Finding Text
2025-003 Internal Control Over Payroll Charged to Federal Awards Program Information Federal Agency U.S. Department of Health and Human Services Assistance Listing Numbers 93.224 Health Centers Program Cluster Award Numbers H80CS00055, H8GCS48089 Criteria Under 2 CFR 200.303, the auditee is required to establish, document, and maintain effective internal control over federal awards, and under 2 CFR 200.430, compensation charged to federal awards must be supported by records that accurately reflect work performed and provide reasonable assurance that charges are accurate, allowable, and properly allocated. [ ] Compliance Finding [X] Significant Deficiency [ ] Material Weakness Condition During fiscal year 2025, we noted that payroll rates used to charge employees’ compensation to the federal award were not reviewed and approved in accordance with the auditee’s established payroll control process. A sample size of 25 employees included 5 employees for which there was no evidence the rate of pay used was approved by the appropriate level per Clinic policy. Cause The auditee did not consistently perform or retain evidence of the payroll-rate approval for employees whose wages were charged to federal awards due to turnover in payroll personnel and insufficient monitoring. Effect Without evidence that payroll rates were reviewed and approved, there is a reasonable possibility that unallowable, inaccurate, or improperly allocated payroll costs could be charged to the federal award and not be prevented, or detected and corrected, on a timely basis. Questioned Costs No questioned costs were identified as a result of this finding. All wages paid were considered reasonable based on the work performed. Recommendation We recommend the Clinic implement a documented payroll-rate approval process, require evidence of approval before payroll costs are charged to federal awards, periodically review payroll-rate changes, and retain approval documentation as part of the official payroll records. Views of responsible officials and planned corrective action White Bird Clinic agrees with this finding. With the onboarding of a new Director of Human Resources, best practices around payroll documentation have been implemented. This includes individual forms for all wage changes per employee. Approval is documented with Supervisors’ signatures on these forms. The wage form is used to update the payroll system and a final accuracy review is performed by the HR Director to verify the updated rate matches the approved change form. The approved wage forms are securely stored in the Human Resources files.