Finding Text
2022-003 Payroll Rates Approval Documentation Federal Program ? Emergency Solutions Grants Program Assistance Listing # 14.231 Significant Deficiency Category of Finding ? Allowable Costs/Cost Principles Criteria ? 2 CFR ? 200.430 requires that compensation for individual employees be reasonable for the services rendered, be consistently applied to both federal and non-federal activities, follows all of the Organizations written policies, and is adequately documented. Adequately documented as defined by the standard requires the charges must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Condition ? During our audit, we noted that pay rates for employees were not documented in a consistent, systematic manner. Context ? 7 of 11 employees selected did not have appropriately documented approved payrates. Cause ? This occurred because no procedure was in place in the personnel department to ensure that all wage rates get approvals and are documented in employee personnel files. Unique wage rate changes, such as promotions, or merit based rases for individual are documented in personnel files, but annual company wide raises are not documented in individual personnel files. Effect ? Employees may be paid using an inappropriate rate or using a rate that is disputed by the employee or employer. Recommendation ? We recommend that the Agate adopt a policy to consistently and appropriately document approvals of all pay rates in individual personnel files. Auditee's comments and response ? Management has reviewed the current practice for approval of raises and are implementing a new payroll system that will have authorizations built into the software which will correct this issue. Responsible party for corrective action: Laura Straw, Finance Director Repeat Finding: No