Finding Text
Finding 2025-002 – Inadequate Documentation of Timesheet Approval for Payroll Costs Charged to the Grant – Significant Deficiency in Internal Control over Compliance Federal Program: U.S. Department of Health and Human Services Health Center Program Cluster (Federal Assistance Listing # 93.224/93.527) and Substance Abuse and Mental Health Services Projects of Regional and National Significance (Federal Assistance Listing # 93.243) Federal Agency: U.S. Department of Health and Human Services Award Year: 2024-2025 Criteria: Per 2 CFR 200.430(i) and LifeLong’s internal timekeeping policies, charges to federal awards must be supported by records that accurately reflect the work performed and must be reviewed and approved by an appropriate supervisor to ensure allowability, allocability, and reasonableness of labor costs. Condition: During our allowability testing of payroll costs charged to the Health Center Program Cluster and Substance Abuse and Mental Health Services Projects of Regional and National Significance, it was identified that timesheets for hourly employees lacked evidence of supervisory approval. For 4 out of 40 hourly employee samples tested, management was unable to provide documentation demonstrating that the related timesheets were reviewed and approved prior to payroll processing. Potential effect: Without documented supervisory approval, the internal control over payroll costs charged to the federal program may not be adequately supported. This represents a significant deficiency in the operation of internal controls that is important enough to merit the attention of those charged with governance. Questioned costs: No questioned costs are reported because payroll hours worked could be substantiated through alternative documentation; while not an instance of material noncompliance, the lack of approval documentation represents a significant deficiency in internal control over timekeeping requirements. Context: We selected a sample of 80 employee pay periods from a statistically valid population of employees eligible for payroll disbursement under the expenditures of federal awards during the fiscal year ended June 30, 2025, of which 40 employees are hourly employees. In 4 out of 40 samples tested, LifeLong was unable to provide documentation demonstrating that the related timesheets were reviewed and approved prior to payroll processing. Repeat Finding: This is not a repeat finding. Recommendation: We recommend that LifeLong implements a standardized process requiring supervisory review and documented approval of all employee timesheets prior to payroll processing. This process should include clear guidelines for supervisors on timely review and approval, as well as retention of approved timesheets as supporting documentation. Additionally, periodic internal audits or spot checks could be conducted to verify adherence to these procedures and promptly address any discrepancies. Views of responsible officials: LifeLong concurs with the finding. LifeLong is working on strengthening its timekeeping and payroll approval controls to ensure that all hourly employees’ timesheets include documented supervisory approval prior to processing payroll or charging costs to any federal award.