Finding 1099782 (2023-002)

Significant Deficiency
Requirement
B
Questioned Costs
-
Year
2023
Accepted
2025-02-14
Audit: 342622
Organization: Choice in Aging (CA)
Auditor: Brymar CPA LLP

AI Summary

  • Core Issue: There are significant deficiencies in internal controls over payroll processes, leading to potential inaccuracies in payroll records.
  • Impacted Requirements: Management must ensure effective internal controls are in place to comply with federal program regulations.
  • Recommended Follow-Up: Implement a termination checklist for payroll and ensure all pay raises have documented approval before processing.

Finding Text

Finding 2023-02: Allowable Costs: Payroll – Significant Deficiency in Internal Control over Compliance Information on the Federal Program: Assistance Listing Number 93.778—Medical Assistance Program, Medicaid Cluster, United States Department Health and Human Services. Pass-Through Entity: California Department of Aging. Award Numbers: MS-2223-47 and MS-2223-56. Criteria: Management is responsible for the design, implementation, and maintenance of effective internal control over compliance with the requirements of laws, statutes, regulations, rules, and provisions of contracts or grant agreements applicable to the Organization’s federal programs. Condition: We identified two inconsistencies in controls related to payroll processes. Cause: The condition occurred primarily because of having either an ineffective or no monthly and year-end control activity designed and implemented to verify payroll information was properly recorded and approved. Effect: Amounts recorded in payroll may be unauthorized or inaccurate. Without a properly designed process and review controls, material misstatements due to error or fraud could occur and not be detected. Questioned Costs: None. Context: We tested one hundred percent of payroll costs for four employees. In one out of the four employees selected for testing, proper approval for employee pay raise was not documented. In addition, for another one of the four employees tested, the employee record was not timely deactivated upon employment termination. Recommendation: We recommend management implement a termination checklist that the payroll administrator completes for each terminated employee before the next payroll is processed. The deactivation of employee record in the payroll system should be one of the steps on the checklist. Additionally, we recommend that all pay raise letters have proper documented approval before being processed in the payroll system. Views of Responsible Official: See next page

Categories

Subrecipient Monitoring Allowable Costs / Cost Principles Reporting Significant Deficiency Internal Control / Segregation of Duties Special Tests & Provisions

Other Findings in this Audit

  • 523340 2023-002
    Significant Deficiency
  • 523341 2023-002
    Significant Deficiency
  • 1099783 2023-002
    Significant Deficiency

Programs in Audit

ALN Program Name Expenditures
93.778 Medical Assistance Program $458,814
93.791 Money Follows the Person Rebalancing Demonstration $173,887
93.048 Special Programs for the Aging, Title Iv, and Title Ii, Discretionary Projects $60,125
93.052 National Family Caregiver Support, Title Iii, Part E $29,317
10.558 Child and Adult Care Food Program $25,279
14.218 Community Development Block Grants/entitlement Grants $8,500
93.044 Special Programs for the Aging, Title Iii, Part B, Grants for Supportive Services and Senior Centers $1,944