Audit 11832

Federal Agency: U.S. Department of Health and Human Services Federal Program Name: Head Start Cluster Assistance Listing Number: 93.600 Pass‐through Agency: N/A Contract numbers: 10CH01029405C3 10CH01029406 10CH01204401 10HE00135801C5 10HE00135801C6 Contract periods: 01/2020‐06/2021 01/2021‐06/2021 07/2021‐12/2021 07/2021‐06/2023 07/2021‐06/2023 Criteria: As stated in the U.S. Department of Health and Human Services (HHS) Grants Policy Statement, grant recipients are required to meet the standards and requirements for financial management systems set forth or referenced in 45 CFR 74.21 or 92.20, as applicable. Further, financial systems must enable grant recipients to do the following: • Provide accurate, current, and complete financial information about Federal awards. • Maintain records that adequately identify the sources of funds for federally assisted activities and the purposes for which the award was used. • Maintain effective control over and accountability for all cash, real and personal property, and other assets under the award. • Compare actual expenditures or outlays with the approved budget for the award. • Determine the allowability of costs in accordance with the applicable federal cost principles, program regulations, and other regulations cited in the Notice of Award. • Minimize the time elapsing between any advance payment under the award(s) and disbursement of the funds for direct program costs and the proportionate share of any allowable indirect or facilities and administrative costs. Condition: The Association’s controls were not effective to ensure the financial systems migration from Intuit QuickBooks Enterprise to MIP Fund Accounting satisfied the requirements for financial reporting as stipulated by federal regulations and HHS. The initial financial reports provided by the Association did not provide accurate or complete information about the federal awards under its management. Further, initial bank reconciliation reports did not provide proof of effective control over and accountability for cash assets held under the award. This internal control deficiency is considered to be a material weakness. Context: Procedures included examining bank reconciliation reports, general ledger detail reports, and budget vs. actual reports by program and tracing to supporting documentation for a sample of transactions in each operations cycle (cash receipts, cash disbursements, payroll disbursements, journal entries). Cause: The Association changed the software used for maintaining its financial systems from Intuit QuickBooks Enterprise to MIP Fund Accounting in July 2020, beginning with their payroll processing. Full implementation of all other operating cycles occurred effective in January 2021. The system migration did not include adequate vendor support for building a chart of accounts or custom reporting tools to allow for a level of reporting required to produce timely and accurate financial statements for federal reporting needs. Further, the beginning subledgers for accounts receivable and accounts payable, and beginning outstanding reconciling items for cash accounts, were not properly built into the MIP Fund Accounting system during the early implementation process, resulting in the Association having difficulties reconciling their cash accounts. Effect: By not successfully implementing a financial system as required under federal and HHS agency regulations, the Association cannot demonstrate compliance with grantor’s requirements that require accurate, current, and complete financial information regarding the federal awards under its management. Recommendation: The Association continue to work internally and with the software vendor and outside consultants as needed to implement a chart of accounts and custom reporting tools that will assist them in complying with federal regulations regarding its financial system. View of Responsible Officials: There is no disagreement with this audit finding.

Criteria: As stated in the U.S. Department of Health and Human Services (HHS) Grants Policy Statement, grant recipients are required to implement financial systems that enable grant recipients to maintain effective control over and accountability for all cash under the award. Condition: The Association’s controls were not effective to ensure it performed the bank reconciliation process on an accurate or timely basis. We consider this internal control deficiency to be a significant deficiency. Context: Our procedures included examining bank reconciliation reports for the December 2021 period. We reviewed the bank reconciliations for unusual transactions, large reconciling items, and traced a sample of transactions to supporting documentation such as copies of cleared checks, bank statements, or other items. Cause: The Association changed the software used for processing its bank reconciliations from Intuit QuickBooks Enterprise to MIP Fund Accounting in January 2021. The system migration did not include entering detailed outstanding reconciling items for cash accounts as of December 31, 2020, resulting in the Association having difficulties reconciling their cash accounts on a timely basis. The initial reconciliations included large journal entries to cash accounts that did not have sufficient documentation as support and resulted in the bank reconciliations being redone to properly account for outstanding uncleared items that carried over from the prior fiscal year. Effect: By not reconciling the bank accounts on a timely basis, the financial reports initially provided for the audit were not accurate. This resulted in the delay of the audit until the bank reconciliations could be properly completed to account for outstanding uncleared items that carried over from the prior fiscal year. Recommendation: We recommend the Association follow its own documented controls to ensure it prepares bank reconciliations on a timely and accurate basis. View of Responsible Officials: There is no disagreement with this audit finding.

Criteria: Accounting principles generally accepted in the United States of America require that amounts be recognized as revenues, with corresponding receivables if applicable, when the product or service has been delivered to a customer and when the dollar amount is readily determinable. Condition: The Association’s controls were not effective to ensure it was recognizing revenues and related receivables for reimbursement‐based programming in the same period the expenditure occurred. We consider this internal control deficiency to be a significant deficiency. Context: Our procedures included examining subsequent cash receipts and vouching to expenditures made during the fiscal year, identifying several such receipts that should have been posted as receivables as of December 31, 2021 but were not. Cause: The Association typically records cash receipts on a cash basis instead of accrual basis as stipulated in U.S. GAAP. Effect: By not recording receivables in the correct period, revenues from reimbursement‐based awards could be materially misstated. Recommendation: We recommend the Association establish controls that allow for the timely and accurate recording of grants and contracts receivable from reimbursement‐based awards in the same period as their corresponding expenditures. View of Responsible Officials: There is no disagreement with this audit finding.

Federal Agency: U.S. Department of Health and Human Services Federal Program Name: Head Start Cluster Assistance Listing Number: 93.600 Pass‐through Agency: N/A Contract numbers: 10CH01029405C3 10CH01029406 10CH01204401 10HE00135801C5 10HE00135801C6 Contract periods: 01/2020‐06/2021 01/2021‐06/2021 07/2021‐12/2021 07/2021‐06/2023 07/2021‐06/2023 Type of Finding: Significant Deficiency in Internal Control Over Compliance ‐ Allowable Costs and Cost Principles Criteria: The Association’s procedures for processing expenditures, and primarily allocating expenditures to programs, should include controls that ensure expenditures are properly charged to program and allocated in accordance with the federal grant requirements. The objective of the Assistance Listing 93.600 Head Start program (including Early Head Start and Early Head Start Partnerships) is to promote school readiness of low‐income children (including American Indians, Alaska Natives and migrant and seasonal farm workers) by enhancing children’s cognitive, social and emotional development. During the fiscal year ending December 31, 2021, the Association expended $4,720,185 in federal funding. Federal regulations require award recipients to establish and follow internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls. Federal regulations require the Association to have adequate time‐and‐effort documentation to support all payroll costs charged to the Head Start awards. 2 CFR 200.430, Compensation – personal services, states, in part: “(i) Standards for Documentation of Personnel Expenses (1) Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (ii) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated…” Depending on the number and types of activities employees perform, time and effort documentation can be in the form of semi‐annual certification or monthly personnel activity reports, such as a timesheet. Condition: The Association’s controls were not effective to ensure it maintained adequate time and effort documentation, as required by federal regulations and the grantor. During review of payroll costs for the year ended December 31, 2021, the following was noted: • Payroll costs were charged according to budgeted time rather than reconciling to actual hours worked. • Two payroll disbursements were not allocated in compliance with the Associations approved cost allocation plan. This internal control deficiency is considered to be a significant deficiency. Questioned Costs: None. Context: Procedures included examining payroll charges for 40 randomly selected employees for January through December 2021. Cause: The Association changed the software used for payroll processing from QuickBooks to MIP in July 2020. They then changed their fiscal accounting software from QuickBooks to MIP in January 2021. The new software implementation was fraught with many challenges, one of which being implementing electronic processes that met the time and effort requirements outlined in the Association’s policy manual. Effect: By not keeping proper time‐and‐effort records, the Association cannot demonstrate compliance with grantor’s requirements that require support for payroll costs charged to the federal program. The Association provided alternate documentation that demonstrated the payroll costs charged to the program were allowable. Therefore, we are not questioning costs. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendation: The Association follow its own documented controls to ensure it prepares adequate time‐ and‐effort documentation to support payroll costs charged to the federal grant. View of Responsible Officials: There is no disagreement with this audit finding.

Federal Agency: U.S. Department of Health and Human Services Federal Program Name: Head Start Cluster Assistance Listing Number: 93.600 Pass‐through Agency: N/A Contract numbers: 10CH01029405C3 10CH01029406 10CH01204401 10HE00135801C5 10HE00135801C6 Contract periods: 01/2020‐06/2021 01/2021‐06/2021 07/2021‐12/2021 07/2021‐06/2023 07/2021‐06/2023 Criteria: As stated in the U.S. Department of Health and Human Services (HHS) Grants Policy Statement, grant recipients are required to meet the standards and requirements for financial management systems set forth or referenced in 45 CFR 74.21 or 92.20, as applicable. Further, financial systems must enable grant recipients to do the following: • Provide accurate, current, and complete financial information about Federal awards. • Maintain records that adequately identify the sources of funds for federally assisted activities and the purposes for which the award was used. • Maintain effective control over and accountability for all cash, real and personal property, and other assets under the award. • Compare actual expenditures or outlays with the approved budget for the award. • Determine the allowability of costs in accordance with the applicable federal cost principles, program regulations, and other regulations cited in the Notice of Award. • Minimize the time elapsing between any advance payment under the award(s) and disbursement of the funds for direct program costs and the proportionate share of any allowable indirect or facilities and administrative costs. Condition: The Association’s controls were not effective to ensure the financial systems migration from Intuit QuickBooks Enterprise to MIP Fund Accounting satisfied the requirements for financial reporting as stipulated by federal regulations and HHS. The initial financial reports provided by the Association did not provide accurate or complete information about the federal awards under its management. Further, initial bank reconciliation reports did not provide proof of effective control over and accountability for cash assets held under the award. This internal control deficiency is considered to be a material weakness. Context: Procedures included examining bank reconciliation reports, general ledger detail reports, and budget vs. actual reports by program and tracing to supporting documentation for a sample of transactions in each operations cycle (cash receipts, cash disbursements, payroll disbursements, journal entries). Cause: The Association changed the software used for maintaining its financial systems from Intuit QuickBooks Enterprise to MIP Fund Accounting in July 2020, beginning with their payroll processing. Full implementation of all other operating cycles occurred effective in January 2021. The system migration did not include adequate vendor support for building a chart of accounts or custom reporting tools to allow for a level of reporting required to produce timely and accurate financial statements for federal reporting needs. Further, the beginning subledgers for accounts receivable and accounts payable, and beginning outstanding reconciling items for cash accounts, were not properly built into the MIP Fund Accounting system during the early implementation process, resulting in the Association having difficulties reconciling their cash accounts. Effect: By not successfully implementing a financial system as required under federal and HHS agency regulations, the Association cannot demonstrate compliance with grantor’s requirements that require accurate, current, and complete financial information regarding the federal awards under its management. Recommendation: The Association continue to work internally and with the software vendor and outside consultants as needed to implement a chart of accounts and custom reporting tools that will assist them in complying with federal regulations regarding its financial system. View of Responsible Officials: There is no disagreement with this audit finding.

Criteria: As stated in the U.S. Department of Health and Human Services (HHS) Grants Policy Statement, grant recipients are required to implement financial systems that enable grant recipients to maintain effective control over and accountability for all cash under the award. Condition: The Association’s controls were not effective to ensure it performed the bank reconciliation process on an accurate or timely basis. We consider this internal control deficiency to be a significant deficiency. Context: Our procedures included examining bank reconciliation reports for the December 2021 period. We reviewed the bank reconciliations for unusual transactions, large reconciling items, and traced a sample of transactions to supporting documentation such as copies of cleared checks, bank statements, or other items. Cause: The Association changed the software used for processing its bank reconciliations from Intuit QuickBooks Enterprise to MIP Fund Accounting in January 2021. The system migration did not include entering detailed outstanding reconciling items for cash accounts as of December 31, 2020, resulting in the Association having difficulties reconciling their cash accounts on a timely basis. The initial reconciliations included large journal entries to cash accounts that did not have sufficient documentation as support and resulted in the bank reconciliations being redone to properly account for outstanding uncleared items that carried over from the prior fiscal year. Effect: By not reconciling the bank accounts on a timely basis, the financial reports initially provided for the audit were not accurate. This resulted in the delay of the audit until the bank reconciliations could be properly completed to account for outstanding uncleared items that carried over from the prior fiscal year. Recommendation: We recommend the Association follow its own documented controls to ensure it prepares bank reconciliations on a timely and accurate basis. View of Responsible Officials: There is no disagreement with this audit finding.

Criteria: Accounting principles generally accepted in the United States of America require that amounts be recognized as revenues, with corresponding receivables if applicable, when the product or service has been delivered to a customer and when the dollar amount is readily determinable. Condition: The Association’s controls were not effective to ensure it was recognizing revenues and related receivables for reimbursement‐based programming in the same period the expenditure occurred. We consider this internal control deficiency to be a significant deficiency. Context: Our procedures included examining subsequent cash receipts and vouching to expenditures made during the fiscal year, identifying several such receipts that should have been posted as receivables as of December 31, 2021 but were not. Cause: The Association typically records cash receipts on a cash basis instead of accrual basis as stipulated in U.S. GAAP. Effect: By not recording receivables in the correct period, revenues from reimbursement‐based awards could be materially misstated. Recommendation: We recommend the Association establish controls that allow for the timely and accurate recording of grants and contracts receivable from reimbursement‐based awards in the same period as their corresponding expenditures. View of Responsible Officials: There is no disagreement with this audit finding.

Federal Agency: U.S. Department of Health and Human Services Federal Program Name: Head Start Cluster Assistance Listing Number: 93.600 Pass‐through Agency: N/A Contract numbers: 10CH01029405C3 10CH01029406 10CH01204401 10HE00135801C5 10HE00135801C6 Contract periods: 01/2020‐06/2021 01/2021‐06/2021 07/2021‐12/2021 07/2021‐06/2023 07/2021‐06/2023 Type of Finding: Significant Deficiency in Internal Control Over Compliance ‐ Allowable Costs and Cost Principles Criteria: The Association’s procedures for processing expenditures, and primarily allocating expenditures to programs, should include controls that ensure expenditures are properly charged to program and allocated in accordance with the federal grant requirements. The objective of the Assistance Listing 93.600 Head Start program (including Early Head Start and Early Head Start Partnerships) is to promote school readiness of low‐income children (including American Indians, Alaska Natives and migrant and seasonal farm workers) by enhancing children’s cognitive, social and emotional development. During the fiscal year ending December 31, 2021, the Association expended $4,720,185 in federal funding. Federal regulations require award recipients to establish and follow internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls. Federal regulations require the Association to have adequate time‐and‐effort documentation to support all payroll costs charged to the Head Start awards. 2 CFR 200.430, Compensation – personal services, states, in part: “(i) Standards for Documentation of Personnel Expenses (1) Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (ii) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated…” Depending on the number and types of activities employees perform, time and effort documentation can be in the form of semi‐annual certification or monthly personnel activity reports, such as a timesheet. Condition: The Association’s controls were not effective to ensure it maintained adequate time and effort documentation, as required by federal regulations and the grantor. During review of payroll costs for the year ended December 31, 2021, the following was noted: • Payroll costs were charged according to budgeted time rather than reconciling to actual hours worked. • Two payroll disbursements were not allocated in compliance with the Associations approved cost allocation plan. This internal control deficiency is considered to be a significant deficiency. Questioned Costs: None. Context: Procedures included examining payroll charges for 40 randomly selected employees for January through December 2021. Cause: The Association changed the software used for payroll processing from QuickBooks to MIP in July 2020. They then changed their fiscal accounting software from QuickBooks to MIP in January 2021. The new software implementation was fraught with many challenges, one of which being implementing electronic processes that met the time and effort requirements outlined in the Association’s policy manual. Effect: By not keeping proper time‐and‐effort records, the Association cannot demonstrate compliance with grantor’s requirements that require support for payroll costs charged to the federal program. The Association provided alternate documentation that demonstrated the payroll costs charged to the program were allowable. Therefore, we are not questioning costs. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendation: The Association follow its own documented controls to ensure it prepares adequate time‐ and‐effort documentation to support payroll costs charged to the federal grant. View of Responsible Officials: There is no disagreement with this audit finding.

Federal Agency: U.S. Department of Health and Human Services Federal Program Name: Head Start Cluster Assistance Listing Number: 93.600 Pass‐through Agency: N/A Contract numbers: 10CH01029405C3 10CH01029406 10CH01204401 10HE00135801C5 10HE00135801C6 Contract periods: 01/2020‐06/2021 01/2021‐06/2021 07/2021‐12/2021 07/2021‐06/2023 07/2021‐06/2023 Criteria: As stated in the U.S. Department of Health and Human Services (HHS) Grants Policy Statement, grant recipients are required to meet the standards and requirements for financial management systems set forth or referenced in 45 CFR 74.21 or 92.20, as applicable. Further, financial systems must enable grant recipients to do the following: • Provide accurate, current, and complete financial information about Federal awards. • Maintain records that adequately identify the sources of funds for federally assisted activities and the purposes for which the award was used. • Maintain effective control over and accountability for all cash, real and personal property, and other assets under the award. • Compare actual expenditures or outlays with the approved budget for the award. • Determine the allowability of costs in accordance with the applicable federal cost principles, program regulations, and other regulations cited in the Notice of Award. • Minimize the time elapsing between any advance payment under the award(s) and disbursement of the funds for direct program costs and the proportionate share of any allowable indirect or facilities and administrative costs. Condition: The Association’s controls were not effective to ensure the financial systems migration from Intuit QuickBooks Enterprise to MIP Fund Accounting satisfied the requirements for financial reporting as stipulated by federal regulations and HHS. The initial financial reports provided by the Association did not provide accurate or complete information about the federal awards under its management. Further, initial bank reconciliation reports did not provide proof of effective control over and accountability for cash assets held under the award. This internal control deficiency is considered to be a material weakness. Context: Procedures included examining bank reconciliation reports, general ledger detail reports, and budget vs. actual reports by program and tracing to supporting documentation for a sample of transactions in each operations cycle (cash receipts, cash disbursements, payroll disbursements, journal entries). Cause: The Association changed the software used for maintaining its financial systems from Intuit QuickBooks Enterprise to MIP Fund Accounting in July 2020, beginning with their payroll processing. Full implementation of all other operating cycles occurred effective in January 2021. The system migration did not include adequate vendor support for building a chart of accounts or custom reporting tools to allow for a level of reporting required to produce timely and accurate financial statements for federal reporting needs. Further, the beginning subledgers for accounts receivable and accounts payable, and beginning outstanding reconciling items for cash accounts, were not properly built into the MIP Fund Accounting system during the early implementation process, resulting in the Association having difficulties reconciling their cash accounts. Effect: By not successfully implementing a financial system as required under federal and HHS agency regulations, the Association cannot demonstrate compliance with grantor’s requirements that require accurate, current, and complete financial information regarding the federal awards under its management. Recommendation: The Association continue to work internally and with the software vendor and outside consultants as needed to implement a chart of accounts and custom reporting tools that will assist them in complying with federal regulations regarding its financial system. View of Responsible Officials: There is no disagreement with this audit finding.

Criteria: As stated in the U.S. Department of Health and Human Services (HHS) Grants Policy Statement, grant recipients are required to implement financial systems that enable grant recipients to maintain effective control over and accountability for all cash under the award. Condition: The Association’s controls were not effective to ensure it performed the bank reconciliation process on an accurate or timely basis. We consider this internal control deficiency to be a significant deficiency. Context: Our procedures included examining bank reconciliation reports for the December 2021 period. We reviewed the bank reconciliations for unusual transactions, large reconciling items, and traced a sample of transactions to supporting documentation such as copies of cleared checks, bank statements, or other items. Cause: The Association changed the software used for processing its bank reconciliations from Intuit QuickBooks Enterprise to MIP Fund Accounting in January 2021. The system migration did not include entering detailed outstanding reconciling items for cash accounts as of December 31, 2020, resulting in the Association having difficulties reconciling their cash accounts on a timely basis. The initial reconciliations included large journal entries to cash accounts that did not have sufficient documentation as support and resulted in the bank reconciliations being redone to properly account for outstanding uncleared items that carried over from the prior fiscal year. Effect: By not reconciling the bank accounts on a timely basis, the financial reports initially provided for the audit were not accurate. This resulted in the delay of the audit until the bank reconciliations could be properly completed to account for outstanding uncleared items that carried over from the prior fiscal year. Recommendation: We recommend the Association follow its own documented controls to ensure it prepares bank reconciliations on a timely and accurate basis. View of Responsible Officials: There is no disagreement with this audit finding.

Criteria: Accounting principles generally accepted in the United States of America require that amounts be recognized as revenues, with corresponding receivables if applicable, when the product or service has been delivered to a customer and when the dollar amount is readily determinable. Condition: The Association’s controls were not effective to ensure it was recognizing revenues and related receivables for reimbursement‐based programming in the same period the expenditure occurred. We consider this internal control deficiency to be a significant deficiency. Context: Our procedures included examining subsequent cash receipts and vouching to expenditures made during the fiscal year, identifying several such receipts that should have been posted as receivables as of December 31, 2021 but were not. Cause: The Association typically records cash receipts on a cash basis instead of accrual basis as stipulated in U.S. GAAP. Effect: By not recording receivables in the correct period, revenues from reimbursement‐based awards could be materially misstated. Recommendation: We recommend the Association establish controls that allow for the timely and accurate recording of grants and contracts receivable from reimbursement‐based awards in the same period as their corresponding expenditures. View of Responsible Officials: There is no disagreement with this audit finding.

Federal Agency: U.S. Department of Health and Human Services Federal Program Name: Head Start Cluster Assistance Listing Number: 93.600 Pass‐through Agency: N/A Contract numbers: 10CH01029405C3 10CH01029406 10CH01204401 10HE00135801C5 10HE00135801C6 Contract periods: 01/2020‐06/2021 01/2021‐06/2021 07/2021‐12/2021 07/2021‐06/2023 07/2021‐06/2023 Type of Finding: Significant Deficiency in Internal Control Over Compliance ‐ Allowable Costs and Cost Principles Criteria: The Association’s procedures for processing expenditures, and primarily allocating expenditures to programs, should include controls that ensure expenditures are properly charged to program and allocated in accordance with the federal grant requirements. The objective of the Assistance Listing 93.600 Head Start program (including Early Head Start and Early Head Start Partnerships) is to promote school readiness of low‐income children (including American Indians, Alaska Natives and migrant and seasonal farm workers) by enhancing children’s cognitive, social and emotional development. During the fiscal year ending December 31, 2021, the Association expended $4,720,185 in federal funding. Federal regulations require award recipients to establish and follow internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls. Federal regulations require the Association to have adequate time‐and‐effort documentation to support all payroll costs charged to the Head Start awards. 2 CFR 200.430, Compensation – personal services, states, in part: “(i) Standards for Documentation of Personnel Expenses (1) Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (ii) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated…” Depending on the number and types of activities employees perform, time and effort documentation can be in the form of semi‐annual certification or monthly personnel activity reports, such as a timesheet. Condition: The Association’s controls were not effective to ensure it maintained adequate time and effort documentation, as required by federal regulations and the grantor. During review of payroll costs for the year ended December 31, 2021, the following was noted: • Payroll costs were charged according to budgeted time rather than reconciling to actual hours worked. • Two payroll disbursements were not allocated in compliance with the Associations approved cost allocation plan. This internal control deficiency is considered to be a significant deficiency. Questioned Costs: None. Context: Procedures included examining payroll charges for 40 randomly selected employees for January through December 2021. Cause: The Association changed the software used for payroll processing from QuickBooks to MIP in July 2020. They then changed their fiscal accounting software from QuickBooks to MIP in January 2021. The new software implementation was fraught with many challenges, one of which being implementing electronic processes that met the time and effort requirements outlined in the Association’s policy manual. Effect: By not keeping proper time‐and‐effort records, the Association cannot demonstrate compliance with grantor’s requirements that require support for payroll costs charged to the federal program. The Association provided alternate documentation that demonstrated the payroll costs charged to the program were allowable. Therefore, we are not questioning costs. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendation: The Association follow its own documented controls to ensure it prepares adequate time‐ and‐effort documentation to support payroll costs charged to the federal grant. View of Responsible Officials: There is no disagreement with this audit finding.

Federal Agency: U.S. Department of Health and Human Services Federal Program Name: Head Start Cluster Assistance Listing Number: 93.600 Pass‐through Agency: N/A Contract numbers: 10CH01029405C3 10CH01029406 10CH01204401 10HE00135801C5 10HE00135801C6 Contract periods: 01/2020‐06/2021 01/2021‐06/2021 07/2021‐12/2021 07/2021‐06/2023 07/2021‐06/2023 Criteria: As stated in the U.S. Department of Health and Human Services (HHS) Grants Policy Statement, grant recipients are required to meet the standards and requirements for financial management systems set forth or referenced in 45 CFR 74.21 or 92.20, as applicable. Further, financial systems must enable grant recipients to do the following: • Provide accurate, current, and complete financial information about Federal awards. • Maintain records that adequately identify the sources of funds for federally assisted activities and the purposes for which the award was used. • Maintain effective control over and accountability for all cash, real and personal property, and other assets under the award. • Compare actual expenditures or outlays with the approved budget for the award. • Determine the allowability of costs in accordance with the applicable federal cost principles, program regulations, and other regulations cited in the Notice of Award. • Minimize the time elapsing between any advance payment under the award(s) and disbursement of the funds for direct program costs and the proportionate share of any allowable indirect or facilities and administrative costs. Condition: The Association’s controls were not effective to ensure the financial systems migration from Intuit QuickBooks Enterprise to MIP Fund Accounting satisfied the requirements for financial reporting as stipulated by federal regulations and HHS. The initial financial reports provided by the Association did not provide accurate or complete information about the federal awards under its management. Further, initial bank reconciliation reports did not provide proof of effective control over and accountability for cash assets held under the award. This internal control deficiency is considered to be a material weakness. Context: Procedures included examining bank reconciliation reports, general ledger detail reports, and budget vs. actual reports by program and tracing to supporting documentation for a sample of transactions in each operations cycle (cash receipts, cash disbursements, payroll disbursements, journal entries). Cause: The Association changed the software used for maintaining its financial systems from Intuit QuickBooks Enterprise to MIP Fund Accounting in July 2020, beginning with their payroll processing. Full implementation of all other operating cycles occurred effective in January 2021. The system migration did not include adequate vendor support for building a chart of accounts or custom reporting tools to allow for a level of reporting required to produce timely and accurate financial statements for federal reporting needs. Further, the beginning subledgers for accounts receivable and accounts payable, and beginning outstanding reconciling items for cash accounts, were not properly built into the MIP Fund Accounting system during the early implementation process, resulting in the Association having difficulties reconciling their cash accounts. Effect: By not successfully implementing a financial system as required under federal and HHS agency regulations, the Association cannot demonstrate compliance with grantor’s requirements that require accurate, current, and complete financial information regarding the federal awards under its management. Recommendation: The Association continue to work internally and with the software vendor and outside consultants as needed to implement a chart of accounts and custom reporting tools that will assist them in complying with federal regulations regarding its financial system. View of Responsible Officials: There is no disagreement with this audit finding.

Criteria: As stated in the U.S. Department of Health and Human Services (HHS) Grants Policy Statement, grant recipients are required to implement financial systems that enable grant recipients to maintain effective control over and accountability for all cash under the award. Condition: The Association’s controls were not effective to ensure it performed the bank reconciliation process on an accurate or timely basis. We consider this internal control deficiency to be a significant deficiency. Context: Our procedures included examining bank reconciliation reports for the December 2021 period. We reviewed the bank reconciliations for unusual transactions, large reconciling items, and traced a sample of transactions to supporting documentation such as copies of cleared checks, bank statements, or other items. Cause: The Association changed the software used for processing its bank reconciliations from Intuit QuickBooks Enterprise to MIP Fund Accounting in January 2021. The system migration did not include entering detailed outstanding reconciling items for cash accounts as of December 31, 2020, resulting in the Association having difficulties reconciling their cash accounts on a timely basis. The initial reconciliations included large journal entries to cash accounts that did not have sufficient documentation as support and resulted in the bank reconciliations being redone to properly account for outstanding uncleared items that carried over from the prior fiscal year. Effect: By not reconciling the bank accounts on a timely basis, the financial reports initially provided for the audit were not accurate. This resulted in the delay of the audit until the bank reconciliations could be properly completed to account for outstanding uncleared items that carried over from the prior fiscal year. Recommendation: We recommend the Association follow its own documented controls to ensure it prepares bank reconciliations on a timely and accurate basis. View of Responsible Officials: There is no disagreement with this audit finding.

Criteria: Accounting principles generally accepted in the United States of America require that amounts be recognized as revenues, with corresponding receivables if applicable, when the product or service has been delivered to a customer and when the dollar amount is readily determinable. Condition: The Association’s controls were not effective to ensure it was recognizing revenues and related receivables for reimbursement‐based programming in the same period the expenditure occurred. We consider this internal control deficiency to be a significant deficiency. Context: Our procedures included examining subsequent cash receipts and vouching to expenditures made during the fiscal year, identifying several such receipts that should have been posted as receivables as of December 31, 2021 but were not. Cause: The Association typically records cash receipts on a cash basis instead of accrual basis as stipulated in U.S. GAAP. Effect: By not recording receivables in the correct period, revenues from reimbursement‐based awards could be materially misstated. Recommendation: We recommend the Association establish controls that allow for the timely and accurate recording of grants and contracts receivable from reimbursement‐based awards in the same period as their corresponding expenditures. View of Responsible Officials: There is no disagreement with this audit finding.

Federal Agency: U.S. Department of Health and Human Services Federal Program Name: Head Start Cluster Assistance Listing Number: 93.600 Pass‐through Agency: N/A Contract numbers: 10CH01029405C3 10CH01029406 10CH01204401 10HE00135801C5 10HE00135801C6 Contract periods: 01/2020‐06/2021 01/2021‐06/2021 07/2021‐12/2021 07/2021‐06/2023 07/2021‐06/2023 Type of Finding: Significant Deficiency in Internal Control Over Compliance ‐ Allowable Costs and Cost Principles Criteria: The Association’s procedures for processing expenditures, and primarily allocating expenditures to programs, should include controls that ensure expenditures are properly charged to program and allocated in accordance with the federal grant requirements. The objective of the Assistance Listing 93.600 Head Start program (including Early Head Start and Early Head Start Partnerships) is to promote school readiness of low‐income children (including American Indians, Alaska Natives and migrant and seasonal farm workers) by enhancing children’s cognitive, social and emotional development. During the fiscal year ending December 31, 2021, the Association expended $4,720,185 in federal funding. Federal regulations require award recipients to establish and follow internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls. Federal regulations require the Association to have adequate time‐and‐effort documentation to support all payroll costs charged to the Head Start awards. 2 CFR 200.430, Compensation – personal services, states, in part: “(i) Standards for Documentation of Personnel Expenses (1) Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (ii) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated…” Depending on the number and types of activities employees perform, time and effort documentation can be in the form of semi‐annual certification or monthly personnel activity reports, such as a timesheet. Condition: The Association’s controls were not effective to ensure it maintained adequate time and effort documentation, as required by federal regulations and the grantor. During review of payroll costs for the year ended December 31, 2021, the following was noted: • Payroll costs were charged according to budgeted time rather than reconciling to actual hours worked. • Two payroll disbursements were not allocated in compliance with the Associations approved cost allocation plan. This internal control deficiency is considered to be a significant deficiency. Questioned Costs: None. Context: Procedures included examining payroll charges for 40 randomly selected employees for January through December 2021. Cause: The Association changed the software used for payroll processing from QuickBooks to MIP in July 2020. They then changed their fiscal accounting software from QuickBooks to MIP in January 2021. The new software implementation was fraught with many challenges, one of which being implementing electronic processes that met the time and effort requirements outlined in the Association’s policy manual. Effect: By not keeping proper time‐and‐effort records, the Association cannot demonstrate compliance with grantor’s requirements that require support for payroll costs charged to the federal program. The Association provided alternate documentation that demonstrated the payroll costs charged to the program were allowable. Therefore, we are not questioning costs. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendation: The Association follow its own documented controls to ensure it prepares adequate time‐ and‐effort documentation to support payroll costs charged to the federal grant. View of Responsible Officials: There is no disagreement with this audit finding.

Federal Agency: U.S. Department of Health and Human Services Federal Program Name: Head Start Cluster Assistance Listing Number: 93.600 Pass‐through Agency: N/A Contract numbers: 10CH01029405C3 10CH01029406 10CH01204401 10HE00135801C5 10HE00135801C6 Contract periods: 01/2020‐06/2021 01/2021‐06/2021 07/2021‐12/2021 07/2021‐06/2023 07/2021‐06/2023 Criteria: As stated in the U.S. Department of Health and Human Services (HHS) Grants Policy Statement, grant recipients are required to meet the standards and requirements for financial management systems set forth or referenced in 45 CFR 74.21 or 92.20, as applicable. Further, financial systems must enable grant recipients to do the following: • Provide accurate, current, and complete financial information about Federal awards. • Maintain records that adequately identify the sources of funds for federally assisted activities and the purposes for which the award was used. • Maintain effective control over and accountability for all cash, real and personal property, and other assets under the award. • Compare actual expenditures or outlays with the approved budget for the award. • Determine the allowability of costs in accordance with the applicable federal cost principles, program regulations, and other regulations cited in the Notice of Award. • Minimize the time elapsing between any advance payment under the award(s) and disbursement of the funds for direct program costs and the proportionate share of any allowable indirect or facilities and administrative costs. Condition: The Association’s controls were not effective to ensure the financial systems migration from Intuit QuickBooks Enterprise to MIP Fund Accounting satisfied the requirements for financial reporting as stipulated by federal regulations and HHS. The initial financial reports provided by the Association did not provide accurate or complete information about the federal awards under its management. Further, initial bank reconciliation reports did not provide proof of effective control over and accountability for cash assets held under the award. This internal control deficiency is considered to be a material weakness. Context: Procedures included examining bank reconciliation reports, general ledger detail reports, and budget vs. actual reports by program and tracing to supporting documentation for a sample of transactions in each operations cycle (cash receipts, cash disbursements, payroll disbursements, journal entries). Cause: The Association changed the software used for maintaining its financial systems from Intuit QuickBooks Enterprise to MIP Fund Accounting in July 2020, beginning with their payroll processing. Full implementation of all other operating cycles occurred effective in January 2021. The system migration did not include adequate vendor support for building a chart of accounts or custom reporting tools to allow for a level of reporting required to produce timely and accurate financial statements for federal reporting needs. Further, the beginning subledgers for accounts receivable and accounts payable, and beginning outstanding reconciling items for cash accounts, were not properly built into the MIP Fund Accounting system during the early implementation process, resulting in the Association having difficulties reconciling their cash accounts. Effect: By not successfully implementing a financial system as required under federal and HHS agency regulations, the Association cannot demonstrate compliance with grantor’s requirements that require accurate, current, and complete financial information regarding the federal awards under its management. Recommendation: The Association continue to work internally and with the software vendor and outside consultants as needed to implement a chart of accounts and custom reporting tools that will assist them in complying with federal regulations regarding its financial system. View of Responsible Officials: There is no disagreement with this audit finding.

Criteria: As stated in the U.S. Department of Health and Human Services (HHS) Grants Policy Statement, grant recipients are required to implement financial systems that enable grant recipients to maintain effective control over and accountability for all cash under the award. Condition: The Association’s controls were not effective to ensure it performed the bank reconciliation process on an accurate or timely basis. We consider this internal control deficiency to be a significant deficiency. Context: Our procedures included examining bank reconciliation reports for the December 2021 period. We reviewed the bank reconciliations for unusual transactions, large reconciling items, and traced a sample of transactions to supporting documentation such as copies of cleared checks, bank statements, or other items. Cause: The Association changed the software used for processing its bank reconciliations from Intuit QuickBooks Enterprise to MIP Fund Accounting in January 2021. The system migration did not include entering detailed outstanding reconciling items for cash accounts as of December 31, 2020, resulting in the Association having difficulties reconciling their cash accounts on a timely basis. The initial reconciliations included large journal entries to cash accounts that did not have sufficient documentation as support and resulted in the bank reconciliations being redone to properly account for outstanding uncleared items that carried over from the prior fiscal year. Effect: By not reconciling the bank accounts on a timely basis, the financial reports initially provided for the audit were not accurate. This resulted in the delay of the audit until the bank reconciliations could be properly completed to account for outstanding uncleared items that carried over from the prior fiscal year. Recommendation: We recommend the Association follow its own documented controls to ensure it prepares bank reconciliations on a timely and accurate basis. View of Responsible Officials: There is no disagreement with this audit finding.

Criteria: Accounting principles generally accepted in the United States of America require that amounts be recognized as revenues, with corresponding receivables if applicable, when the product or service has been delivered to a customer and when the dollar amount is readily determinable. Condition: The Association’s controls were not effective to ensure it was recognizing revenues and related receivables for reimbursement‐based programming in the same period the expenditure occurred. We consider this internal control deficiency to be a significant deficiency. Context: Our procedures included examining subsequent cash receipts and vouching to expenditures made during the fiscal year, identifying several such receipts that should have been posted as receivables as of December 31, 2021 but were not. Cause: The Association typically records cash receipts on a cash basis instead of accrual basis as stipulated in U.S. GAAP. Effect: By not recording receivables in the correct period, revenues from reimbursement‐based awards could be materially misstated. Recommendation: We recommend the Association establish controls that allow for the timely and accurate recording of grants and contracts receivable from reimbursement‐based awards in the same period as their corresponding expenditures. View of Responsible Officials: There is no disagreement with this audit finding.

Federal Agency: U.S. Department of Health and Human Services Federal Program Name: Head Start Cluster Assistance Listing Number: 93.600 Pass‐through Agency: N/A Contract numbers: 10CH01029405C3 10CH01029406 10CH01204401 10HE00135801C5 10HE00135801C6 Contract periods: 01/2020‐06/2021 01/2021‐06/2021 07/2021‐12/2021 07/2021‐06/2023 07/2021‐06/2023 Type of Finding: Significant Deficiency in Internal Control Over Compliance ‐ Allowable Costs and Cost Principles Criteria: The Association’s procedures for processing expenditures, and primarily allocating expenditures to programs, should include controls that ensure expenditures are properly charged to program and allocated in accordance with the federal grant requirements. The objective of the Assistance Listing 93.600 Head Start program (including Early Head Start and Early Head Start Partnerships) is to promote school readiness of low‐income children (including American Indians, Alaska Natives and migrant and seasonal farm workers) by enhancing children’s cognitive, social and emotional development. During the fiscal year ending December 31, 2021, the Association expended $4,720,185 in federal funding. Federal regulations require award recipients to establish and follow internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls. Federal regulations require the Association to have adequate time‐and‐effort documentation to support all payroll costs charged to the Head Start awards. 2 CFR 200.430, Compensation – personal services, states, in part: “(i) Standards for Documentation of Personnel Expenses (1) Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (ii) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated…” Depending on the number and types of activities employees perform, time and effort documentation can be in the form of semi‐annual certification or monthly personnel activity reports, such as a timesheet. Condition: The Association’s controls were not effective to ensure it maintained adequate time and effort documentation, as required by federal regulations and the grantor. During review of payroll costs for the year ended December 31, 2021, the following was noted: • Payroll costs were charged according to budgeted time rather than reconciling to actual hours worked. • Two payroll disbursements were not allocated in compliance with the Associations approved cost allocation plan. This internal control deficiency is considered to be a significant deficiency. Questioned Costs: None. Context: Procedures included examining payroll charges for 40 randomly selected employees for January through December 2021. Cause: The Association changed the software used for payroll processing from QuickBooks to MIP in July 2020. They then changed their fiscal accounting software from QuickBooks to MIP in January 2021. The new software implementation was fraught with many challenges, one of which being implementing electronic processes that met the time and effort requirements outlined in the Association’s policy manual. Effect: By not keeping proper time‐and‐effort records, the Association cannot demonstrate compliance with grantor’s requirements that require support for payroll costs charged to the federal program. The Association provided alternate documentation that demonstrated the payroll costs charged to the program were allowable. Therefore, we are not questioning costs. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendation: The Association follow its own documented controls to ensure it prepares adequate time‐ and‐effort documentation to support payroll costs charged to the federal grant. View of Responsible Officials: There is no disagreement with this audit finding.

Federal Agency: U.S. Department of Health and Human Services Federal Program Name: Head Start Cluster Assistance Listing Number: 93.600 Pass‐through Agency: N/A Contract numbers: 10CH01029405C3 10CH01029406 10CH01204401 10HE00135801C5 10HE00135801C6 Contract periods: 01/2020‐06/2021 01/2021‐06/2021 07/2021‐12/2021 07/2021‐06/2023 07/2021‐06/2023 Criteria: As stated in the U.S. Department of Health and Human Services (HHS) Grants Policy Statement, grant recipients are required to meet the standards and requirements for financial management systems set forth or referenced in 45 CFR 74.21 or 92.20, as applicable. Further, financial systems must enable grant recipients to do the following: • Provide accurate, current, and complete financial information about Federal awards. • Maintain records that adequately identify the sources of funds for federally assisted activities and the purposes for which the award was used. • Maintain effective control over and accountability for all cash, real and personal property, and other assets under the award. • Compare actual expenditures or outlays with the approved budget for the award. • Determine the allowability of costs in accordance with the applicable federal cost principles, program regulations, and other regulations cited in the Notice of Award. • Minimize the time elapsing between any advance payment under the award(s) and disbursement of the funds for direct program costs and the proportionate share of any allowable indirect or facilities and administrative costs. Condition: The Association’s controls were not effective to ensure the financial systems migration from Intuit QuickBooks Enterprise to MIP Fund Accounting satisfied the requirements for financial reporting as stipulated by federal regulations and HHS. The initial financial reports provided by the Association did not provide accurate or complete information about the federal awards under its management. Further, initial bank reconciliation reports did not provide proof of effective control over and accountability for cash assets held under the award. This internal control deficiency is considered to be a material weakness. Context: Procedures included examining bank reconciliation reports, general ledger detail reports, and budget vs. actual reports by program and tracing to supporting documentation for a sample of transactions in each operations cycle (cash receipts, cash disbursements, payroll disbursements, journal entries). Cause: The Association changed the software used for maintaining its financial systems from Intuit QuickBooks Enterprise to MIP Fund Accounting in July 2020, beginning with their payroll processing. Full implementation of all other operating cycles occurred effective in January 2021. The system migration did not include adequate vendor support for building a chart of accounts or custom reporting tools to allow for a level of reporting required to produce timely and accurate financial statements for federal reporting needs. Further, the beginning subledgers for accounts receivable and accounts payable, and beginning outstanding reconciling items for cash accounts, were not properly built into the MIP Fund Accounting system during the early implementation process, resulting in the Association having difficulties reconciling their cash accounts. Effect: By not successfully implementing a financial system as required under federal and HHS agency regulations, the Association cannot demonstrate compliance with grantor’s requirements that require accurate, current, and complete financial information regarding the federal awards under its management. Recommendation: The Association continue to work internally and with the software vendor and outside consultants as needed to implement a chart of accounts and custom reporting tools that will assist them in complying with federal regulations regarding its financial system. View of Responsible Officials: There is no disagreement with this audit finding.

Criteria: As stated in the U.S. Department of Health and Human Services (HHS) Grants Policy Statement, grant recipients are required to implement financial systems that enable grant recipients to maintain effective control over and accountability for all cash under the award. Condition: The Association’s controls were not effective to ensure it performed the bank reconciliation process on an accurate or timely basis. We consider this internal control deficiency to be a significant deficiency. Context: Our procedures included examining bank reconciliation reports for the December 2021 period. We reviewed the bank reconciliations for unusual transactions, large reconciling items, and traced a sample of transactions to supporting documentation such as copies of cleared checks, bank statements, or other items. Cause: The Association changed the software used for processing its bank reconciliations from Intuit QuickBooks Enterprise to MIP Fund Accounting in January 2021. The system migration did not include entering detailed outstanding reconciling items for cash accounts as of December 31, 2020, resulting in the Association having difficulties reconciling their cash accounts on a timely basis. The initial reconciliations included large journal entries to cash accounts that did not have sufficient documentation as support and resulted in the bank reconciliations being redone to properly account for outstanding uncleared items that carried over from the prior fiscal year. Effect: By not reconciling the bank accounts on a timely basis, the financial reports initially provided for the audit were not accurate. This resulted in the delay of the audit until the bank reconciliations could be properly completed to account for outstanding uncleared items that carried over from the prior fiscal year. Recommendation: We recommend the Association follow its own documented controls to ensure it prepares bank reconciliations on a timely and accurate basis. View of Responsible Officials: There is no disagreement with this audit finding.

Criteria: Accounting principles generally accepted in the United States of America require that amounts be recognized as revenues, with corresponding receivables if applicable, when the product or service has been delivered to a customer and when the dollar amount is readily determinable. Condition: The Association’s controls were not effective to ensure it was recognizing revenues and related receivables for reimbursement‐based programming in the same period the expenditure occurred. We consider this internal control deficiency to be a significant deficiency. Context: Our procedures included examining subsequent cash receipts and vouching to expenditures made during the fiscal year, identifying several such receipts that should have been posted as receivables as of December 31, 2021 but were not. Cause: The Association typically records cash receipts on a cash basis instead of accrual basis as stipulated in U.S. GAAP. Effect: By not recording receivables in the correct period, revenues from reimbursement‐based awards could be materially misstated. Recommendation: We recommend the Association establish controls that allow for the timely and accurate recording of grants and contracts receivable from reimbursement‐based awards in the same period as their corresponding expenditures. View of Responsible Officials: There is no disagreement with this audit finding.

Federal Agency: U.S. Department of Health and Human Services Federal Program Name: Head Start Cluster Assistance Listing Number: 93.600 Pass‐through Agency: N/A Contract numbers: 10CH01029405C3 10CH01029406 10CH01204401 10HE00135801C5 10HE00135801C6 Contract periods: 01/2020‐06/2021 01/2021‐06/2021 07/2021‐12/2021 07/2021‐06/2023 07/2021‐06/2023 Type of Finding: Significant Deficiency in Internal Control Over Compliance ‐ Allowable Costs and Cost Principles Criteria: The Association’s procedures for processing expenditures, and primarily allocating expenditures to programs, should include controls that ensure expenditures are properly charged to program and allocated in accordance with the federal grant requirements. The objective of the Assistance Listing 93.600 Head Start program (including Early Head Start and Early Head Start Partnerships) is to promote school readiness of low‐income children (including American Indians, Alaska Natives and migrant and seasonal farm workers) by enhancing children’s cognitive, social and emotional development. During the fiscal year ending December 31, 2021, the Association expended $4,720,185 in federal funding. Federal regulations require award recipients to establish and follow internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls. Federal regulations require the Association to have adequate time‐and‐effort documentation to support all payroll costs charged to the Head Start awards. 2 CFR 200.430, Compensation – personal services, states, in part: “(i) Standards for Documentation of Personnel Expenses (1) Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (ii) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated…” Depending on the number and types of activities employees perform, time and effort documentation can be in the form of semi‐annual certification or monthly personnel activity reports, such as a timesheet. Condition: The Association’s controls were not effective to ensure it maintained adequate time and effort documentation, as required by federal regulations and the grantor. During review of payroll costs for the year ended December 31, 2021, the following was noted: • Payroll costs were charged according to budgeted time rather than reconciling to actual hours worked. • Two payroll disbursements were not allocated in compliance with the Associations approved cost allocation plan. This internal control deficiency is considered to be a significant deficiency. Questioned Costs: None. Context: Procedures included examining payroll charges for 40 randomly selected employees for January through December 2021. Cause: The Association changed the software used for payroll processing from QuickBooks to MIP in July 2020. They then changed their fiscal accounting software from QuickBooks to MIP in January 2021. The new software implementation was fraught with many challenges, one of which being implementing electronic processes that met the time and effort requirements outlined in the Association’s policy manual. Effect: By not keeping proper time‐and‐effort records, the Association cannot demonstrate compliance with grantor’s requirements that require support for payroll costs charged to the federal program. The Association provided alternate documentation that demonstrated the payroll costs charged to the program were allowable. Therefore, we are not questioning costs. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendation: The Association follow its own documented controls to ensure it prepares adequate time‐ and‐effort documentation to support payroll costs charged to the federal grant. View of Responsible Officials: There is no disagreement with this audit finding.

Federal Agency: U.S. Department of Health and Human Services Federal Program Name: Head Start Cluster Assistance Listing Number: 93.600 Pass‐through Agency: N/A Contract numbers: 10CH01029405C3 10CH01029406 10CH01204401 10HE00135801C5 10HE00135801C6 Contract periods: 01/2020‐06/2021 01/2021‐06/2021 07/2021‐12/2021 07/2021‐06/2023 07/2021‐06/2023 Criteria: As stated in the U.S. Department of Health and Human Services (HHS) Grants Policy Statement, grant recipients are required to meet the standards and requirements for financial management systems set forth or referenced in 45 CFR 74.21 or 92.20, as applicable. Further, financial systems must enable grant recipients to do the following: • Provide accurate, current, and complete financial information about Federal awards. • Maintain records that adequately identify the sources of funds for federally assisted activities and the purposes for which the award was used. • Maintain effective control over and accountability for all cash, real and personal property, and other assets under the award. • Compare actual expenditures or outlays with the approved budget for the award. • Determine the allowability of costs in accordance with the applicable federal cost principles, program regulations, and other regulations cited in the Notice of Award. • Minimize the time elapsing between any advance payment under the award(s) and disbursement of the funds for direct program costs and the proportionate share of any allowable indirect or facilities and administrative costs. Condition: The Association’s controls were not effective to ensure the financial systems migration from Intuit QuickBooks Enterprise to MIP Fund Accounting satisfied the requirements for financial reporting as stipulated by federal regulations and HHS. The initial financial reports provided by the Association did not provide accurate or complete information about the federal awards under its management. Further, initial bank reconciliation reports did not provide proof of effective control over and accountability for cash assets held under the award. This internal control deficiency is considered to be a material weakness. Context: Procedures included examining bank reconciliation reports, general ledger detail reports, and budget vs. actual reports by program and tracing to supporting documentation for a sample of transactions in each operations cycle (cash receipts, cash disbursements, payroll disbursements, journal entries). Cause: The Association changed the software used for maintaining its financial systems from Intuit QuickBooks Enterprise to MIP Fund Accounting in July 2020, beginning with their payroll processing. Full implementation of all other operating cycles occurred effective in January 2021. The system migration did not include adequate vendor support for building a chart of accounts or custom reporting tools to allow for a level of reporting required to produce timely and accurate financial statements for federal reporting needs. Further, the beginning subledgers for accounts receivable and accounts payable, and beginning outstanding reconciling items for cash accounts, were not properly built into the MIP Fund Accounting system during the early implementation process, resulting in the Association having difficulties reconciling their cash accounts. Effect: By not successfully implementing a financial system as required under federal and HHS agency regulations, the Association cannot demonstrate compliance with grantor’s requirements that require accurate, current, and complete financial information regarding the federal awards under its management. Recommendation: The Association continue to work internally and with the software vendor and outside consultants as needed to implement a chart of accounts and custom reporting tools that will assist them in complying with federal regulations regarding its financial system. View of Responsible Officials: There is no disagreement with this audit finding.

Criteria: As stated in the U.S. Department of Health and Human Services (HHS) Grants Policy Statement, grant recipients are required to implement financial systems that enable grant recipients to maintain effective control over and accountability for all cash under the award. Condition: The Association’s controls were not effective to ensure it performed the bank reconciliation process on an accurate or timely basis. We consider this internal control deficiency to be a significant deficiency. Context: Our procedures included examining bank reconciliation reports for the December 2021 period. We reviewed the bank reconciliations for unusual transactions, large reconciling items, and traced a sample of transactions to supporting documentation such as copies of cleared checks, bank statements, or other items. Cause: The Association changed the software used for processing its bank reconciliations from Intuit QuickBooks Enterprise to MIP Fund Accounting in January 2021. The system migration did not include entering detailed outstanding reconciling items for cash accounts as of December 31, 2020, resulting in the Association having difficulties reconciling their cash accounts on a timely basis. The initial reconciliations included large journal entries to cash accounts that did not have sufficient documentation as support and resulted in the bank reconciliations being redone to properly account for outstanding uncleared items that carried over from the prior fiscal year. Effect: By not reconciling the bank accounts on a timely basis, the financial reports initially provided for the audit were not accurate. This resulted in the delay of the audit until the bank reconciliations could be properly completed to account for outstanding uncleared items that carried over from the prior fiscal year. Recommendation: We recommend the Association follow its own documented controls to ensure it prepares bank reconciliations on a timely and accurate basis. View of Responsible Officials: There is no disagreement with this audit finding.

Criteria: Accounting principles generally accepted in the United States of America require that amounts be recognized as revenues, with corresponding receivables if applicable, when the product or service has been delivered to a customer and when the dollar amount is readily determinable. Condition: The Association’s controls were not effective to ensure it was recognizing revenues and related receivables for reimbursement‐based programming in the same period the expenditure occurred. We consider this internal control deficiency to be a significant deficiency. Context: Our procedures included examining subsequent cash receipts and vouching to expenditures made during the fiscal year, identifying several such receipts that should have been posted as receivables as of December 31, 2021 but were not. Cause: The Association typically records cash receipts on a cash basis instead of accrual basis as stipulated in U.S. GAAP. Effect: By not recording receivables in the correct period, revenues from reimbursement‐based awards could be materially misstated. Recommendation: We recommend the Association establish controls that allow for the timely and accurate recording of grants and contracts receivable from reimbursement‐based awards in the same period as their corresponding expenditures. View of Responsible Officials: There is no disagreement with this audit finding.

Federal Agency: U.S. Department of Health and Human Services Federal Program Name: Head Start Cluster Assistance Listing Number: 93.600 Pass‐through Agency: N/A Contract numbers: 10CH01029405C3 10CH01029406 10CH01204401 10HE00135801C5 10HE00135801C6 Contract periods: 01/2020‐06/2021 01/2021‐06/2021 07/2021‐12/2021 07/2021‐06/2023 07/2021‐06/2023 Type of Finding: Significant Deficiency in Internal Control Over Compliance ‐ Allowable Costs and Cost Principles Criteria: The Association’s procedures for processing expenditures, and primarily allocating expenditures to programs, should include controls that ensure expenditures are properly charged to program and allocated in accordance with the federal grant requirements. The objective of the Assistance Listing 93.600 Head Start program (including Early Head Start and Early Head Start Partnerships) is to promote school readiness of low‐income children (including American Indians, Alaska Natives and migrant and seasonal farm workers) by enhancing children’s cognitive, social and emotional development. During the fiscal year ending December 31, 2021, the Association expended $4,720,185 in federal funding. Federal regulations require award recipients to establish and follow internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls. Federal regulations require the Association to have adequate time‐and‐effort documentation to support all payroll costs charged to the Head Start awards. 2 CFR 200.430, Compensation – personal services, states, in part: “(i) Standards for Documentation of Personnel Expenses (1) Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (ii) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated…” Depending on the number and types of activities employees perform, time and effort documentation can be in the form of semi‐annual certification or monthly personnel activity reports, such as a timesheet. Condition: The Association’s controls were not effective to ensure it maintained adequate time and effort documentation, as required by federal regulations and the grantor. During review of payroll costs for the year ended December 31, 2021, the following was noted: • Payroll costs were charged according to budgeted time rather than reconciling to actual hours worked. • Two payroll disbursements were not allocated in compliance with the Associations approved cost allocation plan. This internal control deficiency is considered to be a significant deficiency. Questioned Costs: None. Context: Procedures included examining payroll charges for 40 randomly selected employees for January through December 2021. Cause: The Association changed the software used for payroll processing from QuickBooks to MIP in July 2020. They then changed their fiscal accounting software from QuickBooks to MIP in January 2021. The new software implementation was fraught with many challenges, one of which being implementing electronic processes that met the time and effort requirements outlined in the Association’s policy manual. Effect: By not keeping proper time‐and‐effort records, the Association cannot demonstrate compliance with grantor’s requirements that require support for payroll costs charged to the federal program. The Association provided alternate documentation that demonstrated the payroll costs charged to the program were allowable. Therefore, we are not questioning costs. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendation: The Association follow its own documented controls to ensure it prepares adequate time‐ and‐effort documentation to support payroll costs charged to the federal grant. View of Responsible Officials: There is no disagreement with this audit finding.

Federal Agency: U.S. Department of Health and Human Services Federal Program Name: Head Start Cluster Assistance Listing Number: 93.600 Pass‐through Agency: N/A Contract numbers: 10CH01029405C3 10CH01029406 10CH01204401 10HE00135801C5 10HE00135801C6 Contract periods: 01/2020‐06/2021 01/2021‐06/2021 07/2021‐12/2021 07/2021‐06/2023 07/2021‐06/2023 Criteria: As stated in the U.S. Department of Health and Human Services (HHS) Grants Policy Statement, grant recipients are required to meet the standards and requirements for financial management systems set forth or referenced in 45 CFR 74.21 or 92.20, as applicable. Further, financial systems must enable grant recipients to do the following: • Provide accurate, current, and complete financial information about Federal awards. • Maintain records that adequately identify the sources of funds for federally assisted activities and the purposes for which the award was used. • Maintain effective control over and accountability for all cash, real and personal property, and other assets under the award. • Compare actual expenditures or outlays with the approved budget for the award. • Determine the allowability of costs in accordance with the applicable federal cost principles, program regulations, and other regulations cited in the Notice of Award. • Minimize the time elapsing between any advance payment under the award(s) and disbursement of the funds for direct program costs and the proportionate share of any allowable indirect or facilities and administrative costs. Condition: The Association’s controls were not effective to ensure the financial systems migration from Intuit QuickBooks Enterprise to MIP Fund Accounting satisfied the requirements for financial reporting as stipulated by federal regulations and HHS. The initial financial reports provided by the Association did not provide accurate or complete information about the federal awards under its management. Further, initial bank reconciliation reports did not provide proof of effective control over and accountability for cash assets held under the award. This internal control deficiency is considered to be a material weakness. Context: Procedures included examining bank reconciliation reports, general ledger detail reports, and budget vs. actual reports by program and tracing to supporting documentation for a sample of transactions in each operations cycle (cash receipts, cash disbursements, payroll disbursements, journal entries). Cause: The Association changed the software used for maintaining its financial systems from Intuit QuickBooks Enterprise to MIP Fund Accounting in July 2020, beginning with their payroll processing. Full implementation of all other operating cycles occurred effective in January 2021. The system migration did not include adequate vendor support for building a chart of accounts or custom reporting tools to allow for a level of reporting required to produce timely and accurate financial statements for federal reporting needs. Further, the beginning subledgers for accounts receivable and accounts payable, and beginning outstanding reconciling items for cash accounts, were not properly built into the MIP Fund Accounting system during the early implementation process, resulting in the Association having difficulties reconciling their cash accounts. Effect: By not successfully implementing a financial system as required under federal and HHS agency regulations, the Association cannot demonstrate compliance with grantor’s requirements that require accurate, current, and complete financial information regarding the federal awards under its management. Recommendation: The Association continue to work internally and with the software vendor and outside consultants as needed to implement a chart of accounts and custom reporting tools that will assist them in complying with federal regulations regarding its financial system. View of Responsible Officials: There is no disagreement with this audit finding.

Criteria: As stated in the U.S. Department of Health and Human Services (HHS) Grants Policy Statement, grant recipients are required to implement financial systems that enable grant recipients to maintain effective control over and accountability for all cash under the award. Condition: The Association’s controls were not effective to ensure it performed the bank reconciliation process on an accurate or timely basis. We consider this internal control deficiency to be a significant deficiency. Context: Our procedures included examining bank reconciliation reports for the December 2021 period. We reviewed the bank reconciliations for unusual transactions, large reconciling items, and traced a sample of transactions to supporting documentation such as copies of cleared checks, bank statements, or other items. Cause: The Association changed the software used for processing its bank reconciliations from Intuit QuickBooks Enterprise to MIP Fund Accounting in January 2021. The system migration did not include entering detailed outstanding reconciling items for cash accounts as of December 31, 2020, resulting in the Association having difficulties reconciling their cash accounts on a timely basis. The initial reconciliations included large journal entries to cash accounts that did not have sufficient documentation as support and resulted in the bank reconciliations being redone to properly account for outstanding uncleared items that carried over from the prior fiscal year. Effect: By not reconciling the bank accounts on a timely basis, the financial reports initially provided for the audit were not accurate. This resulted in the delay of the audit until the bank reconciliations could be properly completed to account for outstanding uncleared items that carried over from the prior fiscal year. Recommendation: We recommend the Association follow its own documented controls to ensure it prepares bank reconciliations on a timely and accurate basis. View of Responsible Officials: There is no disagreement with this audit finding.

Criteria: Accounting principles generally accepted in the United States of America require that amounts be recognized as revenues, with corresponding receivables if applicable, when the product or service has been delivered to a customer and when the dollar amount is readily determinable. Condition: The Association’s controls were not effective to ensure it was recognizing revenues and related receivables for reimbursement‐based programming in the same period the expenditure occurred. We consider this internal control deficiency to be a significant deficiency. Context: Our procedures included examining subsequent cash receipts and vouching to expenditures made during the fiscal year, identifying several such receipts that should have been posted as receivables as of December 31, 2021 but were not. Cause: The Association typically records cash receipts on a cash basis instead of accrual basis as stipulated in U.S. GAAP. Effect: By not recording receivables in the correct period, revenues from reimbursement‐based awards could be materially misstated. Recommendation: We recommend the Association establish controls that allow for the timely and accurate recording of grants and contracts receivable from reimbursement‐based awards in the same period as their corresponding expenditures. View of Responsible Officials: There is no disagreement with this audit finding.

Federal Agency: U.S. Department of Health and Human Services Federal Program Name: Head Start Cluster Assistance Listing Number: 93.600 Pass‐through Agency: N/A Contract numbers: 10CH01029405C3 10CH01029406 10CH01204401 10HE00135801C5 10HE00135801C6 Contract periods: 01/2020‐06/2021 01/2021‐06/2021 07/2021‐12/2021 07/2021‐06/2023 07/2021‐06/2023 Type of Finding: Significant Deficiency in Internal Control Over Compliance ‐ Allowable Costs and Cost Principles Criteria: The Association’s procedures for processing expenditures, and primarily allocating expenditures to programs, should include controls that ensure expenditures are properly charged to program and allocated in accordance with the federal grant requirements. The objective of the Assistance Listing 93.600 Head Start program (including Early Head Start and Early Head Start Partnerships) is to promote school readiness of low‐income children (including American Indians, Alaska Natives and migrant and seasonal farm workers) by enhancing children’s cognitive, social and emotional development. During the fiscal year ending December 31, 2021, the Association expended $4,720,185 in federal funding. Federal regulations require award recipients to establish and follow internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls. Federal regulations require the Association to have adequate time‐and‐effort documentation to support all payroll costs charged to the Head Start awards. 2 CFR 200.430, Compensation – personal services, states, in part: “(i) Standards for Documentation of Personnel Expenses (1) Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (ii) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated…” Depending on the number and types of activities employees perform, time and effort documentation can be in the form of semi‐annual certification or monthly personnel activity reports, such as a timesheet. Condition: The Association’s controls were not effective to ensure it maintained adequate time and effort documentation, as required by federal regulations and the grantor. During review of payroll costs for the year ended December 31, 2021, the following was noted: • Payroll costs were charged according to budgeted time rather than reconciling to actual hours worked. • Two payroll disbursements were not allocated in compliance with the Associations approved cost allocation plan. This internal control deficiency is considered to be a significant deficiency. Questioned Costs: None. Context: Procedures included examining payroll charges for 40 randomly selected employees for January through December 2021. Cause: The Association changed the software used for payroll processing from QuickBooks to MIP in July 2020. They then changed their fiscal accounting software from QuickBooks to MIP in January 2021. The new software implementation was fraught with many challenges, one of which being implementing electronic processes that met the time and effort requirements outlined in the Association’s policy manual. Effect: By not keeping proper time‐and‐effort records, the Association cannot demonstrate compliance with grantor’s requirements that require support for payroll costs charged to the federal program. The Association provided alternate documentation that demonstrated the payroll costs charged to the program were allowable. Therefore, we are not questioning costs. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendation: The Association follow its own documented controls to ensure it prepares adequate time‐ and‐effort documentation to support payroll costs charged to the federal grant. View of Responsible Officials: There is no disagreement with this audit finding.

Federal Agency: U.S. Department of Health and Human Services Federal Program Name: Head Start Cluster Assistance Listing Number: 93.600 Pass‐through Agency: N/A Contract numbers: 10CH01029405C3 10CH01029406 10CH01204401 10HE00135801C5 10HE00135801C6 Contract periods: 01/2020‐06/2021 01/2021‐06/2021 07/2021‐12/2021 07/2021‐06/2023 07/2021‐06/2023 Criteria: As stated in the U.S. Department of Health and Human Services (HHS) Grants Policy Statement, grant recipients are required to meet the standards and requirements for financial management systems set forth or referenced in 45 CFR 74.21 or 92.20, as applicable. Further, financial systems must enable grant recipients to do the following: • Provide accurate, current, and complete financial information about Federal awards. • Maintain records that adequately identify the sources of funds for federally assisted activities and the purposes for which the award was used. • Maintain effective control over and accountability for all cash, real and personal property, and other assets under the award. • Compare actual expenditures or outlays with the approved budget for the award. • Determine the allowability of costs in accordance with the applicable federal cost principles, program regulations, and other regulations cited in the Notice of Award. • Minimize the time elapsing between any advance payment under the award(s) and disbursement of the funds for direct program costs and the proportionate share of any allowable indirect or facilities and administrative costs. Condition: The Association’s controls were not effective to ensure the financial systems migration from Intuit QuickBooks Enterprise to MIP Fund Accounting satisfied the requirements for financial reporting as stipulated by federal regulations and HHS. The initial financial reports provided by the Association did not provide accurate or complete information about the federal awards under its management. Further, initial bank reconciliation reports did not provide proof of effective control over and accountability for cash assets held under the award. This internal control deficiency is considered to be a material weakness. Context: Procedures included examining bank reconciliation reports, general ledger detail reports, and budget vs. actual reports by program and tracing to supporting documentation for a sample of transactions in each operations cycle (cash receipts, cash disbursements, payroll disbursements, journal entries). Cause: The Association changed the software used for maintaining its financial systems from Intuit QuickBooks Enterprise to MIP Fund Accounting in July 2020, beginning with their payroll processing. Full implementation of all other operating cycles occurred effective in January 2021. The system migration did not include adequate vendor support for building a chart of accounts or custom reporting tools to allow for a level of reporting required to produce timely and accurate financial statements for federal reporting needs. Further, the beginning subledgers for accounts receivable and accounts payable, and beginning outstanding reconciling items for cash accounts, were not properly built into the MIP Fund Accounting system during the early implementation process, resulting in the Association having difficulties reconciling their cash accounts. Effect: By not successfully implementing a financial system as required under federal and HHS agency regulations, the Association cannot demonstrate compliance with grantor’s requirements that require accurate, current, and complete financial information regarding the federal awards under its management. Recommendation: The Association continue to work internally and with the software vendor and outside consultants as needed to implement a chart of accounts and custom reporting tools that will assist them in complying with federal regulations regarding its financial system. View of Responsible Officials: There is no disagreement with this audit finding.

Criteria: As stated in the U.S. Department of Health and Human Services (HHS) Grants Policy Statement, grant recipients are required to implement financial systems that enable grant recipients to maintain effective control over and accountability for all cash under the award. Condition: The Association’s controls were not effective to ensure it performed the bank reconciliation process on an accurate or timely basis. We consider this internal control deficiency to be a significant deficiency. Context: Our procedures included examining bank reconciliation reports for the December 2021 period. We reviewed the bank reconciliations for unusual transactions, large reconciling items, and traced a sample of transactions to supporting documentation such as copies of cleared checks, bank statements, or other items. Cause: The Association changed the software used for processing its bank reconciliations from Intuit QuickBooks Enterprise to MIP Fund Accounting in January 2021. The system migration did not include entering detailed outstanding reconciling items for cash accounts as of December 31, 2020, resulting in the Association having difficulties reconciling their cash accounts on a timely basis. The initial reconciliations included large journal entries to cash accounts that did not have sufficient documentation as support and resulted in the bank reconciliations being redone to properly account for outstanding uncleared items that carried over from the prior fiscal year. Effect: By not reconciling the bank accounts on a timely basis, the financial reports initially provided for the audit were not accurate. This resulted in the delay of the audit until the bank reconciliations could be properly completed to account for outstanding uncleared items that carried over from the prior fiscal year. Recommendation: We recommend the Association follow its own documented controls to ensure it prepares bank reconciliations on a timely and accurate basis. View of Responsible Officials: There is no disagreement with this audit finding.

Criteria: Accounting principles generally accepted in the United States of America require that amounts be recognized as revenues, with corresponding receivables if applicable, when the product or service has been delivered to a customer and when the dollar amount is readily determinable. Condition: The Association’s controls were not effective to ensure it was recognizing revenues and related receivables for reimbursement‐based programming in the same period the expenditure occurred. We consider this internal control deficiency to be a significant deficiency. Context: Our procedures included examining subsequent cash receipts and vouching to expenditures made during the fiscal year, identifying several such receipts that should have been posted as receivables as of December 31, 2021 but were not. Cause: The Association typically records cash receipts on a cash basis instead of accrual basis as stipulated in U.S. GAAP. Effect: By not recording receivables in the correct period, revenues from reimbursement‐based awards could be materially misstated. Recommendation: We recommend the Association establish controls that allow for the timely and accurate recording of grants and contracts receivable from reimbursement‐based awards in the same period as their corresponding expenditures. View of Responsible Officials: There is no disagreement with this audit finding.

Federal Agency: U.S. Department of Health and Human Services Federal Program Name: Head Start Cluster Assistance Listing Number: 93.600 Pass‐through Agency: N/A Contract numbers: 10CH01029405C3 10CH01029406 10CH01204401 10HE00135801C5 10HE00135801C6 Contract periods: 01/2020‐06/2021 01/2021‐06/2021 07/2021‐12/2021 07/2021‐06/2023 07/2021‐06/2023 Type of Finding: Significant Deficiency in Internal Control Over Compliance ‐ Allowable Costs and Cost Principles Criteria: The Association’s procedures for processing expenditures, and primarily allocating expenditures to programs, should include controls that ensure expenditures are properly charged to program and allocated in accordance with the federal grant requirements. The objective of the Assistance Listing 93.600 Head Start program (including Early Head Start and Early Head Start Partnerships) is to promote school readiness of low‐income children (including American Indians, Alaska Natives and migrant and seasonal farm workers) by enhancing children’s cognitive, social and emotional development. During the fiscal year ending December 31, 2021, the Association expended $4,720,185 in federal funding. Federal regulations require award recipients to establish and follow internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls. Federal regulations require the Association to have adequate time‐and‐effort documentation to support all payroll costs charged to the Head Start awards. 2 CFR 200.430, Compensation – personal services, states, in part: “(i) Standards for Documentation of Personnel Expenses (1) Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (ii) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated…” Depending on the number and types of activities employees perform, time and effort documentation can be in the form of semi‐annual certification or monthly personnel activity reports, such as a timesheet. Condition: The Association’s controls were not effective to ensure it maintained adequate time and effort documentation, as required by federal regulations and the grantor. During review of payroll costs for the year ended December 31, 2021, the following was noted: • Payroll costs were charged according to budgeted time rather than reconciling to actual hours worked. • Two payroll disbursements were not allocated in compliance with the Associations approved cost allocation plan. This internal control deficiency is considered to be a significant deficiency. Questioned Costs: None. Context: Procedures included examining payroll charges for 40 randomly selected employees for January through December 2021. Cause: The Association changed the software used for payroll processing from QuickBooks to MIP in July 2020. They then changed their fiscal accounting software from QuickBooks to MIP in January 2021. The new software implementation was fraught with many challenges, one of which being implementing electronic processes that met the time and effort requirements outlined in the Association’s policy manual. Effect: By not keeping proper time‐and‐effort records, the Association cannot demonstrate compliance with grantor’s requirements that require support for payroll costs charged to the federal program. The Association provided alternate documentation that demonstrated the payroll costs charged to the program were allowable. Therefore, we are not questioning costs. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendation: The Association follow its own documented controls to ensure it prepares adequate time‐ and‐effort documentation to support payroll costs charged to the federal grant. View of Responsible Officials: There is no disagreement with this audit finding.

Federal Agency: U.S. Department of Health and Human Services Federal Program Name: Head Start Cluster Assistance Listing Number: 93.600 Pass‐through Agency: N/A Contract numbers: 10CH01029405C3 10CH01029406 10CH01204401 10HE00135801C5 10HE00135801C6 Contract periods: 01/2020‐06/2021 01/2021‐06/2021 07/2021‐12/2021 07/2021‐06/2023 07/2021‐06/2023 Criteria: As stated in the U.S. Department of Health and Human Services (HHS) Grants Policy Statement, grant recipients are required to meet the standards and requirements for financial management systems set forth or referenced in 45 CFR 74.21 or 92.20, as applicable. Further, financial systems must enable grant recipients to do the following: • Provide accurate, current, and complete financial information about Federal awards. • Maintain records that adequately identify the sources of funds for federally assisted activities and the purposes for which the award was used. • Maintain effective control over and accountability for all cash, real and personal property, and other assets under the award. • Compare actual expenditures or outlays with the approved budget for the award. • Determine the allowability of costs in accordance with the applicable federal cost principles, program regulations, and other regulations cited in the Notice of Award. • Minimize the time elapsing between any advance payment under the award(s) and disbursement of the funds for direct program costs and the proportionate share of any allowable indirect or facilities and administrative costs. Condition: The Association’s controls were not effective to ensure the financial systems migration from Intuit QuickBooks Enterprise to MIP Fund Accounting satisfied the requirements for financial reporting as stipulated by federal regulations and HHS. The initial financial reports provided by the Association did not provide accurate or complete information about the federal awards under its management. Further, initial bank reconciliation reports did not provide proof of effective control over and accountability for cash assets held under the award. This internal control deficiency is considered to be a material weakness. Context: Procedures included examining bank reconciliation reports, general ledger detail reports, and budget vs. actual reports by program and tracing to supporting documentation for a sample of transactions in each operations cycle (cash receipts, cash disbursements, payroll disbursements, journal entries). Cause: The Association changed the software used for maintaining its financial systems from Intuit QuickBooks Enterprise to MIP Fund Accounting in July 2020, beginning with their payroll processing. Full implementation of all other operating cycles occurred effective in January 2021. The system migration did not include adequate vendor support for building a chart of accounts or custom reporting tools to allow for a level of reporting required to produce timely and accurate financial statements for federal reporting needs. Further, the beginning subledgers for accounts receivable and accounts payable, and beginning outstanding reconciling items for cash accounts, were not properly built into the MIP Fund Accounting system during the early implementation process, resulting in the Association having difficulties reconciling their cash accounts. Effect: By not successfully implementing a financial system as required under federal and HHS agency regulations, the Association cannot demonstrate compliance with grantor’s requirements that require accurate, current, and complete financial information regarding the federal awards under its management. Recommendation: The Association continue to work internally and with the software vendor and outside consultants as needed to implement a chart of accounts and custom reporting tools that will assist them in complying with federal regulations regarding its financial system. View of Responsible Officials: There is no disagreement with this audit finding.

Criteria: As stated in the U.S. Department of Health and Human Services (HHS) Grants Policy Statement, grant recipients are required to implement financial systems that enable grant recipients to maintain effective control over and accountability for all cash under the award. Condition: The Association’s controls were not effective to ensure it performed the bank reconciliation process on an accurate or timely basis. We consider this internal control deficiency to be a significant deficiency. Context: Our procedures included examining bank reconciliation reports for the December 2021 period. We reviewed the bank reconciliations for unusual transactions, large reconciling items, and traced a sample of transactions to supporting documentation such as copies of cleared checks, bank statements, or other items. Cause: The Association changed the software used for processing its bank reconciliations from Intuit QuickBooks Enterprise to MIP Fund Accounting in January 2021. The system migration did not include entering detailed outstanding reconciling items for cash accounts as of December 31, 2020, resulting in the Association having difficulties reconciling their cash accounts on a timely basis. The initial reconciliations included large journal entries to cash accounts that did not have sufficient documentation as support and resulted in the bank reconciliations being redone to properly account for outstanding uncleared items that carried over from the prior fiscal year. Effect: By not reconciling the bank accounts on a timely basis, the financial reports initially provided for the audit were not accurate. This resulted in the delay of the audit until the bank reconciliations could be properly completed to account for outstanding uncleared items that carried over from the prior fiscal year. Recommendation: We recommend the Association follow its own documented controls to ensure it prepares bank reconciliations on a timely and accurate basis. View of Responsible Officials: There is no disagreement with this audit finding.

Criteria: Accounting principles generally accepted in the United States of America require that amounts be recognized as revenues, with corresponding receivables if applicable, when the product or service has been delivered to a customer and when the dollar amount is readily determinable. Condition: The Association’s controls were not effective to ensure it was recognizing revenues and related receivables for reimbursement‐based programming in the same period the expenditure occurred. We consider this internal control deficiency to be a significant deficiency. Context: Our procedures included examining subsequent cash receipts and vouching to expenditures made during the fiscal year, identifying several such receipts that should have been posted as receivables as of December 31, 2021 but were not. Cause: The Association typically records cash receipts on a cash basis instead of accrual basis as stipulated in U.S. GAAP. Effect: By not recording receivables in the correct period, revenues from reimbursement‐based awards could be materially misstated. Recommendation: We recommend the Association establish controls that allow for the timely and accurate recording of grants and contracts receivable from reimbursement‐based awards in the same period as their corresponding expenditures. View of Responsible Officials: There is no disagreement with this audit finding.

Federal Agency: U.S. Department of Health and Human Services Federal Program Name: Head Start Cluster Assistance Listing Number: 93.600 Pass‐through Agency: N/A Contract numbers: 10CH01029405C3 10CH01029406 10CH01204401 10HE00135801C5 10HE00135801C6 Contract periods: 01/2020‐06/2021 01/2021‐06/2021 07/2021‐12/2021 07/2021‐06/2023 07/2021‐06/2023 Type of Finding: Significant Deficiency in Internal Control Over Compliance ‐ Allowable Costs and Cost Principles Criteria: The Association’s procedures for processing expenditures, and primarily allocating expenditures to programs, should include controls that ensure expenditures are properly charged to program and allocated in accordance with the federal grant requirements. The objective of the Assistance Listing 93.600 Head Start program (including Early Head Start and Early Head Start Partnerships) is to promote school readiness of low‐income children (including American Indians, Alaska Natives and migrant and seasonal farm workers) by enhancing children’s cognitive, social and emotional development. During the fiscal year ending December 31, 2021, the Association expended $4,720,185 in federal funding. Federal regulations require award recipients to establish and follow internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls. Federal regulations require the Association to have adequate time‐and‐effort documentation to support all payroll costs charged to the Head Start awards. 2 CFR 200.430, Compensation – personal services, states, in part: “(i) Standards for Documentation of Personnel Expenses (1) Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (ii) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated…” Depending on the number and types of activities employees perform, time and effort documentation can be in the form of semi‐annual certification or monthly personnel activity reports, such as a timesheet. Condition: The Association’s controls were not effective to ensure it maintained adequate time and effort documentation, as required by federal regulations and the grantor. During review of payroll costs for the year ended December 31, 2021, the following was noted: • Payroll costs were charged according to budgeted time rather than reconciling to actual hours worked. • Two payroll disbursements were not allocated in compliance with the Associations approved cost allocation plan. This internal control deficiency is considered to be a significant deficiency. Questioned Costs: None. Context: Procedures included examining payroll charges for 40 randomly selected employees for January through December 2021. Cause: The Association changed the software used for payroll processing from QuickBooks to MIP in July 2020. They then changed their fiscal accounting software from QuickBooks to MIP in January 2021. The new software implementation was fraught with many challenges, one of which being implementing electronic processes that met the time and effort requirements outlined in the Association’s policy manual. Effect: By not keeping proper time‐and‐effort records, the Association cannot demonstrate compliance with grantor’s requirements that require support for payroll costs charged to the federal program. The Association provided alternate documentation that demonstrated the payroll costs charged to the program were allowable. Therefore, we are not questioning costs. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendation: The Association follow its own documented controls to ensure it prepares adequate time‐ and‐effort documentation to support payroll costs charged to the federal grant. View of Responsible Officials: There is no disagreement with this audit finding.