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Audit (A-04-13-01027)

12-11-2014
The University of California at Irvine's Pilot Payroll Certification System Could Not Be Assessed

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Summary

We could not determine whether the University of California-Irvine's (the University) payroll certification system pilot provided data that supported labor charges that it made to its Federal awards because it could not reconcile its accounting records to its Federal Financial Reports (FFRs). Specifically, the University's reconciliation showed a total variance of approximately $3.8 million for the 666 Federal awards, totaling $491 million, that the University received during the audit period. As a result, we could not determine if the University had a valid list of labor transactions from which we could select a statistical sample for review. At the time of our audit, the University did not have a process in place to reconcile its accounting records to its FFRs. Without a reconciliation of accounting records to the FFRs and a valid list of transactions from which to sample, we could not express an opinion on whether the University certified, reported, or claimed labor costs and associated fringe benefits that accurately reflected the actual effort its personnel devoted to Federal awards.

We recommended that the University (1) reconcile the $491.3 million it reported on its FFRs to its accounting records and (2) modify its financial management system to ensure that amounts it reports on its FFRs can be supported by amounts recorded in its accounting records. The University did not agree with either of our recommendations.

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