Finding Text
CRITERIA: The Organization is required to implement a system of internal controls which provides reasonable assurance that charges to federal awards for personnel expenses are accurate, allowable, and properly allocated. CONDITION: The Organization does not have adequate documentation to support payroll allocations. CONTEXT: During dual purpose tests of controls and compliance over payroll disbursements, we noted employees do not maintain time sheets to support their activities. Therefore, allocations to grants are based on estimates of time commitment instead of actual work performed. Additionally, we noted that salary and benefit amounts used in allocations did not agree to underlying payroll records; in some instances amounts were understated, and in other instances they were overstated. In a sample of six pay periods, errors were noted in all six pay periods. EFFECT: Payroll expenses based on actual work performed cannot be determined, and therefore, the accuracy and proper allocation of costs cannot be verified. CAUSE: The Organization received significant passthrough grants as a result of the COVID-19 pandemic, resulting in a substantial increase in federal funding expended within a short period of time. The Organization had limited capacity to implement all requirements included in Uniform Guidance. RECOMMENDATION: We recommend that management: require employees working on federal grants to track their time; allocate payroll expenses to federal grants based on actual time incurred; and establish a system of internal controls over payroll expenses to ensure that charges are accurate, allowable, and properly allocated. VIEWS OF RESPONSIBLE OFFICIALS: The Organization concurs with the finding.