FINDING 2022-003 - LATE FINANCIAL REPORTING AND LIMITED CONTROLS OVER TIMELY REPORTING - CRIME VICTIMS ASSISTANCE, FEDERAL ASSISTANCE LISTING NUMBER 16.575 Criteria: The grant agreement specifies for Federal Assistance Listing Number 16.575 that monthly financial reports are to be submitted to the grantor no later than 15 days after each month-end. Condition: For the project year ended June 30, 2022, none of the monthly reports were submitted to the grantor timely. Questioned Costs: None. Effect: Delayed reporting affects the grantor?s ability to exercise effective grantee oversight and could result in grantor's withholding of payments and other adverse actions. Cause: Lack of proper management oversight and other controls over compliance with the reporting requirements. Recommendation: Management should communicate periodically with the federal agency and design and implement effective controls to ensure timely submission of future reports. Also, all past due reports should be submitted to the grantor as soon as possible. Management's Response: The Organization terminated our professional relationship with our financial services provider in FY23, Quatrro BSS. We established a financial services contract with Metropolitan Family Services (MFS) that began July 1, 2022. MFS has not had any late submission findings in the past ten years of audits. We have created a calendar with all necessary reporting deadlines for all funding agencies. The calendar is reviewed by the finance team, the executive team, and a government contracts and grants manager to ensure accurately recorded deadlines are reflected. The Director of Budgets reviews monthly deadlines and ensures timely submission of reports.
FINDING 2022-003 - LATE FINANCIAL REPORTING AND LIMITED CONTROLS OVER TIMELY REPORTING - CRIME VICTIMS ASSISTANCE, FEDERAL ASSISTANCE LISTING NUMBER 16.575 Criteria: The grant agreement specifies for Federal Assistance Listing Number 16.575 that monthly financial reports are to be submitted to the grantor no later than 15 days after each month-end. Condition: For the project year ended June 30, 2022, none of the monthly reports were submitted to the grantor timely. Questioned Costs: None. Effect: Delayed reporting affects the grantor?s ability to exercise effective grantee oversight and could result in grantor's withholding of payments and other adverse actions. Cause: Lack of proper management oversight and other controls over compliance with the reporting requirements. Recommendation: Management should communicate periodically with the federal agency and design and implement effective controls to ensure timely submission of future reports. Also, all past due reports should be submitted to the grantor as soon as possible. Management's Response: The Organization terminated our professional relationship with our financial services provider in FY23, Quatrro BSS. We established a financial services contract with Metropolitan Family Services (MFS) that began July 1, 2022. MFS has not had any late submission findings in the past ten years of audits. We have created a calendar with all necessary reporting deadlines for all funding agencies. The calendar is reviewed by the finance team, the executive team, and a government contracts and grants manager to ensure accurately recorded deadlines are reflected. The Director of Budgets reviews monthly deadlines and ensures timely submission of reports.
FINDING 2022-002 - LATE FINANCIAL REPORTING AND LIMITED CONTROLS OVER TIMELY REPORTING (REPEAT) - HEAD START CLUSTER, FEDERAL ASSISTANCE LISTING NUMBER 93.600 Criteria: The 2022 OMB Compliance Supplement specifies for Federal Assistance Listing Number 93.600 that SF- 425, Federal Financial Report (FFR) and SF-429, Real Property Status, are required to be filed. According to the FFR instructions, the submission of interim FFRs is required on a quarterly basis, or as directed by the Federal Agency. The Federal Agency requires for the submission of the following reports as it applies to the Organization; a semiannual FFR due April 30, an annual FFR due October 30, and a final FFR due January 30. The SF-429 is required to be submitted on the same date the Organization's annual FFR is due. Condition: For project years ended August 31, 2021 and August 31, 2022, the semi-annual, annual, and final reporting requirements for the SF-425 and SF-429 reports due during the year ended June 30, 2022 were not met. Questioned Costs: None. Effect: Delayed reporting affects the grantor?s ability to exercise effective grantee oversight and could result in grantor's withholding of payments and other adverse actions. Cause: Lack of proper management oversight and other controls over compliance with the reporting requirements. Recommendation: Management should communicate periodically with the federal agency and design and implement effective controls to ensure timely submission of future reports. Also, all past due reports should be submitted to the grantor as soon as possible. Management's Response: The Organization terminated our professional relationship with our financial services provider in FY23, Quatrro BSS. We established a financial services contract with Metropolitan Family Services (MFS) that began July 1, 2022. MFS has not had any late submission findings in the past ten years of audits. We have created a calendar with all necessary reporting deadlines for all funding agencies. The calendar is reviewed by the finance team, the executive team, and a government contracts and grants manager to ensure accurately recorded deadlines are reflected. The Director of Budgets reviews monthly deadlines and ensures timely submission of reports.
FINDING 2022-004 - ALLOWABLE PAYROLL COSTS AND CONTROLS OVER PAYROLL (REPEAT) - HEAD START CLUSTER, FEDERAL ASSISTANCE LISTING NUMBER 93.600 Criteria: Charges to federal awards for salaries and wages must be based on records that accurately reflect the work performed. These charges must be supported by a system of internal control, which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Records must support the distribution of the employee?s salary or wages among the specific activities or cost objectives, if the employee works on more than one federal award. 2 CFR 200.430(i) Standards for Documentation of Personnel Expenses. Condition: The Organization?s payroll records did not accurately reflect the actual hours worked by employees whose salaries and wages were charged to the various direct and indirect cost centers for fiscal year 2022. We tested five pay periods and identified a lack of time studies performed in each pay period to support the budgeted percentages used to allocate an employee?s payroll to more than one cost center. Questioned Costs: $80,277 - Payroll and payroll tax expenses totaling $445,531 and $32,971, respectively, were charged to the Early Head Start federal award during fiscal year 2022 and subject to sampling. Our testing identified $74,862 and $5,415 of payroll and payroll tax expenses, respectively, of questioned costs. Our sample was a statistically valid sample. Effect: The current methodology of allocating payroll amongst the various programs and supporting cost centers could result in over allocating payroll costs to certain awards and other cost centers and allocating too little payroll costs to others. Cause: The Organization allocates payroll based on budgeted percentages, however, budget estimates alone do not qualify as support for charges to federal awards. Recommendation: The Organization should establish policies and procedures to support a system of internal controls, which provides a reasonable assurance that the charges to federal awards for salaries and other payroll related costs are accurate, allowable, and properly allocated. Documentation of all employees? approved pay rates, hours worked, and support for the allocation percentages (or actual hours worked) should be maintained. Management's Response: The Organization terminated our professional relationship with our financial services provider in FY23, Quatrro BSS. We established a financial services contract with Metropolitan Family Services (MFS) that began July 1, 2022. MFS manages over 130 million dollars in revenue each year and the current finance team has over 50+ years of combined experience managing government and private contracts. MFS is a Professional Employer Organization (PEO) for five organizations averaging four million dollars in annual revenue and has established back-office and finance service contracts with those organizations. MFS has policies and procedures to support a system of internal controls which provides a reasonable assurance that charges to federal awards for payroll related costs are accurate, allowable, and properly allocated. Budget estimates are used for interim accounting purposes provided the estimates produce reasonable approximations of activity performed. The MFS finance team and the Organization's executive team review payroll allocations each quarter. Allocations are supported by an after-the-fact accounting of employee time and effort in a Personal Activity Report (PAR), significant changes in work activity are identified and entered into the record, and the after-the-fact review is completed to make all necessary adjustments to the final amount charged to the Organization's federal awards to help ensure charges are accurate, allowable, and properly allocated.
FINDING 2022-005 - SPECIAL TESTS AND PROVISIONS - GOVERNING BOARD TRAINING - HEAD START CLUSTER, FEDERAL ASSISTANCE LISTING NUMBER 93.600 Criteria: The Federal Agency requires for the governing board and policy council members to receive annual training and technical assistance related to their fiscal responsibilities. Condition: The governing board and policy council members of the Organization did not receive annual training and technical assistance related to their fiscal responsibilities for the year ended June 30, 2022. Questioned Costs: None. Effect: A lack of fiscal training and technical assistance by the governing board and policy council members could result in deficient oversight of the federal award. Cause: The Organization did not properly monitor the requirements prescribed by the federal agency. Recommendation: The Organization should establish policies and procedures to ensure all applicable special tests and provisions are completed accurately and timely. Management's Response: The Organization has created a written plan to provide appropriate training and technical assistance on the Head Start performance standards that is sufficient to ensure that the governing body and policy council can fulfill their responsibilities under the Head Start Act. Training is to take place within 180 days of the beginning of the term of a new governing body or policy council. The training: i) includes methods on how to collect complete and accurate eligibility information from families and third party sources; ii) explains program policies and procedures that describe actions taken against staff, families, or participants who attempt to provide or intentionally provide false information; and, iii) incorporates strategies for treating families with dignity and respect and dealing with possible issues of domestic violence, stigma, and privacy.
FINDING 2022-002 - LATE FINANCIAL REPORTING AND LIMITED CONTROLS OVER TIMELY REPORTING (REPEAT) - HEAD START CLUSTER, FEDERAL ASSISTANCE LISTING NUMBER 93.600 Criteria: The 2022 OMB Compliance Supplement specifies for Federal Assistance Listing Number 93.600 that SF- 425, Federal Financial Report (FFR) and SF-429, Real Property Status, are required to be filed. According to the FFR instructions, the submission of interim FFRs is required on a quarterly basis, or as directed by the Federal Agency. The Federal Agency requires for the submission of the following reports as it applies to the Organization; a semiannual FFR due April 30, an annual FFR due October 30, and a final FFR due January 30. The SF-429 is required to be submitted on the same date the Organization's annual FFR is due. Condition: For project years ended August 31, 2021 and August 31, 2022, the semi-annual, annual, and final reporting requirements for the SF-425 and SF-429 reports due during the year ended June 30, 2022 were not met. Questioned Costs: None. Effect: Delayed reporting affects the grantor?s ability to exercise effective grantee oversight and could result in grantor's withholding of payments and other adverse actions. Cause: Lack of proper management oversight and other controls over compliance with the reporting requirements. Recommendation: Management should communicate periodically with the federal agency and design and implement effective controls to ensure timely submission of future reports. Also, all past due reports should be submitted to the grantor as soon as possible. Management's Response: The Organization terminated our professional relationship with our financial services provider in FY23, Quatrro BSS. We established a financial services contract with Metropolitan Family Services (MFS) that began July 1, 2022. MFS has not had any late submission findings in the past ten years of audits. We have created a calendar with all necessary reporting deadlines for all funding agencies. The calendar is reviewed by the finance team, the executive team, and a government contracts and grants manager to ensure accurately recorded deadlines are reflected. The Director of Budgets reviews monthly deadlines and ensures timely submission of reports.
FINDING 2022-004 - ALLOWABLE PAYROLL COSTS AND CONTROLS OVER PAYROLL (REPEAT) - HEAD START CLUSTER, FEDERAL ASSISTANCE LISTING NUMBER 93.600 Criteria: Charges to federal awards for salaries and wages must be based on records that accurately reflect the work performed. These charges must be supported by a system of internal control, which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Records must support the distribution of the employee?s salary or wages among the specific activities or cost objectives, if the employee works on more than one federal award. 2 CFR 200.430(i) Standards for Documentation of Personnel Expenses. Condition: The Organization?s payroll records did not accurately reflect the actual hours worked by employees whose salaries and wages were charged to the various direct and indirect cost centers for fiscal year 2022. We tested five pay periods and identified a lack of time studies performed in each pay period to support the budgeted percentages used to allocate an employee?s payroll to more than one cost center. Questioned Costs: $80,277 - Payroll and payroll tax expenses totaling $445,531 and $32,971, respectively, were charged to the Early Head Start federal award during fiscal year 2022 and subject to sampling. Our testing identified $74,862 and $5,415 of payroll and payroll tax expenses, respectively, of questioned costs. Our sample was a statistically valid sample. Effect: The current methodology of allocating payroll amongst the various programs and supporting cost centers could result in over allocating payroll costs to certain awards and other cost centers and allocating too little payroll costs to others. Cause: The Organization allocates payroll based on budgeted percentages, however, budget estimates alone do not qualify as support for charges to federal awards. Recommendation: The Organization should establish policies and procedures to support a system of internal controls, which provides a reasonable assurance that the charges to federal awards for salaries and other payroll related costs are accurate, allowable, and properly allocated. Documentation of all employees? approved pay rates, hours worked, and support for the allocation percentages (or actual hours worked) should be maintained. Management's Response: The Organization terminated our professional relationship with our financial services provider in FY23, Quatrro BSS. We established a financial services contract with Metropolitan Family Services (MFS) that began July 1, 2022. MFS manages over 130 million dollars in revenue each year and the current finance team has over 50+ years of combined experience managing government and private contracts. MFS is a Professional Employer Organization (PEO) for five organizations averaging four million dollars in annual revenue and has established back-office and finance service contracts with those organizations. MFS has policies and procedures to support a system of internal controls which provides a reasonable assurance that charges to federal awards for payroll related costs are accurate, allowable, and properly allocated. Budget estimates are used for interim accounting purposes provided the estimates produce reasonable approximations of activity performed. The MFS finance team and the Organization's executive team review payroll allocations each quarter. Allocations are supported by an after-the-fact accounting of employee time and effort in a Personal Activity Report (PAR), significant changes in work activity are identified and entered into the record, and the after-the-fact review is completed to make all necessary adjustments to the final amount charged to the Organization's federal awards to help ensure charges are accurate, allowable, and properly allocated.
FINDING 2022-005 - SPECIAL TESTS AND PROVISIONS - GOVERNING BOARD TRAINING - HEAD START CLUSTER, FEDERAL ASSISTANCE LISTING NUMBER 93.600 Criteria: The Federal Agency requires for the governing board and policy council members to receive annual training and technical assistance related to their fiscal responsibilities. Condition: The governing board and policy council members of the Organization did not receive annual training and technical assistance related to their fiscal responsibilities for the year ended June 30, 2022. Questioned Costs: None. Effect: A lack of fiscal training and technical assistance by the governing board and policy council members could result in deficient oversight of the federal award. Cause: The Organization did not properly monitor the requirements prescribed by the federal agency. Recommendation: The Organization should establish policies and procedures to ensure all applicable special tests and provisions are completed accurately and timely. Management's Response: The Organization has created a written plan to provide appropriate training and technical assistance on the Head Start performance standards that is sufficient to ensure that the governing body and policy council can fulfill their responsibilities under the Head Start Act. Training is to take place within 180 days of the beginning of the term of a new governing body or policy council. The training: i) includes methods on how to collect complete and accurate eligibility information from families and third party sources; ii) explains program policies and procedures that describe actions taken against staff, families, or participants who attempt to provide or intentionally provide false information; and, iii) incorporates strategies for treating families with dignity and respect and dealing with possible issues of domestic violence, stigma, and privacy.
FINDING 2022-003 - LATE FINANCIAL REPORTING AND LIMITED CONTROLS OVER TIMELY REPORTING - CRIME VICTIMS ASSISTANCE, FEDERAL ASSISTANCE LISTING NUMBER 16.575 Criteria: The grant agreement specifies for Federal Assistance Listing Number 16.575 that monthly financial reports are to be submitted to the grantor no later than 15 days after each month-end. Condition: For the project year ended June 30, 2022, none of the monthly reports were submitted to the grantor timely. Questioned Costs: None. Effect: Delayed reporting affects the grantor?s ability to exercise effective grantee oversight and could result in grantor's withholding of payments and other adverse actions. Cause: Lack of proper management oversight and other controls over compliance with the reporting requirements. Recommendation: Management should communicate periodically with the federal agency and design and implement effective controls to ensure timely submission of future reports. Also, all past due reports should be submitted to the grantor as soon as possible. Management's Response: The Organization terminated our professional relationship with our financial services provider in FY23, Quatrro BSS. We established a financial services contract with Metropolitan Family Services (MFS) that began July 1, 2022. MFS has not had any late submission findings in the past ten years of audits. We have created a calendar with all necessary reporting deadlines for all funding agencies. The calendar is reviewed by the finance team, the executive team, and a government contracts and grants manager to ensure accurately recorded deadlines are reflected. The Director of Budgets reviews monthly deadlines and ensures timely submission of reports.
FINDING 2022-003 - LATE FINANCIAL REPORTING AND LIMITED CONTROLS OVER TIMELY REPORTING - CRIME VICTIMS ASSISTANCE, FEDERAL ASSISTANCE LISTING NUMBER 16.575 Criteria: The grant agreement specifies for Federal Assistance Listing Number 16.575 that monthly financial reports are to be submitted to the grantor no later than 15 days after each month-end. Condition: For the project year ended June 30, 2022, none of the monthly reports were submitted to the grantor timely. Questioned Costs: None. Effect: Delayed reporting affects the grantor?s ability to exercise effective grantee oversight and could result in grantor's withholding of payments and other adverse actions. Cause: Lack of proper management oversight and other controls over compliance with the reporting requirements. Recommendation: Management should communicate periodically with the federal agency and design and implement effective controls to ensure timely submission of future reports. Also, all past due reports should be submitted to the grantor as soon as possible. Management's Response: The Organization terminated our professional relationship with our financial services provider in FY23, Quatrro BSS. We established a financial services contract with Metropolitan Family Services (MFS) that began July 1, 2022. MFS has not had any late submission findings in the past ten years of audits. We have created a calendar with all necessary reporting deadlines for all funding agencies. The calendar is reviewed by the finance team, the executive team, and a government contracts and grants manager to ensure accurately recorded deadlines are reflected. The Director of Budgets reviews monthly deadlines and ensures timely submission of reports.
FINDING 2022-002 - LATE FINANCIAL REPORTING AND LIMITED CONTROLS OVER TIMELY REPORTING (REPEAT) - HEAD START CLUSTER, FEDERAL ASSISTANCE LISTING NUMBER 93.600 Criteria: The 2022 OMB Compliance Supplement specifies for Federal Assistance Listing Number 93.600 that SF- 425, Federal Financial Report (FFR) and SF-429, Real Property Status, are required to be filed. According to the FFR instructions, the submission of interim FFRs is required on a quarterly basis, or as directed by the Federal Agency. The Federal Agency requires for the submission of the following reports as it applies to the Organization; a semiannual FFR due April 30, an annual FFR due October 30, and a final FFR due January 30. The SF-429 is required to be submitted on the same date the Organization's annual FFR is due. Condition: For project years ended August 31, 2021 and August 31, 2022, the semi-annual, annual, and final reporting requirements for the SF-425 and SF-429 reports due during the year ended June 30, 2022 were not met. Questioned Costs: None. Effect: Delayed reporting affects the grantor?s ability to exercise effective grantee oversight and could result in grantor's withholding of payments and other adverse actions. Cause: Lack of proper management oversight and other controls over compliance with the reporting requirements. Recommendation: Management should communicate periodically with the federal agency and design and implement effective controls to ensure timely submission of future reports. Also, all past due reports should be submitted to the grantor as soon as possible. Management's Response: The Organization terminated our professional relationship with our financial services provider in FY23, Quatrro BSS. We established a financial services contract with Metropolitan Family Services (MFS) that began July 1, 2022. MFS has not had any late submission findings in the past ten years of audits. We have created a calendar with all necessary reporting deadlines for all funding agencies. The calendar is reviewed by the finance team, the executive team, and a government contracts and grants manager to ensure accurately recorded deadlines are reflected. The Director of Budgets reviews monthly deadlines and ensures timely submission of reports.
FINDING 2022-004 - ALLOWABLE PAYROLL COSTS AND CONTROLS OVER PAYROLL (REPEAT) - HEAD START CLUSTER, FEDERAL ASSISTANCE LISTING NUMBER 93.600 Criteria: Charges to federal awards for salaries and wages must be based on records that accurately reflect the work performed. These charges must be supported by a system of internal control, which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Records must support the distribution of the employee?s salary or wages among the specific activities or cost objectives, if the employee works on more than one federal award. 2 CFR 200.430(i) Standards for Documentation of Personnel Expenses. Condition: The Organization?s payroll records did not accurately reflect the actual hours worked by employees whose salaries and wages were charged to the various direct and indirect cost centers for fiscal year 2022. We tested five pay periods and identified a lack of time studies performed in each pay period to support the budgeted percentages used to allocate an employee?s payroll to more than one cost center. Questioned Costs: $80,277 - Payroll and payroll tax expenses totaling $445,531 and $32,971, respectively, were charged to the Early Head Start federal award during fiscal year 2022 and subject to sampling. Our testing identified $74,862 and $5,415 of payroll and payroll tax expenses, respectively, of questioned costs. Our sample was a statistically valid sample. Effect: The current methodology of allocating payroll amongst the various programs and supporting cost centers could result in over allocating payroll costs to certain awards and other cost centers and allocating too little payroll costs to others. Cause: The Organization allocates payroll based on budgeted percentages, however, budget estimates alone do not qualify as support for charges to federal awards. Recommendation: The Organization should establish policies and procedures to support a system of internal controls, which provides a reasonable assurance that the charges to federal awards for salaries and other payroll related costs are accurate, allowable, and properly allocated. Documentation of all employees? approved pay rates, hours worked, and support for the allocation percentages (or actual hours worked) should be maintained. Management's Response: The Organization terminated our professional relationship with our financial services provider in FY23, Quatrro BSS. We established a financial services contract with Metropolitan Family Services (MFS) that began July 1, 2022. MFS manages over 130 million dollars in revenue each year and the current finance team has over 50+ years of combined experience managing government and private contracts. MFS is a Professional Employer Organization (PEO) for five organizations averaging four million dollars in annual revenue and has established back-office and finance service contracts with those organizations. MFS has policies and procedures to support a system of internal controls which provides a reasonable assurance that charges to federal awards for payroll related costs are accurate, allowable, and properly allocated. Budget estimates are used for interim accounting purposes provided the estimates produce reasonable approximations of activity performed. The MFS finance team and the Organization's executive team review payroll allocations each quarter. Allocations are supported by an after-the-fact accounting of employee time and effort in a Personal Activity Report (PAR), significant changes in work activity are identified and entered into the record, and the after-the-fact review is completed to make all necessary adjustments to the final amount charged to the Organization's federal awards to help ensure charges are accurate, allowable, and properly allocated.
FINDING 2022-005 - SPECIAL TESTS AND PROVISIONS - GOVERNING BOARD TRAINING - HEAD START CLUSTER, FEDERAL ASSISTANCE LISTING NUMBER 93.600 Criteria: The Federal Agency requires for the governing board and policy council members to receive annual training and technical assistance related to their fiscal responsibilities. Condition: The governing board and policy council members of the Organization did not receive annual training and technical assistance related to their fiscal responsibilities for the year ended June 30, 2022. Questioned Costs: None. Effect: A lack of fiscal training and technical assistance by the governing board and policy council members could result in deficient oversight of the federal award. Cause: The Organization did not properly monitor the requirements prescribed by the federal agency. Recommendation: The Organization should establish policies and procedures to ensure all applicable special tests and provisions are completed accurately and timely. Management's Response: The Organization has created a written plan to provide appropriate training and technical assistance on the Head Start performance standards that is sufficient to ensure that the governing body and policy council can fulfill their responsibilities under the Head Start Act. Training is to take place within 180 days of the beginning of the term of a new governing body or policy council. The training: i) includes methods on how to collect complete and accurate eligibility information from families and third party sources; ii) explains program policies and procedures that describe actions taken against staff, families, or participants who attempt to provide or intentionally provide false information; and, iii) incorporates strategies for treating families with dignity and respect and dealing with possible issues of domestic violence, stigma, and privacy.
FINDING 2022-002 - LATE FINANCIAL REPORTING AND LIMITED CONTROLS OVER TIMELY REPORTING (REPEAT) - HEAD START CLUSTER, FEDERAL ASSISTANCE LISTING NUMBER 93.600 Criteria: The 2022 OMB Compliance Supplement specifies for Federal Assistance Listing Number 93.600 that SF- 425, Federal Financial Report (FFR) and SF-429, Real Property Status, are required to be filed. According to the FFR instructions, the submission of interim FFRs is required on a quarterly basis, or as directed by the Federal Agency. The Federal Agency requires for the submission of the following reports as it applies to the Organization; a semiannual FFR due April 30, an annual FFR due October 30, and a final FFR due January 30. The SF-429 is required to be submitted on the same date the Organization's annual FFR is due. Condition: For project years ended August 31, 2021 and August 31, 2022, the semi-annual, annual, and final reporting requirements for the SF-425 and SF-429 reports due during the year ended June 30, 2022 were not met. Questioned Costs: None. Effect: Delayed reporting affects the grantor?s ability to exercise effective grantee oversight and could result in grantor's withholding of payments and other adverse actions. Cause: Lack of proper management oversight and other controls over compliance with the reporting requirements. Recommendation: Management should communicate periodically with the federal agency and design and implement effective controls to ensure timely submission of future reports. Also, all past due reports should be submitted to the grantor as soon as possible. Management's Response: The Organization terminated our professional relationship with our financial services provider in FY23, Quatrro BSS. We established a financial services contract with Metropolitan Family Services (MFS) that began July 1, 2022. MFS has not had any late submission findings in the past ten years of audits. We have created a calendar with all necessary reporting deadlines for all funding agencies. The calendar is reviewed by the finance team, the executive team, and a government contracts and grants manager to ensure accurately recorded deadlines are reflected. The Director of Budgets reviews monthly deadlines and ensures timely submission of reports.
FINDING 2022-004 - ALLOWABLE PAYROLL COSTS AND CONTROLS OVER PAYROLL (REPEAT) - HEAD START CLUSTER, FEDERAL ASSISTANCE LISTING NUMBER 93.600 Criteria: Charges to federal awards for salaries and wages must be based on records that accurately reflect the work performed. These charges must be supported by a system of internal control, which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Records must support the distribution of the employee?s salary or wages among the specific activities or cost objectives, if the employee works on more than one federal award. 2 CFR 200.430(i) Standards for Documentation of Personnel Expenses. Condition: The Organization?s payroll records did not accurately reflect the actual hours worked by employees whose salaries and wages were charged to the various direct and indirect cost centers for fiscal year 2022. We tested five pay periods and identified a lack of time studies performed in each pay period to support the budgeted percentages used to allocate an employee?s payroll to more than one cost center. Questioned Costs: $80,277 - Payroll and payroll tax expenses totaling $445,531 and $32,971, respectively, were charged to the Early Head Start federal award during fiscal year 2022 and subject to sampling. Our testing identified $74,862 and $5,415 of payroll and payroll tax expenses, respectively, of questioned costs. Our sample was a statistically valid sample. Effect: The current methodology of allocating payroll amongst the various programs and supporting cost centers could result in over allocating payroll costs to certain awards and other cost centers and allocating too little payroll costs to others. Cause: The Organization allocates payroll based on budgeted percentages, however, budget estimates alone do not qualify as support for charges to federal awards. Recommendation: The Organization should establish policies and procedures to support a system of internal controls, which provides a reasonable assurance that the charges to federal awards for salaries and other payroll related costs are accurate, allowable, and properly allocated. Documentation of all employees? approved pay rates, hours worked, and support for the allocation percentages (or actual hours worked) should be maintained. Management's Response: The Organization terminated our professional relationship with our financial services provider in FY23, Quatrro BSS. We established a financial services contract with Metropolitan Family Services (MFS) that began July 1, 2022. MFS manages over 130 million dollars in revenue each year and the current finance team has over 50+ years of combined experience managing government and private contracts. MFS is a Professional Employer Organization (PEO) for five organizations averaging four million dollars in annual revenue and has established back-office and finance service contracts with those organizations. MFS has policies and procedures to support a system of internal controls which provides a reasonable assurance that charges to federal awards for payroll related costs are accurate, allowable, and properly allocated. Budget estimates are used for interim accounting purposes provided the estimates produce reasonable approximations of activity performed. The MFS finance team and the Organization's executive team review payroll allocations each quarter. Allocations are supported by an after-the-fact accounting of employee time and effort in a Personal Activity Report (PAR), significant changes in work activity are identified and entered into the record, and the after-the-fact review is completed to make all necessary adjustments to the final amount charged to the Organization's federal awards to help ensure charges are accurate, allowable, and properly allocated.
FINDING 2022-005 - SPECIAL TESTS AND PROVISIONS - GOVERNING BOARD TRAINING - HEAD START CLUSTER, FEDERAL ASSISTANCE LISTING NUMBER 93.600 Criteria: The Federal Agency requires for the governing board and policy council members to receive annual training and technical assistance related to their fiscal responsibilities. Condition: The governing board and policy council members of the Organization did not receive annual training and technical assistance related to their fiscal responsibilities for the year ended June 30, 2022. Questioned Costs: None. Effect: A lack of fiscal training and technical assistance by the governing board and policy council members could result in deficient oversight of the federal award. Cause: The Organization did not properly monitor the requirements prescribed by the federal agency. Recommendation: The Organization should establish policies and procedures to ensure all applicable special tests and provisions are completed accurately and timely. Management's Response: The Organization has created a written plan to provide appropriate training and technical assistance on the Head Start performance standards that is sufficient to ensure that the governing body and policy council can fulfill their responsibilities under the Head Start Act. Training is to take place within 180 days of the beginning of the term of a new governing body or policy council. The training: i) includes methods on how to collect complete and accurate eligibility information from families and third party sources; ii) explains program policies and procedures that describe actions taken against staff, families, or participants who attempt to provide or intentionally provide false information; and, iii) incorporates strategies for treating families with dignity and respect and dealing with possible issues of domestic violence, stigma, and privacy.