Finding Text
Finding 2024-003: 11.307 Economic Development Cluster: Material Weakness: Allocation and Approval of Time Charged to Grants
Criteria: Policies and procedures should be in place to identify and review payroll-related expenditures charged to grants to ensure accurate grant reporting. This should include documentation of proper supervision and review.
Condition: The allocation of payroll-related expenditures charged to grants did not directly tie to timesheets and could not easily be reconciled. Furthermore, timecards were not reviewed and approved by management on a timely basis.
Cause: Employees code time to various projects and functions, including grants, however, there was no evidence or supporting documentation of management’s review and approval of the timecards used to allocate personnel expenses between programs. While payroll-related expenditures are charged to grants, the amount charged does not tie to timecards/paystubs. Instead, wages are allocated based on a percentage calculated during an analysis of each employee’s time worked on the program, while the fringe benefits are charged at a budgeted 25% of the wages.
Effect: Payroll-related expenditures are not easily tied back to underlying timecards and paystubs. These expenses did not have evidence of approval which creates the potential for payroll-related amounts on specific grants to be inaccurate.
Recommendation: A policy should be implemented for management to review and document approval of timecards to determine whether time coded to grants is appropriate. Additionally, management should implement a system where hours are tracked and coded to grants during each pay period and payroll-related expenditures charged to the grant are reconciled to the time coded. This includes payroll related taxes and employee benefits.
Management’s Response: The WV Community Development Hub management is actively addressing the deficiencies related to allocation and approval of time charge to federal grants. We have implemented improved internal processes over the past year to better track and allocate staff time across all grants, including federal grants, and maintain detailed time tracking for all staff that determine payroll allocations. We recognize there is further need to directly link time tracking to payroll allocation, and that we need more standardized bi-monthly supervisory approval processes for staff time tracking, and management approval of payroll allocations on a consistent basis. We are implementing a new, significantly more robust financial accounting system that will standardize time tracking, payroll allocation and approval processes all within one system. This system was determined as a need at the beginning of 2024, and we have conducted a multi-month review and analysis process to identify the best system for our organizational needs. The system will be in place and fully operational within six (6) months and we expect it will directly address and remediate current challenges in all of the areas identified by the auditors.