Finding Text
Finding 2022-003: Payroll Allocations
Information on the Federal Programs: 98.001
Criteria or Specific Requirement (Including Statutory, Regulatory, or Other Citation): 2 CFR
200.430 Compensation – personal services, section (i) indicates that charges to Federal awards for
salaries and wages must be based on records that accurately reflect the work performed, and that
such records be supported by a system of internal control which provides reasonable assurance that
the charges are accurate, allowable, and properly allocated.
Condition: InterAction has a timekeeping system in place that provides for employees to record
hours worked to specific cost objectives, including to US Government grants. We reviewed the
allocation system during the audit, and noted that it automatically and accurately calculates values to
be charged to each project reflective of the time recorded by employees. However we noted that in
several cases the allocation amounts as per the timekeeping system were different from the
amounts ultimately recorded within InterAction's general ledger. While the differences were not
significant, these discrepancies indicate a deficiency in the internal controls around recording of
salary expenditures to projects.
Cause: The primary cause appears to be human error, and the result of manual recordkeeping.
Effect or Potential Effect: Salary expenditures that are not charged in accordance with the
standards referenced above may be questioned or disallowed by the donor.
Questioned Costs: Undetermined
Context: Our procedures included testing a sample of 40 salary transactions. We noted variances
of the nature described above for 36 of the 40 samples tested. The issue appears to be systemic.
Identification as a Repeat Finding, if Applicable: N/A. Recommendation: We recommend that management revisit its procedures for transferring data
from the timekeeping system to the general ledger and implement proper internal controls to ensure
that the amounts of salary expenditures charged to grants in the general ledger reconcile to the
amounts calculated by the timekeeping system.