Corrective Action Plans

Finding Number 2024-028 Subject Heading (Financial) or AL no. and program name (Federal) AL #84.010 TITLE I, PART A – GRANTS TO LOCAL EDUCATIONAL AGENCIES AL #84.425 – EDUCATION STABILIZATION FUND (ESF - AL #84.425D; 84.425U) Planned Corrective Action Since January 2025, the Office of Title Services (OTS) has maintained time and effort records per internal guidelines. OSDE is drafting policies to ensure all employees meet the requirements of 2 CFR §200.430. After implementation, OTS will train staff on these procedures. Anticipated Completion Date Jan-2025 Responsible Contact Person Tammy Smith

Management agrees with the auditors' finding and will take action to implement controlling procedures over federal programs.

Management’s Response and Corrective Action Plan Management was unaware that certain City of Philadelphia contracts contained federal pass-through funding until confirmation was received from the City during the audit. Upon becoming aware of the federal funding, management developed an allocation methodology for shared personnel costs and has begun implementing procedures to identify federal funding at award inception and to document payroll allocations contemporaneously for future reporting periods.

We agree with the recommendations offered, and as of the date of this report, have already established and implemented a written incentive compensation policy that contains all the elements required by the Uniform Guidance.

As noted above, we are working with consultants and our government partners to determine and define the requirements for each relevant program. We understand the recommendations offered and will review, and possibly revise, our policies and procedures, including supervisory review of documentation to support the allowability of costs charged to federal agreements. We will also review existing policies and procedures for preventing or detecting and correcting unallowable costs charged to federal agreements to ensure consistent application of those policies and procedures for all costs charged to federal agreements. The anticipated completion date is October 2026.

Recommendation We recommend that UVNR strengthen its payroll review and approval procedures by requiring that: - The final timesheet used to process payroll be reviewed and approved by the appropriate supervisor before payroll is submitted; - Approved timesheets be reconciled to the payroll register and retained with the payroll documentation; - Timesheet calculations and total hours be independently reviewed for math accuracy; - Version controls be implemented to clearly identify the final approved timesheet when corrected or revised timesheets are submitted; and - Payroll errors and discrepancies be documented and corrected promptly through a subsequent payroll. Management Response Corrective Action: The identified exceptions resulted from isolated administrative errors in the payroll review process and did not reflect intentional noncompliance. Specifically, one exception occurred because an updated Excel timesheet was used for payroll processing without obtaining the required supervisory approval or retaining documentation demonstrating approval of the final version. The second exception resulted from a clerical error in totaling hours on a timesheet. Management acknowledges that these errors indicate opportunities to strengthen payroll review, documentation, and reconciliation procedures. To address the finding, UVNR has implemented enhanced payroll controls designed to improve the accuracy, completeness, and documentation of payroll transactions charged to federal awards: • All payroll timesheets must receive documented supervisory approval before payroll is processed. Only the final approved version of the timesheet may be submitted for payroll processing. • Payroll staff will reconcile approved timesheets to the payroll register prior to payroll submission and retain the approved timesheets with the supporting payroll documentation. • An independent review of timesheet calculations and total hours will be performed before payroll is finalized to verify mathematical accuracy. • Version control procedures have been established to ensure that revised or corrected timesheets are clearly identified as the final approved version, with prior versions retained as appropriate for audit purposes. • Any payroll discrepancies identified after processing will be documented and corrected through the next available payroll cycle, with supporting documentation maintained for the adjustment. • In addition, management will provide refresher training to supervisors and payroll personnel regarding timesheet approval requirements, documentation retention, and payroll review procedures to promote consistent compliance with internal controls and federal grant requirements. Management expects these corrective actions to strengthen internal controls over payroll processing and prevent similar exceptions in the future. Due Date of Completion July 21, 2026 Responsible Party(ies) Co-Executive Directors

The Government concurs with the auditor’s findings and recommendations and finalizing a comprehensive corrective action plan to strengthen grant management and compliance through the Public Finance Management initiative including the development of a three-tier overarching Financial and Compliance policy and procedures framework. The Government’s Audit Committee is leading the development of a structured, three-tier policy and procedures framework under the Public Finance Management project. This framework includes Tier 1, which establishes the overarching Financial and Compliance Policy; Tier 2, which defines Standard Operating Procedures (SOPs) to promote cross-agency consistency; and Tier 3, which outlines detailed, step-by-step procedures that clearly define roles and responsibilities and accountability measures to ensure compliance with all federal regulations including fiscal and administrative requirements for expending and accounting for payroll expenditures. Regular training sessions will be provided to staff involved in grant management to ensure they understand and adhere to compliance requirements with monitoring and evaluation occurring by the OMB Compliance Unit supported by the Government’s Audit Committee, to assess and improve the effectiveness of controls.

VIDE will strengthen payroll and personnel action controls by requiring the Budget Team and Deputy Commissioner to review and approve all personnel actions before NOPA execution to validate pay rates. Furthermore, Payroll will establish a final review step to reconcile approved hours against both the payroll processing register and the final reimbursement invoice. Approved timesheets, Notices of Per Diem, and related payroll support will be centrally retained in SharePoint by pay period and attached to applicable invoices or general ledger journal entries. Program staff and supervisors will receive mandatory training on updated timesheet procedures and federal time and effort requirements. The Office of Fiscal and Administrative Services will also conduct monthly spot checks of SharePoint repositories and ERP logs to document compliance, identify control gaps, and ensure timely corrective action. Finalization of the formal SOPs and supporting controls is a top priority to achieve the necessary level of control precision and prevent repeat findings.

VIDE will strengthen payroll and personnel action controls by requiring the Budget Team and Deputy Commissioner to review and approve all personnel actions before NOPA execution to validate pay rates. Furthermore, Payroll will establish a final review step to reconcile approved hours against both the payroll processing register and the final reimbursement invoice. Approved timesheets, Notices of Per Diem, and related payroll support will be centrally retained in SharePoint by pay period and attached to applicable invoices or general ledger journal entries. Program staff and supervisors will receive mandatory training on updated timesheet procedures and federal time and effort requirements. The Office of Fiscal and Administrative Services will also conduct monthly spot checks of SharePoint repositories and ERP logs to document compliance, identify control gaps, and ensure timely corrective action. Finalization of the formal SOPs and supporting controls is a top priority to achieve the necessary level of control precision and prevent repeat findings.

VIDE will strengthen payroll and personnel action controls by requiring the Budget Team and Deputy Commissioner to review and approve all personnel actions before NOPA execution to validate pay rates. Furthermore, Payroll will establish a final review step to reconcile approved hours against both the payroll processing register and the final reimbursement invoice. Approved timesheets, Notices of Per Diem, and related payroll support will be centrally retained in SharePoint by pay period and attached to applicable invoices or general ledger journal entries. Program staff and supervisors will receive mandatory training on updated timesheet procedures and federal time and effort requirements. The Office of Fiscal and Administrative Services will also conduct monthly spot checks of SharePoint repositories and ERP logs to document compliance, identify control gaps, and ensure timely corrective action. Finalization of the formal SOPs and supporting controls is a top priority to achieve the necessary level of control precision and prevent repeat findings.

DPNR recognizes the discrepancies identified between the employee pay rates reflected in the payroll registers and the Notices of Personnel Action (NOPAs) that were provided during the audit. Preliminary review indicates that the payroll system calculates employee compensation based on approved personnel actions maintained within the payroll system; however, it is possible that the NOPAs provided for audit testing did not reflect the most current approved personnel actions or subsequent amendments affecting employee compensation. Additionally, DPNR's procedures for maintaining and readily retrieving complete personnel and payroll support documentation were not sufficiently centralized to ensure that the most current supporting records were consistently available for audit review. DPNR will conduct a comprehensive internal review of the payroll transactions identified in the audit sample to determine the cause of the discrepancies between the payroll registers and the NOPAs provided during the audit. The review will include: • Verification of the official personnel actions maintained in the payroll system; • Review of any amended or revised NOPAs affecting employee compensation; • Reconciliation of payroll registers to approved personnel actions; • Verification that salaries and wages charged to Federal awards are properly supported and accurately reflected in official records; and • Identification and correction of any deficiencies in document retention or record management procedures.

OMB acknowledges the findings and notes that OMB does not calculate or determine fringe benefit amounts charged to payroll expenditures. However, OMB will coordinate with the Department of Finance to communicate the identified discrepancy and will work collaboratively to strengthen review procedures over payroll cost allocations charged to federal programs. In addition, OMB will reevaluate its existing oversight controls to ensure that payroll expenditures charged to federal awards are supported by appropriate documentation and reviewed for compliance with applicable federal requirements.

The Government will implement enhanced internal control procedures to ensure that payroll expenditures reported on the Schedule of Expenditures of Federal Awards (SEFA) are complete, accurate, and fully supported by transaction-level detail in accordance with 2 CFR 200.303, 2 CFR 200.403(g), and 2 CFR 200.430(i). Corrective actions will include the following: 1. Implementation of Monthly Payroll Reconciliations: The Government will establish a formal reconciliation process requiring monthly reconciliation of payroll expenditures recorded in the accounting system to detailed payroll records generated from the payroll system. o All variances will be identified, investigated, resolved, and documented. o Supporting documentation (e.g., payroll registers, timesheets, and cost allocation reports) will be retained and readily available for audit review. This aligns with enterprise expectations that reconciliation exceptions must be logged, investigated, and resolved with supporting evidence retained. 2. Development and Formalization of Standard Operating Procedures (SOPs): The Government will develop and/or enhance SOPs governing: o Payroll cost charging to federal awards o Documentation standards required to support payroll expenditures o Reconciliation procedures between payroll system and general ledger o SEFA preparation and validation procedures These SOPs will ensure consistency, completeness, and compliance with Uniform Guidance requirements. 3. Strengthening Documentation Controls: Payroll costs charged to federal awards will be supported by documentation that: o Accurately reflects the work performed o Reconciles to total compensation (100% effort) o Is incorporated into official records and retained in accordance with record retention policies Documentation reviews will be incorporated into routine processing and supervisory review controls. 4. Independent Review and Oversight: Reconciliations and payroll allocations to federal programs will be subject to supervisory or independent review to verify: o Accuracy and completeness o Proper allocation across funding sources o Consistency with grant terms and conditions Evidence of review and approval will be maintained. 5. SEFA Validation and Pre-Submission Review: Prior to finalizing the SEFA, the Government will implement a mandatory validation step requiring: o Reconciliation of SEFA totals to the general ledger o Verification that all amounts reported are supported by transaction-level payroll detail o Confirmation that all adjustments are documented and approved This aligns with established CAP practices requiring documented reconciliation outputs that demonstrate control effectiveness. 6. Training and Capacity Building: Relevant personnel will receive training on: o Federal cost principles under 2 CFR 200 o Payroll documentation and certification requirements o SEFA preparation and reconciliation expectations Training will ensure consistent application of policies and improve compliance. 7. Ongoing Monitoring and Compliance Reviews: The Government will implement periodic (quarterly) compliance reviews to: o Assess the effectiveness of payroll reconciliation controls o Ensure documentation requirements are consistently met o Identify and remediate any recurring issues timely These monitoring activities are consistent with prior CAP approaches that require periodic review of payroll documentation and reconciliation practices.

DPNR will: • Conduct a review of payroll transactions to identify any additional discrepancies between timesheets and payroll registers. • Implement a requirement for supervisory review and certification of employee timesheets prior to payroll processing. • Establish a reconciliation process requiring payroll staff to compare approved timesheets to payroll registers before final payroll approval. Grant Charge Authorization • Review personnel funding assignments to verify that salary charges are consistent with approved Notices of Personnel Action (NOPAs), grant budgets, and personnel authorizations. • Correct the employee's funding allocation to reflect the authorized grant funding source. • Establish a secondary review process to verify funding sources before payroll is posted to grant accounts. Payroll Adjustments • Review outstanding payroll adjustments and correction entries. • Process the identified correction and updated procedures to ensure adjustments are completed promptly upon discovery. • Establish tracking procedures to monitor payroll corrections through completion.

DHS adopted the electronic Timeforce (STATS) system for payroll, replacing manual processes. Time and attendance are approved through management levels, with payroll based on Notice of Personnel Action (NOPA) cost centers. Financial Analysts reconcile payroll, and a workflow ensures accurate NOPA listings for payroll purposes. Additionally, in order to ensure that Notices of Personnel Actions are updated on a timely basis, ensuring that salaries are charged to the respective account, DHS has implemented the following process: Provisional Payroll Codes are requested prior to the close of the Fiscal Year by the Department of Finance through the Office of Management and Budget through the established process. Once the codes are received, the Division of Human Resources will update the most current Personnel Distribution Sheets to reflect active employees. The sheets will be submitted to Fiscal for certification by the CFO.NOPA’s are updated with the provisional codes. Lastly, once payroll is processed by the Department of Finance (DOF), a Flex Earnings Report is generated by the Analyst on each payday. A reconciliation is then performed to ensure that all employees, along with their respective fringe benefits, are accurately captured and drawn. Following this process, DOF posts the payroll to the accounting system. The Federal Grants Financial Analyst, once onboarded, will also play a key role in ensuring that transactions are recorded in the appropriate accounting period and that costs are properly allocated. DHS has added an additional layer of monitoring with the onboarding of a Director of Federal Grants. The newly created unit of Audit and Compliance, once staffed will play a crucial role with periodic monitoring.

UCM is implementing Insperity, a new Human Resource and Payroll software system, to improve the accuracy and documentation of time allocation, payroll processing, and benefit allocation across programs and funding sources, including the Family Achievement Program federal award. UCM will configure Insperity and related procedures to support time allocation by program, grant, or cost objective, supervisor approval, payroll allocation reporting, and retention of supporting documentation. In addition, UCM will develop and implement written policies and procedures addressing time and effort reporting, employee benefit allocations, payroll allocation methodology, review and approval requirements, and documentation retention standards. These procedures will require that employee benefits charged to the federal award are based on actual benefit costs incurred, rather than budgeted or estimated amounts, unless otherwise permitted by the award terms and adjusted to actual costs within the required reporting period. UCM will establish a review process to ensure payroll and benefit costs charged to the federal award are accurate, allowable, based on actual costs incurred, properly supported, and consistent with Uniform Guidance requirements. Staff responsible for grant accounting, payroll processing, and federal award compliance will receive Uniform Guidance training. Responsible for Corrective Action: Shruti Jha, Senior Director of Finance Deborah Ewell, Director of Human Resources Laura D’Ambrogi, Grants Manager Anticipated Completion Date: September 30, 2026

Recommendations: Management should implement procedures to ensure that all payroll-related costs, including bonuses and stipends, are properly classified within the accounting system. Management should also establish review controls over coding of expenditures to ensure consistency with Uniform Guidance and grant reporting requirements. Views of responsible officials and planned corrective actions: Management agrees with the finding and indicates that it will strengthen review procedures over expense classification and ensure that compensation costs are properly recorded within payroll-related accounts going forward. Anticipated Completion Date: September 30, 2026

Recommendations: Management should establish formal procedures requiring documented authorization for all disbursements and ensure that such approvals are retained in an organized and accessible manner. Additionally, the Organization should implement procedures requiring formal documentation of employee compensation arrangements, including established pay rates, and ensure that this documentation is consistently maintained and readily available for audit and compliance purposes. Views of responsible officials and planned corrective actions: Management agrees with the finding and indicates that it will implement formal approval procedures requiring documented authorization for all disbursements and will retain such documentation within its accounting records. Management also plans to implement standardized employment agreements and compensation authorization documentation for all employees and strengthen document retention practices to ensure compliance with federal requirements. Anticipated Completion Date: September 30, 2026

FINDING 2024-002 Criteria: Recipients of federal awards must follow the costs principles set out at 2 CFR section 200.430 to substantiate compensation and other purchases charged to a federal program. “Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: …(iii) reasonable reflect the total activity for which the employee is compensated by the non-Federal entity” 2 CFR section 200.430(i). The Organization’s processes did not maintain sufficient documentation of the approval of the activity of each employee or the purchase of goods/services. Audit Recommendation: We recommend the Organization ensure it 1) maintains records of each employee’s activity and 2) monitors compliance with the job-costing system implemented. Auditee Response: Organization believes that prior leadership and lack of supervision allowed paychecks to be approved without the proper flow. FY24 Turnover was roughly 75% in leadership and 60% across the organization. Corrective Action Plan: UICSL moved away to Paycom early 2024 to better help account for Labor Allocation and Grant Codes. With Paycom, employees are automated to each program and there is a designated reporting function allowing us to review what is assigned. UICSL going into 2025 has better defined leadership and Directors for each division so there are clearly defined approvers and supervisors for each purchase and transaction – leadership turnover was high. Person Responsible: Som Chivukula, Finance Director; Matt Poss, Executive Director; Eva Leyer, Human Resources Manager Timeline: UICSL filled all leadership positions by mid-2025 and went through two organizational restructures, creating more mid-level management. This will help ensure compliance with FY25 Audit.

Schedule of Corrective Action Plan For the Year Ended June 30, 2024 Finding 2024-002: Material Weakness in internal controls over Activities Allowed or Unallowed and Allowable Cost/Cost Principle (Payroll) Responsible Official’s Response and Corrective Action Plan We concur with the finding related to deficiencies in our time tracking process. We have implemented a time tracking system using QuickBooks Time starting in the fourth quarter of fiscal year 2025. This system is designed to accurately capture and record employees’ hours worked by project/grant. Comprehensive training sessions have been conducted for all affected employees to ensure they are proficient in using the new time tracking system. Supervisors have received additional training on monitoring and verifying time entries. Planned Implementation Date of Corrective Action Plan September 1, 2024 Person Responsible for Corrective Action Plan Caryn York, President & CEO

Response: MSP plans to implement changes overall to timekeeping processes to ensure that payroll costs accurately reflect the work performed and to reconcile and true up any budget estimates on a consistent basis.

Finding 2023-005 ● Condition: There are no written policies and procedures for allowable costs/cost principles, cash management, procurement and suspension and debarment requirements. ● Cause: The Organization does not have a process for reviewing their accounting policies and procedures manual on a regular basis to ensure written procedures conform to Uniform Guidance requirements. ● Corrective Action Plan: Management agrees with the finding and they will evaluate our findings to determine an appropriate corrective action. Financial policies and procedures will be created and implemented. Annual schedule of expenditures will be created by Executive Director or Bookkeeper and reviewed by Board of Directors. Contact Person: Kirsten Jurcek Anticipated Date of Completion: September 1, 2026

Corrective Action Planned: Management acknowledges the finding related to the lack of formal documentation maintained evidencing a hindsight review of employee working hours to verify alignment between actual hours. The Effort Reporting requirement is now met with a revamped process that includes an updated institutional effort reporting policy and development of a newly developed effort reporting workflow that aligned with the relatively recent (April 2024) implementation of new ERP system Oracle. This new process applies to those team members who have effort either charged, in-kind or cost-shared, to a grant funded project. The new Effort Reporting workflow formally went live institution wide on 10/1/25, with a pilot implementation done in September 2025. Effort reporting is conducted monthly and requires a preview of all team members with effort allocated to grants from an automated report. Each report is reviewed for accuracy and then each line item is entered into a Smartsheet format for automated delivery of an individual effort report to each team member. A mid-month report is automated to flag and identify upcoming end dates of grant funding in preparation of the next month effort report. This midmonth review is necessary to adjust for any edits needed in preparation for the next month effort report workflow. In addition, the new process allows for follow up with escalation if individual effort report(s) are not signed by respective team member(s) within the prescribed monthly due date. Name(s) of Contact Person(s) Responsible for Corrective Action: Kimberly Davey, Director Office for Sponsored Programs Anticipated Completion Date: Completion 9/30/2025, active as of 10/01/2025

Management has reviewed the finding, noting the inherent complexity of time allocation in our operational environment. Because our personnel routinely serve multiple clients simultaneously across various federal grants, tracking exact hours per case presents a significant administrative challenge. Furthermore, the delayed receipt of the FY23 audit-delivered post-FY24-precluded the implementation of procedural adjustments during the audited timeframe. To address our operational realities and ensure strict, ongoing adherence to 2 CFR § 200.430, the agency immediately instituted systemic enhancements for FY25. The Organization has transitioned all time tracking to a streamlined, system-driven process within our UKG platform: • Integrated UKG Time Tracking and Approvals: All employees are now required to punch in and out directly through the UKG system, efficiently assigning their actual hours worked to specific program and grant codes to generate functional, after-the-fact timesheets. To further streamline this documentation, the Organization is gradually transitioning our existing supervisory reviews into UKG’s electronic sign-off workflow, which will centralize our approval records and ensure accurate distribution across federal awards.

U.S. Department of Health and Human Services - Community Service Block Grant Significant Deficiency in Internal Control over Compliance - Other Matters Recommendation: We recommend the Neighborhood Service Center, Inc. reevaluate its current process, implement proper controls and perform additional training over time and effort reporting. The Neighborhood Service Center, Inc. should not report salaries and wages unless it can substantiate that the time and effort was dedicated to the federal program. Documentation should be readily available for audit. Explanation of disagreement with audit finding: There is no disagreement with the audit finding. Action planned/taken in response to finding: The Neighborhood Service, Inc. will require employees whose salaries are allocated to several funding areas to do periodic (at least 2 times per year) time studies to provide documentation to support how salaries are being allocated in the payroll system to grants and other funding areas. These documents will be signed on June 15 and December 15 of each year. Name of the contact persons responsible for corrective action: E. Yvette Robinson, Deputy Director Planned completion date for corrective action plan: For immediate implementation and ongoing.