Finding Text
U.S. Department of Agriculture
Federal Financial Assistance Listing # 10.565 All Awards
Federal Financial Assistance Listing # 10.568 All Awards
Food Distribution Cluster
Activities Allowed/Unallowed and Allowable Costs/Cost Principles
Significant Deficiency in Internal Control over Compliance
Criteria – A good system of internal controls includes a process to ensure that all costs are appropriately allocated to the programs.
Condition – As part of our audit, it was identified that there were multiple payroll allocation errors that were not identified by management. It was determined that some errors resulted in overallocation of costs while others in underallocation of costs.
Cause – No formal review was completed of the allocations before or after each payroll. This resulted in incorrect amounts being allocated to the programs.
Effect – The failure to adequately review payroll allocations resulted in incorrect charges to the program.
Questioned Costs – None Reported.
Context/Sampling – A nonstatistical sample of 8 pay periods out of a population of 26 pay periods were selected for testing. 6 pay periods had an error.
Repeat Finding from Prior Year(s) – Yes.
Recommendation – It is recommended that the Organization implement processes and controls to ensure that payroll allocations are reviewed and approved with each payroll processed.
Views of Responsible Officials – Management agrees with the finding.