Finding Text
Federal Assistance Listing Title and Number: 93.575 – Child Care and Development Block Grant –
Cluster
Name of Federal Agency: U.S. Department of Health and Human Services
Internal Control over Compliance: Allowable Cost/ Cost Principles
Criteria: Payroll costs should be allocated in accordance with approved payroll authorization forms to
ensure accuracy, proper cost distribution, and compliance with grant or funding requirements.
Condition: During payroll testing, we identified that one employee’s payroll allocation within the Child
Development programs did not match the allocation specified in the payroll authorization form.
Cause: The discrepancy may have resulted from an administrative error, lack of proper review controls,
or failure to update payroll records in line with authorization forms.
Effect or Potential Effect: Misallocation of payroll expenses, which could impact program cost reporting
and compliance with funding requirements. There is also a risk of audit findings or questioned costs if
payroll expenses are not properly allocated.
Questioned Cost: None.
Repeat of a Prior-Year Finding: No.
Recommendation: We recommend that management strengthen payroll controls to ensure that payroll
allocations align with approved authorization forms. Specifically, management should implement a
periodic reconciliation process between payroll records and authorization forms.
Management Response: To ensure accurate allocation for hourly employees, department heads have
been informed that the allocation must be manually inputted into the employee's timesheet at the end of
each pay period. Employees are encouraged to keep a log of the sites they attend and submit it to their
supervisors for proper allocation. This approach has helped supervisors allocate hours accurately and
prevent discrepancies in work hour records.
Furthermore, when payroll receives payroll authorizations for hourly employees with multiple allocations,
we ensure that supervisors and department heads are notified and properly trained on the allocation
process for hourly employees. Department heads are tasked to review allocations quarterly.