Program: WIC Special Supplemental Nutrition Program for Women, Infants, and Children Federal Financial Assistance Listing Number: 10.557 Federal Grantor: U.S. Department of Agriculture Pass-Through: California Department of Public Health Award No. and Year: 22-10270 A03 and 2022 Compliance Requireme...
Program: WIC Special Supplemental Nutrition Program for Women, Infants, and Children Federal Financial Assistance Listing Number: 10.557 Federal Grantor: U.S. Department of Agriculture Pass-Through: California Department of Public Health Award No. and Year: 22-10270 A03 and 2022 Compliance Requirements: Activities Allowed or Unallowed and Allowable Costs/Cost Principles Type of Finding: Significant Deficiency in Internal Control over Compliance Criteria: 2 CFR Section 200.303(a), Internal Controls, states that the non-Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. 2 CFR Section 200.430, Compensation – Personal Services, states that 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 control that provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Condition: During our testing of the HCA’s provisions for activities allowed or unallowed and allowable costs/cost principles requirements, we noted that for one (1) of sixty (60) payroll samples tested, the employee was able to review and approve their own timecard. Cause: It was determined that the control deficiency resulted from a system configuration error that permitted the employee to approve their own timecard under the supervisor/manager review role. Effect: Failure to consistently apply internal controls over payroll charges increases the risk that unallowable or unsupported payroll costs could be charged to the Federal program and not be detected in a timely manner. Questioned Costs: No questioned costs were identified as a result of our procedures. Context/Sampling: A nonstatistical sampling of sixty (60) timecards was selected for testing out of a population of 1,144. The condition noted above was identified during our procedures related to activities allowed or unallowed and allowable costs/cost principles. Repeat Finding from Prior Years: No. Recommendation: Management should ensure appropriate segregation of duties within the payroll system by restricting approval authority to independent supervisors or managers and implementing controls to prevent self-approval. In addition, management should periodically review user access roles and system configurations to confirm that approval controls are operating as designed and that payroll charges to Federal programs are allowable, properly allocated, and adequately supported. Management Response and Corrective Action Plan: 1. Person Responsible: Barbara Harano, HCA Disbursements Manager 2. Corrective action plan: An unexpected change occurred in the OC Time system that allowed an employee to both submit and approve their own timesheet. This issue had been previously reported and resolved. Auditor-Controller IT has reported the issue again to the timekeeping system vendor and is currently validating and testing the updated configuration to ensure the problem does not recur. 3. Anticipated Implementation date: June 30, 2026