Finding Text
2023 – 004 Internal Control over Payroll Tracking
Federal Agency: U.S. Department of Health and Human Services
Federal Program Name: Head Start
Assistance Listing Number: 93.600
Federal Award Identification Number and Year: N/A
Pass-Through Agency: City of Chicago Department of Family and Support Services & Start Early
Pass-Through Number(s): 1130806/181206/189365/190275; 05CH011953-ELH23-03
Award Period: Start Early: 1/1/22-12/31/22; 1/1/23-12/31/23; City of Chicago: 113806: 12/1/2019-11/30/22; 181206/189365/190275: 4/1/22-11/30/22
Type of Finding: Significant Deficiency in Internal Control over Compliance
Criteria or Specific Requirement: Reports reflecting the distribution of activity of each employee must be maintained for all staff members whose compensation is charged, in whole or in part, directly to awards, in accordance with Cost Principles for Non-Profit Organizations (2 CFR Part 230.8). Charges to Federal awards must also be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. These records must also support the distribution of the employee's salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity.
Condition: The Organization provided time records that account for the number of hours worked by the selected employees and the departments employees are charged. The Organization's control procedures call for dual signatures of the employee and supervisor as a control over hours worked. We noted for 13 timecards tested, one of these signoffs was not present.
Questioned Costs: None
Context: This condition occurred in 13 of the 49 payroll transactions selected for testing and represented 13 different employees.
Cause: Internal controls over compliance with the Uniform Guidance were not followed.
Section III – Findings and Questioned Costs – Major Federal Programs (Continued)
2023 – 004 Internal Control over Payroll Tracking (Continued)
Effect: Inaccurate payroll costs may be charged to federal programs if the Agency does not have procedures in place to monitor and record employee time devoted to federal programs.
Repeat Finding: The finding is not a repeat finding.
Recommendation: Management should follow established controls requiring signatures on time cards of the employee and their supervisor to ensure the completeness and accuracy of hours allocated to the federally funded grant.
Views of Responsible Officials and Planned Corrective Actions: There is no disagreement with this finding.