Audit 351311

Federal Assistance Listing Title and Number: 93.575 – Child Care and Development Block Grant – Cluster Name of Federal Agency: U.S. Department of Health and Human Services Internal Control over Compliance: Allowable Cost/ Cost Principles Criteria: Payroll costs should be allocated in accordance with approved payroll authorization forms to ensure accuracy, proper cost distribution, and compliance with grant or funding requirements. Condition: During payroll testing, we identified that one employee’s payroll allocation within the Child Development programs did not match the allocation specified in the payroll authorization form. Cause: The discrepancy may have resulted from an administrative error, lack of proper review controls, or failure to update payroll records in line with authorization forms. Effect or Potential Effect: Misallocation of payroll expenses, which could impact program cost reporting and compliance with funding requirements. There is also a risk of audit findings or questioned costs if payroll expenses are not properly allocated. Questioned Cost: None. Repeat of a Prior-Year Finding: No. Recommendation: We recommend that management strengthen payroll controls to ensure that payroll allocations align with approved authorization forms. Specifically, management should implement a periodic reconciliation process between payroll records and authorization forms. Management Response: To ensure accurate allocation for hourly employees, department heads have been informed that the allocation must be manually inputted into the employee's timesheet at the end of each pay period. Employees are encouraged to keep a log of the sites they attend and submit it to their supervisors for proper allocation. This approach has helped supervisors allocate hours accurately and prevent discrepancies in work hour records. Furthermore, when payroll receives payroll authorizations for hourly employees with multiple allocations, we ensure that supervisors and department heads are notified and properly trained on the allocation process for hourly employees. Department heads are tasked to review allocations quarterly.

Federal Assistance Listing Title and Number: 93.575 – Child Care and Development Block Grant – Cluster Name of Federal Agency: U.S. Department of Health and Human Services Internal Control over Compliance: Allowable Cost/ Cost Principles Criteria: Payroll costs should be allocated in accordance with approved payroll authorization forms to ensure accuracy, proper cost distribution, and compliance with grant or funding requirements. Condition: During payroll testing, we identified that one employee’s payroll allocation within the Child Development programs did not match the allocation specified in the payroll authorization form. Cause: The discrepancy may have resulted from an administrative error, lack of proper review controls, or failure to update payroll records in line with authorization forms. Effect or Potential Effect: Misallocation of payroll expenses, which could impact program cost reporting and compliance with funding requirements. There is also a risk of audit findings or questioned costs if payroll expenses are not properly allocated. Questioned Cost: None. Repeat of a Prior-Year Finding: No. Recommendation: We recommend that management strengthen payroll controls to ensure that payroll allocations align with approved authorization forms. Specifically, management should implement a periodic reconciliation process between payroll records and authorization forms. Management Response: To ensure accurate allocation for hourly employees, department heads have been informed that the allocation must be manually inputted into the employee's timesheet at the end of each pay period. Employees are encouraged to keep a log of the sites they attend and submit it to their supervisors for proper allocation. This approach has helped supervisors allocate hours accurately and prevent discrepancies in work hour records. Furthermore, when payroll receives payroll authorizations for hourly employees with multiple allocations, we ensure that supervisors and department heads are notified and properly trained on the allocation process for hourly employees. Department heads are tasked to review allocations quarterly.