Finding Text
Condition : Cost allocations for salaries and related expenses allocated across program activities, including federal award programs were improperly submitted for reimbursement under the Head Start program. The allocation issue affected only 3 of the timesheets examined and were isolated to the first quarter of the fiscal year. The identified errors represented underallocation of hours compared to the approved personnel activity reports and timecards.
Criteria : Internal controls should be in place and consistently applied that provide reasonable assurance that cost allocations accurately represent the correct allocation of employee-related costs based on the time spent by the applicable employees.
Cause : Personnel activity reports submitted by employees are not consistently reconciled to the vouchers submitted for federal and other programs.
Effect : Because the reconciliation process in place was not consistently followed to agree to personnel activity reports to costs allocations, it is possible that an employee's time may be inappropriately allocated amongst functional activities, including federal award programs.
Recomendation : Procedures should be consistently applied requiring the reconciliation of submitted personnel activity reports to the employees' actual costs allocated and charged to federal and other programs.
Views of Responsible Officials and Planned Corrective Actions : This finding was initially identified during fiscal year 2020, and corrective actions were taken by the School in 2021. To address the issue, the School implemented new procedures that require a monthly review by management, which includes a detailed reconciliation of submitted personnel activity reports to vouchers prepared for federal and other programs. This reconciliation process helps to ensure that payroll cost allocation accurately reflects the submitted personnel activity reports. In addition, the School has made changes to its payroll system to ensure accurate time tracking for its various programs. This includes changing the service provider responsible for voucher submissions. These changes will help to prevent similar issues from occurring in the future and ensure that employee-related costs are accurately allocated to the appropriate programs. As of June 30, 2022, the School has successfully implemented these changes and continues to review and monitor its procedures to maintain compliance with federal and other program regulations. Finding was repeated during FY23 and FY24, as the School was in the process of transitioning accountants during the period of exceptions noted. As noted in the Condition above, no further issues were found for periods following the first quarter of FY24.