and procedures, which will ensure compliance with the record-keeping requirements of the federal wage and hour law. Condition: We noted the following exceptions while testing payroll expenditures: 1. Three (3) employees in the sample were not properly approved by the board. The contracts did not agree with the actual amount paid. The total amount paid to each employee could not be traced to the minutes or salary scales for FY24. 2. One (1) employee could not provide a Personnel Activity Report (PAR) to show how time and effort is being allocated between district and federal funds. Context: Internal control procedures were tested for payroll in the major federal funds and other nonmajor federal funds if included in the sample. Cause: The district did not have proper controls in place to ensure all payments to employees are being properly board approved on an annual basis and can be traced to the board minutes. Also, the district needs to ensure employees meet compliance requirements with Personnel Activity Reports. Effect: Not being able to verify an employee’s pay could result in underpaying or overpaying an employee according to the federal application or budgeted amount approved by the board. Incomplete or missing PAR reports could result in improper use of federal funds. Questioned Costs: None Recommendation: We recommend the district implement internal controls to ensure all employees are properly board approved each year with the amount paid traceable to the board minutes. Controls should also be implemented to ensure all applicable employees paid with federal funds complete the Personnel Activity Report requirements. Response: Please refer to the Auditee’s Corrective Action Plan beginning on page 86.