Finding Text
2023-001: Documentation of Payroll Costs
Federal Agency: Department of Health and Human Services
Federal Program: Head Start Cluster
Assistance Listing Number: 93.600
Federal Award Identification Number and Year: 05CH011626/03 – 2022/2023 and 05CH011421 – 2023/2024
Award Period: March 1, 2022 to February 28, 2023 and March 1, 2023 to February 29, 2024
Pass-Through Agency: City of Chicago Department of Family and Support Services
Pass-Through Agency Numbers: 180890, 222577, 180493, 181763, 222576, and 223573
Award Period: December 1, 2021 to November 30, 2022 and December 1, 2022 to November 30, 2023
Type of Finding: Significant Deficiency in Internal Control over Compliance and 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 charges 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 payroll transactions, noted nine of 21 items sampled were not supported by an up-to-date payroll authorization notice (PAN) form.
Questioned costs: Unknown
Context: The Organization completes a PAN form for each employee documenting the approved pay rates and allocation percentage. During our testing of the pay rates and employee personnel files, we noted that the vouchering system was updated with the appropriate information, however, an updated PAN form was not completed for the respective employees' file.
Cause: The Organization has not fully complied with established policies and procedures related to federal cost principles for payroll related costs and activities.
Effect: Appropriate up-to-date supporting documentation was not maintained for all payroll costs charged to federal programs.
Repeat finding: This finding is not a repeat finding.
Recommendation: We recommend the Organization emphasize compliance with their established policies and procedures related to maintaining appropriate up-to-date supporting documentation for payroll costs.
Views of Responsible Official: There is no disagreement with this finding.