Audit 300664

Finding 2023-001 – Internal Controls over Payroll Approval – Employee Timesheets U.S. Department of Veterans Affairs – Direct Awards Assistance Listing #64.033 – Supportive Services for Veteran Families (SSVF) Federal Awards: All Recipient Organization: Mosaic Community Services, Inc. U.S. Department of Health and Human Services – Direct Awards Assistance Listing # 93.600 – Early Head Start Federal Awards: All Recipient Organization: Family Services, Inc. Criteria: A well-designed internal control system over payroll requires an employee’s time to be reviewed and approved prior to processing. Condition: We selected 40 payroll transactions from the following two major programs, Early Head Start and SSVF for a total of 80 transactions. During our payroll testing we noted 11 of 80 employee timesheets that were not approved by the employee’s supervisor or manager. A payroll sign-off is not an authorization as they would have no knowledge of the accuracy of hours worked and/or activities performed. A Payroll Specialist performing the necessary sign-off allows for payroll to be processed; however would not detect an error. Cause: Supervisors and/or managers had not performed a review at the time in which payroll needed to be processed, requiring the Payroll Department personnel to perform the sign-off. Effect: Without proper oversight and approval of employee hours by a supervisor or manager a higher risk exists that time recorded by the employee may be incomplete or inaccurate. Questioned Costs: N/A Repeat Finding: Yes Recommendation: We recommend the Organization review its current internal control policies and procedures over payroll as requiring no supervisory or manager approval of an employee’s timesheet does not support a well-designed internal control system. Response: While the FY23 policy indicates that all time sheets are approved by the employee and the supervisor, there are occasions where that is not possible, and payroll must approve to process payroll. Tracking employee approvals before processing pay is not possible in an organization with 5,000 employees. The payroll team continues to communicate to program leaders the importance of supervisor and manager review over timekeeping.

Finding 2023-001 – Internal Controls over Payroll Approval – Employee Timesheets U.S. Department of Veterans Affairs – Direct Awards Assistance Listing #64.033 – Supportive Services for Veteran Families (SSVF) Federal Awards: All Recipient Organization: Mosaic Community Services, Inc. U.S. Department of Health and Human Services – Direct Awards Assistance Listing # 93.600 – Early Head Start Federal Awards: All Recipient Organization: Family Services, Inc. Criteria: A well-designed internal control system over payroll requires an employee’s time to be reviewed and approved prior to processing. Condition: We selected 40 payroll transactions from the following two major programs, Early Head Start and SSVF for a total of 80 transactions. During our payroll testing we noted 11 of 80 employee timesheets that were not approved by the employee’s supervisor or manager. A payroll sign-off is not an authorization as they would have no knowledge of the accuracy of hours worked and/or activities performed. A Payroll Specialist performing the necessary sign-off allows for payroll to be processed; however would not detect an error. Cause: Supervisors and/or managers had not performed a review at the time in which payroll needed to be processed, requiring the Payroll Department personnel to perform the sign-off. Effect: Without proper oversight and approval of employee hours by a supervisor or manager a higher risk exists that time recorded by the employee may be incomplete or inaccurate. Questioned Costs: N/A Repeat Finding: Yes Recommendation: We recommend the Organization review its current internal control policies and procedures over payroll as requiring no supervisory or manager approval of an employee’s timesheet does not support a well-designed internal control system. Response: While the FY23 policy indicates that all time sheets are approved by the employee and the supervisor, there are occasions where that is not possible, and payroll must approve to process payroll. Tracking employee approvals before processing pay is not possible in an organization with 5,000 employees. The payroll team continues to communicate to program leaders the importance of supervisor and manager review over timekeeping.

Finding 2023-001 – Internal Controls over Payroll Approval – Employee Timesheets U.S. Department of Veterans Affairs – Direct Awards Assistance Listing #64.033 – Supportive Services for Veteran Families (SSVF) Federal Awards: All Recipient Organization: Mosaic Community Services, Inc. U.S. Department of Health and Human Services – Direct Awards Assistance Listing # 93.600 – Early Head Start Federal Awards: All Recipient Organization: Family Services, Inc. Criteria: A well-designed internal control system over payroll requires an employee’s time to be reviewed and approved prior to processing. Condition: We selected 40 payroll transactions from the following two major programs, Early Head Start and SSVF for a total of 80 transactions. During our payroll testing we noted 11 of 80 employee timesheets that were not approved by the employee’s supervisor or manager. A payroll sign-off is not an authorization as they would have no knowledge of the accuracy of hours worked and/or activities performed. A Payroll Specialist performing the necessary sign-off allows for payroll to be processed; however would not detect an error. Cause: Supervisors and/or managers had not performed a review at the time in which payroll needed to be processed, requiring the Payroll Department personnel to perform the sign-off. Effect: Without proper oversight and approval of employee hours by a supervisor or manager a higher risk exists that time recorded by the employee may be incomplete or inaccurate. Questioned Costs: N/A Repeat Finding: Yes Recommendation: We recommend the Organization review its current internal control policies and procedures over payroll as requiring no supervisory or manager approval of an employee’s timesheet does not support a well-designed internal control system. Response: While the FY23 policy indicates that all time sheets are approved by the employee and the supervisor, there are occasions where that is not possible, and payroll must approve to process payroll. Tracking employee approvals before processing pay is not possible in an organization with 5,000 employees. The payroll team continues to communicate to program leaders the importance of supervisor and manager review over timekeeping.

Finding 2023-001 – Internal Controls over Payroll Approval – Employee Timesheets U.S. Department of Veterans Affairs – Direct Awards Assistance Listing #64.033 – Supportive Services for Veteran Families (SSVF) Federal Awards: All Recipient Organization: Mosaic Community Services, Inc. U.S. Department of Health and Human Services – Direct Awards Assistance Listing # 93.600 – Early Head Start Federal Awards: All Recipient Organization: Family Services, Inc. Criteria: A well-designed internal control system over payroll requires an employee’s time to be reviewed and approved prior to processing. Condition: We selected 40 payroll transactions from the following two major programs, Early Head Start and SSVF for a total of 80 transactions. During our payroll testing we noted 11 of 80 employee timesheets that were not approved by the employee’s supervisor or manager. A payroll sign-off is not an authorization as they would have no knowledge of the accuracy of hours worked and/or activities performed. A Payroll Specialist performing the necessary sign-off allows for payroll to be processed; however would not detect an error. Cause: Supervisors and/or managers had not performed a review at the time in which payroll needed to be processed, requiring the Payroll Department personnel to perform the sign-off. Effect: Without proper oversight and approval of employee hours by a supervisor or manager a higher risk exists that time recorded by the employee may be incomplete or inaccurate. Questioned Costs: N/A Repeat Finding: Yes Recommendation: We recommend the Organization review its current internal control policies and procedures over payroll as requiring no supervisory or manager approval of an employee’s timesheet does not support a well-designed internal control system. Response: While the FY23 policy indicates that all time sheets are approved by the employee and the supervisor, there are occasions where that is not possible, and payroll must approve to process payroll. Tracking employee approvals before processing pay is not possible in an organization with 5,000 employees. The payroll team continues to communicate to program leaders the importance of supervisor and manager review over timekeeping.