Finding Text
Finding 2025-003: Payroll Error Federal Program Affected: U.S. Department of Health and Human Services Head Start and Early Head Start Program (ALN #93.600) Compliance Requirement: Allowable Costs/Cost Principles Questioned Costs: None known or likely over $25,000 Condition and Cause: During testing of payroll charged to the federal program, we noted the Organization overpaid an employee $26 due to a payroll calculation error. The existing payroll review process did not identify the error. Criteria and Effect: Under the Uniform Guidance, costs charged to a federal award must be allowable, allocable, reasonable, and adequately documented. The Organization is also required to maintain effective internal controls over federal awards to provide reasonable assurance that charges to federal programs are accurate and comply with applicable cost principles and award requirements. Although the dollar amount was immaterial, the error indicates that payroll review controls did not operate with sufficient precision to prevent or detect the error prior to processing. Repeat Finding from Prior Year: No Recommendation: We recommend that management reinforce its payroll review procedures to ensure payroll charges to federal awards are reviewed for accuracy before processing and that any identified errors are timely corrected. Response/Corrective Action Plan: The Organization agrees with the above Finding. See Corrective Action Plan.