Finding Text
Federal Agency: U.S. Department of Housing and Urban Development
Federal Program Name: Homeless Services
Assistance Listing Number: 14.231
Pass-Through Agencies: All Chicago and Chicago Department of Family and Support Services
Pass-Through Numbers: N/A
Award Periods: January 1, 2023 through December 31, 2024
Type of Finding:
Material Weakness in Internal Control over Compliance
Other Matters
Criteria or Specific Requirement:
Under allowable cost/cost principles, an organization in receipt of federal funding is required to have a system of controls in place to safeguard assets and ensure that only allowable costs are charged to federal programs. 2 CFR Part 200 states that changes to awards for salaries and wages are to be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated.
Condition:
In testing a sample of 40 payroll items, we identified the following:
• 15 out of the 40 transactions tested did not have supporting documentation for the specific employee’s payroll allocation.
• Time and effort was not documented for all employees tested.
Questioned Costs:
$-0-
Context:
Payroll transactions are not being properly documented, and allocations supported throughout the payroll process.
Cause:
Time and effort studies, and support for allocations are not being performed.
Effect:
Inaccurate payroll costs may be charged to federal programs.
Repeat Finding:
This is a repeat finding.
Recommendation:
Policies and procedures over the processing of payroll transactions should include the following:
• Time and effort studies should be conducted on all employees to support allocations.
Views of Responsible Officials and Planned Corrective Actions:
There is no disagreement with the audit finding. We are revising procedures to ensure that all payroll costs are allocated accurately and supported by time and effort studies to prevent future discrepancies and maintain compliance with applicable regulations.
Name of the Contact Person Responsible for Corrective Action:
Bo Gasic, CFO
Planned Completion Date for Corrective Action Plan:
Immediately