Payroll Allocations: Criteria: Management was responsible for implementing policies and procedures to ensure salaries and wages reimbursable by the federal award are approved and submitted for reimbursement at appropriate amounts. Condition: During compliance testing, it was determined that certain payroll expenses related to an employee whose wages are reimbursed by the federal award, were not properly allocated to the federal award. Context: Improper allocations of one employee's wages resulted in an under-allocation totaling $9,287 to the federal award during the year ended June 30, 2025. Cause: The allocation percentages were not appropriately updated in the underlying accounting system. Effect: As a result of the condition, the payroll expenses related to the federal award were under-reported during the year ended June 30, 2025. Questioned Costs: None. Repeat Finding: No. Recommendation: In the future, the System should implement appropriate processes and controls to ensure the underlying accounting system is updated timely and appropriately for changes in payroll allocations. Contact: Michael Hammond, Interim Health System Controller. Corrective Actions Taken or Planned: Management acknowledges the finding and ensure to implement appropriate processes and controls to update the system accordingly as needed.