Finding 1173938 (2023-006)

Material Weakness Repeat Finding
Requirement
A
Questioned Costs
-
Year
2023
Accepted
2026-02-17
Audit: 387535
Organization: National Indian Health Board (DC)
Auditor: SIKICH CPA LLC

AI Summary

  • Core Issue: Employees were not paid the correct salary rates, leading to payroll errors and missing timesheet approvals.
  • Impacted Requirements: Compliance with 2 CFR 200.430, which mandates accurate payroll records and internal controls for salary charges.
  • Recommended Follow-Up: Ensure proper salary rate approvals and timesheet signatures are in place to prevent future payroll discrepancies.

Finding Text

Employee not paid approved salary rate and payroll allocation based on incorrect pay rate. Timesheets missing approval. 93.011 National Organizations for State and Local Officials 93.318 Protecting and Improving Health Globally: Building and Strengthening Public Health Impact, Systems, Capacity and Security 93.341 Analyses, Research and Studies to Address the Impact of CMS Programs on American Indian/Alaska Native (AI/AN) Beneficiaries and the Health Care System Serving these Beneficiaries 93.421 Strengthening Public Health Systems and Services Criteria: 2 CFR 200.430 states “Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (ii) Be incorporated into the official records of the non Federal entity; (iii) Reasonably reflect the total activity for which the employee is compensated by the non Federal entity, not exceeding 100% of compensated activities." Condition: During our testing of payroll, we noted twenty one instances of incorrect pay rates, missing timesheet approvals and twenty four payroll allocations based on incorrect pay rates. We consider these to be a significant deficiency in internal control over compliance relating to activities allowed and unallowed and allowable costs/cost principles requirements and is not considered a repeated finding. Statistical sampling was not used in making sample selections. Questioned costs: $4,245 Effect: Employee compensation was not processed using the authorized salary rate, resulting in payroll allocations based on an incorrect pay rate. Additionally, timesheets lacked the required approval signatures. Overall this could result in an employee being incorrectly paid for time worked. Cause: This is due to lack of controls over document retention resulting from employee turnover. Recommendation: Auditors recommend the Organization maintain proper salary rate approval and ensure all pay rates are approved by an appropriate individual and properly paid to employees. We also recommend timesheets should be approved by an appropriate individual and payroll allocations should be based on proper salary rates. Views of Responsible Officials and Planned Corrective Actions: Management agrees with this Single Audit Finding and response is included in the Corrective Action Plan.

Corrective Action Plan

In response to the noted deficiencies in salary rates and allocated costs, Management introduced Personnel Action Forms (PAFs) to document any changes in an employee’s salary or supervisory status. These forms ensure that salary adjustments are properly recorded and authorized in alignment with standard operating procecures and with the necessary supervisory approval. If a salary or supervisory status changes is due to a promotion or interim role, a formal letter accompanies the PAF, clearly outlining the terms of the change. These letters require signatures from the employee, their supervisor, and the CEO and are securely stored in the employee’s e-file with Human Resources. To further improve the documentation process, Management is transitioning to a new Applicant Tracking System (ATS) that integrates with Management’s PEO system, Paychex. This system allows for electronic distribution and automatic storage of offer letters, ensuring they are consistently filed and easily retrievable. These procedures reinforce the existing Payroll policy, ensures staff receive targeted training on relevant requirements such as timesheet approvals, and incorporates additional review measures into the payroll process. Furthermore, the Grants Director must review timesheets and payroll rates for allocations before payroll costs are requested for reimbursement. The payroll platform has been upgraded to manage employee pay rate changes, and the Human Resources manager is required to maintain approved documentation of pay rate changes in a centralized location, thereby ensuring full compliance with federal requirements relating to allowable salary costs and time and effort documentation. In addition, employees whose compensation is charged to federal awards complete biweekly time and effort certifications identifying the program or cost objective worked. Certifications are approved by the employee’s supervisor and retained in payroll records. Payroll charges to federal awards are based solely on certified time.

Categories

Allowable Costs / Cost Principles

Other Findings in this Audit

  • 1173851 2023-005
    Material Weakness Repeat
  • 1173852 2023-006
    Material Weakness Repeat
  • 1173853 2023-007
    Material Weakness Repeat
  • 1173854 2023-008
    Material Weakness Repeat
  • 1173855 2023-004
    Material Weakness Repeat
  • 1173856 2023-005
    Material Weakness Repeat
  • 1173857 2023-006
    Material Weakness Repeat
  • 1173858 2023-007
    Material Weakness Repeat
  • 1173859 2023-008
    Material Weakness Repeat
  • 1173860 2023-004
    Material Weakness Repeat
  • 1173861 2023-005
    Material Weakness Repeat
  • 1173862 2023-006
    Material Weakness Repeat
  • 1173863 2023-007
    Material Weakness Repeat
  • 1173864 2023-008
    Material Weakness Repeat
  • 1173865 2023-004
    Material Weakness Repeat
  • 1173866 2023-005
    Material Weakness Repeat
  • 1173867 2023-006
    Material Weakness Repeat
  • 1173868 2023-007
    Material Weakness Repeat
  • 1173869 2023-008
    Material Weakness Repeat
  • 1173870 2023-004
    Material Weakness Repeat
  • 1173871 2023-005
    Material Weakness Repeat
  • 1173872 2023-006
    Material Weakness Repeat
  • 1173873 2023-007
    Material Weakness Repeat
  • 1173874 2023-008
    Material Weakness Repeat
  • 1173875 2023-004
    Material Weakness Repeat
  • 1173876 2023-005
    Material Weakness Repeat
  • 1173877 2023-006
    Material Weakness Repeat
  • 1173878 2023-007
    Material Weakness Repeat
  • 1173879 2023-008
    Material Weakness Repeat
  • 1173880 2023-004
    Material Weakness Repeat
  • 1173881 2023-005
    Material Weakness Repeat
  • 1173882 2023-006
    Material Weakness Repeat
  • 1173883 2023-007
    Material Weakness Repeat
  • 1173884 2023-008
    Material Weakness Repeat
  • 1173885 2023-004
    Material Weakness Repeat
  • 1173886 2023-005
    Material Weakness Repeat
  • 1173887 2023-006
    Material Weakness Repeat
  • 1173888 2023-007
    Material Weakness Repeat
  • 1173889 2023-008
    Material Weakness Repeat
  • 1173890 2023-004
    Material Weakness Repeat
  • 1173891 2023-005
    Material Weakness Repeat
  • 1173892 2023-006
    Material Weakness Repeat
  • 1173893 2023-007
    Material Weakness Repeat
  • 1173894 2023-008
    Material Weakness Repeat
  • 1173895 2023-004
    Material Weakness Repeat
  • 1173896 2023-005
    Material Weakness Repeat
  • 1173897 2023-006
    Material Weakness Repeat
  • 1173898 2023-007
    Material Weakness Repeat
  • 1173899 2023-008
    Material Weakness Repeat
  • 1173900 2023-004
    Material Weakness Repeat
  • 1173901 2023-005
    Material Weakness Repeat
  • 1173902 2023-006
    Material Weakness Repeat
  • 1173903 2023-007
    Material Weakness Repeat
  • 1173904 2023-008
    Material Weakness Repeat
  • 1173905 2023-004
    Material Weakness Repeat
  • 1173906 2023-005
    Material Weakness Repeat
  • 1173907 2023-006
    Material Weakness Repeat
  • 1173908 2023-007
    Material Weakness Repeat
  • 1173909 2023-008
    Material Weakness Repeat
  • 1173910 2023-004
    Material Weakness Repeat
  • 1173911 2023-005
    Material Weakness Repeat
  • 1173912 2023-006
    Material Weakness Repeat
  • 1173913 2023-007
    Material Weakness Repeat
  • 1173914 2023-008
    Material Weakness Repeat
  • 1173915 2023-004
    Material Weakness Repeat
  • 1173916 2023-005
    Material Weakness Repeat
  • 1173917 2023-006
    Material Weakness Repeat
  • 1173918 2023-007
    Material Weakness Repeat
  • 1173919 2023-008
    Material Weakness Repeat
  • 1173920 2023-005
    Material Weakness Repeat
  • 1173921 2023-006
    Material Weakness Repeat
  • 1173922 2023-008
    Material Weakness Repeat
  • 1173923 2023-005
    Material Weakness Repeat
  • 1173924 2023-006
    Material Weakness Repeat
  • 1173925 2023-008
    Material Weakness Repeat
  • 1173926 2023-004
    Material Weakness Repeat
  • 1173927 2023-005
    Material Weakness Repeat
  • 1173928 2023-006
    Material Weakness Repeat
  • 1173929 2023-007
    Material Weakness Repeat
  • 1173930 2023-008
    Material Weakness Repeat
  • 1173931 2023-004
    Material Weakness Repeat
  • 1173932 2023-005
    Material Weakness Repeat
  • 1173933 2023-006
    Material Weakness Repeat
  • 1173934 2023-007
    Material Weakness Repeat
  • 1173935 2023-008
    Material Weakness Repeat
  • 1173936 2023-004
    Material Weakness Repeat
  • 1173937 2023-005
    Material Weakness Repeat
  • 1173939 2023-007
    Material Weakness Repeat
  • 1173940 2023-008
    Material Weakness Repeat

Programs in Audit

ALN Program Name Expenditures
93.341 ANALYSES, RESEARCH AND STUDIES TO ADDRESS THE IMPACT OF CMS’ PROGRAMS ON AMERICAN INDIAN/ALASKA NATIVE (AI/AN) BENEFICIARIES AND THE HEALTH CARE SYSTEM SERVING THESE BENEFICIARIES $804,408
93.011 NATIONAL ORGANIZATIONS FOR STATE AND LOCAL OFFICIALS $498,838
66.309 SURVEYS, STUDIES, INVESTIGATIONS, TRAINING AND SPECIAL PURPOSE ACTIVITIES RELATING TO ENVIRONMENTAL JUSTICE $467,089
93.421 STRENGTHENING PUBLIC HEALTH SYSTEMS AND SERVICES THROUGH NATIONAL PARTNERSHIPS TO IMPROVE AND PROTECT THE NATION’S HEALTH $101,462
93.318 PROTECTING AND IMPROVING HEALTH GLOBALLY: BUILDING AND STRENGTHENING PUBLIC HEALTH IMPACT, SYSTEMS, CAPACITY AND SECURITY $100,994
93.933 DEMONSTRATION PROJECTS FOR INDIAN HEALTH $83,041