Audit 34307

Finding 2022-001, Inaccurate SEFA, Reporting - U.S. Department of Health and Human Services, Head Start Cluster: ALN 93.600 Criteria: The Uniform Guidance requires that the auditee prepare a SEFA for the period covered by the auditee's financial statements. At a minimum, the schedule shall: ? List all individual Federal programs by Federal agency. ? Include the name of the pass-through entity and the identifying number assigned by the passthrough entity for all Federal funds expended as a subrecipient. ? Include the amount of Federal funds passed through to subrecipients. ? Provide the total Federal awards expended for each individual Federal program and the Assistance Listing Number or other identifying number when the Assistance Listing Number information is not available. Condition and Context: The Organization's current policies and procedures on the preparation of the SEFA were not detailed enough to ensure that all pass-through federal funds are included, which resulted in the SEFA provided to the auditors to not accurately reflect the pass-through federal funds given to subrecipients. Cause: Internal controls over the accurate preparation and completeness of the SEFA were not operating effectively. Effect: An improper SEFA and delays in identifying pass-through federal funds given to subrecipients could result in errors in accounting, revenue recognition, disallowed costs, and noncompliance with Uniform Guidance requirements. Identification as a repeat finding: Yes. Questioned costs: None. Recommendation: We recommend that the Organization strengthen its policies and procedures for the identification of Federal awards, including pass-through federal funds to subrecipients, to ensure a complete and accurate SEFA is prepared in a timely manner and in accordance with the requirements of the Uniform Guidance. Views of responsible official: There was an oversight in the completion of the SEFA resulting in not including passthrough federal funds given to subrecipients. Going forward, workflow has been amended to take into account any subawards given to subrecipients of federal funds, to ensure inclusion of the information in the SEFA.

Item 2022-002, Reporting, U.S. Department of Health and Human Services, Head Start Cluster: ALN 93.600 Criteria or specific requirement: Under the requirements of the Federal Funding Accountability and Transparency Act ("Transparency Act") that are codified in 2 CFR Part 170, recipients (i.e. direct recipients) of grants or cooperative agreements who make a first tier subaward of $30,000 or more are required to register in the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS) and report subaward data through FSRS. Statement of condition and context: During our testing of the reporting compliance requirement, it was noted that the Organization has one first tier subaward that is required to be reported in the FSRS. The Organization did not report the subaward information timely. Statement of cause: Management was not aware that they have to register and report subaward information in the FSRS related to the first tier subaward given to another entity that was over $30,000. Effect: The Organization did not comply with the reporting compliance requirement as required by the Transparency Act. Questioned costs: None. Identification of repeat finding: No. Recommendation: We recommend that the Organization register in the FSRS and timely report the required subaward information as required by the Transparency Act. Views of responsible official: There is a specific Head Start requirement that all direct subawards with an obligated amount over a $30,000 threshold must be reported as such by no later than the end of the following month of the agreement to FSRS. There was an oversight on the specifics of this requirement resulting in a late report. Going forward, workflow has been amended to take this requirement into account and to submit the report on a timely basis, no later than the end of the following month of the agreement.

Finding 2022-001, Inaccurate SEFA, Reporting - U.S. Department of Health and Human Services, Head Start Cluster: ALN 93.600 Criteria: The Uniform Guidance requires that the auditee prepare a SEFA for the period covered by the auditee's financial statements. At a minimum, the schedule shall: ? List all individual Federal programs by Federal agency. ? Include the name of the pass-through entity and the identifying number assigned by the passthrough entity for all Federal funds expended as a subrecipient. ? Include the amount of Federal funds passed through to subrecipients. ? Provide the total Federal awards expended for each individual Federal program and the Assistance Listing Number or other identifying number when the Assistance Listing Number information is not available. Condition and Context: The Organization's current policies and procedures on the preparation of the SEFA were not detailed enough to ensure that all pass-through federal funds are included, which resulted in the SEFA provided to the auditors to not accurately reflect the pass-through federal funds given to subrecipients. Cause: Internal controls over the accurate preparation and completeness of the SEFA were not operating effectively. Effect: An improper SEFA and delays in identifying pass-through federal funds given to subrecipients could result in errors in accounting, revenue recognition, disallowed costs, and noncompliance with Uniform Guidance requirements. Identification as a repeat finding: Yes. Questioned costs: None. Recommendation: We recommend that the Organization strengthen its policies and procedures for the identification of Federal awards, including pass-through federal funds to subrecipients, to ensure a complete and accurate SEFA is prepared in a timely manner and in accordance with the requirements of the Uniform Guidance. Views of responsible official: There was an oversight in the completion of the SEFA resulting in not including passthrough federal funds given to subrecipients. Going forward, workflow has been amended to take into account any subawards given to subrecipients of federal funds, to ensure inclusion of the information in the SEFA.

Item 2022-002, Reporting, U.S. Department of Health and Human Services, Head Start Cluster: ALN 93.600 Criteria or specific requirement: Under the requirements of the Federal Funding Accountability and Transparency Act ("Transparency Act") that are codified in 2 CFR Part 170, recipients (i.e. direct recipients) of grants or cooperative agreements who make a first tier subaward of $30,000 or more are required to register in the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS) and report subaward data through FSRS. Statement of condition and context: During our testing of the reporting compliance requirement, it was noted that the Organization has one first tier subaward that is required to be reported in the FSRS. The Organization did not report the subaward information timely. Statement of cause: Management was not aware that they have to register and report subaward information in the FSRS related to the first tier subaward given to another entity that was over $30,000. Effect: The Organization did not comply with the reporting compliance requirement as required by the Transparency Act. Questioned costs: None. Identification of repeat finding: No. Recommendation: We recommend that the Organization register in the FSRS and timely report the required subaward information as required by the Transparency Act. Views of responsible official: There is a specific Head Start requirement that all direct subawards with an obligated amount over a $30,000 threshold must be reported as such by no later than the end of the following month of the agreement to FSRS. There was an oversight on the specifics of this requirement resulting in a late report. Going forward, workflow has been amended to take this requirement into account and to submit the report on a timely basis, no later than the end of the following month of the agreement.