Finding Text
Grant Program: Department of Health and Human Services Health Centers Cluster – Assistance Listing # 93.224/93.527
Condition: As a result of our audit procedures, we noted an instance that payroll was processed without prior approval from the Chief Executive Officer (CEO) or Chief financial Officer (CFO), which is a violation of the Clinic's internal control policies.
Criteria: The Clinic's internal control policies require that all payroll transactions be approved by either the CEO or the CFO before processing to ensure accuracy and compliance with budgetary allocations.
Effect: The absence of proper approval could lead to unauthorized or erroneous payroll transactions, potentially resulting in financial misstatements and non-compliance with internal control requirements. This could also affect the Clinic’s financial integrity and accountability.
Context: The approval for payroll processing was missing for one out of five payroll periods tested.
Cause: The established pre-approval process was inadvertently bypassed by the payroll department staff.
Recommendation: We recommend the implementation of a mandatory approval feature within the payroll system that requires sign-off by the CEO or CFO before payroll can be processed. Additionally, training should be provided to all payroll staff on the importance of adhering to internal control policies. Regular audits of payroll approvals should also be instituted to ensure compliance with the policy.
Management Response: See Corrective Action Plan.