NORTH EAST TEXAS PUBLIC HEALTH DIST

2025-001 – Payroll Timecard Approvals – PHIG and WIC Programs Federal Program: (“WIC”) Special Supplemental Food Program for Women, Infants, and Children Federal Assistance Listing Number: 10.557 Pass-Through Agency: Texas Health and Human Services Commission Pass-Through Grantor Number: HHS000805600001 Federal Program: Public Health Infrastructure Grant (“PHIG”) – CDC Collaboration with Academia to Strengthen Public Health Federal Assistance Listing Number: 93.967 Pass-Through Agency: Texas Department of State Health Services Pass-Through Grantor Number: HHS001313000001 Criteria: Per the District’s Pay and Compensation Policy, Supervisors and/or Directors are required to approve employee time in Paycom no later than 10 a.m. on the Monday prior to Human Resources processing payroll. Paycom is the District’s electronic payroll and timekeeping system used to record employee hours and facilitate supervisor approval of timecards before payroll processing. Timely approval of timecards is an internal control designed to ensure accurate and allowable payroll charges to federal awards, consistent with 2 CFR §200.430 and applicable cost principles. Condition: During testing of payroll timecards:  PHIG grant: 3 employees across 4 payroll periods had timecard hours charged to grant not approved by the Supervisor/Director in Paycom.  WIC grant: 3 employees from a sample of 40 had timecard hours charged to grant not approved by the Supervisor/Director in Paycom. Cause: Supervisors/Directors did not consistently follow the District’s payroll approval policy, resulting in deviations from the required approval workflow. Effect: Payroll hours charged to the federal programs may not have been properly reviewed for accuracy and allowability prior to processing. This represents a control deficiency and a risk of noncompliance with federal award requirements.

NORTHEAST TEXAS PUBLIC HEALTH DISTRICT SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR THE YEAR ENDED SEPTEMBER 30, 2025 Recommendation: Management should reinforce the timecard approval process and ensure supervisors review and approve all employee timecards in Paycom prior to payroll processing. Additional monitoring procedures may include periodic internal audits or system alerts to prevent recurrence. Questioned Costs: Based on review of the timecards, no dollar amounts were questioned, as all hours appear reasonable and were properly supported. Total Questioned Costs: $0

Federal Program: WIC Special Supplemental Food Program for Women, Infants, and Children Federal Assistance Listing Number: 10.557 Pass-Through Agency: Texas Health and Human Services Commission Pass-Through Grantor Number: HHS001096400022 Criteria: The Period of Performance requirement for the WIC program mandates that all charges to the grant during a contract term must be in the possession of the District and billed to the state agency no later than ninety calendar days following the end of the contract term. Further, because the District operates this grant on the accrual basis, Texas WIC Health and Human Services “Reimbursement of Allowable Expenses” policy (effective April 1, 2019, Policy No. AC:02.0) requires accrual basis expenditures to be paid no later than the tenth day after the receipt of payment from the state agency. Condition: Certain checks are prepared , dated, and signed for grant reimbursement purposes but are stored in the safe until work is completed. These transactions are reported on the request for reimbursement as paid. This delay in processing payments stems from the practice of withholding checks until work is finalized, leading to potential discrepancies in recording outstanding checks and delaying the payment of accrued expenditures related to the grant. Cause: Due to the relatively short timeframe to identify and spend supplemental funds after notification that supplemental funds are available, certain projects are identified, but not completed or received prior to the prescribed deadlines; however, checks are prepared and expenditures are accrued to be able to request for reimbursement on the supplemental vouchers. Effect: Six accrued expenditures were not paid by the prescribed deadline. This noncompliance with the period of performance requirements results in overcharging the grant for expenditures outside the grant period, potentially leading to misallocation of funds and inaccurate financial reporting. Questioned Costs: The questioned costs amount to $19,111.80, representing the total value of transactions not paid by the prescribed deadline. Recommendation: Implement a revised process where checks are only prepared, dated, signed, and mailed to vendors after work is completed or items are received, ensuring compliance with the period of performance requirements. Enhance internal controls by establishing procedures to monitor and ensure timely payment of accrued expenditures, such as regular reconciliation of outstanding checks and communication with vendors on performance requirements. Additionally, consider streamlining communication and coordination among relevant departments to expedite the payment process while maintaining compliance with grant regulations. Management’s Views and Corrective Action Plan: The Northeast Texas Public Health District (NET Health) will take steps to ensure overall effective grant monitoring and to increase communications between NET Health Grant Managers and the Chief Financial Officer and Chief Executive Officer. The NET Health Leadership Team will discuss any issues during our weekly Leadership Team meetings to ensure compliance. These weekly meetings will address costs expended within the grant parameters and ensure grant funds will be more evenly expended during the year as appropriate. NET Heatlh will continue to develop effective methods of grant oversight as it finds weaknesses in its processes. To ensure compliance with the period of performance requirements, NET Health will change its processes effectively immediately. Going forward checks will only be prepared, dated, signed, and mailed to vendors after work is completed or items are received. There will be enhanced internal controls by establishing procedures to monitor and ensure timely payment of accrued expenditures, such as regularly accounting for any outstanding checks and actively communicating with vendors on performance requirements. In addition, we will enhance communication and coordination among relevant departments to expedite the payment process while maintaining compliance with grant regulations. George T. Roberts, CEO, and Lawanda Owens, CFO, are the persons responsible for this action plan going forward. NET Health is expected to have this action plan implemented by May 1, 2024.