Rockingham Planning Commission

2024-001 Improve Internal Controls Over Timesheet Approvals Federal Program Information Federal Agency: Department of Transportation Award Name(s): Highway Planning and Construction Assistance Listing Number(s): 20.205 Award Year: 2024 Compliance Requirement: Allowable Costs/Cost Principles Type of Finding Compliance Internal Control over Compliance – Significant Deficiency Criteria or Specific Requirement Grantees must provide reasonable assurance that federal awards are expended only for allowable activities and that the costs charged to federal awards are allowable and in accordance with the applicable cost principles. Management is also responsible for establishing and maintaining effective internal control over compliance with federal requirements that have a direct and material effect on a federal program. A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of perform¬ing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. Condition and Context During our audit, we tested a sample of thirty-three payroll transactions for the major program in order to determine if charges were properly approved prior to disbursement. As a result of our testing, it was identified that each of the eleven selections for the Executive Director’s timesheets were not approved by a knowledgeable individual. Cause The Organization did not have adequate controls in place to ensure approval over all timesheets prior to disbursement and application to federal awards.   SECTION III – FEDERAL AWARD FINDINGS AND QUESTIONED COSTS (CONTINUED) 2024-001 Improve Internal Controls Over Timesheet Approvals (continued) Effect or Potential Effect Due to the weakness in internal controls noted above, there is a risk that amounts charged to federal awards could not be allowable or in accordance with applicable cost principles. No questioned costs are reported as the auditor obtained approved salary documentation and recalculated the Executive Director’s gross pay and application to federal awards without exception. Recommendation The Commission should address the weaknesses in internal controls noted above in order to provide reasonable assurance that federal awards are expended only for allowable activities, and that the costs charged to federal awards are allowable and in accordance with the applicable cost principles. The Commission should implement controls to ensure that all timesheets are approved to ensure allowability of the costs applied to the federal award. Views of Responsible Official Management’s corrective action plan is included at the end of this report after the Schedule of Prior Year Findings.

Planned Corrective Action: Assistant Director to review and initial all Executive Director's timesheets. Planned Implementation Date of Corrective Action: July 2024 Person Responsible for Corrective Action: Annette Pettengill