Finding Text
Condition and Context: Samples of 19 payroll periods, with 162 employee charges totaling $96,300 under ALN 17.270, and two payroll periods, with three employee charges totaling $5,324 under ALN 17.280, were selected for audit from populations of 111 payroll periods with expenditures totaling $624,021 under ALN 17.270 and 20 payroll periods with expenditures totaling $60,709 under ALN 17.280. All employees who charged time during these payroll periods were selected for testing. For 19 of the 162 employee charges selected for testing under ALN 17.270 and two of the three employee charges selected for testing under ALN 17.280, the amount of payroll costs charged to the federal award programs exceeded the amount that should have been charged, based on the actual hours worked by the employees on the applicable federal award program.
Criteria: 2 CFR 200 requires that auditees support payroll costs with appropriate supporting documentation, including pay rates and direct labor hours worked on federal award programs.
Effect: The costs incurred may not have been allowed under the federal award program.
Cause: OICA’s Financial Reporting Department was undergoing significant transition during the audited period. As a result, the records to support the selected expenditures were not retained properly to ensure documentation of costs.
Questioned Costs: Known questioned costs were $9,203 under ALN 17.270 and $420 under ALN 17.280.
Recommendation: OICA’s management should reinforce with personnel responsible for recording program charges the need for expenditures charged to federal award programs to reflect expenditures based on actual hours and pay rate.
Management’s Response: OICA concurs with the recommendation.