Finding Text
2023-001 Payroll Finding – Terminated Employees
Federal Agency: U.S. Department of Health and Human Services
Federal Program Name: Head Start Cluster
Assistance Listing Number: 93.600
Federal Award Identification Number and Year: 05CH011111-04 for 2022/2023
Pass-Through Agency: Not Applicable
Pass-Through Number(s): Not Applicable
Award Period: July 1, 2022 – June 30, 2023
Compliance Requirement: Allowable Activities, Allowable Costs
Type of Finding: Significant Deficiency in Internal Control over Compliance, Other Matter
Criteria or Specific Requirement: Uniform Guidance requires that charges to federal awards for salaries and wages be based on records that accurately reflect time worked.
Condition: As part of our payroll testing, we noted 1 out of 22 employees did not have time / effort reporting for the pay period tested.
Questioned Costs: $5,050
Context: As part of our payroll testing, we noted 1 out of 22 employees did not have time / effort reporting as the employee had been terminated a few weeks prior. The Corporation noted this was an issue specific to salaried terminated employees so we reviewed all terminated employees timesheets (time / effort documentation) for the last pay period worked compared to the amount paid in the payroll records. We noted one additional employee with the similar issue - a total of two errors out of 20 terminated employees.
Cause: Salaried employees who are terminated may receive additional pay for earned leave after they are no longer working. In order to pay this additional time, the Corporation did not "terminate" the employee in the system. The employee was then not "terminated" in the payroll system prior to the next pay period which allowed the salaried employee to be paid.
Effect: Costs were charged to the grant without proper time / effort reporting. Employees were paid when they no longer worked for the Corporation.
Repeat Finding: No
Recommendation: We recommend the Corporation reviews their current processes in place over terminated employees to ensure they are "terminated" within their payroll system immediately following their last pay period worked. We also recommend the Corporation increase their review over payroll prior to issuing checks to ensure that all employees who are being paid are continuing employees.
Views of Responsible Officials: There is no disagreement with the audit finding. Refer to the Corporation’s Corrective Action Plan for more information.