Finding 398380 (2023-002)

U.S. Department of Health and Human Services (“DHHS”) Administration for Children and Families, Office of Head Start – Early Head Start Grants – ALN 93.600 Criteria: PART 200—UNIFORM ADMINISTRATIVE REQUIREMENTS, COST PRINCIPLES, AND AUDIT REQUIREMENTS FOR FEDERAL AWARDS, Section 200.430, (i) Standards for Documentation of Personnel Expenses (1) Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (vii) Support the distribution of the employee's salary or wages among specific activities or cost objectives if the employee works on more than one Federal award. Condition The Organization did not comply with these requirements at the bi‐weekly payroll level. Effect At the bi‐weekly payroll level, not all the documentation supporting the salary expense charged to the federal award for certain employees was maintained. Questioned Costs The Organization has documentation to support the assertion that total salary expense allocated to federal awards for the year ended June 30, 2023 is, in aggregate, commensurate with the actual activity of employees. Hence there is no questioned cost. Context During the year ended June 30, 2023 there were personnel changes in connection with who was overseeing and performing the accounting at the Organization. Repeat finding This is a repeat finding. Recommendations The Organization should implement appropriate procedures to create and retain the documentation noted above supporting salary expense, at the bi‐weekly payroll level, for each employee allocated to federal programs. View of responsible officials Management agrees that we do not always have documentation of allocation on the payroll level and with the turnover of staff in the accounting department during the year, it exacerbated the situation. However, we want to emphasize that our records accurately reflect the work performed for the total year basis. Further, we are currently putting a system in place to remediate the situation. This system is expected to provide documentation of allocation on a payroll level.