Finding Text
Finding 2023-003, 2022-001: Allowable Activities - Payroll Documentation and Reconciliation
Program Name: Title I Grants to Local Educational Agencies – Assistance Listing 84.010 & Education Stabilization Fund – Assistance Listing 84.425C, 84.425D, 84.425U
Awarding Agency: U.S. Department of Education, passed through Michigan Department of Education
Finding Type: Material Weakness on Internal Controls over Compliance and Material Noncompliance
Questioned Cost Amount: Unknown
Context / Criteria: The School District determines salary and hourly rates based on contractual agreements and other approved rates and charges these expenses to grants in accordance with approved grant agreements. The School
District’s payroll processing should maintain internal controls sufficient to pay employees at agreed amounts, ensure timely changes to agreed amounts, and that amounts are charged to the correct grants in compliance with approved budgets.
Condition: During our payroll testing we noted that 13 payments to employees charged to Title I and 10 payments to
employees charged to ESSER were not paid based on approved rates. It was also noted that 3 employees charged to ESSER were not charged to the correct expense accounts based on their position changes. Additionally, it was noted that a bonus charged to the Title I grant was unallowable.
Cause / Effect: The School District did not maintain sufficient procedures to ensure changes in pay rates were communicated to the appropriate departments for payroll processing. Employees could have been over or under-paid as a
result. Additionally, the School District did not maintain sufficient procedures to ensure all expenses charged to the grant were allowable based on the approved budget.
Recommendation: We recommend the School District document annual pay rates and increases within each personnel file and those pay rates should be communicated to the payroll department to ensure the changes are made within the payroll software. The payroll register should be reviewed before payroll is processed and paid. Additionally, the School District should review all expenditures to ensure the expense is allowable and monitor budget to actual more closely. The School District should ensure the budget used for this comparison agrees to the approved grant budget.
Views of Responsible Officials and Corrective Actions: Management agrees with the finding. See accompanying Corrective Action Plan.