Finding 621190 (2022-003)

2022-003 Internal Controls over Payroll Prior Year Finding Number: N/A Repeat Finding Since: N/A Type of Finding: Internal Control Over Compliance Severity of Deficiency: Material Weakness Federal Agency: U.S. Department of the Treasury and U.S. Department of Health and Human Services Program: 21.027 COVID-19 ? Coronavirus State and Local Fiscal Recovery Funds; 93.563 Child Support Enforcement; 93.778 Medical Assistance Program Award Number and Year: Assistance Listing Number Award Number Year 21.027 Federal Direct 2022 93.563 2201MNCEST 2201MNCSES 2022 93.778 2205MN5ADM 2205MN5MAP 2022 Pass-Through Agency: Assistance Listing Number Pass-Through Agency 21.027 Not applicable 93.563 Minnesota Department of Human Services 93.778 Minnesota Department of Human Services Questioned Costs: None Criteria: Management is responsible for designing and implementing internal controls over accounting processes, including payroll. To obtain greater assurance that errors or fraud in payroll are prevented, detected, and corrected in a timely manner, payroll disbursements made to employees should be supported by appropriate supervisory authorization. Furthermore, Title 2 U.S. Code of Federal Regulations ? 200.303 states that the auditee must establish and maintain effective internal control over the federal award that provides reasonable assurance that the auditee is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition: During testing of internal controls over payroll processing, the County was unable to provide evidence of assigned supervisory review or approval of timesheets for payroll processed during fourth quarter. For each major federal program audit, the fourth quarter payroll expenditures selected for testing contained no evidence of supervisory review or approval. Context: Beginning September 24, 2022, with the implementation of the new time and attendance and payroll system, Workday, Human Resources began mass approving timesheets. Once posted, the mass approval overrides all other approvals in the system making it impossible to identify which timesheets were reviewed and approved by assigned supervisors and which were not. The sample sizes were based on the guidance from Chapter 11 of the AICPA Audit Guide, Government Auditing Standards and Single Audits. Effect: The lack of assigned supervisory review and approval of timesheets has created errors in payroll transactions resulting in an increased number of corrections and supplemental pay needing to be processed. Cause: Human Resources began mass approving timesheets during the implementation to Workday as a way to speed up the processing of payroll. At the same time the County implemented Workday, Human Resources experienced a large amount of staff turnover. The increase in staff turnover combined with implementing Workday, caused significant internal controls to be overlooked. Recommendation: We recommend the County discontinue the practice of mass approving timesheets and design and implement procedures that requires each timesheet to be reviewed and approved within the system by the assigned supervisors. View of Responsible Official: Acknowledge