Finding 6903 (2023-002)

Finding 2023-002 Significant deficiency in internal control over compliance for allowable costs related to timesheet approvals. Federal Agency: United States Department of State Program Titles: Office of Global Women’s Issues Assistance Listing Number: 19.801 Pass-Through Entity: N/A Award Numbers: SLMAQM21CA3275 Award Periods: September 30, 2021 through September 30, 2025 Criteria Internal control requirements contained in Title 2 U.S. Code of Federal Regulations Uniform Administrative Requirements, Cost Principles and Audit Requirements for Federal Awards, Subpart E ‐ Cost Principles, Section 200.400, policy guide, require that a non‐Federal entity ensure that charges to federal awards for salaries and wages be based on records that accurately reflect the work performed and must include among other things: be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; be incorporated into the official records of the non-federal entity and reasonably reflect the total activity for which the employee is compensated, not exceeding 100% of compensated activities. Condition/Context The Organization’s internal controls require review and approval of costs charged to the Federal awards by a knowledgeable and authorized individual to ensure that costs are accurately charged. During our direct and indirect payroll testing, we noted multiple cases in which the hours charged to grants were not appropriately approved by the authorized personnel. This was noted in 20 of the total 71 payroll transactions tested. Additionally, 4 out of the total 31 indirect payroll costs tested were missing evidence of pay rate authorizations or approvals. Cause The Organization’s internal controls failed to prevent, or detect and timely correct, these payroll errors from occurring. Effect Payroll charges to the federal awards could result in questioned costs as errors would not have been identified by the employee's supervisor. Questioned Costs Not determinable. Repeat Finding No. Recommendation We recommend the Organization implement measures to ensure that all employee timesheets are reviewed and approved by authorized personnel. Views of Responsible Individual and Corrective Action Plan Management agrees with the finding and has provided the accompanying corrective action plan.