Finding Text
Department of Health and Human Services,
Special Programs for the Aging – Title III, Aging Cluster
Assistance Listing Number(s): 93.044, 93.045, and 93.053
2023-003: Bonus Payments
Criteria: Management and the Board of Directors of the Corporation are responsible for establishing and maintaining a system of internal controls over financial reporting and implementing policies and procedures for financials, as well as implementing adequate segregation of duties.
Condition: During our audit, we noted the employees received cash bonuses, which were not processed as payroll transactions with associated withholding taxes and liabilities.
Effect: Payments to employees that are not recorded and reported to the Internal Revenue Service could result in penalties and fines for the Corporation as well as penalties and fines to the employees individually.
Cause: Internal controls were not properly designed or implemented.
Identification of a repeat finding: This is a repeat finding from the immediate previous audit.
Recommendation: We recommend that all payments to employees and contractors be recorded and reported to the Internal Revenue Service to ensure that the Corporation does not incur future penalties and fines.
Views of responsible officials and planned corrective actions: The Corporation agrees with this finding and will adhere to the corrective action plan on page 35 in this audit report.