Finding Text
Criteria – Federally funded entities must establish internal control procedures over compliance with provisions of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) that require, among other things, that direct charges to federal awards be for allowable costs. To be an allowable cost, charges must be supported by appropriate documentation and be properly approved.
Condition and Context – Employee payroll costs are charged to programs based on an approved timesheet, and an allocation rate and pay rate approved through each employee’s personnel action for action form. For pay periods spanning reporting periods the Health Board allocates employee payroll costs to each reporting period based on the number of days of each reporting period included in the pay period.
The first payroll subsequent to year-end covered the period September 25, 2023 through October 8, 2023. This pay period included six days of fiscal year 2023 and eight days of fiscal year 2024. However, the Health Board incorrectly accrued eight days of payroll costs to fiscal year 2023, thereby overcharging the programs.
Cause – It appears this deficiency was caused by inadequate internal controls over the year-end payroll accrual calculation.
Effect – Without strong internal controls over payroll unallowable expenditures could be charged to a federally funded program.
Questioned Costs – This control deficiency resulted in the following questioned costs;
• AL Number 93.193 – Known questioned costs were $49,659
• AL Number 93.479 – Known questioned costs were $1,613
• AL Number 93.231 – Known questioned costs were $11,355
Since we evaluated 100% of the year-end accrued payroll there are no likely questioned costs.
Repeat Finding – No
Recommendation – We recommend the Health Board improve the controls over the payroll, to ensure year-end accrual amounts are properly calculated.
Views of responsible officials – Management respectfully disagrees with the characterization of the finding as a significant deficiency in internal control over compliance and another matter. Management believes the internal control processes and reviews currently in place are effective. Management will implement the additional review step identified in the corrective action plan to further enhance the internal control.