Finding Text
Finding 2022-001 Internal Control Over Payroll Type of Finding: Material Weakness in Internal Control over Compliance Condition and Context: An effective internal control system was not in place at the Organization to ensure that employee work hours charged to federal contracts were properly recorded, tracked, approved, and accurate prior to submitting reimbursement claims. Payroll claims without appropriate documentation or supervision totaled $177,512 during the reporting period. Criteria: Management is responsible for establishing internal controls to properly record, track, and approve personnel work efforts on federal contracts to determine that the work claimed is accurate with the work performed. Cause: The Organization had not established an effective system of internal controls that would have ensured proper tracking and approving of work efforts that could distinguish between funding sources and contracts. Effect: The failure to establish an internal control system could enable noncompliance to go undetected. Noncompliance with the grant agreement leading to charging payroll costs to the wrong contract could have resulted in the loss of federal funds to the Organization. Questioned Costs: Known questioned costs of $177,512 were identified, as detailed in the Condition and Context above. Recommendation: We recommended that the Organization's management establish and implement a system of internal controls and maintain adequate supporting documentation to ensure the work efforts for all personnel working on federal contracts are accurate and properly supervised. Views of Responsible Officials: Management agrees with the recommendation and has implemented the following steps. The employees charged to the federal contracts are salaried employees and do not prepare time sheets in the normal course of business. However, the Organization utilizes a time reporting worksheet template provided by the grantor to report employee work hours. This worksheet includes employee name, date, and hours worked per federal contract. The Organization has added the step of including written approval by the employee and the employee?s supervisor on the aforementioned time reporting worksheet to confirm the accuracy of the information submitted.