SCHNEIDER REGIONAL MEDICAL CENTER

Criteria or specific requirement: Per Title 2 Part 200 of the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, ?200.61, Schneider Regional Medical Center (the District) is required to design internal controls that provide reasonable assurance of the achievement of the following categories: (a) Effectiveness and efficiency of operations; (b) Reliability of reporting for internal and external use; and (c) Compliance with applicable laws and regulations. Condition: The District is responsible for establishing and maintaining effective internal controls over payroll. During testing of payroll disbursements, noted several instances in which internal controls were not operating effectively within the District. Questioned costs: None. Context: During payroll testing, we identified one of the 40 payroll transactions tested did not have support for the wage rate being paid. Of the 40 payroll transactions tested, 12 of these transactions had employee hours that were coded to OTN (overtime not paid) or COMP (compensatory time) on their timesheet. The employees did not receive payment for the hours coded to OTN or COMP, however, there was no employee handbook or personnel policy available to substantiate that the exclusion of these hours from the employees pay was correct and in accordance with the District's policies. Of the 40 payroll transactions tested, we noted one instance in which an employee was not paid for 55.25 regular hours that they had worked per their timesheet, resulting in the employee being underpaid for the pay period. One payroll transaction was identified in which the employee was paid an incorrect wage rate, which resulted in the employee being underpaid for the pay period by $92.44. When the retro payment was made, the employee was paid an incorrect wage rate, resulting in a total overpayment to the employee of $299.20. Cause: Internal controls over payroll were not properly operating. The District was not able to locate internal policies to support the treatment of certain payroll items. Effect: The lack of controls in place over payroll increases the risk of misappropriation and error. Employees may be paid at incorrect wage rates, or for incorrect hours. Repeat Finding: No. Recommendation: We recommend the District adopt a systemic manner of filing payroll related documents to ensure adequate records are retained and can easily be located. When retro payments are necessary, we recommend retaining the detailed support for the calculation and the rates in order to support the amount being paid. We also recommend reviewing and updating internal payroll policies as they relate to classes of employees and exemptions, such as overtime, in order to ensure the District's payroll practices are in agreement with the policy. Views of responsible officials: Schneider Regional Medical Center has a process where payroll changes are supported by the appropriate approval form established by policy. Management will review the filing process to improve the proper and accurate employee files.

Community Disaster Loan ? CFDA No. 97.030 Recommendation: The District should adopt a systemic manner of filing payroll related documents to ensure adequate records are retained and can easily be located. When retro payments are necessary, we recommend retaining the detailed support for the calculation and the rates in order to support the amount being paid. Explanation of disagreement with audit finding: There is no disagreement with the audit finding. Action taken in response to finding: Schneider Regional Medical Center has a process where payroll changes are supported by the appropriate approval form established by policy. Management will review the filing process to improve the proper and accurate employee files. Name(s) of the contact person(s) responsible for corrective action: Scott Nothnagel Planned completion date for corrective action plan: 05/31/2021 If there are questions regarding this plan, please call Scott Nothnagel, Chief Financial Officer, at 340-776-8311.

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