2025-002 Payroll Significant Deficiency in Internal Control (Repeated from prior year, Finding No. 2024-002) Condition: During our audit of payroll expenditures, the Authority was unable to provide adequate supporting documentation and as a result we were unable to verify that employees were paid at...
2025-002 Payroll Significant Deficiency in Internal Control (Repeated from prior year, Finding No. 2024-002) Condition: During our audit of payroll expenditures, the Authority was unable to provide adequate supporting documentation and as a result we were unable to verify that employees were paid at the properly approved rates for the periods tested and that internal controls were operating effectively. Auditor’s Recommendations: The Authority should implement internal controls over payroll and human resources to ensure complete and accurate personnel files are maintained on an ongoing basis for all employees. The Authority should review all current employee payroll files to ensure their files are up to date and include documentation supporting their approved pay rates and all subsequent compensation changes. Management Response: Management acknowledges the findings and the significant deficiency in internal control. We accept responsibility for the deficiencies in internal control over payroll reporting and are committed to implementing corrective actions as follows to ensure a robust control environment that ensures payroll transactions are verified against authorized documentation. Action(s) Taken: • Comprehensive File Reviews: • Immediately initiated a full review of all current employee payroll files to confirm completeness. • Acknowledge that some documentation predating the implementation of Paycom may remain incomplete; however, CHA is making every effort to ensure files are as complete as possible. • Documentation Verification: • Began verifying that each employee file contains proper documentation, including: • initial pay rates, • compensation changes, and • job descriptions and offer letters, where applicable. • Implemented a checks-and-balances review process to ensure that: • time is entered accurately, • timesheets are reviewed and signed by both the employee and the employee's supervisor, and • Authority leadership conducts a pre-payroll audit prior to processing. • Internal Controls: • The Authority utilizes a third-party provider, Paycom, for payroll administration and recordkeeping. • Timesheets are submitted, reviewed, and approved electronically within the system. • Pre-payroll audits are performed by the Executive Director prior to final payroll approval. • All payroll records are securely stored, easily searchable, and fully traceable through the electronic system. • Final payroll approval by the Executive Director through an approval memo to the HR Director before payments are allowed to be made. • Ongoing Compliance: • The HR Director will conduct semi-annual internal audits of a sample of employee files to verify and document ongoing compliance. • Staff responsible for inputting and reviewing payroll will receive ongoing compliance training. • A standardized file documentation checklist will be used to support consistent and complete recordkeeping. Name of Responsible Person(s): Jackie Otto, Executive Director, Sherdana Wade, Director of Operations, and Natalie Hawks, HR Director Projected Completion Date: Some of the corrective activities are underway. We anticipate full compliance ahead of the June 30, 2027 audited submission.