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2024-004 Federal Agencies: U.S. Department of Agriculture Federal Program Names: The Child Nutrition Cluster: National School Lunch Program Summer Food Service Program Child and Adult Care Food Program Assistance Listing Numbers: 10.555 10.559 10.558 Pass-Through Agency: Commonwealth of Pennsylvania, Department of Education Pass-Through Number: 359-46-477-8 Award Period: July 1, 2023 through June 30, 2024 Type of Finding: • Material Weakness in Internal Control over Compliance Criteria: Per 2 CFR 200.430 (“Compensation—personal services”), compensation charged to federal awards must be accurately documented, supported by appropriate records, and approved in accordance with established personnel policies. Additionally, federal program agreements—including the Commonwealth of Pennsylvania’s SFSP contract—require that any additional employee compensation charged to the award must be authorized, supported by documentation, and allowability must be verifiable. Internal control requirements under 2 CFR 200.303 mandate entities to establish and maintain effective controls over payroll processing, including documented approval of pay rate changes and personnel actions. Condition: As part of our audit procedures, we selected a sample of 40 payroll transactions for review. This process included examination of employee human resource files (such as signed W-4 and I-9 forms), management-approved pay rates, time sheets with supervisory sign-off, and corresponding payroll reports. We recalculated total hours per timesheet using the employees' pay rates and compared these figures to the relevant payroll reports. During our review, we observed that two employees received additional compensation ranging from $25 to $75 for undertaking extra responsibilities related to the administration of the CBS Food Program’s Summer Food Service Program by the former Chief Executive Officer. Management was unable to provide supporting documentation evidencing approval by the former Chief Executive Officer or confirmation from the Commonwealth of Pennsylvania, Department of Education, indicating that such additional compensation complied with the contractual agreement governing the Summer Food Service Program. Additionally, of the 40 payroll transactions sampled, we noted one employee’s required payroll change documentation (e.g., an approved payroll change form) was not present in their personnel file. Questioned Costs: None Cause: Management did not consistently maintain or enforce internal controls over payroll documentation, including the requirement for retaining approval of supplemental compensation and payroll change forms. Additionally, there was no centralized electronic document management system to ensure secure and consistent retention of personnel and payroll support. Effect: Without proper documentation and approval, the Organization may have charged unallowable or inadequately supported compensation to the federal program. Payroll changes could be processed without appropriate authorization, increasing the risk of errors or unauthorized transactions. The lack of adequate payroll documentation may lead to questioned costs and reduce the reliability of payroll charges reported to the federal awarding agency. Recommendation: We recommend that management improve internal controls for payroll authorization by making sure every payroll change form and supplemental compensation approval is filled out, approved, and kept on file. Introducing a central electronic document management system will help securely store records, standardize documentation, and create clear audit trails for all payroll and personnel files. Management should also regularly review payroll records to confirm that all necessary paperwork, such as personnel forms, pay rate approvals, and backup for extra pay, is included. Views of Responsible Officers and Corrective Action Plan: Please refer to Community Benefit Solutions dba CBS Food Program’s Corrective Action Plan.