Audit 290449

Identification of the federal program: Assistance Listing #93.600 - Head Start Criteria or specific requirement (including statutory, regulatory, or other citation): In accordance with Title 2 U.S. Code of Federal Regulations (CFR) Part 200, paragraph 328 “Financial Reporting” states recipients must use the standard financial reporting forms or such other forms as may be authorized by OMB (approval is indicated by an OMB paperwork control number on the form) when reporting to the federal awarding agency. Each recipient must report program outlays and program income on a cash or accrual basis, as prescribed by the federal awarding agency. The Department of Health and Human Services Head Start program requires the annual submission of SF-425, Federal Financial Report. Recipients use the FFR as a standardized format to report expenditures under federal awards, as well as, when applicable, cash status (Lines 10.a, 10.b, and 10c). References to this report include its applicability as both an expenditure and a cash status report unless otherwise indicated. Condition: During the course of the audit, we noted the Federal Financial Report, SF 425, we noted that cash receipts reported on lines 10.a and cash disbursements reported on lines 10.b, did not agree to the actual cash received and cash disbursed per the financial records. Cash receipts were understated by $99,286 and cash disbursements were understated by $99,286. Management was not able to correct the report after the report was submitted electronically in the Department of Health and Human Services Payment Management System (PMS). Cause: The Organization suffered a loss of operational capacity due to COVID-19 and significant turnover in management including the Executive Director position as well as the Chief Financial Officer position caused delays and errors in the underlying accounting records from which the SF-425, Federal Financial Report was prepared. Effect or potential effect: Inaccurate financial reporting to the Department of Health and Human Services. Questioned costs: No questioned costs were noted during the course of the audit. All cash received under the Head Start award #04CH01102803 during the year ended October 31, 2021 was properly expended in accordance with provisions of the grant award. Context: The finding relates to the annual submission of SF-425, Federal Financial Report. Identification as a repeat finding: Not a repeat finding. Recommendation: We recommend the Organization review the current internal controls and processes in place surrounding the preparation, review and approval of financial reporting in order to ensure financial reports are complete, accurate, and prepared in accordance with the required basis of accounting. Views of responsible officials: The Organization strives to engage employees who possess industry knowledge and expertise and is in the process of hiring a new and qualified Executive Director and Chief Financial Officer. Under new leadership, improvement in the financial reporting process will be a priority. Currently, the Board of Directors is actively involved in managing the Organization and provides guidance and oversight of the financial reporting process.

Identification of the federal program: Assistance Listing #93.600 - Head Start Criteria or specific requirement (including statutory, regulatory, or other citation): In accordance with Title 2 U.S. Code of Federal Regulations (CFR) Part 200, paragraph 328 “Financial Reporting” states recipients must use the standard financial reporting forms or such other forms as may be authorized by OMB (approval is indicated by an OMB paperwork control number on the form) when reporting to the federal awarding agency. Each recipient must report program outlays and program income on a cash or accrual basis, as prescribed by the federal awarding agency. The Department of Health and Human Services Head Start program requires the annual submission of SF-425, Federal Financial Report. Recipients use the FFR as a standardized format to report expenditures under federal awards, as well as, when applicable, cash status (Lines 10.a, 10.b, and 10c). References to this report include its applicability as both an expenditure and a cash status report unless otherwise indicated. Condition: During the course of the audit, we noted the Federal Financial Report, SF 425, we noted that cash receipts reported on lines 10.a and cash disbursements reported on lines 10.b, did not agree to the actual cash received and cash disbursed per the financial records. Cash receipts were understated by $99,286 and cash disbursements were understated by $99,286. Management was not able to correct the report after the report was submitted electronically in the Department of Health and Human Services Payment Management System (PMS). Cause: The Organization suffered a loss of operational capacity due to COVID-19 and significant turnover in management including the Executive Director position as well as the Chief Financial Officer position caused delays and errors in the underlying accounting records from which the SF-425, Federal Financial Report was prepared. Effect or potential effect: Inaccurate financial reporting to the Department of Health and Human Services. Questioned costs: No questioned costs were noted during the course of the audit. All cash received under the Head Start award #04CH01102803 during the year ended October 31, 2021 was properly expended in accordance with provisions of the grant award. Context: The finding relates to the annual submission of SF-425, Federal Financial Report. Identification as a repeat finding: Not a repeat finding. Recommendation: We recommend the Organization review the current internal controls and processes in place surrounding the preparation, review and approval of financial reporting in order to ensure financial reports are complete, accurate, and prepared in accordance with the required basis of accounting. Views of responsible officials: The Organization strives to engage employees who possess industry knowledge and expertise and is in the process of hiring a new and qualified Executive Director and Chief Financial Officer. Under new leadership, improvement in the financial reporting process will be a priority. Currently, the Board of Directors is actively involved in managing the Organization and provides guidance and oversight of the financial reporting process.