Finding 37018 (2022-001)

-
Requirement
AB
Questioned Costs
$1
Year
2022
Accepted
2022-10-26
Audit: 36296
Organization: Bear River Head Start (UT)

AI Summary

  • Core Issue: Unauthorized payroll expenses were incurred due to a supervisor approving unworked hours for maintenance employees.
  • Impacted Requirements: This violates compliance requirements for allowable costs, which mandate that expenses must be necessary, reasonable, and properly documented.
  • Recommended Follow-Up: Review payroll practices and implement stricter oversight to prevent future unauthorized expenditures, addressing the estimated $10,000 to $40,000 in questionable costs.

Finding Text

2022-01 ? Unallowed Payroll Expenditures Criteria: Compliance Requirement B relating to Allowable Costs requires costs to meet general criteria for allowability, including being necessary and reasonable for the performance of the federal award, allocable thereto and adequately documented. Condition: A supervisor authorized excess time for maintenance employees that was not worked. Context: Excessive hours were questioned by board members and upper management. Management reviewed maintenance jobs and estimated hours to complete to determine the magnitude of unallowed expenditures. Cause: The supervisor was motivated to keep maintenance employees, because they were reliable and did good work. She felt justified, because if the funds were not spent, they were lost. The opportunity existed only with collusion between the supervisor and the employees. Effect: Federal funds were used to pay fraudulent payroll expenses. Estimated excess payments/questions costs are between $10,000 and $40,000 over three years, with no more than $20,000 occurring in FY 2022.

Corrective Action Plan

Bear River Head Start Inc.?s management became aware that a few hourly maintenance staff employees were recording time in excess of actual hours that were worked. The employees certified they were working the documented hours and their immediate supervisor also certified that the hours were true and correct (even though she had knowledge that they were not correct). Management immediately conducted an internal investigation, concluded that fraudulent time had been reported, disclosed the fraud to their Board, notified the Regional Office (grantor), consulted with legal counsel, and turned over the investigation to the local police department (investigation still ongoing). To help mitigate risks in the future, an additional timecard procedure of internally auditing timecards on a random sample basis as well as a new Critical Fiscal Issues Procedure have been incorporated into Bear River Head Start Inc.?s internal controls.

Categories

Questioned Costs Allowable Costs / Cost Principles

Other Findings in this Audit

Programs in Audit

ALN Program Name Expenditures
93.558 Temporary Assistance for Needy Families $90,792
10.558 Child and Adult Care Food Program $41,204
93.600 Head Start $7,628