Audit 336686

2023-003 Finding – Federal Award Type: Special Reporting - Federal Funding Accountability and Transparency Act (FFATA) – Material Non- Compliance and Material Weakness in Internal Controls over Compliance. Identification of Federal Program: AL Number: 64.033 Supportive Services for Veteran Families Criteria / Requirement: 2 CFR section 200.303 requires that non-federal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the non-federal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. Criteria / Requirement: (Continued) Under the requirements of the Federal Funding Accountability and Transparency Act (Pub. L. No. 109-282), as amended by Section 6202 of Pub. L. No. 110-252, that are codified in 2 CFR Part 170, recipients (i.e., direct recipients) of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). The subawards meeting the above definition are to be reported no later than the last day of the month following the month in which the subaward/subaward amendment obligation was made or the subcontract award/subcontract modification was made. Condition / Context: During the year June 30, 2023, CAT entered into three first-tier subawards greater than $30,000 under AL number 64.033. The auditor tested one of these subawards, noting that the award was not reported under the Federal Funding Accountability and Transparency Act to the Federal Subaward Reporting System. Per further inquiry, none of the first-tier subawards were reported to FSRS. Cause: CAT was not aware of the FFATA reporting requirements. Additionally, CAT was not maintaining adequate internal controls over review of federal awards for compliance requirements as this requirement was listed on the original contract. Procedures were not in place to track and report first-tier subawards. Effect: Failure to maintain sufficient internal controls and proper procedures, including identifying compliance requirements of grant agreements and tracking over reporting first-tier subawards may result in wrongful use of federal funds and non-compliance with federal awards. Questioned Costs: None. Recommendation: The Organization should establish written policies and procedures regarding review of grant agreements for compliance requirements along with written policies and procedures for first-tier subawards including tracking and proper internal control procedures. Management’s Response: Management concurs with the finding and has defined corrective action to address it. We have identified gaps in our reporting processes and worked to implement changes to ensure compliance with special reporting requirements. Policies and procedures will be updated regarding special reporting requirements. The Fiscal department will also be responsible for reviewing all contracts to identify all compliance requirements. Tracking procedures will be implemented to ensure reports are filed timely. The above identified corrective action was implemented in July 2024. Stacey Wilson, Fiscal Director, has implemented a tracking system for the FFATA.

2023-004 Finding – Federal Award Type: Subrecipient Monitoring – Material Non-Compliance and Material Weakness in Internal Control over Compliance) Identification of Federal Program: AL Number: 64.033 Supportive Services for Veteran Families Criteria / Requirement: 2 CFR section 200.303 requires that non-federal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the non-federal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. In accordance with 2 CFR section 200.332, a pass-through entity must clearly identify to the subrecipient the award as a subaward by providing the required federal information related to the award, and all requirements imposed by the pass-through entity on the subrecipient so that the federal award is used in accordance with federal statutes, regulations, and the provisions of contracts and grants agreements. The pass-through entity must evaluate risk of non-compliance of each subrecipient, monitoring the subrecipient and ensuring accountability of for-profit subrecipients. Per 2 CFR 200.332(d)(2) & (3), an entity must ensure that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, highlighting the status of action planned or taken to address Single Audit Finding related to the subaward. Further, they must issue a management decision for applicable audit findings. Condition / Context: CAT passed through $486,835 in funding to subrecipients under AL number 64.033. It was noted during the audit that CAT did not have documented written procedures or controls in place to ensure compliance with Uniform Guidance Subrecipient Monitoring requirements. Condition / Context (Continued): It was noted that within subaward contracts, required federal contract information was provided. Additionally, CAT is having regular meetings to ensure tasks are being completed in a timely manner and providing technical assistance when needed. However, for the one subrecipient tested out of three, there was no documentation of risk assessment of the subrecipient entity and no formal monitoring of the entity. The subrecipient tested was subject to 2 CFR Subpart F, Single Audit, and the audit for this entity was not obtained and therefore CAT did not review Single Audit Findings that may be related to the subaward. Cause: Procedures and internal controls were not in place to ensure that CAT is maintaining proper subrecipient monitoring for each federal subrecipient. Effect: Failure to maintain sufficient subrecipient monitoring may result in the wrongful use of federal funds and non-compliance with the provisions of applicable requirements of the federal award. Questioned Costs: None. Recommendation: The Organization should establish written policies and procedures regarding the contracting and monitoring of subrecipients that are in line with Uniform Guidance requirements, as well as establish organizational controls to ensure that such policies and procedures are being followed. Management’s Response: Management concurs with the finding and has defined corrective action to address it. Staff have reviewed policies and procedures already in place to ensure compliance of subrecipient monitoring. The Fiscal department has subsequently conducted a fiscal desk review of the subrecipient in question for FY 22/23 and no findings were found. Standard Operating Processes were updated to ensure all subrecipients are fiscally monitored based on the Risk Assessment Determination level. The above identified corrective action was implemented in July 2024. Stacey Wilson, Fiscal Director, has implemented a monitoring calendar for fiscal and Program Director’s will be responsible for ensuring subrecipients are monitored.

2023-002 Finding – Federal Award Type: Special Reporting – Real Property Status Report SF-429 – Non-Compliance and Significant Deficiency in Internal Control Over Compliance Identification of Federal Program: AL Number: 93.600 Head Start Cluster Criteria / Requirement: Annual reporting of Real Property is required for all grantees through the Real Property Status Report form SF-429, regardless of whether or not they hold reportable property that was paid for using federal funds under AL number 93.600. For non-federal entities with a budget period beginning July 1st, the SF-429 report is due July 30th following the end of the year. Condition / Context: The Organization filed the SF-429, however the report was filed after the required date. Additionally, the report was not reviewed prior to submission, though the information contained in the SF-429 was accurate. Cause: Procedures were not in place to ensure that the Organization filed the report timely, and there were no procedures in place to ensure the report submitted was accurate. Effect: Failure to maintain sufficient internal controls over special reporting may result in non-compliance and or inaccurate reporting. Questioned Costs: None. Recommendation: The Organization should establish written policies and procedures regarding special reporting such as Real Property Status Reporting form SF-429 as well as establish organizational controls to ensure that such policies and procedures are being followed. Management’s Response: We have identified gaps in our reporting processes and worked to implement changes to ensure compliance with special reporting requirements. Policies and procedures will be updated regarding special reporting requirements and ensure controls are in place for additional review of such reports prior to filing. Tracking procedures will be implemented to ensure reports are filed timely. The above identified corrective action was implemented in July 2024. Stacey Wilson, Fiscal Director, has implemented a tracking system for Real Property Reporting form SF-429.

2023-003 Finding – Federal Award Type: Special Reporting - Federal Funding Accountability and Transparency Act (FFATA) – Material Non- Compliance and Material Weakness in Internal Controls over Compliance. Identification of Federal Program: AL Number: 64.033 Supportive Services for Veteran Families Criteria / Requirement: 2 CFR section 200.303 requires that non-federal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the non-federal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. Criteria / Requirement: (Continued) Under the requirements of the Federal Funding Accountability and Transparency Act (Pub. L. No. 109-282), as amended by Section 6202 of Pub. L. No. 110-252, that are codified in 2 CFR Part 170, recipients (i.e., direct recipients) of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). The subawards meeting the above definition are to be reported no later than the last day of the month following the month in which the subaward/subaward amendment obligation was made or the subcontract award/subcontract modification was made. Condition / Context: During the year June 30, 2023, CAT entered into three first-tier subawards greater than $30,000 under AL number 64.033. The auditor tested one of these subawards, noting that the award was not reported under the Federal Funding Accountability and Transparency Act to the Federal Subaward Reporting System. Per further inquiry, none of the first-tier subawards were reported to FSRS. Cause: CAT was not aware of the FFATA reporting requirements. Additionally, CAT was not maintaining adequate internal controls over review of federal awards for compliance requirements as this requirement was listed on the original contract. Procedures were not in place to track and report first-tier subawards. Effect: Failure to maintain sufficient internal controls and proper procedures, including identifying compliance requirements of grant agreements and tracking over reporting first-tier subawards may result in wrongful use of federal funds and non-compliance with federal awards. Questioned Costs: None. Recommendation: The Organization should establish written policies and procedures regarding review of grant agreements for compliance requirements along with written policies and procedures for first-tier subawards including tracking and proper internal control procedures. Management’s Response: Management concurs with the finding and has defined corrective action to address it. We have identified gaps in our reporting processes and worked to implement changes to ensure compliance with special reporting requirements. Policies and procedures will be updated regarding special reporting requirements. The Fiscal department will also be responsible for reviewing all contracts to identify all compliance requirements. Tracking procedures will be implemented to ensure reports are filed timely. The above identified corrective action was implemented in July 2024. Stacey Wilson, Fiscal Director, has implemented a tracking system for the FFATA.

2023-004 Finding – Federal Award Type: Subrecipient Monitoring – Material Non-Compliance and Material Weakness in Internal Control over Compliance) Identification of Federal Program: AL Number: 64.033 Supportive Services for Veteran Families Criteria / Requirement: 2 CFR section 200.303 requires that non-federal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the non-federal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. In accordance with 2 CFR section 200.332, a pass-through entity must clearly identify to the subrecipient the award as a subaward by providing the required federal information related to the award, and all requirements imposed by the pass-through entity on the subrecipient so that the federal award is used in accordance with federal statutes, regulations, and the provisions of contracts and grants agreements. The pass-through entity must evaluate risk of non-compliance of each subrecipient, monitoring the subrecipient and ensuring accountability of for-profit subrecipients. Per 2 CFR 200.332(d)(2) & (3), an entity must ensure that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, highlighting the status of action planned or taken to address Single Audit Finding related to the subaward. Further, they must issue a management decision for applicable audit findings. Condition / Context: CAT passed through $486,835 in funding to subrecipients under AL number 64.033. It was noted during the audit that CAT did not have documented written procedures or controls in place to ensure compliance with Uniform Guidance Subrecipient Monitoring requirements. Condition / Context (Continued): It was noted that within subaward contracts, required federal contract information was provided. Additionally, CAT is having regular meetings to ensure tasks are being completed in a timely manner and providing technical assistance when needed. However, for the one subrecipient tested out of three, there was no documentation of risk assessment of the subrecipient entity and no formal monitoring of the entity. The subrecipient tested was subject to 2 CFR Subpart F, Single Audit, and the audit for this entity was not obtained and therefore CAT did not review Single Audit Findings that may be related to the subaward. Cause: Procedures and internal controls were not in place to ensure that CAT is maintaining proper subrecipient monitoring for each federal subrecipient. Effect: Failure to maintain sufficient subrecipient monitoring may result in the wrongful use of federal funds and non-compliance with the provisions of applicable requirements of the federal award. Questioned Costs: None. Recommendation: The Organization should establish written policies and procedures regarding the contracting and monitoring of subrecipients that are in line with Uniform Guidance requirements, as well as establish organizational controls to ensure that such policies and procedures are being followed. Management’s Response: Management concurs with the finding and has defined corrective action to address it. Staff have reviewed policies and procedures already in place to ensure compliance of subrecipient monitoring. The Fiscal department has subsequently conducted a fiscal desk review of the subrecipient in question for FY 22/23 and no findings were found. Standard Operating Processes were updated to ensure all subrecipients are fiscally monitored based on the Risk Assessment Determination level. The above identified corrective action was implemented in July 2024. Stacey Wilson, Fiscal Director, has implemented a monitoring calendar for fiscal and Program Director’s will be responsible for ensuring subrecipients are monitored.

2023-002 Finding – Federal Award Type: Special Reporting – Real Property Status Report SF-429 – Non-Compliance and Significant Deficiency in Internal Control Over Compliance Identification of Federal Program: AL Number: 93.600 Head Start Cluster Criteria / Requirement: Annual reporting of Real Property is required for all grantees through the Real Property Status Report form SF-429, regardless of whether or not they hold reportable property that was paid for using federal funds under AL number 93.600. For non-federal entities with a budget period beginning July 1st, the SF-429 report is due July 30th following the end of the year. Condition / Context: The Organization filed the SF-429, however the report was filed after the required date. Additionally, the report was not reviewed prior to submission, though the information contained in the SF-429 was accurate. Cause: Procedures were not in place to ensure that the Organization filed the report timely, and there were no procedures in place to ensure the report submitted was accurate. Effect: Failure to maintain sufficient internal controls over special reporting may result in non-compliance and or inaccurate reporting. Questioned Costs: None. Recommendation: The Organization should establish written policies and procedures regarding special reporting such as Real Property Status Reporting form SF-429 as well as establish organizational controls to ensure that such policies and procedures are being followed. Management’s Response: We have identified gaps in our reporting processes and worked to implement changes to ensure compliance with special reporting requirements. Policies and procedures will be updated regarding special reporting requirements and ensure controls are in place for additional review of such reports prior to filing. Tracking procedures will be implemented to ensure reports are filed timely. The above identified corrective action was implemented in July 2024. Stacey Wilson, Fiscal Director, has implemented a tracking system for Real Property Reporting form SF-429.