Finding Text
FINDINGS AND QUESTIONED COSTS RELATED TO FEDERAL AWARDS Finding Number: 2022-001 Repeat Finding: No Program Name/Assistance Listing Title: Education Stabilization Fund Assistance Listing Number: 84.425D Federal Agency: U.S. Department of Education Federal Award Number: S425D210038 Pass-Through Agency: Arizona Department of Education Questioned Costs: $96,357 Type of Finding: Noncompliance, Material Weakness Compliance Requirement: Activities allowed or unallowed, Allowable costs/cost principles CRITERIA Management is responsible for establishing and maintaining internal controls over payroll processing. This includes ensuring adequate separation of responsibilities for preparing payroll, authorizing payroll, and distributing payroll. In addition, management is responsible for maintaining documentation to support all salary and wage payments to employees. CONDITION The District lacked proper internal controls over payroll processing. CAUSE The District did not ensure there was a proper separation of duties as it related to payroll. The HR/Payroll employee left in June 2022 and did not have an adequate filing system in place to ensure all files would be retained. EFFECT The District?s internal controls related to payroll were not adequate to ensure a misstatement would be prevented and/or detected. CONTEXT The District?s human resources director was solely responsible for human resources and portions of the payroll functions. This includes entering new employees and their pay rate or contract amount into the accounting system, issuing contracts to employees, processing Governing Board approved pay increases and receiving and entering all timecards. During our review of 50 payroll records we noted the following: ? The District did not have support for the pay rate for three employees. The sample was not intended to be, and was not, a statistically valid sample. RECOMMENDATION The District must implement new procedures over payroll to ensure adequate maintenance of documents. Those procedures must include verifying pay rates are properly supported. VIEWS OF RESPONSIBLE OFFICIALS See Corrective Action Plan.