Finding Text
Reference # and Title: 2022-001 Allowable Costs in Head Start Entity-wide or program/department specific: This finding relates to the Head Start grant program AL#93.600 for the federal award year 2022 received directly from the U. S. Department of Health and Human Services. Criteria or specific requirement: In order to receive cost reimbursement under Head Start, the Office of Community Services submits claims asserting that allowable and eligible costs have been incurred in accordance with 2 CFR part 200, subpart E. Condition found: Administrative salaries are allocated among the federal grants based on a cost allocation that is set up in the payroll module at the beginning of the year. The allocation of salaries and benefits was incorrect based on time sheets prepared by some administrative staff which denote the percentage of time spent on each grant. Salaries and benefits in the Transportation program were understated based on the time sheets for that program. Salaries and benefits in the Head Start program were overstated. The salaries and benefits that were recorded in the Head Start fund were reimbursed through the Head Start grant. An adjusting entry was made to move the salaries and benefits to the correct fund which resulted in an overpayment from Head Start of $31,729. Other salary-related benefit errors were noted in the calculation of worker?s compensation and health insurance which resulted in a net overpayment from Head Start of $12,170. A conference cancelation which had already been paid for and requested resulted in an overpayment of $6,937. Total questioned costs were $50,836. Identification of Questioned Costs: Time sheets were used to calculate the salaries and benefits understatement in the Transportation program for each month. This was compared to the amount that was charged to other programs. Accruals for worker?s compensation and health insurance benefits were compared to amounts billed to arrive at the amount of the error in employee benefits. These questioned costs were received under grant #06CH01155702. Context: A finding was reported in the prior year regarding the incorrect allocation of salaries and benefits. This error continued in the months of January through June in 2022. Other salary related benefits errors were noted in analysis of expenditure accounts for worker?s compensation and health insurance. The conference was actually paid for in September of 2021 and was reimbursed to the Office of Community Services in January 2022 but the money had already been requested. Cause: The cost allocation for several administrative employees was not correct in the payroll system for the months January through June 2022. The calculation of worker?s compensation and health insurance benefits was not correct. Effect: The Head Start program was charged for some administrative salaries and benefits that were reimbursed by another program and was also overcharged for some other salary related benefits. Recommendation to prevent future occurrences: Time sheets should be used to record salaries and benefits for each grant instead of the cost allocation. The amounts that were overcharged to Head Start should be repaid. Expenditures for salary related benefits such as worker?s compensation and health insurance should be reviewed monthly to ensure these amounts are correctly calculated and recorded. Origination date and prior year reference (if applicable): This finding originated in the prior year. View of responsible official: All employees paid by cost allocation will be charged to the programs based on time sheets. This was fully implemented June 15, 2022.