Finding Text
Known Questioned Cost: $17,680. Criteria: The Agency should be paying its unemployment expenses in accordance with what has been calculated. Condition: The transition to new accounting software and returning payroll processing back to in-house has created a challenging process that requires additional training and changes in accounting procedures to accommodate the software. Context: The Agency’s payroll software automatically accrues payroll liabilities to each grant. When those liabilities were paid by the Agency, the Agency used the expense reports for unemployment from the general ledger instead of the payroll liability report from the payroll module. Additionally, when the liabilities were paid, the Agency recorded the payments into the expense account and not the liability account. These compounding factors led to the overpayment of $17,680 in unemployment expenses charged to federal programs. The cumulative balance of overpayments, net of refunds and credits applied during the current year, is $105,902 and are broken down as follows: (SEE CHART IN SCHEDULE OF FINGINGS AND QUESTIONED COSTS FOR THE YEAR ENDED DECEMBER 31, 2023) Both the Head Start Cluster and the Low-Income Home Energy Assistance Program were major programs identified for the audit of the year ended December 31, 2023. Cause: The Agency has gone through several staff changes and a new software implementation that led to gaps in the skills, knowledge and experience required to process the unemployment payments properly. Effect: Unemployment expenses were overstated to the grantors and overpaid by the Agency. Recommendation: We recommend that formal procedures be put in place for recording and reporting unemployment expenses. This should include a reconciliation between the payroll module, general ledger and quarterly filing reports. Additionally, the Agency needs to have the overpayments refunded and notify the grantors of overpayments. Views of responsible officials and planned corrective action: Management has reviewed the matter and agrees that an error has occurred. Corrections in payroll processing procedures will be implemented and the South Carolina Department of Employment and Workforce has been contacted to retrieve the overpayments.