2024-002 Noncompliance with Allowable Costs/Cost Principles and Weakness in Internal Controls over Indirect Cost Calculation (Significant Deficiency)
Federal Award Program – 93.600 Head Start Cluster
Criteria – Per the Organization’s nonprofit indirect cost rate agreement with U.S. Department of Health and Human Services, the base for calculating indirect costs is total direct costs excluding capital expenditures.
Condition and Context – Audit procedures noted MMCA included capital expenditures in the direct cost base used for indirect cost calculations.
Cause – The non-compliance resulted from management’s oversight of the indirect cost rate agreement requirements for calculating the base.
Effect – MMCA was not in compliance with indirect cost calculation requirements. The total direct costs base used for the indirect expense calculation was overstated, which lead to an overstatement of indirect costs charged to the federal Head Start award 01CH107081-06.
Questioned Costs – The overstatement of indirect cost totaled $109,521.
Recommendations – We recommend the Organization ensure its indirect cost calculation methodology excludes capital expenditures from the direct cost base. All amounts included in the base should be reviewed for unallowable costs as part of the Organization’s internal review process prior to charging expenses. The Organization should ensure that all key personnel involved in calculating and reviewing indirect costs have a clear understanding of both the indirect cost rate agreement and the applicable Uniform Guidance standards. It is our understanding that management has reported this error to the funding administrators for Agreement No. 01CH107081-06 in order to address the questioned costs noted above.
Views of Responsible Officials and Planned Corrective Actions – All costs related to indirect cost calculations will be thoroughly reviewed and analyzed prior to being posted in the accounting system. The formulas within the current indirect cost allocation spreadsheet will be examined to ensure accuracy and compliance with all applicable restrictions. The approved indirect cost rate agreement and its associated restrictions will be reviewed with all members of the fiscal team, Program Directors, the President/CEO, and the Board of Directors. It is essential that all relevant staff maintain a thorough understanding of the terms outlined in the letter issued by the U.S. Department of Health and Human Services (HHS). This review will be conducted annually to ensure ongoing compliance and awareness.
2024-002 Noncompliance with Allowable Costs/Cost Principles and Weakness in Internal Controls over Indirect Cost Calculation (Significant Deficiency)
Federal Award Program – 93.600 Head Start Cluster
Criteria – Per the Organization’s nonprofit indirect cost rate agreement with U.S. Department of Health and Human Services, the base for calculating indirect costs is total direct costs excluding capital expenditures.
Condition and Context – Audit procedures noted MMCA included capital expenditures in the direct cost base used for indirect cost calculations.
Cause – The non-compliance resulted from management’s oversight of the indirect cost rate agreement requirements for calculating the base.
Effect – MMCA was not in compliance with indirect cost calculation requirements. The total direct costs base used for the indirect expense calculation was overstated, which lead to an overstatement of indirect costs charged to the federal Head Start award 01CH107081-06.
Questioned Costs – The overstatement of indirect cost totaled $109,521.
Recommendations – We recommend the Organization ensure its indirect cost calculation methodology excludes capital expenditures from the direct cost base. All amounts included in the base should be reviewed for unallowable costs as part of the Organization’s internal review process prior to charging expenses. The Organization should ensure that all key personnel involved in calculating and reviewing indirect costs have a clear understanding of both the indirect cost rate agreement and the applicable Uniform Guidance standards. It is our understanding that management has reported this error to the funding administrators for Agreement No. 01CH107081-06 in order to address the questioned costs noted above.
Views of Responsible Officials and Planned Corrective Actions – All costs related to indirect cost calculations will be thoroughly reviewed and analyzed prior to being posted in the accounting system. The formulas within the current indirect cost allocation spreadsheet will be examined to ensure accuracy and compliance with all applicable restrictions. The approved indirect cost rate agreement and its associated restrictions will be reviewed with all members of the fiscal team, Program Directors, the President/CEO, and the Board of Directors. It is essential that all relevant staff maintain a thorough understanding of the terms outlined in the letter issued by the U.S. Department of Health and Human Services (HHS). This review will be conducted annually to ensure ongoing compliance and awareness.
2024-002 Noncompliance with Allowable Costs/Cost Principles and Weakness in Internal Controls over Indirect Cost Calculation (Significant Deficiency)
Federal Award Program – 93.600 Head Start Cluster
Criteria – Per the Organization’s nonprofit indirect cost rate agreement with U.S. Department of Health and Human Services, the base for calculating indirect costs is total direct costs excluding capital expenditures.
Condition and Context – Audit procedures noted MMCA included capital expenditures in the direct cost base used for indirect cost calculations.
Cause – The non-compliance resulted from management’s oversight of the indirect cost rate agreement requirements for calculating the base.
Effect – MMCA was not in compliance with indirect cost calculation requirements. The total direct costs base used for the indirect expense calculation was overstated, which lead to an overstatement of indirect costs charged to the federal Head Start award 01CH107081-06.
Questioned Costs – The overstatement of indirect cost totaled $109,521.
Recommendations – We recommend the Organization ensure its indirect cost calculation methodology excludes capital expenditures from the direct cost base. All amounts included in the base should be reviewed for unallowable costs as part of the Organization’s internal review process prior to charging expenses. The Organization should ensure that all key personnel involved in calculating and reviewing indirect costs have a clear understanding of both the indirect cost rate agreement and the applicable Uniform Guidance standards. It is our understanding that management has reported this error to the funding administrators for Agreement No. 01CH107081-06 in order to address the questioned costs noted above.
Views of Responsible Officials and Planned Corrective Actions – All costs related to indirect cost calculations will be thoroughly reviewed and analyzed prior to being posted in the accounting system. The formulas within the current indirect cost allocation spreadsheet will be examined to ensure accuracy and compliance with all applicable restrictions. The approved indirect cost rate agreement and its associated restrictions will be reviewed with all members of the fiscal team, Program Directors, the President/CEO, and the Board of Directors. It is essential that all relevant staff maintain a thorough understanding of the terms outlined in the letter issued by the U.S. Department of Health and Human Services (HHS). This review will be conducted annually to ensure ongoing compliance and awareness.
2024-003 Internal Control over Preparation of the Schedule of Expenditures of Federal Awards (Significant Deficiency – All Awards), Repeated
Criteria – 2 CFR 200, Uniform Administrative Requirements, Cost Principals, and Audit Requirements for Federal Awards, £200.508(b) The auditee must prepare appropriate statements including an accurate Schedule of Expenditures of Federal Awards (SEFA) in accordance with £200.510, Financial Statements.
Condition and Context – Low-Income Home Energy Assistance expenditures were understated by $54,831 as federal LIAP and Assurance 16 funds were not included on the prepared SEFA.
Cause – Insufficient internal controls over the preparation and review process for the SEFA.
Effect – Errors on reporting can lead to issues in reconciling and tracking of awards earned and recognized in the financial statements. They could also lead to findings and corrective action with funders.
Questioned Costs – None
Recommendations – The Organization should strengthen its review process to ensure that federal award program revenue reported in the statement of activities reconciles to the amounts reported on the SEFA. As part of this review, all required minimum elements should be traced to original source documentation, including award letters, grant reports, and trial balance profit and loss reports.
Views of Responsible Officials and Planned Corrective Actions – The Finance Director has initiated a training process to ensure that all fiscal team members are equipped to review contracts, grants, and Memorandum of Understanding (MOUs). This includes verifying that all applicable Assistance Listing Numbers (ALNs) are properly identified and that related revenue is accurately tracked within the accounting system. Additionally, a new revenue code has been established to separately track Low-Income Home Energy Assistance Program (LIHEAP) funds from other federal revenues. This ensures accurate reporting and proper classification of federal awards on the Schedule of Expenditures of Federal Awards (SEFA).
2024-003 Internal Control over Preparation of the Schedule of Expenditures of Federal Awards (Significant Deficiency – All Awards), Repeated
Criteria – 2 CFR 200, Uniform Administrative Requirements, Cost Principals, and Audit Requirements for Federal Awards, £200.508(b) The auditee must prepare appropriate statements including an accurate Schedule of Expenditures of Federal Awards (SEFA) in accordance with £200.510, Financial Statements.
Condition and Context – Low-Income Home Energy Assistance expenditures were understated by $54,831 as federal LIAP and Assurance 16 funds were not included on the prepared SEFA.
Cause – Insufficient internal controls over the preparation and review process for the SEFA.
Effect – Errors on reporting can lead to issues in reconciling and tracking of awards earned and recognized in the financial statements. They could also lead to findings and corrective action with funders.
Questioned Costs – None
Recommendations – The Organization should strengthen its review process to ensure that federal award program revenue reported in the statement of activities reconciles to the amounts reported on the SEFA. As part of this review, all required minimum elements should be traced to original source documentation, including award letters, grant reports, and trial balance profit and loss reports.
Views of Responsible Officials and Planned Corrective Actions – The Finance Director has initiated a training process to ensure that all fiscal team members are equipped to review contracts, grants, and Memorandum of Understanding (MOUs). This includes verifying that all applicable Assistance Listing Numbers (ALNs) are properly identified and that related revenue is accurately tracked within the accounting system. Additionally, a new revenue code has been established to separately track Low-Income Home Energy Assistance Program (LIHEAP) funds from other federal revenues. This ensures accurate reporting and proper classification of federal awards on the Schedule of Expenditures of Federal Awards (SEFA).
2024-003 Internal Control over Preparation of the Schedule of Expenditures of Federal Awards (Significant Deficiency – All Awards), Repeated
Criteria – 2 CFR 200, Uniform Administrative Requirements, Cost Principals, and Audit Requirements for Federal Awards, £200.508(b) The auditee must prepare appropriate statements including an accurate Schedule of Expenditures of Federal Awards (SEFA) in accordance with £200.510, Financial Statements.
Condition and Context – Low-Income Home Energy Assistance expenditures were understated by $54,831 as federal LIAP and Assurance 16 funds were not included on the prepared SEFA.
Cause – Insufficient internal controls over the preparation and review process for the SEFA.
Effect – Errors on reporting can lead to issues in reconciling and tracking of awards earned and recognized in the financial statements. They could also lead to findings and corrective action with funders.
Questioned Costs – None
Recommendations – The Organization should strengthen its review process to ensure that federal award program revenue reported in the statement of activities reconciles to the amounts reported on the SEFA. As part of this review, all required minimum elements should be traced to original source documentation, including award letters, grant reports, and trial balance profit and loss reports.
Views of Responsible Officials and Planned Corrective Actions – The Finance Director has initiated a training process to ensure that all fiscal team members are equipped to review contracts, grants, and Memorandum of Understanding (MOUs). This includes verifying that all applicable Assistance Listing Numbers (ALNs) are properly identified and that related revenue is accurately tracked within the accounting system. Additionally, a new revenue code has been established to separately track Low-Income Home Energy Assistance Program (LIHEAP) funds from other federal revenues. This ensures accurate reporting and proper classification of federal awards on the Schedule of Expenditures of Federal Awards (SEFA).
2024-003 Internal Control over Preparation of the Schedule of Expenditures of Federal Awards (Significant Deficiency – All Awards), Repeated
Criteria – 2 CFR 200, Uniform Administrative Requirements, Cost Principals, and Audit Requirements for Federal Awards, £200.508(b) The auditee must prepare appropriate statements including an accurate Schedule of Expenditures of Federal Awards (SEFA) in accordance with £200.510, Financial Statements.
Condition and Context – Low-Income Home Energy Assistance expenditures were understated by $54,831 as federal LIAP and Assurance 16 funds were not included on the prepared SEFA.
Cause – Insufficient internal controls over the preparation and review process for the SEFA.
Effect – Errors on reporting can lead to issues in reconciling and tracking of awards earned and recognized in the financial statements. They could also lead to findings and corrective action with funders.
Questioned Costs – None
Recommendations – The Organization should strengthen its review process to ensure that federal award program revenue reported in the statement of activities reconciles to the amounts reported on the SEFA. As part of this review, all required minimum elements should be traced to original source documentation, including award letters, grant reports, and trial balance profit and loss reports.
Views of Responsible Officials and Planned Corrective Actions – The Finance Director has initiated a training process to ensure that all fiscal team members are equipped to review contracts, grants, and Memorandum of Understanding (MOUs). This includes verifying that all applicable Assistance Listing Numbers (ALNs) are properly identified and that related revenue is accurately tracked within the accounting system. Additionally, a new revenue code has been established to separately track Low-Income Home Energy Assistance Program (LIHEAP) funds from other federal revenues. This ensures accurate reporting and proper classification of federal awards on the Schedule of Expenditures of Federal Awards (SEFA).
2024-004 Internal Control Over Reporting Review (Significant Deficiency – All Awards)
Criteria – Management is responsible for the design and implementation of internal controls to ensure reporting is accurate, complete, and compliant with relevant regulations.
Condition and Context – Audit procedures noted that several reports tested for federal and state agreements were not reviewed and approved before submission or lacked documentation that a review or approval occurred.
Cause – Staff turnover and change of responsibilities has led to insufficient controls to ensure reporting review and approval documentation prior to submission.
Effect – Without proper review and approval, there is a heightened risk that reports may be inaccurate, incomplete, or non-compliant with regulatory requirements.
Questioned Costs – None
Recommendations – We recommend that the Organization prioritize training for staff involved in the preparation and review of reports. Clear guidelines, defined responsibilities, and established deadlines should be implemented to support accuracy and accountability. Additionally, efforts should be made to ensure continuity of internal controls in the event of staffing or responsibility changes. Management should periodically test these controls to ensure they operate effectively, particularly following changes in key personnel involved in the process.
Views of Responsible Officials and Planned Corrective Actions – The Fiscal Department has implemented a new agency-wide approval system to strengthen internal controls and streamline workflow processes. All relevant staff have received comprehensive training to ensure a smooth transition to the new software. The system enables submission of reports, journal entries, purchase orders, and supporting documentation for review and approval by Supervisors, Program Directors, and the President/CEO. The software maintains a complete audit trail, documenting the originator and each level of the approval. To ensure compliance and effectiveness, the Finance Director will conduct an internal audit six months into the fiscal year. This audit will evaluate adherence to established processes and procedures, confirm the effectiveness of internal controls, and identify any areas for improvement.
2024-004 Internal Control Over Reporting Review (Significant Deficiency – All Awards)
Criteria – Management is responsible for the design and implementation of internal controls to ensure reporting is accurate, complete, and compliant with relevant regulations.
Condition and Context – Audit procedures noted that several reports tested for federal and state agreements were not reviewed and approved before submission or lacked documentation that a review or approval occurred.
Cause – Staff turnover and change of responsibilities has led to insufficient controls to ensure reporting review and approval documentation prior to submission.
Effect – Without proper review and approval, there is a heightened risk that reports may be inaccurate, incomplete, or non-compliant with regulatory requirements.
Questioned Costs – None
Recommendations – We recommend that the Organization prioritize training for staff involved in the preparation and review of reports. Clear guidelines, defined responsibilities, and established deadlines should be implemented to support accuracy and accountability. Additionally, efforts should be made to ensure continuity of internal controls in the event of staffing or responsibility changes. Management should periodically test these controls to ensure they operate effectively, particularly following changes in key personnel involved in the process.
Views of Responsible Officials and Planned Corrective Actions – The Fiscal Department has implemented a new agency-wide approval system to strengthen internal controls and streamline workflow processes. All relevant staff have received comprehensive training to ensure a smooth transition to the new software. The system enables submission of reports, journal entries, purchase orders, and supporting documentation for review and approval by Supervisors, Program Directors, and the President/CEO. The software maintains a complete audit trail, documenting the originator and each level of the approval. To ensure compliance and effectiveness, the Finance Director will conduct an internal audit six months into the fiscal year. This audit will evaluate adherence to established processes and procedures, confirm the effectiveness of internal controls, and identify any areas for improvement.
2024-004 Internal Control Over Reporting Review (Significant Deficiency – All Awards)
Criteria – Management is responsible for the design and implementation of internal controls to ensure reporting is accurate, complete, and compliant with relevant regulations.
Condition and Context – Audit procedures noted that several reports tested for federal and state agreements were not reviewed and approved before submission or lacked documentation that a review or approval occurred.
Cause – Staff turnover and change of responsibilities has led to insufficient controls to ensure reporting review and approval documentation prior to submission.
Effect – Without proper review and approval, there is a heightened risk that reports may be inaccurate, incomplete, or non-compliant with regulatory requirements.
Questioned Costs – None
Recommendations – We recommend that the Organization prioritize training for staff involved in the preparation and review of reports. Clear guidelines, defined responsibilities, and established deadlines should be implemented to support accuracy and accountability. Additionally, efforts should be made to ensure continuity of internal controls in the event of staffing or responsibility changes. Management should periodically test these controls to ensure they operate effectively, particularly following changes in key personnel involved in the process.
Views of Responsible Officials and Planned Corrective Actions – The Fiscal Department has implemented a new agency-wide approval system to strengthen internal controls and streamline workflow processes. All relevant staff have received comprehensive training to ensure a smooth transition to the new software. The system enables submission of reports, journal entries, purchase orders, and supporting documentation for review and approval by Supervisors, Program Directors, and the President/CEO. The software maintains a complete audit trail, documenting the originator and each level of the approval. To ensure compliance and effectiveness, the Finance Director will conduct an internal audit six months into the fiscal year. This audit will evaluate adherence to established processes and procedures, confirm the effectiveness of internal controls, and identify any areas for improvement.
2024-004 Internal Control Over Reporting Review (Significant Deficiency – All Awards)
Criteria – Management is responsible for the design and implementation of internal controls to ensure reporting is accurate, complete, and compliant with relevant regulations.
Condition and Context – Audit procedures noted that several reports tested for federal and state agreements were not reviewed and approved before submission or lacked documentation that a review or approval occurred.
Cause – Staff turnover and change of responsibilities has led to insufficient controls to ensure reporting review and approval documentation prior to submission.
Effect – Without proper review and approval, there is a heightened risk that reports may be inaccurate, incomplete, or non-compliant with regulatory requirements.
Questioned Costs – None
Recommendations – We recommend that the Organization prioritize training for staff involved in the preparation and review of reports. Clear guidelines, defined responsibilities, and established deadlines should be implemented to support accuracy and accountability. Additionally, efforts should be made to ensure continuity of internal controls in the event of staffing or responsibility changes. Management should periodically test these controls to ensure they operate effectively, particularly following changes in key personnel involved in the process.
Views of Responsible Officials and Planned Corrective Actions – The Fiscal Department has implemented a new agency-wide approval system to strengthen internal controls and streamline workflow processes. All relevant staff have received comprehensive training to ensure a smooth transition to the new software. The system enables submission of reports, journal entries, purchase orders, and supporting documentation for review and approval by Supervisors, Program Directors, and the President/CEO. The software maintains a complete audit trail, documenting the originator and each level of the approval. To ensure compliance and effectiveness, the Finance Director will conduct an internal audit six months into the fiscal year. This audit will evaluate adherence to established processes and procedures, confirm the effectiveness of internal controls, and identify any areas for improvement.
2024-005 Internal Control Over Timesheets (Significant Deficiency – All Awards)
Criteria – The Organization’s internal control policies require that Supervisors approve all timesheets prior to submission to the Administrative & Fiscal Services Department.
Condition and Context – During audit procedures, one timesheet selected for testing did not have the required approval from the employee’s supervisor. The timesheet was processed for payment without documented supervisory approval.
Cause – The failure to obtain approval on the timesheet was due to a new supervisor inadvertently missing the employee’s timecard for approval. Controls in place did not prevent the timesheet from being processed without the necessary supervisory review.
Effect – The absence of proper supervisory approval on the timesheet creates a risk that inaccurate or inappropriate payroll information could be processed.
Questioned Costs – None
Recommendations – We recommend that the Organization provide additional training to new supervisors on the importance of reviewing and approving timesheets promptly. Additionally, efforts should be made to ensure continuity of internal controls in the event of staffing or responsibility changes. Management should strengthen controls to prevent processing of timesheets without required approvals. Management should periodically test these controls to ensure they operate effectively, particularly following changes in key personnel involved in the process.
Views of Responsible Officials and Planned Corrective Actions – The Finance Director, in collaboration with the HR Assistant, conducts biweekly reviews of employee timesheets to ensure that both employees and their supervisors have completed and approved submissions prior to payroll processing. MMCA has held meetings with both new and tenured managers to emphasize the critical importance of timely, accurate, and fully approved timesheets. MMCA’s contracted payroll processing company enforces a strict submission deadline to ensure employees are paid on time. In accordance with federal labor regulations, all hours worked must be paid within a reasonable timeframe. Once payroll is submitted to the processor, time sheets can no longer be edited – making the window for corrections very limited. To strengthen accountability, the HR Assistant has implemented a system rule requiring that supervisors cannot approve a timesheet before it has been reviewed and submitted by the employee. This ensures that both parties are actively verifying time entries. Ongoing management training is provided to reinforce best practices in timekeeping and payroll compliance. Additionally, the Finance Director will collaborate with the Director of Human Resources and the President/CEO to revise and formalize the timecard approval process, ensuring consistency, transparency, and compliance across the organization.
2024-005 Internal Control Over Timesheets (Significant Deficiency – All Awards)
Criteria – The Organization’s internal control policies require that Supervisors approve all timesheets prior to submission to the Administrative & Fiscal Services Department.
Condition and Context – During audit procedures, one timesheet selected for testing did not have the required approval from the employee’s supervisor. The timesheet was processed for payment without documented supervisory approval.
Cause – The failure to obtain approval on the timesheet was due to a new supervisor inadvertently missing the employee’s timecard for approval. Controls in place did not prevent the timesheet from being processed without the necessary supervisory review.
Effect – The absence of proper supervisory approval on the timesheet creates a risk that inaccurate or inappropriate payroll information could be processed.
Questioned Costs – None
Recommendations – We recommend that the Organization provide additional training to new supervisors on the importance of reviewing and approving timesheets promptly. Additionally, efforts should be made to ensure continuity of internal controls in the event of staffing or responsibility changes. Management should strengthen controls to prevent processing of timesheets without required approvals. Management should periodically test these controls to ensure they operate effectively, particularly following changes in key personnel involved in the process.
Views of Responsible Officials and Planned Corrective Actions – The Finance Director, in collaboration with the HR Assistant, conducts biweekly reviews of employee timesheets to ensure that both employees and their supervisors have completed and approved submissions prior to payroll processing. MMCA has held meetings with both new and tenured managers to emphasize the critical importance of timely, accurate, and fully approved timesheets. MMCA’s contracted payroll processing company enforces a strict submission deadline to ensure employees are paid on time. In accordance with federal labor regulations, all hours worked must be paid within a reasonable timeframe. Once payroll is submitted to the processor, time sheets can no longer be edited – making the window for corrections very limited. To strengthen accountability, the HR Assistant has implemented a system rule requiring that supervisors cannot approve a timesheet before it has been reviewed and submitted by the employee. This ensures that both parties are actively verifying time entries. Ongoing management training is provided to reinforce best practices in timekeeping and payroll compliance. Additionally, the Finance Director will collaborate with the Director of Human Resources and the President/CEO to revise and formalize the timecard approval process, ensuring consistency, transparency, and compliance across the organization.
2024-005 Internal Control Over Timesheets (Significant Deficiency – All Awards)
Criteria – The Organization’s internal control policies require that Supervisors approve all timesheets prior to submission to the Administrative & Fiscal Services Department.
Condition and Context – During audit procedures, one timesheet selected for testing did not have the required approval from the employee’s supervisor. The timesheet was processed for payment without documented supervisory approval.
Cause – The failure to obtain approval on the timesheet was due to a new supervisor inadvertently missing the employee’s timecard for approval. Controls in place did not prevent the timesheet from being processed without the necessary supervisory review.
Effect – The absence of proper supervisory approval on the timesheet creates a risk that inaccurate or inappropriate payroll information could be processed.
Questioned Costs – None
Recommendations – We recommend that the Organization provide additional training to new supervisors on the importance of reviewing and approving timesheets promptly. Additionally, efforts should be made to ensure continuity of internal controls in the event of staffing or responsibility changes. Management should strengthen controls to prevent processing of timesheets without required approvals. Management should periodically test these controls to ensure they operate effectively, particularly following changes in key personnel involved in the process.
Views of Responsible Officials and Planned Corrective Actions – The Finance Director, in collaboration with the HR Assistant, conducts biweekly reviews of employee timesheets to ensure that both employees and their supervisors have completed and approved submissions prior to payroll processing. MMCA has held meetings with both new and tenured managers to emphasize the critical importance of timely, accurate, and fully approved timesheets. MMCA’s contracted payroll processing company enforces a strict submission deadline to ensure employees are paid on time. In accordance with federal labor regulations, all hours worked must be paid within a reasonable timeframe. Once payroll is submitted to the processor, time sheets can no longer be edited – making the window for corrections very limited. To strengthen accountability, the HR Assistant has implemented a system rule requiring that supervisors cannot approve a timesheet before it has been reviewed and submitted by the employee. This ensures that both parties are actively verifying time entries. Ongoing management training is provided to reinforce best practices in timekeeping and payroll compliance. Additionally, the Finance Director will collaborate with the Director of Human Resources and the President/CEO to revise and formalize the timecard approval process, ensuring consistency, transparency, and compliance across the organization.
2024-005 Internal Control Over Timesheets (Significant Deficiency – All Awards)
Criteria – The Organization’s internal control policies require that Supervisors approve all timesheets prior to submission to the Administrative & Fiscal Services Department.
Condition and Context – During audit procedures, one timesheet selected for testing did not have the required approval from the employee’s supervisor. The timesheet was processed for payment without documented supervisory approval.
Cause – The failure to obtain approval on the timesheet was due to a new supervisor inadvertently missing the employee’s timecard for approval. Controls in place did not prevent the timesheet from being processed without the necessary supervisory review.
Effect – The absence of proper supervisory approval on the timesheet creates a risk that inaccurate or inappropriate payroll information could be processed.
Questioned Costs – None
Recommendations – We recommend that the Organization provide additional training to new supervisors on the importance of reviewing and approving timesheets promptly. Additionally, efforts should be made to ensure continuity of internal controls in the event of staffing or responsibility changes. Management should strengthen controls to prevent processing of timesheets without required approvals. Management should periodically test these controls to ensure they operate effectively, particularly following changes in key personnel involved in the process.
Views of Responsible Officials and Planned Corrective Actions – The Finance Director, in collaboration with the HR Assistant, conducts biweekly reviews of employee timesheets to ensure that both employees and their supervisors have completed and approved submissions prior to payroll processing. MMCA has held meetings with both new and tenured managers to emphasize the critical importance of timely, accurate, and fully approved timesheets. MMCA’s contracted payroll processing company enforces a strict submission deadline to ensure employees are paid on time. In accordance with federal labor regulations, all hours worked must be paid within a reasonable timeframe. Once payroll is submitted to the processor, time sheets can no longer be edited – making the window for corrections very limited. To strengthen accountability, the HR Assistant has implemented a system rule requiring that supervisors cannot approve a timesheet before it has been reviewed and submitted by the employee. This ensures that both parties are actively verifying time entries. Ongoing management training is provided to reinforce best practices in timekeeping and payroll compliance. Additionally, the Finance Director will collaborate with the Director of Human Resources and the President/CEO to revise and formalize the timecard approval process, ensuring consistency, transparency, and compliance across the organization.
2024-002 Noncompliance with Allowable Costs/Cost Principles and Weakness in Internal Controls over Indirect Cost Calculation (Significant Deficiency)
Federal Award Program – 93.600 Head Start Cluster
Criteria – Per the Organization’s nonprofit indirect cost rate agreement with U.S. Department of Health and Human Services, the base for calculating indirect costs is total direct costs excluding capital expenditures.
Condition and Context – Audit procedures noted MMCA included capital expenditures in the direct cost base used for indirect cost calculations.
Cause – The non-compliance resulted from management’s oversight of the indirect cost rate agreement requirements for calculating the base.
Effect – MMCA was not in compliance with indirect cost calculation requirements. The total direct costs base used for the indirect expense calculation was overstated, which lead to an overstatement of indirect costs charged to the federal Head Start award 01CH107081-06.
Questioned Costs – The overstatement of indirect cost totaled $109,521.
Recommendations – We recommend the Organization ensure its indirect cost calculation methodology excludes capital expenditures from the direct cost base. All amounts included in the base should be reviewed for unallowable costs as part of the Organization’s internal review process prior to charging expenses. The Organization should ensure that all key personnel involved in calculating and reviewing indirect costs have a clear understanding of both the indirect cost rate agreement and the applicable Uniform Guidance standards. It is our understanding that management has reported this error to the funding administrators for Agreement No. 01CH107081-06 in order to address the questioned costs noted above.
Views of Responsible Officials and Planned Corrective Actions – All costs related to indirect cost calculations will be thoroughly reviewed and analyzed prior to being posted in the accounting system. The formulas within the current indirect cost allocation spreadsheet will be examined to ensure accuracy and compliance with all applicable restrictions. The approved indirect cost rate agreement and its associated restrictions will be reviewed with all members of the fiscal team, Program Directors, the President/CEO, and the Board of Directors. It is essential that all relevant staff maintain a thorough understanding of the terms outlined in the letter issued by the U.S. Department of Health and Human Services (HHS). This review will be conducted annually to ensure ongoing compliance and awareness.
2024-002 Noncompliance with Allowable Costs/Cost Principles and Weakness in Internal Controls over Indirect Cost Calculation (Significant Deficiency)
Federal Award Program – 93.600 Head Start Cluster
Criteria – Per the Organization’s nonprofit indirect cost rate agreement with U.S. Department of Health and Human Services, the base for calculating indirect costs is total direct costs excluding capital expenditures.
Condition and Context – Audit procedures noted MMCA included capital expenditures in the direct cost base used for indirect cost calculations.
Cause – The non-compliance resulted from management’s oversight of the indirect cost rate agreement requirements for calculating the base.
Effect – MMCA was not in compliance with indirect cost calculation requirements. The total direct costs base used for the indirect expense calculation was overstated, which lead to an overstatement of indirect costs charged to the federal Head Start award 01CH107081-06.
Questioned Costs – The overstatement of indirect cost totaled $109,521.
Recommendations – We recommend the Organization ensure its indirect cost calculation methodology excludes capital expenditures from the direct cost base. All amounts included in the base should be reviewed for unallowable costs as part of the Organization’s internal review process prior to charging expenses. The Organization should ensure that all key personnel involved in calculating and reviewing indirect costs have a clear understanding of both the indirect cost rate agreement and the applicable Uniform Guidance standards. It is our understanding that management has reported this error to the funding administrators for Agreement No. 01CH107081-06 in order to address the questioned costs noted above.
Views of Responsible Officials and Planned Corrective Actions – All costs related to indirect cost calculations will be thoroughly reviewed and analyzed prior to being posted in the accounting system. The formulas within the current indirect cost allocation spreadsheet will be examined to ensure accuracy and compliance with all applicable restrictions. The approved indirect cost rate agreement and its associated restrictions will be reviewed with all members of the fiscal team, Program Directors, the President/CEO, and the Board of Directors. It is essential that all relevant staff maintain a thorough understanding of the terms outlined in the letter issued by the U.S. Department of Health and Human Services (HHS). This review will be conducted annually to ensure ongoing compliance and awareness.
2024-002 Noncompliance with Allowable Costs/Cost Principles and Weakness in Internal Controls over Indirect Cost Calculation (Significant Deficiency)
Federal Award Program – 93.600 Head Start Cluster
Criteria – Per the Organization’s nonprofit indirect cost rate agreement with U.S. Department of Health and Human Services, the base for calculating indirect costs is total direct costs excluding capital expenditures.
Condition and Context – Audit procedures noted MMCA included capital expenditures in the direct cost base used for indirect cost calculations.
Cause – The non-compliance resulted from management’s oversight of the indirect cost rate agreement requirements for calculating the base.
Effect – MMCA was not in compliance with indirect cost calculation requirements. The total direct costs base used for the indirect expense calculation was overstated, which lead to an overstatement of indirect costs charged to the federal Head Start award 01CH107081-06.
Questioned Costs – The overstatement of indirect cost totaled $109,521.
Recommendations – We recommend the Organization ensure its indirect cost calculation methodology excludes capital expenditures from the direct cost base. All amounts included in the base should be reviewed for unallowable costs as part of the Organization’s internal review process prior to charging expenses. The Organization should ensure that all key personnel involved in calculating and reviewing indirect costs have a clear understanding of both the indirect cost rate agreement and the applicable Uniform Guidance standards. It is our understanding that management has reported this error to the funding administrators for Agreement No. 01CH107081-06 in order to address the questioned costs noted above.
Views of Responsible Officials and Planned Corrective Actions – All costs related to indirect cost calculations will be thoroughly reviewed and analyzed prior to being posted in the accounting system. The formulas within the current indirect cost allocation spreadsheet will be examined to ensure accuracy and compliance with all applicable restrictions. The approved indirect cost rate agreement and its associated restrictions will be reviewed with all members of the fiscal team, Program Directors, the President/CEO, and the Board of Directors. It is essential that all relevant staff maintain a thorough understanding of the terms outlined in the letter issued by the U.S. Department of Health and Human Services (HHS). This review will be conducted annually to ensure ongoing compliance and awareness.
2024-003 Internal Control over Preparation of the Schedule of Expenditures of Federal Awards (Significant Deficiency – All Awards), Repeated
Criteria – 2 CFR 200, Uniform Administrative Requirements, Cost Principals, and Audit Requirements for Federal Awards, £200.508(b) The auditee must prepare appropriate statements including an accurate Schedule of Expenditures of Federal Awards (SEFA) in accordance with £200.510, Financial Statements.
Condition and Context – Low-Income Home Energy Assistance expenditures were understated by $54,831 as federal LIAP and Assurance 16 funds were not included on the prepared SEFA.
Cause – Insufficient internal controls over the preparation and review process for the SEFA.
Effect – Errors on reporting can lead to issues in reconciling and tracking of awards earned and recognized in the financial statements. They could also lead to findings and corrective action with funders.
Questioned Costs – None
Recommendations – The Organization should strengthen its review process to ensure that federal award program revenue reported in the statement of activities reconciles to the amounts reported on the SEFA. As part of this review, all required minimum elements should be traced to original source documentation, including award letters, grant reports, and trial balance profit and loss reports.
Views of Responsible Officials and Planned Corrective Actions – The Finance Director has initiated a training process to ensure that all fiscal team members are equipped to review contracts, grants, and Memorandum of Understanding (MOUs). This includes verifying that all applicable Assistance Listing Numbers (ALNs) are properly identified and that related revenue is accurately tracked within the accounting system. Additionally, a new revenue code has been established to separately track Low-Income Home Energy Assistance Program (LIHEAP) funds from other federal revenues. This ensures accurate reporting and proper classification of federal awards on the Schedule of Expenditures of Federal Awards (SEFA).
2024-003 Internal Control over Preparation of the Schedule of Expenditures of Federal Awards (Significant Deficiency – All Awards), Repeated
Criteria – 2 CFR 200, Uniform Administrative Requirements, Cost Principals, and Audit Requirements for Federal Awards, £200.508(b) The auditee must prepare appropriate statements including an accurate Schedule of Expenditures of Federal Awards (SEFA) in accordance with £200.510, Financial Statements.
Condition and Context – Low-Income Home Energy Assistance expenditures were understated by $54,831 as federal LIAP and Assurance 16 funds were not included on the prepared SEFA.
Cause – Insufficient internal controls over the preparation and review process for the SEFA.
Effect – Errors on reporting can lead to issues in reconciling and tracking of awards earned and recognized in the financial statements. They could also lead to findings and corrective action with funders.
Questioned Costs – None
Recommendations – The Organization should strengthen its review process to ensure that federal award program revenue reported in the statement of activities reconciles to the amounts reported on the SEFA. As part of this review, all required minimum elements should be traced to original source documentation, including award letters, grant reports, and trial balance profit and loss reports.
Views of Responsible Officials and Planned Corrective Actions – The Finance Director has initiated a training process to ensure that all fiscal team members are equipped to review contracts, grants, and Memorandum of Understanding (MOUs). This includes verifying that all applicable Assistance Listing Numbers (ALNs) are properly identified and that related revenue is accurately tracked within the accounting system. Additionally, a new revenue code has been established to separately track Low-Income Home Energy Assistance Program (LIHEAP) funds from other federal revenues. This ensures accurate reporting and proper classification of federal awards on the Schedule of Expenditures of Federal Awards (SEFA).
2024-003 Internal Control over Preparation of the Schedule of Expenditures of Federal Awards (Significant Deficiency – All Awards), Repeated
Criteria – 2 CFR 200, Uniform Administrative Requirements, Cost Principals, and Audit Requirements for Federal Awards, £200.508(b) The auditee must prepare appropriate statements including an accurate Schedule of Expenditures of Federal Awards (SEFA) in accordance with £200.510, Financial Statements.
Condition and Context – Low-Income Home Energy Assistance expenditures were understated by $54,831 as federal LIAP and Assurance 16 funds were not included on the prepared SEFA.
Cause – Insufficient internal controls over the preparation and review process for the SEFA.
Effect – Errors on reporting can lead to issues in reconciling and tracking of awards earned and recognized in the financial statements. They could also lead to findings and corrective action with funders.
Questioned Costs – None
Recommendations – The Organization should strengthen its review process to ensure that federal award program revenue reported in the statement of activities reconciles to the amounts reported on the SEFA. As part of this review, all required minimum elements should be traced to original source documentation, including award letters, grant reports, and trial balance profit and loss reports.
Views of Responsible Officials and Planned Corrective Actions – The Finance Director has initiated a training process to ensure that all fiscal team members are equipped to review contracts, grants, and Memorandum of Understanding (MOUs). This includes verifying that all applicable Assistance Listing Numbers (ALNs) are properly identified and that related revenue is accurately tracked within the accounting system. Additionally, a new revenue code has been established to separately track Low-Income Home Energy Assistance Program (LIHEAP) funds from other federal revenues. This ensures accurate reporting and proper classification of federal awards on the Schedule of Expenditures of Federal Awards (SEFA).
2024-003 Internal Control over Preparation of the Schedule of Expenditures of Federal Awards (Significant Deficiency – All Awards), Repeated
Criteria – 2 CFR 200, Uniform Administrative Requirements, Cost Principals, and Audit Requirements for Federal Awards, £200.508(b) The auditee must prepare appropriate statements including an accurate Schedule of Expenditures of Federal Awards (SEFA) in accordance with £200.510, Financial Statements.
Condition and Context – Low-Income Home Energy Assistance expenditures were understated by $54,831 as federal LIAP and Assurance 16 funds were not included on the prepared SEFA.
Cause – Insufficient internal controls over the preparation and review process for the SEFA.
Effect – Errors on reporting can lead to issues in reconciling and tracking of awards earned and recognized in the financial statements. They could also lead to findings and corrective action with funders.
Questioned Costs – None
Recommendations – The Organization should strengthen its review process to ensure that federal award program revenue reported in the statement of activities reconciles to the amounts reported on the SEFA. As part of this review, all required minimum elements should be traced to original source documentation, including award letters, grant reports, and trial balance profit and loss reports.
Views of Responsible Officials and Planned Corrective Actions – The Finance Director has initiated a training process to ensure that all fiscal team members are equipped to review contracts, grants, and Memorandum of Understanding (MOUs). This includes verifying that all applicable Assistance Listing Numbers (ALNs) are properly identified and that related revenue is accurately tracked within the accounting system. Additionally, a new revenue code has been established to separately track Low-Income Home Energy Assistance Program (LIHEAP) funds from other federal revenues. This ensures accurate reporting and proper classification of federal awards on the Schedule of Expenditures of Federal Awards (SEFA).
2024-004 Internal Control Over Reporting Review (Significant Deficiency – All Awards)
Criteria – Management is responsible for the design and implementation of internal controls to ensure reporting is accurate, complete, and compliant with relevant regulations.
Condition and Context – Audit procedures noted that several reports tested for federal and state agreements were not reviewed and approved before submission or lacked documentation that a review or approval occurred.
Cause – Staff turnover and change of responsibilities has led to insufficient controls to ensure reporting review and approval documentation prior to submission.
Effect – Without proper review and approval, there is a heightened risk that reports may be inaccurate, incomplete, or non-compliant with regulatory requirements.
Questioned Costs – None
Recommendations – We recommend that the Organization prioritize training for staff involved in the preparation and review of reports. Clear guidelines, defined responsibilities, and established deadlines should be implemented to support accuracy and accountability. Additionally, efforts should be made to ensure continuity of internal controls in the event of staffing or responsibility changes. Management should periodically test these controls to ensure they operate effectively, particularly following changes in key personnel involved in the process.
Views of Responsible Officials and Planned Corrective Actions – The Fiscal Department has implemented a new agency-wide approval system to strengthen internal controls and streamline workflow processes. All relevant staff have received comprehensive training to ensure a smooth transition to the new software. The system enables submission of reports, journal entries, purchase orders, and supporting documentation for review and approval by Supervisors, Program Directors, and the President/CEO. The software maintains a complete audit trail, documenting the originator and each level of the approval. To ensure compliance and effectiveness, the Finance Director will conduct an internal audit six months into the fiscal year. This audit will evaluate adherence to established processes and procedures, confirm the effectiveness of internal controls, and identify any areas for improvement.
2024-004 Internal Control Over Reporting Review (Significant Deficiency – All Awards)
Criteria – Management is responsible for the design and implementation of internal controls to ensure reporting is accurate, complete, and compliant with relevant regulations.
Condition and Context – Audit procedures noted that several reports tested for federal and state agreements were not reviewed and approved before submission or lacked documentation that a review or approval occurred.
Cause – Staff turnover and change of responsibilities has led to insufficient controls to ensure reporting review and approval documentation prior to submission.
Effect – Without proper review and approval, there is a heightened risk that reports may be inaccurate, incomplete, or non-compliant with regulatory requirements.
Questioned Costs – None
Recommendations – We recommend that the Organization prioritize training for staff involved in the preparation and review of reports. Clear guidelines, defined responsibilities, and established deadlines should be implemented to support accuracy and accountability. Additionally, efforts should be made to ensure continuity of internal controls in the event of staffing or responsibility changes. Management should periodically test these controls to ensure they operate effectively, particularly following changes in key personnel involved in the process.
Views of Responsible Officials and Planned Corrective Actions – The Fiscal Department has implemented a new agency-wide approval system to strengthen internal controls and streamline workflow processes. All relevant staff have received comprehensive training to ensure a smooth transition to the new software. The system enables submission of reports, journal entries, purchase orders, and supporting documentation for review and approval by Supervisors, Program Directors, and the President/CEO. The software maintains a complete audit trail, documenting the originator and each level of the approval. To ensure compliance and effectiveness, the Finance Director will conduct an internal audit six months into the fiscal year. This audit will evaluate adherence to established processes and procedures, confirm the effectiveness of internal controls, and identify any areas for improvement.
2024-004 Internal Control Over Reporting Review (Significant Deficiency – All Awards)
Criteria – Management is responsible for the design and implementation of internal controls to ensure reporting is accurate, complete, and compliant with relevant regulations.
Condition and Context – Audit procedures noted that several reports tested for federal and state agreements were not reviewed and approved before submission or lacked documentation that a review or approval occurred.
Cause – Staff turnover and change of responsibilities has led to insufficient controls to ensure reporting review and approval documentation prior to submission.
Effect – Without proper review and approval, there is a heightened risk that reports may be inaccurate, incomplete, or non-compliant with regulatory requirements.
Questioned Costs – None
Recommendations – We recommend that the Organization prioritize training for staff involved in the preparation and review of reports. Clear guidelines, defined responsibilities, and established deadlines should be implemented to support accuracy and accountability. Additionally, efforts should be made to ensure continuity of internal controls in the event of staffing or responsibility changes. Management should periodically test these controls to ensure they operate effectively, particularly following changes in key personnel involved in the process.
Views of Responsible Officials and Planned Corrective Actions – The Fiscal Department has implemented a new agency-wide approval system to strengthen internal controls and streamline workflow processes. All relevant staff have received comprehensive training to ensure a smooth transition to the new software. The system enables submission of reports, journal entries, purchase orders, and supporting documentation for review and approval by Supervisors, Program Directors, and the President/CEO. The software maintains a complete audit trail, documenting the originator and each level of the approval. To ensure compliance and effectiveness, the Finance Director will conduct an internal audit six months into the fiscal year. This audit will evaluate adherence to established processes and procedures, confirm the effectiveness of internal controls, and identify any areas for improvement.
2024-004 Internal Control Over Reporting Review (Significant Deficiency – All Awards)
Criteria – Management is responsible for the design and implementation of internal controls to ensure reporting is accurate, complete, and compliant with relevant regulations.
Condition and Context – Audit procedures noted that several reports tested for federal and state agreements were not reviewed and approved before submission or lacked documentation that a review or approval occurred.
Cause – Staff turnover and change of responsibilities has led to insufficient controls to ensure reporting review and approval documentation prior to submission.
Effect – Without proper review and approval, there is a heightened risk that reports may be inaccurate, incomplete, or non-compliant with regulatory requirements.
Questioned Costs – None
Recommendations – We recommend that the Organization prioritize training for staff involved in the preparation and review of reports. Clear guidelines, defined responsibilities, and established deadlines should be implemented to support accuracy and accountability. Additionally, efforts should be made to ensure continuity of internal controls in the event of staffing or responsibility changes. Management should periodically test these controls to ensure they operate effectively, particularly following changes in key personnel involved in the process.
Views of Responsible Officials and Planned Corrective Actions – The Fiscal Department has implemented a new agency-wide approval system to strengthen internal controls and streamline workflow processes. All relevant staff have received comprehensive training to ensure a smooth transition to the new software. The system enables submission of reports, journal entries, purchase orders, and supporting documentation for review and approval by Supervisors, Program Directors, and the President/CEO. The software maintains a complete audit trail, documenting the originator and each level of the approval. To ensure compliance and effectiveness, the Finance Director will conduct an internal audit six months into the fiscal year. This audit will evaluate adherence to established processes and procedures, confirm the effectiveness of internal controls, and identify any areas for improvement.
2024-005 Internal Control Over Timesheets (Significant Deficiency – All Awards)
Criteria – The Organization’s internal control policies require that Supervisors approve all timesheets prior to submission to the Administrative & Fiscal Services Department.
Condition and Context – During audit procedures, one timesheet selected for testing did not have the required approval from the employee’s supervisor. The timesheet was processed for payment without documented supervisory approval.
Cause – The failure to obtain approval on the timesheet was due to a new supervisor inadvertently missing the employee’s timecard for approval. Controls in place did not prevent the timesheet from being processed without the necessary supervisory review.
Effect – The absence of proper supervisory approval on the timesheet creates a risk that inaccurate or inappropriate payroll information could be processed.
Questioned Costs – None
Recommendations – We recommend that the Organization provide additional training to new supervisors on the importance of reviewing and approving timesheets promptly. Additionally, efforts should be made to ensure continuity of internal controls in the event of staffing or responsibility changes. Management should strengthen controls to prevent processing of timesheets without required approvals. Management should periodically test these controls to ensure they operate effectively, particularly following changes in key personnel involved in the process.
Views of Responsible Officials and Planned Corrective Actions – The Finance Director, in collaboration with the HR Assistant, conducts biweekly reviews of employee timesheets to ensure that both employees and their supervisors have completed and approved submissions prior to payroll processing. MMCA has held meetings with both new and tenured managers to emphasize the critical importance of timely, accurate, and fully approved timesheets. MMCA’s contracted payroll processing company enforces a strict submission deadline to ensure employees are paid on time. In accordance with federal labor regulations, all hours worked must be paid within a reasonable timeframe. Once payroll is submitted to the processor, time sheets can no longer be edited – making the window for corrections very limited. To strengthen accountability, the HR Assistant has implemented a system rule requiring that supervisors cannot approve a timesheet before it has been reviewed and submitted by the employee. This ensures that both parties are actively verifying time entries. Ongoing management training is provided to reinforce best practices in timekeeping and payroll compliance. Additionally, the Finance Director will collaborate with the Director of Human Resources and the President/CEO to revise and formalize the timecard approval process, ensuring consistency, transparency, and compliance across the organization.
2024-005 Internal Control Over Timesheets (Significant Deficiency – All Awards)
Criteria – The Organization’s internal control policies require that Supervisors approve all timesheets prior to submission to the Administrative & Fiscal Services Department.
Condition and Context – During audit procedures, one timesheet selected for testing did not have the required approval from the employee’s supervisor. The timesheet was processed for payment without documented supervisory approval.
Cause – The failure to obtain approval on the timesheet was due to a new supervisor inadvertently missing the employee’s timecard for approval. Controls in place did not prevent the timesheet from being processed without the necessary supervisory review.
Effect – The absence of proper supervisory approval on the timesheet creates a risk that inaccurate or inappropriate payroll information could be processed.
Questioned Costs – None
Recommendations – We recommend that the Organization provide additional training to new supervisors on the importance of reviewing and approving timesheets promptly. Additionally, efforts should be made to ensure continuity of internal controls in the event of staffing or responsibility changes. Management should strengthen controls to prevent processing of timesheets without required approvals. Management should periodically test these controls to ensure they operate effectively, particularly following changes in key personnel involved in the process.
Views of Responsible Officials and Planned Corrective Actions – The Finance Director, in collaboration with the HR Assistant, conducts biweekly reviews of employee timesheets to ensure that both employees and their supervisors have completed and approved submissions prior to payroll processing. MMCA has held meetings with both new and tenured managers to emphasize the critical importance of timely, accurate, and fully approved timesheets. MMCA’s contracted payroll processing company enforces a strict submission deadline to ensure employees are paid on time. In accordance with federal labor regulations, all hours worked must be paid within a reasonable timeframe. Once payroll is submitted to the processor, time sheets can no longer be edited – making the window for corrections very limited. To strengthen accountability, the HR Assistant has implemented a system rule requiring that supervisors cannot approve a timesheet before it has been reviewed and submitted by the employee. This ensures that both parties are actively verifying time entries. Ongoing management training is provided to reinforce best practices in timekeeping and payroll compliance. Additionally, the Finance Director will collaborate with the Director of Human Resources and the President/CEO to revise and formalize the timecard approval process, ensuring consistency, transparency, and compliance across the organization.
2024-005 Internal Control Over Timesheets (Significant Deficiency – All Awards)
Criteria – The Organization’s internal control policies require that Supervisors approve all timesheets prior to submission to the Administrative & Fiscal Services Department.
Condition and Context – During audit procedures, one timesheet selected for testing did not have the required approval from the employee’s supervisor. The timesheet was processed for payment without documented supervisory approval.
Cause – The failure to obtain approval on the timesheet was due to a new supervisor inadvertently missing the employee’s timecard for approval. Controls in place did not prevent the timesheet from being processed without the necessary supervisory review.
Effect – The absence of proper supervisory approval on the timesheet creates a risk that inaccurate or inappropriate payroll information could be processed.
Questioned Costs – None
Recommendations – We recommend that the Organization provide additional training to new supervisors on the importance of reviewing and approving timesheets promptly. Additionally, efforts should be made to ensure continuity of internal controls in the event of staffing or responsibility changes. Management should strengthen controls to prevent processing of timesheets without required approvals. Management should periodically test these controls to ensure they operate effectively, particularly following changes in key personnel involved in the process.
Views of Responsible Officials and Planned Corrective Actions – The Finance Director, in collaboration with the HR Assistant, conducts biweekly reviews of employee timesheets to ensure that both employees and their supervisors have completed and approved submissions prior to payroll processing. MMCA has held meetings with both new and tenured managers to emphasize the critical importance of timely, accurate, and fully approved timesheets. MMCA’s contracted payroll processing company enforces a strict submission deadline to ensure employees are paid on time. In accordance with federal labor regulations, all hours worked must be paid within a reasonable timeframe. Once payroll is submitted to the processor, time sheets can no longer be edited – making the window for corrections very limited. To strengthen accountability, the HR Assistant has implemented a system rule requiring that supervisors cannot approve a timesheet before it has been reviewed and submitted by the employee. This ensures that both parties are actively verifying time entries. Ongoing management training is provided to reinforce best practices in timekeeping and payroll compliance. Additionally, the Finance Director will collaborate with the Director of Human Resources and the President/CEO to revise and formalize the timecard approval process, ensuring consistency, transparency, and compliance across the organization.
2024-005 Internal Control Over Timesheets (Significant Deficiency – All Awards)
Criteria – The Organization’s internal control policies require that Supervisors approve all timesheets prior to submission to the Administrative & Fiscal Services Department.
Condition and Context – During audit procedures, one timesheet selected for testing did not have the required approval from the employee’s supervisor. The timesheet was processed for payment without documented supervisory approval.
Cause – The failure to obtain approval on the timesheet was due to a new supervisor inadvertently missing the employee’s timecard for approval. Controls in place did not prevent the timesheet from being processed without the necessary supervisory review.
Effect – The absence of proper supervisory approval on the timesheet creates a risk that inaccurate or inappropriate payroll information could be processed.
Questioned Costs – None
Recommendations – We recommend that the Organization provide additional training to new supervisors on the importance of reviewing and approving timesheets promptly. Additionally, efforts should be made to ensure continuity of internal controls in the event of staffing or responsibility changes. Management should strengthen controls to prevent processing of timesheets without required approvals. Management should periodically test these controls to ensure they operate effectively, particularly following changes in key personnel involved in the process.
Views of Responsible Officials and Planned Corrective Actions – The Finance Director, in collaboration with the HR Assistant, conducts biweekly reviews of employee timesheets to ensure that both employees and their supervisors have completed and approved submissions prior to payroll processing. MMCA has held meetings with both new and tenured managers to emphasize the critical importance of timely, accurate, and fully approved timesheets. MMCA’s contracted payroll processing company enforces a strict submission deadline to ensure employees are paid on time. In accordance with federal labor regulations, all hours worked must be paid within a reasonable timeframe. Once payroll is submitted to the processor, time sheets can no longer be edited – making the window for corrections very limited. To strengthen accountability, the HR Assistant has implemented a system rule requiring that supervisors cannot approve a timesheet before it has been reviewed and submitted by the employee. This ensures that both parties are actively verifying time entries. Ongoing management training is provided to reinforce best practices in timekeeping and payroll compliance. Additionally, the Finance Director will collaborate with the Director of Human Resources and the President/CEO to revise and formalize the timecard approval process, ensuring consistency, transparency, and compliance across the organization.