Finding 13038 (2022-001)

Significant Deficiency
Requirement
B
Questioned Costs
-
Year
2022
Accepted
2023-08-24

AI Summary

  • Core Issue: Employees were underpaid compared to what was charged to the program for on-call hours, resulting in a total discrepancy of $297.50.
  • Impacted Requirements: The Organization must ensure accurate payroll processing and billing alignment between the HR/Timekeeping system (Unanet) and the payroll system (Empath).
  • Recommended Follow-Up: Verify that the new UKG HRIS system is functioning correctly to prevent future discrepancies and ensure accurate grant billings.

Finding Text

Criteria: The Organization is responsible for ensuring employees are paid for hours worked as reported on their timesheets at applicable approved personnel rates, and charged to the correct program. Condition: During our testing of payroll transactions of this award, we noted three instances within our sample where the employee?s paycheck amount does not equate to the amount charged to the program. All three discrepancies occurred within the same payroll period and the differences were in relation to the pay of on-call hours, see details below; ? Program charged $50 for 1 hour of on-call time versus employee receiving $25 on paycheck ? Program charged $170 for 5 hours of on-call time versus employee receiving $92.50 on paycheck ? Program charged $330 for 9 hours of on-call time versus employee receiving $135 on paycheck In total, the program was charged $550 for the above on-call hours and the applicable employees were paid $252.50, a difference of $297.50. Cause: The Organization utilizes two systems to process payroll; the first being the HR/Timekeeping system (Unanet) and the second being the payroll system (Empath). These two systems are not integrated. For example, if a pay rate was changed in Empath, the same change needed to occur in Unanet. In the above instances, there was discrepancy between hours/rates of on-call time amongst the two systems and the grant was billed from Unanet and employees paid from Empath. Effect: It appears the program may have been overbilled due to the discrepancy between what the employees were actually paid and what was billed to the grantor. It is not clear if this was an isolated instance or occurred at other times during the year. Questioned Costs: N/A Repeat Finding: No Recommendation: We recommend the Organization ensure systems are operating as expected to ensure grant billings agree to the underlying accounting records. Views of Responsible Officials: In FY22, Family Services utilized a separate timekeeping system and payroll system with data being manually imported in the general ledger system. While payroll and finance teams pride themselves on a high degree of accuracy, there are inherent complexities in operating multiple systems and the manual process is prone to human error. On August 1st, 2023, Sheppard Pratt implemented UKG HRIS system with integrated timekeeping and payroll, with reporting that integrates seamlessly with the ERP (General Ledger) system, Oracle. This is a major step forward for integration of the finance and payroll function and will greatly reduce manual processing and errors.

Corrective Action Plan

U.S. Department of Health and Human Services Pass Through ? Anne Arundel County Mental Health Agency Assistance Listing #93.958 ? Block Grants for Community Mental Health Services (On-Track Maryland) Federal Award: MH 261 OTH Recipient Organization: Family Services, Inc. Finding 2022-001 ? Internal Controls over Payroll ? Payroll Discrepancies Management is committed to implementing modern systems and processes replacing manual process and outdated technology. With the addition of the Oracle ERP in FY22, our auditors remarked at the automation and inherent improvement in internal control. With the addition of UKG HRIS system on 8/1/23, we are seeing a simplified payroll process with greater internal controls. Additionally, organizational and payroll leadership with support from our operational excellence team is working to simplify the pay structure so that there are not one-off arrangements for supplemental pay that increase complexity unnecessarily. That work is underway and expected completion date for phase one is 12/31/23. The project has the support of the highest levels of leadership within the organization with the CEO, Dr. Harsh Trivedi, as the project sponsor.

Categories

Reporting

Other Findings in this Audit

Programs in Audit

ALN Program Name Expenditures
64.033 Va Supportive Services for Veteran Families Program $4.16M
93.600 Head Start $2.01M
93.829 Section 223 Demonstration Programs to Improve Community Mental Health Services $1.78M
17.805 Homeless Veterans Reintegration Project $876,636
10.558 Child and Adult Care Food Program $782,799
64.024 Va Homeless Providers Grant and Per Diem Program $586,359
93.558 Temporary Assistance for Needy Families $554,300
93.086 Healthy Marriage Promotion and Responsible Fatherhood Grants $400,462
93.307 Minority Health and Health Disparities Research $215,718
93.959 Block Grants for Prevention and Treatment of Substance Abuse $145,409
93.788 Opioid Str $121,483
84.027 Special Education_grants to States $118,954
93.958 Block Grants for Community Mental Health Services $101,519
14.239 Home Investment Partnerships Program $94,785
93.498 Provider Relief Fund $77,653
93.243 Substance Abuse and Mental Health Services_projects of Regional and National Significance $68,102
84.010 Title I Grants to Local Educational Agencies $58,123
93.658 Foster Care_title IV-E $45,651
99.150 Projects for Assistance in Transition From Homelessness (path) $35,438
93.590 Community-Based Child Abuse Prevention Grants $30,000
21.027 Coronavirus State and Local Fiscal Recovery Funds $29,564
93.242 Mental Health Research Grants $7,306