Finding 570036 (2024-004)

Federal Agency: U.S. Department of Veterans Affairs Federal Program Name: Supportive Services for Veteran Families Assistance Listing Number: 64.033 Federal Award Identification Number and Year: 12-NC-050 Award Period: September 30, 2022 through September 30, 2024 - Type of Finding: Material Weakness in Internal Control over Compliance and Other Matters Criteria or specific requirement: Per 2 CFR Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), §200.403 Factors affecting allowability of costs, costs must be necessary, reasonable, and adequately documented. Condition: During testing of the underlying expenditure details, we noted that the payroll reports provided by the Corporation did not agree with the underlying grant expenditure records. Specifically, the underlying payroll reports were less than what was charged to the grant. Questioned costs: $6,004 Context: During our testing we reviewed the underlying expenditure details. We compared the payroll reports provided by the Corporation to the underlying grant expenditure records. Our review identified a discrepancy where the payroll detail was $6,004 less than the amount charged to the grant. This discrepancy indicates a potential issue with internal controls over the reconciliation process for payroll costs. Cause: The discrepancy was due to inadequate internal controls over the reconciliation of payroll reports to the grant expenditures. The client did not have a process in place to ensure that payroll costs charged to the grant were supported by detailed payroll records. Effect: As a result, there is a risk that unallowable costs were charged to the grant, which could lead to noncompliance with federal requirements and potential disallowance of costs. Recommendation: We recommend that the Corporation implement internal controls over the reconciliation of payroll reports to grant expenditures. This should include regular reconciliations and reviews to ensure that all payroll costs charged to the grant are adequately supported by detailed payroll records. Views of responsible officials: Management agrees with the above finding. A payroll salary reconciliation report will be completed after each payroll issued and will be verified against the grant reports, accounting system class coding and employee-specific payroll file(s). Printed reports will be maintained on file in the Finance Department for historical reference.