2022-004 Head Start Cluster, Federal Assistance Listing No. 93.600 Allowable Payroll Costs and Controls Over Payroll (Repeat) Recommendation: The auditors recommend that the Organization establish policies and procedures to support a system of internal controls, which provides a reasonable assuran...
2022-004 Head Start Cluster, Federal Assistance Listing No. 93.600 Allowable Payroll Costs and Controls Over Payroll (Repeat) Recommendation: The auditors recommend that the Organization establish policies and procedures to support a system of internal controls, which provides a reasonable assurance that the charges to federal awards for salaries and other payroll related costs are accurate, allowable and properly allocated. Documentation of all employees? approved pay rates, hours worked and support for the allocation percentages (or actual hours worked) should be maintained. Actions Taken or Planned: The Organization terminated our professional relationship with our financial services provider in FY23, Quatrro BSS. We established a financial services contract with Metropolitan Family Services (MFS) that began July 1, 2022. MFS manages over 130 million dollars in revenue each year and the current finance team has over 50+ years of combined experience managing government and private contracts. MFS is a Professional Employer Organization (PEO) for five organizations averaging four million dollars in annual revenue and has established back-office and finance service contracts with those organizations. MFS has policies and procedures to support a system of internal controls which provides a reasonable assurance that charges to federal awards for payroll related costs are accurate, allowable, and properly allocated. Budget estimates are used for interim accounting purposes provided the estimates produce reasonable approximations of activity performed. The MFS finance team and the Organization's executive team review payroll allocations each quarter. Allocations are supported by an after-the-fact accounting of employee time and effort in a Personal Activity Report (PAR), significant changes in work activity are identified and entered into the record, and the after-the-fact review is completed to make all necessary adjustments to the final amount charged to the Organization's federal awards to help ensure charges are accurate, allowable, and properly allocated. Person Responsible: The Howard Area Community Center Executive Director, Jason Kaiser and the Metropolitan Family Services finance team including CFO James Baldwin, Controller Kelly Kelly, Director of Budget Don Pzynarski, and Assistant Budget Director Emilia Vargas. Estimated Date of Completion: April 2023.