SADD, INC.

Finding 2025-001: Lack of Supervisory Approval Over Employee Timesheets (Significant Deficiency) Federal Agency: National Highway Traffic Safety Administration Federal Programs: State and Community Highway Safety and National Priority Safety Program Assistance Listing Number(s): 20.600 / 20.616 Pass-Through Entity Name(s): Various Type of Finding: Significant Deficiency in Internal Control over Compliance Criteria or Specific Requirement: Per 2 CFR §200.430(i), charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must be supported by a system of internal controls that provide reasonable assurance that the charges are accurate, allowable, and properly allocated. Such records should be reviewed and approved by a responsible supervisory official having firsthand knowledge of the work performed. Condition: During our testing of payroll transactions, we noted that a sample of employee timesheets charged to Federal awards did not evidence documented supervisory review or approval. In these instances, while the timesheets were prepared by employees, there was no indication that a supervisor reviewed and approved the recorded hours prior to payroll processing or cost allocation. Cause: The Organization did not have adequate procedures or controls in place to ensure that all employee timesheets were consistently reviewed and approved by supervisory personnel. Effect or Potential Effect: Without documented supervisory approval, there is an increased risk that payroll costs charged to Federal awards may not be accurate, properly supported, or allowable. This deficiency could result in questioned costs and noncompliance with Federal regulations governing compensation charged to awards Questioned Costs: None noted. Context: During our testing of payroll, we selected a sample of 40 employee timesheets for the period under audit. Of the items tested, 9 timesheets lacked evidence of supervisory review and approval. Identification as a Repeat Finding: This is not a repeat finding. Recommendation: We recommend that the Organization implement and enforce a policy requiring documented supervisory review and approval of all employee timesheets prior to payroll processing. Procedures should include periodic monitoring to ensure compliance with this requirement.