Audit 319153

Finding 2022-002: Allowable Costs/Cost Principles - Time and Effort Reporting (Repeat Observation) Federal program information: U.S. Department of Health and Human Services, CFDA Number 93.600, Head Start Program and Early Head Start Child Care Partnership/Babies Step Forward; U.S. Department of Health and Human Services, CFDA Number 93.569/93.558, 477 Cluster; U.S. Department of Health and Human Services, CFDA Number 93.568, Low-Income Energy Assistance; U.S. Department of Health and Human Services, CFDA Number 93.575, CCDF Cluster; U.S. Department of Energy, CFDA Number 81.042, Weatherization Services for Low- Income Persons Criteria: The Code of Federal Regulations Section 200.430 (2 CFR 200.430) requires that charges to federal awards for salaries and wages must be based on records that accurately reflect the work performed. Budget estimates determined prior to services being performed by personnel may be used for interim accounting processes, but the organization’s internal controls must include a process to review these charges after services have been performed to make any necessary adjustments to ensure that final amounts charged to federal awards are accurate, allowable and properly allocated. Budget estimates alone do not qualify as support for charges to federal awards. Charges for salaries and wages must be supported by documentation that is incorporated into the official records of the organization. Condition: For the year ended July 31, 2022, WestCOP and Affiliates used status change forms to document an estimation of the distribution of employees’ salaries and wages among specific programs. Management’s process is to complete a status change form for an employee upon hire and then modify the form when there is a significant change in an employee’s duties impacting the allocation of time and effort among programs. The accounting department uses the distribution documented in the status change form to determine how to charge an employee’s compensation to programs and federal awards. While management has communicated to the auditors that regular reviews of actual personnel time and effort were performed during the year ended July 31, 2022, there is no formal documentation of this review process. Questioned Costs: Not determinable. Context: For all major programs tested, management did not provide documentation of its review of actual personnel time and effort after employee services were provided, such as personnel time reports or any other documented analysis of how personnel actually spent their time versus the estimates. Personnel costs represent a significant component of the total cost charged to the three major programs for the year ended July 31, 2022. We tested 40 individual charges of salaries and wages for each of the major federal award programs. We were able to recalculate the charges based on the estimated distributions per employee status change forms. Several selected employees for each program also spend 100% of their time on the programs, so allocations are not applicable. Effect: WestCOP and Affiliates were unable to demonstrate that personnel costs charged to the major federal award programs reflected actual time incurred on the programs that were properly supported in compliance with the time and effort reporting requirements described in 2 CFR 200.430. Cause: Management does not have a formal, documented process to review actual personnel time and effort after employee services are performed to ensure that charges to federal awards based on estimates are accurate. Charges to federal awards are based on estimates documented in personnel status change forms prior to services being performed. While these forms may be updated periodically to reflect changes in estimates of personnel time and effort, the updates are not supported by any documented analysis of actual time and effort. Recommendation: Management can continue using the estimates of the distribution of employees’ time per status change forms for interim accounting processes. However, we recommend that management formally document a process to periodically review the actual distribution of employee time and effort among federally-funded programs. Management can determine the frequency of this documentation, but we recommend that such review be formally documented at least monthly. Documentation could be in the form of personnel time and effort reports reflecting the distribution of actual time among programs prepared by employees and reviewed by direct supervisors. Alternatively, management personnel familiar with employees’ activities, such as direct supervisors, could prepare periodic analyses of the distribution of employee time and effort to support allocations and charges of salaries and wages to federal awards. Views of responsible officials and planned corrective actions: For employees who are paid in full or in part with federal and other funds, management will increase the frequency of the time and effort reporting to quarterly intervals. Specifically, employees will document their time and effort based on funding sources for each payroll period; and at the end each quarter, management will review and compare the actual time and effort percentages with the current ADP Labor Distribution Report for reasonableness. The Management review report will be used as a basis to effect changes to the labor distribution report using the employee status change forms. The time and effort documentation will be available for audit. The implementation of the Corrective Action Plan did not commence until FY23 because the auditor’s field work for fiscal year 2021 ended after the close of fiscal year 2022.

Finding 2022-002: Allowable Costs/Cost Principles - Time and Effort Reporting (Repeat Observation) Federal program information: U.S. Department of Health and Human Services, CFDA Number 93.600, Head Start Program and Early Head Start Child Care Partnership/Babies Step Forward; U.S. Department of Health and Human Services, CFDA Number 93.569/93.558, 477 Cluster; U.S. Department of Health and Human Services, CFDA Number 93.568, Low-Income Energy Assistance; U.S. Department of Health and Human Services, CFDA Number 93.575, CCDF Cluster; U.S. Department of Energy, CFDA Number 81.042, Weatherization Services for Low- Income Persons Criteria: The Code of Federal Regulations Section 200.430 (2 CFR 200.430) requires that charges to federal awards for salaries and wages must be based on records that accurately reflect the work performed. Budget estimates determined prior to services being performed by personnel may be used for interim accounting processes, but the organization’s internal controls must include a process to review these charges after services have been performed to make any necessary adjustments to ensure that final amounts charged to federal awards are accurate, allowable and properly allocated. Budget estimates alone do not qualify as support for charges to federal awards. Charges for salaries and wages must be supported by documentation that is incorporated into the official records of the organization. Condition: For the year ended July 31, 2022, WestCOP and Affiliates used status change forms to document an estimation of the distribution of employees’ salaries and wages among specific programs. Management’s process is to complete a status change form for an employee upon hire and then modify the form when there is a significant change in an employee’s duties impacting the allocation of time and effort among programs. The accounting department uses the distribution documented in the status change form to determine how to charge an employee’s compensation to programs and federal awards. While management has communicated to the auditors that regular reviews of actual personnel time and effort were performed during the year ended July 31, 2022, there is no formal documentation of this review process. Questioned Costs: Not determinable. Context: For all major programs tested, management did not provide documentation of its review of actual personnel time and effort after employee services were provided, such as personnel time reports or any other documented analysis of how personnel actually spent their time versus the estimates. Personnel costs represent a significant component of the total cost charged to the three major programs for the year ended July 31, 2022. We tested 40 individual charges of salaries and wages for each of the major federal award programs. We were able to recalculate the charges based on the estimated distributions per employee status change forms. Several selected employees for each program also spend 100% of their time on the programs, so allocations are not applicable. Effect: WestCOP and Affiliates were unable to demonstrate that personnel costs charged to the major federal award programs reflected actual time incurred on the programs that were properly supported in compliance with the time and effort reporting requirements described in 2 CFR 200.430. Cause: Management does not have a formal, documented process to review actual personnel time and effort after employee services are performed to ensure that charges to federal awards based on estimates are accurate. Charges to federal awards are based on estimates documented in personnel status change forms prior to services being performed. While these forms may be updated periodically to reflect changes in estimates of personnel time and effort, the updates are not supported by any documented analysis of actual time and effort. Recommendation: Management can continue using the estimates of the distribution of employees’ time per status change forms for interim accounting processes. However, we recommend that management formally document a process to periodically review the actual distribution of employee time and effort among federally-funded programs. Management can determine the frequency of this documentation, but we recommend that such review be formally documented at least monthly. Documentation could be in the form of personnel time and effort reports reflecting the distribution of actual time among programs prepared by employees and reviewed by direct supervisors. Alternatively, management personnel familiar with employees’ activities, such as direct supervisors, could prepare periodic analyses of the distribution of employee time and effort to support allocations and charges of salaries and wages to federal awards. Views of responsible officials and planned corrective actions: For employees who are paid in full or in part with federal and other funds, management will increase the frequency of the time and effort reporting to quarterly intervals. Specifically, employees will document their time and effort based on funding sources for each payroll period; and at the end each quarter, management will review and compare the actual time and effort percentages with the current ADP Labor Distribution Report for reasonableness. The Management review report will be used as a basis to effect changes to the labor distribution report using the employee status change forms. The time and effort documentation will be available for audit. The implementation of the Corrective Action Plan did not commence until FY23 because the auditor’s field work for fiscal year 2021 ended after the close of fiscal year 2022.

Finding 2022-002: Allowable Costs/Cost Principles - Time and Effort Reporting (Repeat Observation) Federal program information: U.S. Department of Health and Human Services, CFDA Number 93.600, Head Start Program and Early Head Start Child Care Partnership/Babies Step Forward; U.S. Department of Health and Human Services, CFDA Number 93.569/93.558, 477 Cluster; U.S. Department of Health and Human Services, CFDA Number 93.568, Low-Income Energy Assistance; U.S. Department of Health and Human Services, CFDA Number 93.575, CCDF Cluster; U.S. Department of Energy, CFDA Number 81.042, Weatherization Services for Low- Income Persons Criteria: The Code of Federal Regulations Section 200.430 (2 CFR 200.430) requires that charges to federal awards for salaries and wages must be based on records that accurately reflect the work performed. Budget estimates determined prior to services being performed by personnel may be used for interim accounting processes, but the organization’s internal controls must include a process to review these charges after services have been performed to make any necessary adjustments to ensure that final amounts charged to federal awards are accurate, allowable and properly allocated. Budget estimates alone do not qualify as support for charges to federal awards. Charges for salaries and wages must be supported by documentation that is incorporated into the official records of the organization. Condition: For the year ended July 31, 2022, WestCOP and Affiliates used status change forms to document an estimation of the distribution of employees’ salaries and wages among specific programs. Management’s process is to complete a status change form for an employee upon hire and then modify the form when there is a significant change in an employee’s duties impacting the allocation of time and effort among programs. The accounting department uses the distribution documented in the status change form to determine how to charge an employee’s compensation to programs and federal awards. While management has communicated to the auditors that regular reviews of actual personnel time and effort were performed during the year ended July 31, 2022, there is no formal documentation of this review process. Questioned Costs: Not determinable. Context: For all major programs tested, management did not provide documentation of its review of actual personnel time and effort after employee services were provided, such as personnel time reports or any other documented analysis of how personnel actually spent their time versus the estimates. Personnel costs represent a significant component of the total cost charged to the three major programs for the year ended July 31, 2022. We tested 40 individual charges of salaries and wages for each of the major federal award programs. We were able to recalculate the charges based on the estimated distributions per employee status change forms. Several selected employees for each program also spend 100% of their time on the programs, so allocations are not applicable. Effect: WestCOP and Affiliates were unable to demonstrate that personnel costs charged to the major federal award programs reflected actual time incurred on the programs that were properly supported in compliance with the time and effort reporting requirements described in 2 CFR 200.430. Cause: Management does not have a formal, documented process to review actual personnel time and effort after employee services are performed to ensure that charges to federal awards based on estimates are accurate. Charges to federal awards are based on estimates documented in personnel status change forms prior to services being performed. While these forms may be updated periodically to reflect changes in estimates of personnel time and effort, the updates are not supported by any documented analysis of actual time and effort. Recommendation: Management can continue using the estimates of the distribution of employees’ time per status change forms for interim accounting processes. However, we recommend that management formally document a process to periodically review the actual distribution of employee time and effort among federally-funded programs. Management can determine the frequency of this documentation, but we recommend that such review be formally documented at least monthly. Documentation could be in the form of personnel time and effort reports reflecting the distribution of actual time among programs prepared by employees and reviewed by direct supervisors. Alternatively, management personnel familiar with employees’ activities, such as direct supervisors, could prepare periodic analyses of the distribution of employee time and effort to support allocations and charges of salaries and wages to federal awards. Views of responsible officials and planned corrective actions: For employees who are paid in full or in part with federal and other funds, management will increase the frequency of the time and effort reporting to quarterly intervals. Specifically, employees will document their time and effort based on funding sources for each payroll period; and at the end each quarter, management will review and compare the actual time and effort percentages with the current ADP Labor Distribution Report for reasonableness. The Management review report will be used as a basis to effect changes to the labor distribution report using the employee status change forms. The time and effort documentation will be available for audit. The implementation of the Corrective Action Plan did not commence until FY23 because the auditor’s field work for fiscal year 2021 ended after the close of fiscal year 2022.

Finding 2022-002: Allowable Costs/Cost Principles - Time and Effort Reporting (Repeat Observation) Federal program information: U.S. Department of Health and Human Services, CFDA Number 93.600, Head Start Program and Early Head Start Child Care Partnership/Babies Step Forward; U.S. Department of Health and Human Services, CFDA Number 93.569/93.558, 477 Cluster; U.S. Department of Health and Human Services, CFDA Number 93.568, Low-Income Energy Assistance; U.S. Department of Health and Human Services, CFDA Number 93.575, CCDF Cluster; U.S. Department of Energy, CFDA Number 81.042, Weatherization Services for Low- Income Persons Criteria: The Code of Federal Regulations Section 200.430 (2 CFR 200.430) requires that charges to federal awards for salaries and wages must be based on records that accurately reflect the work performed. Budget estimates determined prior to services being performed by personnel may be used for interim accounting processes, but the organization’s internal controls must include a process to review these charges after services have been performed to make any necessary adjustments to ensure that final amounts charged to federal awards are accurate, allowable and properly allocated. Budget estimates alone do not qualify as support for charges to federal awards. Charges for salaries and wages must be supported by documentation that is incorporated into the official records of the organization. Condition: For the year ended July 31, 2022, WestCOP and Affiliates used status change forms to document an estimation of the distribution of employees’ salaries and wages among specific programs. Management’s process is to complete a status change form for an employee upon hire and then modify the form when there is a significant change in an employee’s duties impacting the allocation of time and effort among programs. The accounting department uses the distribution documented in the status change form to determine how to charge an employee’s compensation to programs and federal awards. While management has communicated to the auditors that regular reviews of actual personnel time and effort were performed during the year ended July 31, 2022, there is no formal documentation of this review process. Questioned Costs: Not determinable. Context: For all major programs tested, management did not provide documentation of its review of actual personnel time and effort after employee services were provided, such as personnel time reports or any other documented analysis of how personnel actually spent their time versus the estimates. Personnel costs represent a significant component of the total cost charged to the three major programs for the year ended July 31, 2022. We tested 40 individual charges of salaries and wages for each of the major federal award programs. We were able to recalculate the charges based on the estimated distributions per employee status change forms. Several selected employees for each program also spend 100% of their time on the programs, so allocations are not applicable. Effect: WestCOP and Affiliates were unable to demonstrate that personnel costs charged to the major federal award programs reflected actual time incurred on the programs that were properly supported in compliance with the time and effort reporting requirements described in 2 CFR 200.430. Cause: Management does not have a formal, documented process to review actual personnel time and effort after employee services are performed to ensure that charges to federal awards based on estimates are accurate. Charges to federal awards are based on estimates documented in personnel status change forms prior to services being performed. While these forms may be updated periodically to reflect changes in estimates of personnel time and effort, the updates are not supported by any documented analysis of actual time and effort. Recommendation: Management can continue using the estimates of the distribution of employees’ time per status change forms for interim accounting processes. However, we recommend that management formally document a process to periodically review the actual distribution of employee time and effort among federally-funded programs. Management can determine the frequency of this documentation, but we recommend that such review be formally documented at least monthly. Documentation could be in the form of personnel time and effort reports reflecting the distribution of actual time among programs prepared by employees and reviewed by direct supervisors. Alternatively, management personnel familiar with employees’ activities, such as direct supervisors, could prepare periodic analyses of the distribution of employee time and effort to support allocations and charges of salaries and wages to federal awards. Views of responsible officials and planned corrective actions: For employees who are paid in full or in part with federal and other funds, management will increase the frequency of the time and effort reporting to quarterly intervals. Specifically, employees will document their time and effort based on funding sources for each payroll period; and at the end each quarter, management will review and compare the actual time and effort percentages with the current ADP Labor Distribution Report for reasonableness. The Management review report will be used as a basis to effect changes to the labor distribution report using the employee status change forms. The time and effort documentation will be available for audit. The implementation of the Corrective Action Plan did not commence until FY23 because the auditor’s field work for fiscal year 2021 ended after the close of fiscal year 2022.

Finding 2022-002: Allowable Costs/Cost Principles - Time and Effort Reporting (Repeat Observation) Federal program information: U.S. Department of Health and Human Services, CFDA Number 93.600, Head Start Program and Early Head Start Child Care Partnership/Babies Step Forward; U.S. Department of Health and Human Services, CFDA Number 93.569/93.558, 477 Cluster; U.S. Department of Health and Human Services, CFDA Number 93.568, Low-Income Energy Assistance; U.S. Department of Health and Human Services, CFDA Number 93.575, CCDF Cluster; U.S. Department of Energy, CFDA Number 81.042, Weatherization Services for Low- Income Persons Criteria: The Code of Federal Regulations Section 200.430 (2 CFR 200.430) requires that charges to federal awards for salaries and wages must be based on records that accurately reflect the work performed. Budget estimates determined prior to services being performed by personnel may be used for interim accounting processes, but the organization’s internal controls must include a process to review these charges after services have been performed to make any necessary adjustments to ensure that final amounts charged to federal awards are accurate, allowable and properly allocated. Budget estimates alone do not qualify as support for charges to federal awards. Charges for salaries and wages must be supported by documentation that is incorporated into the official records of the organization. Condition: For the year ended July 31, 2022, WestCOP and Affiliates used status change forms to document an estimation of the distribution of employees’ salaries and wages among specific programs. Management’s process is to complete a status change form for an employee upon hire and then modify the form when there is a significant change in an employee’s duties impacting the allocation of time and effort among programs. The accounting department uses the distribution documented in the status change form to determine how to charge an employee’s compensation to programs and federal awards. While management has communicated to the auditors that regular reviews of actual personnel time and effort were performed during the year ended July 31, 2022, there is no formal documentation of this review process. Questioned Costs: Not determinable. Context: For all major programs tested, management did not provide documentation of its review of actual personnel time and effort after employee services were provided, such as personnel time reports or any other documented analysis of how personnel actually spent their time versus the estimates. Personnel costs represent a significant component of the total cost charged to the three major programs for the year ended July 31, 2022. We tested 40 individual charges of salaries and wages for each of the major federal award programs. We were able to recalculate the charges based on the estimated distributions per employee status change forms. Several selected employees for each program also spend 100% of their time on the programs, so allocations are not applicable. Effect: WestCOP and Affiliates were unable to demonstrate that personnel costs charged to the major federal award programs reflected actual time incurred on the programs that were properly supported in compliance with the time and effort reporting requirements described in 2 CFR 200.430. Cause: Management does not have a formal, documented process to review actual personnel time and effort after employee services are performed to ensure that charges to federal awards based on estimates are accurate. Charges to federal awards are based on estimates documented in personnel status change forms prior to services being performed. While these forms may be updated periodically to reflect changes in estimates of personnel time and effort, the updates are not supported by any documented analysis of actual time and effort. Recommendation: Management can continue using the estimates of the distribution of employees’ time per status change forms for interim accounting processes. However, we recommend that management formally document a process to periodically review the actual distribution of employee time and effort among federally-funded programs. Management can determine the frequency of this documentation, but we recommend that such review be formally documented at least monthly. Documentation could be in the form of personnel time and effort reports reflecting the distribution of actual time among programs prepared by employees and reviewed by direct supervisors. Alternatively, management personnel familiar with employees’ activities, such as direct supervisors, could prepare periodic analyses of the distribution of employee time and effort to support allocations and charges of salaries and wages to federal awards. Views of responsible officials and planned corrective actions: For employees who are paid in full or in part with federal and other funds, management will increase the frequency of the time and effort reporting to quarterly intervals. Specifically, employees will document their time and effort based on funding sources for each payroll period; and at the end each quarter, management will review and compare the actual time and effort percentages with the current ADP Labor Distribution Report for reasonableness. The Management review report will be used as a basis to effect changes to the labor distribution report using the employee status change forms. The time and effort documentation will be available for audit. The implementation of the Corrective Action Plan did not commence until FY23 because the auditor’s field work for fiscal year 2021 ended after the close of fiscal year 2022.

Finding 2022-002: Allowable Costs/Cost Principles - Time and Effort Reporting (Repeat Observation) Federal program information: U.S. Department of Health and Human Services, CFDA Number 93.600, Head Start Program and Early Head Start Child Care Partnership/Babies Step Forward; U.S. Department of Health and Human Services, CFDA Number 93.569/93.558, 477 Cluster; U.S. Department of Health and Human Services, CFDA Number 93.568, Low-Income Energy Assistance; U.S. Department of Health and Human Services, CFDA Number 93.575, CCDF Cluster; U.S. Department of Energy, CFDA Number 81.042, Weatherization Services for Low- Income Persons Criteria: The Code of Federal Regulations Section 200.430 (2 CFR 200.430) requires that charges to federal awards for salaries and wages must be based on records that accurately reflect the work performed. Budget estimates determined prior to services being performed by personnel may be used for interim accounting processes, but the organization’s internal controls must include a process to review these charges after services have been performed to make any necessary adjustments to ensure that final amounts charged to federal awards are accurate, allowable and properly allocated. Budget estimates alone do not qualify as support for charges to federal awards. Charges for salaries and wages must be supported by documentation that is incorporated into the official records of the organization. Condition: For the year ended July 31, 2022, WestCOP and Affiliates used status change forms to document an estimation of the distribution of employees’ salaries and wages among specific programs. Management’s process is to complete a status change form for an employee upon hire and then modify the form when there is a significant change in an employee’s duties impacting the allocation of time and effort among programs. The accounting department uses the distribution documented in the status change form to determine how to charge an employee’s compensation to programs and federal awards. While management has communicated to the auditors that regular reviews of actual personnel time and effort were performed during the year ended July 31, 2022, there is no formal documentation of this review process. Questioned Costs: Not determinable. Context: For all major programs tested, management did not provide documentation of its review of actual personnel time and effort after employee services were provided, such as personnel time reports or any other documented analysis of how personnel actually spent their time versus the estimates. Personnel costs represent a significant component of the total cost charged to the three major programs for the year ended July 31, 2022. We tested 40 individual charges of salaries and wages for each of the major federal award programs. We were able to recalculate the charges based on the estimated distributions per employee status change forms. Several selected employees for each program also spend 100% of their time on the programs, so allocations are not applicable. Effect: WestCOP and Affiliates were unable to demonstrate that personnel costs charged to the major federal award programs reflected actual time incurred on the programs that were properly supported in compliance with the time and effort reporting requirements described in 2 CFR 200.430. Cause: Management does not have a formal, documented process to review actual personnel time and effort after employee services are performed to ensure that charges to federal awards based on estimates are accurate. Charges to federal awards are based on estimates documented in personnel status change forms prior to services being performed. While these forms may be updated periodically to reflect changes in estimates of personnel time and effort, the updates are not supported by any documented analysis of actual time and effort. Recommendation: Management can continue using the estimates of the distribution of employees’ time per status change forms for interim accounting processes. However, we recommend that management formally document a process to periodically review the actual distribution of employee time and effort among federally-funded programs. Management can determine the frequency of this documentation, but we recommend that such review be formally documented at least monthly. Documentation could be in the form of personnel time and effort reports reflecting the distribution of actual time among programs prepared by employees and reviewed by direct supervisors. Alternatively, management personnel familiar with employees’ activities, such as direct supervisors, could prepare periodic analyses of the distribution of employee time and effort to support allocations and charges of salaries and wages to federal awards. Views of responsible officials and planned corrective actions: For employees who are paid in full or in part with federal and other funds, management will increase the frequency of the time and effort reporting to quarterly intervals. Specifically, employees will document their time and effort based on funding sources for each payroll period; and at the end each quarter, management will review and compare the actual time and effort percentages with the current ADP Labor Distribution Report for reasonableness. The Management review report will be used as a basis to effect changes to the labor distribution report using the employee status change forms. The time and effort documentation will be available for audit. The implementation of the Corrective Action Plan did not commence until FY23 because the auditor’s field work for fiscal year 2021 ended after the close of fiscal year 2022.

Finding 2022-002: Allowable Costs/Cost Principles - Time and Effort Reporting (Repeat Observation) Federal program information: U.S. Department of Health and Human Services, CFDA Number 93.600, Head Start Program and Early Head Start Child Care Partnership/Babies Step Forward; U.S. Department of Health and Human Services, CFDA Number 93.569/93.558, 477 Cluster; U.S. Department of Health and Human Services, CFDA Number 93.568, Low-Income Energy Assistance; U.S. Department of Health and Human Services, CFDA Number 93.575, CCDF Cluster; U.S. Department of Energy, CFDA Number 81.042, Weatherization Services for Low- Income Persons Criteria: The Code of Federal Regulations Section 200.430 (2 CFR 200.430) requires that charges to federal awards for salaries and wages must be based on records that accurately reflect the work performed. Budget estimates determined prior to services being performed by personnel may be used for interim accounting processes, but the organization’s internal controls must include a process to review these charges after services have been performed to make any necessary adjustments to ensure that final amounts charged to federal awards are accurate, allowable and properly allocated. Budget estimates alone do not qualify as support for charges to federal awards. Charges for salaries and wages must be supported by documentation that is incorporated into the official records of the organization. Condition: For the year ended July 31, 2022, WestCOP and Affiliates used status change forms to document an estimation of the distribution of employees’ salaries and wages among specific programs. Management’s process is to complete a status change form for an employee upon hire and then modify the form when there is a significant change in an employee’s duties impacting the allocation of time and effort among programs. The accounting department uses the distribution documented in the status change form to determine how to charge an employee’s compensation to programs and federal awards. While management has communicated to the auditors that regular reviews of actual personnel time and effort were performed during the year ended July 31, 2022, there is no formal documentation of this review process. Questioned Costs: Not determinable. Context: For all major programs tested, management did not provide documentation of its review of actual personnel time and effort after employee services were provided, such as personnel time reports or any other documented analysis of how personnel actually spent their time versus the estimates. Personnel costs represent a significant component of the total cost charged to the three major programs for the year ended July 31, 2022. We tested 40 individual charges of salaries and wages for each of the major federal award programs. We were able to recalculate the charges based on the estimated distributions per employee status change forms. Several selected employees for each program also spend 100% of their time on the programs, so allocations are not applicable. Effect: WestCOP and Affiliates were unable to demonstrate that personnel costs charged to the major federal award programs reflected actual time incurred on the programs that were properly supported in compliance with the time and effort reporting requirements described in 2 CFR 200.430. Cause: Management does not have a formal, documented process to review actual personnel time and effort after employee services are performed to ensure that charges to federal awards based on estimates are accurate. Charges to federal awards are based on estimates documented in personnel status change forms prior to services being performed. While these forms may be updated periodically to reflect changes in estimates of personnel time and effort, the updates are not supported by any documented analysis of actual time and effort. Recommendation: Management can continue using the estimates of the distribution of employees’ time per status change forms for interim accounting processes. However, we recommend that management formally document a process to periodically review the actual distribution of employee time and effort among federally-funded programs. Management can determine the frequency of this documentation, but we recommend that such review be formally documented at least monthly. Documentation could be in the form of personnel time and effort reports reflecting the distribution of actual time among programs prepared by employees and reviewed by direct supervisors. Alternatively, management personnel familiar with employees’ activities, such as direct supervisors, could prepare periodic analyses of the distribution of employee time and effort to support allocations and charges of salaries and wages to federal awards. Views of responsible officials and planned corrective actions: For employees who are paid in full or in part with federal and other funds, management will increase the frequency of the time and effort reporting to quarterly intervals. Specifically, employees will document their time and effort based on funding sources for each payroll period; and at the end each quarter, management will review and compare the actual time and effort percentages with the current ADP Labor Distribution Report for reasonableness. The Management review report will be used as a basis to effect changes to the labor distribution report using the employee status change forms. The time and effort documentation will be available for audit. The implementation of the Corrective Action Plan did not commence until FY23 because the auditor’s field work for fiscal year 2021 ended after the close of fiscal year 2022.

Finding 2022-002: Allowable Costs/Cost Principles - Time and Effort Reporting (Repeat Observation) Federal program information: U.S. Department of Health and Human Services, CFDA Number 93.600, Head Start Program and Early Head Start Child Care Partnership/Babies Step Forward; U.S. Department of Health and Human Services, CFDA Number 93.569/93.558, 477 Cluster; U.S. Department of Health and Human Services, CFDA Number 93.568, Low-Income Energy Assistance; U.S. Department of Health and Human Services, CFDA Number 93.575, CCDF Cluster; U.S. Department of Energy, CFDA Number 81.042, Weatherization Services for Low- Income Persons Criteria: The Code of Federal Regulations Section 200.430 (2 CFR 200.430) requires that charges to federal awards for salaries and wages must be based on records that accurately reflect the work performed. Budget estimates determined prior to services being performed by personnel may be used for interim accounting processes, but the organization’s internal controls must include a process to review these charges after services have been performed to make any necessary adjustments to ensure that final amounts charged to federal awards are accurate, allowable and properly allocated. Budget estimates alone do not qualify as support for charges to federal awards. Charges for salaries and wages must be supported by documentation that is incorporated into the official records of the organization. Condition: For the year ended July 31, 2022, WestCOP and Affiliates used status change forms to document an estimation of the distribution of employees’ salaries and wages among specific programs. Management’s process is to complete a status change form for an employee upon hire and then modify the form when there is a significant change in an employee’s duties impacting the allocation of time and effort among programs. The accounting department uses the distribution documented in the status change form to determine how to charge an employee’s compensation to programs and federal awards. While management has communicated to the auditors that regular reviews of actual personnel time and effort were performed during the year ended July 31, 2022, there is no formal documentation of this review process. Questioned Costs: Not determinable. Context: For all major programs tested, management did not provide documentation of its review of actual personnel time and effort after employee services were provided, such as personnel time reports or any other documented analysis of how personnel actually spent their time versus the estimates. Personnel costs represent a significant component of the total cost charged to the three major programs for the year ended July 31, 2022. We tested 40 individual charges of salaries and wages for each of the major federal award programs. We were able to recalculate the charges based on the estimated distributions per employee status change forms. Several selected employees for each program also spend 100% of their time on the programs, so allocations are not applicable. Effect: WestCOP and Affiliates were unable to demonstrate that personnel costs charged to the major federal award programs reflected actual time incurred on the programs that were properly supported in compliance with the time and effort reporting requirements described in 2 CFR 200.430. Cause: Management does not have a formal, documented process to review actual personnel time and effort after employee services are performed to ensure that charges to federal awards based on estimates are accurate. Charges to federal awards are based on estimates documented in personnel status change forms prior to services being performed. While these forms may be updated periodically to reflect changes in estimates of personnel time and effort, the updates are not supported by any documented analysis of actual time and effort. Recommendation: Management can continue using the estimates of the distribution of employees’ time per status change forms for interim accounting processes. However, we recommend that management formally document a process to periodically review the actual distribution of employee time and effort among federally-funded programs. Management can determine the frequency of this documentation, but we recommend that such review be formally documented at least monthly. Documentation could be in the form of personnel time and effort reports reflecting the distribution of actual time among programs prepared by employees and reviewed by direct supervisors. Alternatively, management personnel familiar with employees’ activities, such as direct supervisors, could prepare periodic analyses of the distribution of employee time and effort to support allocations and charges of salaries and wages to federal awards. Views of responsible officials and planned corrective actions: For employees who are paid in full or in part with federal and other funds, management will increase the frequency of the time and effort reporting to quarterly intervals. Specifically, employees will document their time and effort based on funding sources for each payroll period; and at the end each quarter, management will review and compare the actual time and effort percentages with the current ADP Labor Distribution Report for reasonableness. The Management review report will be used as a basis to effect changes to the labor distribution report using the employee status change forms. The time and effort documentation will be available for audit. The implementation of the Corrective Action Plan did not commence until FY23 because the auditor’s field work for fiscal year 2021 ended after the close of fiscal year 2022.

Finding 2022-002: Allowable Costs/Cost Principles - Time and Effort Reporting (Repeat Observation) Federal program information: U.S. Department of Health and Human Services, CFDA Number 93.600, Head Start Program and Early Head Start Child Care Partnership/Babies Step Forward; U.S. Department of Health and Human Services, CFDA Number 93.569/93.558, 477 Cluster; U.S. Department of Health and Human Services, CFDA Number 93.568, Low-Income Energy Assistance; U.S. Department of Health and Human Services, CFDA Number 93.575, CCDF Cluster; U.S. Department of Energy, CFDA Number 81.042, Weatherization Services for Low- Income Persons Criteria: The Code of Federal Regulations Section 200.430 (2 CFR 200.430) requires that charges to federal awards for salaries and wages must be based on records that accurately reflect the work performed. Budget estimates determined prior to services being performed by personnel may be used for interim accounting processes, but the organization’s internal controls must include a process to review these charges after services have been performed to make any necessary adjustments to ensure that final amounts charged to federal awards are accurate, allowable and properly allocated. Budget estimates alone do not qualify as support for charges to federal awards. Charges for salaries and wages must be supported by documentation that is incorporated into the official records of the organization. Condition: For the year ended July 31, 2022, WestCOP and Affiliates used status change forms to document an estimation of the distribution of employees’ salaries and wages among specific programs. Management’s process is to complete a status change form for an employee upon hire and then modify the form when there is a significant change in an employee’s duties impacting the allocation of time and effort among programs. The accounting department uses the distribution documented in the status change form to determine how to charge an employee’s compensation to programs and federal awards. While management has communicated to the auditors that regular reviews of actual personnel time and effort were performed during the year ended July 31, 2022, there is no formal documentation of this review process. Questioned Costs: Not determinable. Context: For all major programs tested, management did not provide documentation of its review of actual personnel time and effort after employee services were provided, such as personnel time reports or any other documented analysis of how personnel actually spent their time versus the estimates. Personnel costs represent a significant component of the total cost charged to the three major programs for the year ended July 31, 2022. We tested 40 individual charges of salaries and wages for each of the major federal award programs. We were able to recalculate the charges based on the estimated distributions per employee status change forms. Several selected employees for each program also spend 100% of their time on the programs, so allocations are not applicable. Effect: WestCOP and Affiliates were unable to demonstrate that personnel costs charged to the major federal award programs reflected actual time incurred on the programs that were properly supported in compliance with the time and effort reporting requirements described in 2 CFR 200.430. Cause: Management does not have a formal, documented process to review actual personnel time and effort after employee services are performed to ensure that charges to federal awards based on estimates are accurate. Charges to federal awards are based on estimates documented in personnel status change forms prior to services being performed. While these forms may be updated periodically to reflect changes in estimates of personnel time and effort, the updates are not supported by any documented analysis of actual time and effort. Recommendation: Management can continue using the estimates of the distribution of employees’ time per status change forms for interim accounting processes. However, we recommend that management formally document a process to periodically review the actual distribution of employee time and effort among federally-funded programs. Management can determine the frequency of this documentation, but we recommend that such review be formally documented at least monthly. Documentation could be in the form of personnel time and effort reports reflecting the distribution of actual time among programs prepared by employees and reviewed by direct supervisors. Alternatively, management personnel familiar with employees’ activities, such as direct supervisors, could prepare periodic analyses of the distribution of employee time and effort to support allocations and charges of salaries and wages to federal awards. Views of responsible officials and planned corrective actions: For employees who are paid in full or in part with federal and other funds, management will increase the frequency of the time and effort reporting to quarterly intervals. Specifically, employees will document their time and effort based on funding sources for each payroll period; and at the end each quarter, management will review and compare the actual time and effort percentages with the current ADP Labor Distribution Report for reasonableness. The Management review report will be used as a basis to effect changes to the labor distribution report using the employee status change forms. The time and effort documentation will be available for audit. The implementation of the Corrective Action Plan did not commence until FY23 because the auditor’s field work for fiscal year 2021 ended after the close of fiscal year 2022.

Finding 2022-002: Allowable Costs/Cost Principles - Time and Effort Reporting (Repeat Observation) Federal program information: U.S. Department of Health and Human Services, CFDA Number 93.600, Head Start Program and Early Head Start Child Care Partnership/Babies Step Forward; U.S. Department of Health and Human Services, CFDA Number 93.569/93.558, 477 Cluster; U.S. Department of Health and Human Services, CFDA Number 93.568, Low-Income Energy Assistance; U.S. Department of Health and Human Services, CFDA Number 93.575, CCDF Cluster; U.S. Department of Energy, CFDA Number 81.042, Weatherization Services for Low- Income Persons Criteria: The Code of Federal Regulations Section 200.430 (2 CFR 200.430) requires that charges to federal awards for salaries and wages must be based on records that accurately reflect the work performed. Budget estimates determined prior to services being performed by personnel may be used for interim accounting processes, but the organization’s internal controls must include a process to review these charges after services have been performed to make any necessary adjustments to ensure that final amounts charged to federal awards are accurate, allowable and properly allocated. Budget estimates alone do not qualify as support for charges to federal awards. Charges for salaries and wages must be supported by documentation that is incorporated into the official records of the organization. Condition: For the year ended July 31, 2022, WestCOP and Affiliates used status change forms to document an estimation of the distribution of employees’ salaries and wages among specific programs. Management’s process is to complete a status change form for an employee upon hire and then modify the form when there is a significant change in an employee’s duties impacting the allocation of time and effort among programs. The accounting department uses the distribution documented in the status change form to determine how to charge an employee’s compensation to programs and federal awards. While management has communicated to the auditors that regular reviews of actual personnel time and effort were performed during the year ended July 31, 2022, there is no formal documentation of this review process. Questioned Costs: Not determinable. Context: For all major programs tested, management did not provide documentation of its review of actual personnel time and effort after employee services were provided, such as personnel time reports or any other documented analysis of how personnel actually spent their time versus the estimates. Personnel costs represent a significant component of the total cost charged to the three major programs for the year ended July 31, 2022. We tested 40 individual charges of salaries and wages for each of the major federal award programs. We were able to recalculate the charges based on the estimated distributions per employee status change forms. Several selected employees for each program also spend 100% of their time on the programs, so allocations are not applicable. Effect: WestCOP and Affiliates were unable to demonstrate that personnel costs charged to the major federal award programs reflected actual time incurred on the programs that were properly supported in compliance with the time and effort reporting requirements described in 2 CFR 200.430. Cause: Management does not have a formal, documented process to review actual personnel time and effort after employee services are performed to ensure that charges to federal awards based on estimates are accurate. Charges to federal awards are based on estimates documented in personnel status change forms prior to services being performed. While these forms may be updated periodically to reflect changes in estimates of personnel time and effort, the updates are not supported by any documented analysis of actual time and effort. Recommendation: Management can continue using the estimates of the distribution of employees’ time per status change forms for interim accounting processes. However, we recommend that management formally document a process to periodically review the actual distribution of employee time and effort among federally-funded programs. Management can determine the frequency of this documentation, but we recommend that such review be formally documented at least monthly. Documentation could be in the form of personnel time and effort reports reflecting the distribution of actual time among programs prepared by employees and reviewed by direct supervisors. Alternatively, management personnel familiar with employees’ activities, such as direct supervisors, could prepare periodic analyses of the distribution of employee time and effort to support allocations and charges of salaries and wages to federal awards. Views of responsible officials and planned corrective actions: For employees who are paid in full or in part with federal and other funds, management will increase the frequency of the time and effort reporting to quarterly intervals. Specifically, employees will document their time and effort based on funding sources for each payroll period; and at the end each quarter, management will review and compare the actual time and effort percentages with the current ADP Labor Distribution Report for reasonableness. The Management review report will be used as a basis to effect changes to the labor distribution report using the employee status change forms. The time and effort documentation will be available for audit. The implementation of the Corrective Action Plan did not commence until FY23 because the auditor’s field work for fiscal year 2021 ended after the close of fiscal year 2022.

Finding 2022-002: Allowable Costs/Cost Principles - Time and Effort Reporting (Repeat Observation) Federal program information: U.S. Department of Health and Human Services, CFDA Number 93.600, Head Start Program and Early Head Start Child Care Partnership/Babies Step Forward; U.S. Department of Health and Human Services, CFDA Number 93.569/93.558, 477 Cluster; U.S. Department of Health and Human Services, CFDA Number 93.568, Low-Income Energy Assistance; U.S. Department of Health and Human Services, CFDA Number 93.575, CCDF Cluster; U.S. Department of Energy, CFDA Number 81.042, Weatherization Services for Low- Income Persons Criteria: The Code of Federal Regulations Section 200.430 (2 CFR 200.430) requires that charges to federal awards for salaries and wages must be based on records that accurately reflect the work performed. Budget estimates determined prior to services being performed by personnel may be used for interim accounting processes, but the organization’s internal controls must include a process to review these charges after services have been performed to make any necessary adjustments to ensure that final amounts charged to federal awards are accurate, allowable and properly allocated. Budget estimates alone do not qualify as support for charges to federal awards. Charges for salaries and wages must be supported by documentation that is incorporated into the official records of the organization. Condition: For the year ended July 31, 2022, WestCOP and Affiliates used status change forms to document an estimation of the distribution of employees’ salaries and wages among specific programs. Management’s process is to complete a status change form for an employee upon hire and then modify the form when there is a significant change in an employee’s duties impacting the allocation of time and effort among programs. The accounting department uses the distribution documented in the status change form to determine how to charge an employee’s compensation to programs and federal awards. While management has communicated to the auditors that regular reviews of actual personnel time and effort were performed during the year ended July 31, 2022, there is no formal documentation of this review process. Questioned Costs: Not determinable. Context: For all major programs tested, management did not provide documentation of its review of actual personnel time and effort after employee services were provided, such as personnel time reports or any other documented analysis of how personnel actually spent their time versus the estimates. Personnel costs represent a significant component of the total cost charged to the three major programs for the year ended July 31, 2022. We tested 40 individual charges of salaries and wages for each of the major federal award programs. We were able to recalculate the charges based on the estimated distributions per employee status change forms. Several selected employees for each program also spend 100% of their time on the programs, so allocations are not applicable. Effect: WestCOP and Affiliates were unable to demonstrate that personnel costs charged to the major federal award programs reflected actual time incurred on the programs that were properly supported in compliance with the time and effort reporting requirements described in 2 CFR 200.430. Cause: Management does not have a formal, documented process to review actual personnel time and effort after employee services are performed to ensure that charges to federal awards based on estimates are accurate. Charges to federal awards are based on estimates documented in personnel status change forms prior to services being performed. While these forms may be updated periodically to reflect changes in estimates of personnel time and effort, the updates are not supported by any documented analysis of actual time and effort. Recommendation: Management can continue using the estimates of the distribution of employees’ time per status change forms for interim accounting processes. However, we recommend that management formally document a process to periodically review the actual distribution of employee time and effort among federally-funded programs. Management can determine the frequency of this documentation, but we recommend that such review be formally documented at least monthly. Documentation could be in the form of personnel time and effort reports reflecting the distribution of actual time among programs prepared by employees and reviewed by direct supervisors. Alternatively, management personnel familiar with employees’ activities, such as direct supervisors, could prepare periodic analyses of the distribution of employee time and effort to support allocations and charges of salaries and wages to federal awards. Views of responsible officials and planned corrective actions: For employees who are paid in full or in part with federal and other funds, management will increase the frequency of the time and effort reporting to quarterly intervals. Specifically, employees will document their time and effort based on funding sources for each payroll period; and at the end each quarter, management will review and compare the actual time and effort percentages with the current ADP Labor Distribution Report for reasonableness. The Management review report will be used as a basis to effect changes to the labor distribution report using the employee status change forms. The time and effort documentation will be available for audit. The implementation of the Corrective Action Plan did not commence until FY23 because the auditor’s field work for fiscal year 2021 ended after the close of fiscal year 2022.

Finding 2022-002: Allowable Costs/Cost Principles - Time and Effort Reporting (Repeat Observation) Federal program information: U.S. Department of Health and Human Services, CFDA Number 93.600, Head Start Program and Early Head Start Child Care Partnership/Babies Step Forward; U.S. Department of Health and Human Services, CFDA Number 93.569/93.558, 477 Cluster; U.S. Department of Health and Human Services, CFDA Number 93.568, Low-Income Energy Assistance; U.S. Department of Health and Human Services, CFDA Number 93.575, CCDF Cluster; U.S. Department of Energy, CFDA Number 81.042, Weatherization Services for Low- Income Persons Criteria: The Code of Federal Regulations Section 200.430 (2 CFR 200.430) requires that charges to federal awards for salaries and wages must be based on records that accurately reflect the work performed. Budget estimates determined prior to services being performed by personnel may be used for interim accounting processes, but the organization’s internal controls must include a process to review these charges after services have been performed to make any necessary adjustments to ensure that final amounts charged to federal awards are accurate, allowable and properly allocated. Budget estimates alone do not qualify as support for charges to federal awards. Charges for salaries and wages must be supported by documentation that is incorporated into the official records of the organization. Condition: For the year ended July 31, 2022, WestCOP and Affiliates used status change forms to document an estimation of the distribution of employees’ salaries and wages among specific programs. Management’s process is to complete a status change form for an employee upon hire and then modify the form when there is a significant change in an employee’s duties impacting the allocation of time and effort among programs. The accounting department uses the distribution documented in the status change form to determine how to charge an employee’s compensation to programs and federal awards. While management has communicated to the auditors that regular reviews of actual personnel time and effort were performed during the year ended July 31, 2022, there is no formal documentation of this review process. Questioned Costs: Not determinable. Context: For all major programs tested, management did not provide documentation of its review of actual personnel time and effort after employee services were provided, such as personnel time reports or any other documented analysis of how personnel actually spent their time versus the estimates. Personnel costs represent a significant component of the total cost charged to the three major programs for the year ended July 31, 2022. We tested 40 individual charges of salaries and wages for each of the major federal award programs. We were able to recalculate the charges based on the estimated distributions per employee status change forms. Several selected employees for each program also spend 100% of their time on the programs, so allocations are not applicable. Effect: WestCOP and Affiliates were unable to demonstrate that personnel costs charged to the major federal award programs reflected actual time incurred on the programs that were properly supported in compliance with the time and effort reporting requirements described in 2 CFR 200.430. Cause: Management does not have a formal, documented process to review actual personnel time and effort after employee services are performed to ensure that charges to federal awards based on estimates are accurate. Charges to federal awards are based on estimates documented in personnel status change forms prior to services being performed. While these forms may be updated periodically to reflect changes in estimates of personnel time and effort, the updates are not supported by any documented analysis of actual time and effort. Recommendation: Management can continue using the estimates of the distribution of employees’ time per status change forms for interim accounting processes. However, we recommend that management formally document a process to periodically review the actual distribution of employee time and effort among federally-funded programs. Management can determine the frequency of this documentation, but we recommend that such review be formally documented at least monthly. Documentation could be in the form of personnel time and effort reports reflecting the distribution of actual time among programs prepared by employees and reviewed by direct supervisors. Alternatively, management personnel familiar with employees’ activities, such as direct supervisors, could prepare periodic analyses of the distribution of employee time and effort to support allocations and charges of salaries and wages to federal awards. Views of responsible officials and planned corrective actions: For employees who are paid in full or in part with federal and other funds, management will increase the frequency of the time and effort reporting to quarterly intervals. Specifically, employees will document their time and effort based on funding sources for each payroll period; and at the end each quarter, management will review and compare the actual time and effort percentages with the current ADP Labor Distribution Report for reasonableness. The Management review report will be used as a basis to effect changes to the labor distribution report using the employee status change forms. The time and effort documentation will be available for audit. The implementation of the Corrective Action Plan did not commence until FY23 because the auditor’s field work for fiscal year 2021 ended after the close of fiscal year 2022.