Finding Text
Assistance Listing Number, Federal Agency, and Program Name - 21.027 - U.S. Department of the Treasury - COVID-19 - Coronavirus State and Local Fiscal Recovery Funds 93.959 - U.S. Department of Health and Human Services - Block Grants for Prevention and Treatment of Substance Abuse Federal Award Identification Number and Year - 21.027 - All programs reported 93.959 - Grant numbers 43CDZ03232, 43CDC03016, 43CDC03736, 43CDZ03787, and 43CDC03731 Pass through Entity - 21.027 - Cook County Health and Kane County, Illinois 93.959 - Direct Awards Finding Type - Significant deficiency Repeat Finding - No Criteria - Under 2 CFR 200.430(i), charges to federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: • Be supported by a system of internal control that provides reasonable assurance charges are accurate, allowable, and properly allocated • Be supported by documentation that reflects the total activity for which the employee is compensated Condition - The Organization allocates personnel costs to federal programs based on wage forms that reflect estimated time expected to be worked across programs. Supervisors perform biweekly reviews of employee time charged within the Paylocity system and compare allocations to supporting information, such as program schedules and caseloads. However, we noted that: • There is no formal documentation retained evidencing the supervisor’s review of supporting records (e.g., caseloads and schedules) to substantiate that recorded time aligns with actual work performed. • The only evidence of review is system approval within Paylocity, which indicates the timecard was approved but does not demonstrate the nature, extent, or basis of the review performed. Questioned Costs - N/A If Questioned Costs are Not Determinable, Description of Why Known Questioned Costs Were Undetermined or Otherwise Could Not be Reported - N/A Identification of How Questioned Costs Were Computed - N/A Context - The Organization allocates payroll costs to federal awards based on wage forms reflecting how employees are expected to work across programs. Supervisors review employee time biweekly and consider information, such as caseloads, counselor/doctor notes, and other operational records, to assess whether recorded allocations remain reasonable. If an employee’s actual time differs from the allocation reflected in Paylocity, the allocation is expected to be reviewed and corrected within the payroll system via an updated wage form. Cause and Effect - The Organization relies on system approval within Paylocity and informal supervisory processes rather than a formal, documented review process to support payroll allocations charged to federal awards. Without documented evidence of supervisory review, the Organization cannot clearly demonstrate that payroll costs charged to federal awards are supported and accurately reflect actual work performed. Due to the lack of formal documentation to demonstrate that payroll allocations charged to the grant were reasonable, additional audit procedures were necessary. Recommendation - We recommend the Organization strengthen its internal controls over personnel cost allocations by implementing a more formal and well documented review process. At a minimum, supervisors should document their review of payroll allocations, including the supporting information considered (e.g., caseloads and counselor/doctor notes) and the basis for concluding that recorded time reasonably reflects work performed. To further enhance compliance and documentation, the Organization may consider the following approaches: • Track time by grant at the employee level: Require employees to record actual time worked by funding source (e.g., by grant or cost objective) within the payroll system, reducing reliance on estimated allocations. • Implement personnel activity reports (PARs): Utilize periodic certifications (e.g., each pay period) in which employees attest that recorded time reflects actual work performed across funding sources, with supervisory review and approval documented. • Enhance existing processes: If continuing to use estimated allocations, require consistent documentation of supervisory review, including evidence of comparison to supporting records and evaluation of any variances. Documenting and retaining evidence of these reviews will strengthen the Organization’s ability to demonstrate that personnel costs are accurate, allowable, and properly allocated in accordance with the Uniform Guidance and will reduce audit burden in future periods. Views of Responsible Officials and Planned Corrective Actions - Management agrees and will implement a control that requires direct supervisors to document their reviews of supporting records (e.g., caseloads and schedules) of direct reports to substantiate that recorded time aligns with actual work performed as a part of the supervisors' biweekly timesheet reviews. Family Guidance Centers, Inc. will retain this documentation in accordance with its document retention policy.