FAC Explorer

Audit 351890

FY End
2024-06-30
Total Expended
$6.08M
Findings
6
Programs
7
Organization: Community Action Partnership of Mercer County (PA)
Year: 2024 Accepted: 2025-03-31
Auditor: Black Bashor & Porsch LLP

Organization Exclusion Status:

Findings

ID Ref Severity Repeat Requirement
547964 2024-001 Material Weakness - B
547965 2024-002 Material Weakness - B
547966 2024-003 Material Weakness - B
1124406 2024-001 Material Weakness - B
1124407 2024-002 Material Weakness - B
1124408 2024-003 Material Weakness - B

Programs

ALN Program Spent Major Findings
93.600 Head Start $3.73M Yes 3
93.568 Low-Income Home Energy Assistance $866,273 - 0
10.558 Child and Adult Care Food Program $355,013 - 0
93.569 Community Services Block Grant $48,533 - 0
81.042 Weatherization Assistance for Low-Income Persons $19,817 - 0
14.218 Community Development Block Grants/entitlement Grants $13,654 - 0
14.169 Housing Counseling Assistance Program $11,697 - 0

Contacts

Name Title Type
HL15C9W4SKA8 Norbert F. Dietrich, Jr. CPA Auditee
7249817510 Norbert F. Dietrich, Jr. CPA Auditor
No contacts on file

Notes to SEFA

Title: 2.   BASIS OF PRESENTATION Accounting Policies: Expenditures reported on the Schedule are reported on the accrual basis of accounting. Such expenditures are recognized following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement. Therefore, some of the amounts presented in the schedule may differ from amounts presented in or used in the preparation of the basic financial statements. Because the Schedule presents only a selected portion of the operations of Community Action Partnership of Mercer County, Inc. and Affiliate, it is not intended to and does not present the basic financial statements of Community Action Partnership of Mercer County, Inc., and Affiliates. De Minimis Rate Used: N Rate Explanation: N/A The accompanying schedule of expenditures of federal awards (Schedule) includes the federal awards activity of Community Action Partnership of Mercer County, Inc., and Affiliates under programs of the federal government for the year ended June 30, 2024. The information in this Schedule is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance).
Title: 3.   INDIRECT COST RATE Accounting Policies: Expenditures reported on the Schedule are reported on the accrual basis of accounting. Such expenditures are recognized following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement. Therefore, some of the amounts presented in the schedule may differ from amounts presented in or used in the preparation of the basic financial statements. Because the Schedule presents only a selected portion of the operations of Community Action Partnership of Mercer County, Inc. and Affiliate, it is not intended to and does not present the basic financial statements of Community Action Partnership of Mercer County, Inc., and Affiliates. De Minimis Rate Used: N Rate Explanation: N/A Community Action Partnership of Mercer County, Inc., and Affiliates has elected not to use the 10 percent de minimis indirect cost rate allowed under the Uniform Guidance.

Finding Details

Finding 2024-001
Compliance Requirement - Costs Allowed or Allowable Finding Type - Material Weakness Federal Agency - U.S. Department of Health and Human Services Federal Program Title - Administration for Children & Families - Head Start Assistance Listing Number - 93.600 Criteria: The Organization receives federal assistance from the Department of Health and Human Services. The Organization requests draw down of grant funds based on actual expenditures incurred. The Organization is required to maintain adequate internal controls over financial reporting in order to ensure expenditures are properly supported, reported under the correct funding source, and within the correct grant period. 2 CFR 200.403 details the factors affecting the allowability of cost. Specifically, 2 CRF 200.403(e) provides that costs must be determined in accordance with generally accepted accounting principles (GAAP). GAAP provides that costs are not incurred until the services are performed or the product is received. Condition: During audit procedures, we noted total reimbursements received exceeded expenditures. The Organization has charged costs to the program and received reimbursement; however, the products cost charged to the program had not been received prior to June 30, 2024. We consider this to be a material weakness. Questioned Costs: $562,831 Cause: In an effort to obligate funds before the end of the grant period, certain expenditure amounts and adjustments to various accounts for products to be purchased were recorded as expenditures within the Organization’s books and records before the products were received and a liability was incurred. Therefore, the reports used in supporting draw down of funds were not accurately stated. Effect: Inaccurate financial reporting of expenditures resulted in the Organization’s reimbursement requests exceeding total program expenditures. Recommendations: We recommend that all expenditures and adjustments are accounted for in the books and records of the Organization when a liability has been incurred, and that revenue and expenditure reports be review for accuracy prior to submitting draw down requests. A reconciliation should be prepared of the expenditures recorded on the books and records to the amount submitted for reimbursement on a regular basis. All excess, unexpended funds from the current year as well as from prior year’s should be returned to remain in compliance. View of Responsible Officials: There is no disagreement with the audit finding. The Head Start Program obligated funds for supplies in June but did not receive the merchandise until August. Payables were entered in the accounting software from purchase orders then the checks were voided after the draw down occurred which caused the reports to be inaccurately stated.
Finding 2024-002
Compliance Requirement - Costs Allowed or Allowable Finding Type - Material Weakness Federal Agency - U.S. Department of Health and Human Services Federal Program Title - Administration for Children & Families - Head Start Assistance Listing Number - 93.600 Criteria: The Organization is required to maintain books and records to include all revenues and expenditures, and adjusting journal entries as deemed necessary, to prevent the Organization’s books and records from being materially misstated. Journal entries are to be made, when appropriate, to adjust account balances including those relating to the federal and state grant assistance funding sources. Condition: During the audit several adjusting journal entries were proposed. These entries would have a material effect on the financial statements if not proposed and recorded. We consider this to be a material weakness. Questioned Costs: $ - 0 - Cause: Due to inadequate staffing and lack of resources, regular/monthly reconciliations and review of the Organization's general ledger accounts caused various journal entries to be proposed during the audit. These entries affected various statement of financial position, revenues, and expenditure accounts. Effect: The financial statements of the Organization would have been materially misstated if these journal entries were not proposed and recorded. Recommendations: We recommend the Organization implement procedures to review the general ledger more carefully, including the statement of financial position, revenues and expenditure accounts. This review should include reconciliations where deemed necessary so that all amounts are recorded accurately, and on a timely basis. View of Responsible Officials: There is no disagreement with the audit finding. The supplies that were ordered were not obligated correctly to the programs. The various journal entries to be proposed were to correct the cost allocations of the supplies, but there were still confusions as to what programs. The general ledger, balance sheet and expenditures are to be reviewed on a timely basis.
Finding 2024-003
Compliance Requirement - Costs Allowed or Allowable Finding Type - Material Weakness Federal Agency - U.S. Department of Health and Human Services Federal Program Title - Administration for Children & Families - Head Start Assistance Listing Number - 93.600 Criteria: The Organization receives federal assistance from the Department of Health and Human Services and from the state of Pennsylvania. The Organization requests draw down of grant funds based on actual expenditures incurred. The Organization is required to maintain adequate internal controls over financial reporting in order to ensure expenditures are properly supported, reported under the correct funding source, and within the correct grant period. Condition: During audit procedures, we noted expenditures were charged to the program via adjusting journal entry for which adequate supporting documentation could not be provided. We consider this to be a material weakness. Questioned Costs: $159,598 Cause: An adjustment to reclassify expenditures from another funding source was recorded on the Organization's accounts. As a result, the reports used in supporting draw down of federal funds were not accurately stated. Effect: Inaccurate financial reporting of expenditures resulted in the Organization's reimbursement requests exceeding total program expenditures. Recommendations: We recommend the Organization implement procedures to review and approve all adjusting journal entries before they are posted to the Organization's accounts to ensure they are being charged to the correct funding source and supported by appropriate documentation. View of Responsible Officials: There is no disagreement with the audit finding. There were various journal entries that were not timely reviewed and approved before they were posted. New staff have been hired to help with this. Community Action Partnership of Mercer County does not foresee this happening again in the future.
Finding 2024-001
Compliance Requirement - Costs Allowed or Allowable Finding Type - Material Weakness Federal Agency - U.S. Department of Health and Human Services Federal Program Title - Administration for Children & Families - Head Start Assistance Listing Number - 93.600 Criteria: The Organization receives federal assistance from the Department of Health and Human Services. The Organization requests draw down of grant funds based on actual expenditures incurred. The Organization is required to maintain adequate internal controls over financial reporting in order to ensure expenditures are properly supported, reported under the correct funding source, and within the correct grant period. 2 CFR 200.403 details the factors affecting the allowability of cost. Specifically, 2 CRF 200.403(e) provides that costs must be determined in accordance with generally accepted accounting principles (GAAP). GAAP provides that costs are not incurred until the services are performed or the product is received. Condition: During audit procedures, we noted total reimbursements received exceeded expenditures. The Organization has charged costs to the program and received reimbursement; however, the products cost charged to the program had not been received prior to June 30, 2024. We consider this to be a material weakness. Questioned Costs: $562,831 Cause: In an effort to obligate funds before the end of the grant period, certain expenditure amounts and adjustments to various accounts for products to be purchased were recorded as expenditures within the Organization’s books and records before the products were received and a liability was incurred. Therefore, the reports used in supporting draw down of funds were not accurately stated. Effect: Inaccurate financial reporting of expenditures resulted in the Organization’s reimbursement requests exceeding total program expenditures. Recommendations: We recommend that all expenditures and adjustments are accounted for in the books and records of the Organization when a liability has been incurred, and that revenue and expenditure reports be review for accuracy prior to submitting draw down requests. A reconciliation should be prepared of the expenditures recorded on the books and records to the amount submitted for reimbursement on a regular basis. All excess, unexpended funds from the current year as well as from prior year’s should be returned to remain in compliance. View of Responsible Officials: There is no disagreement with the audit finding. The Head Start Program obligated funds for supplies in June but did not receive the merchandise until August. Payables were entered in the accounting software from purchase orders then the checks were voided after the draw down occurred which caused the reports to be inaccurately stated.
Finding 2024-002
Compliance Requirement - Costs Allowed or Allowable Finding Type - Material Weakness Federal Agency - U.S. Department of Health and Human Services Federal Program Title - Administration for Children & Families - Head Start Assistance Listing Number - 93.600 Criteria: The Organization is required to maintain books and records to include all revenues and expenditures, and adjusting journal entries as deemed necessary, to prevent the Organization’s books and records from being materially misstated. Journal entries are to be made, when appropriate, to adjust account balances including those relating to the federal and state grant assistance funding sources. Condition: During the audit several adjusting journal entries were proposed. These entries would have a material effect on the financial statements if not proposed and recorded. We consider this to be a material weakness. Questioned Costs: $ - 0 - Cause: Due to inadequate staffing and lack of resources, regular/monthly reconciliations and review of the Organization's general ledger accounts caused various journal entries to be proposed during the audit. These entries affected various statement of financial position, revenues, and expenditure accounts. Effect: The financial statements of the Organization would have been materially misstated if these journal entries were not proposed and recorded. Recommendations: We recommend the Organization implement procedures to review the general ledger more carefully, including the statement of financial position, revenues and expenditure accounts. This review should include reconciliations where deemed necessary so that all amounts are recorded accurately, and on a timely basis. View of Responsible Officials: There is no disagreement with the audit finding. The supplies that were ordered were not obligated correctly to the programs. The various journal entries to be proposed were to correct the cost allocations of the supplies, but there were still confusions as to what programs. The general ledger, balance sheet and expenditures are to be reviewed on a timely basis.
Finding 2024-003
Compliance Requirement - Costs Allowed or Allowable Finding Type - Material Weakness Federal Agency - U.S. Department of Health and Human Services Federal Program Title - Administration for Children & Families - Head Start Assistance Listing Number - 93.600 Criteria: The Organization receives federal assistance from the Department of Health and Human Services and from the state of Pennsylvania. The Organization requests draw down of grant funds based on actual expenditures incurred. The Organization is required to maintain adequate internal controls over financial reporting in order to ensure expenditures are properly supported, reported under the correct funding source, and within the correct grant period. Condition: During audit procedures, we noted expenditures were charged to the program via adjusting journal entry for which adequate supporting documentation could not be provided. We consider this to be a material weakness. Questioned Costs: $159,598 Cause: An adjustment to reclassify expenditures from another funding source was recorded on the Organization's accounts. As a result, the reports used in supporting draw down of federal funds were not accurately stated. Effect: Inaccurate financial reporting of expenditures resulted in the Organization's reimbursement requests exceeding total program expenditures. Recommendations: We recommend the Organization implement procedures to review and approve all adjusting journal entries before they are posted to the Organization's accounts to ensure they are being charged to the correct funding source and supported by appropriate documentation. View of Responsible Officials: There is no disagreement with the audit finding. There were various journal entries that were not timely reviewed and approved before they were posted. New staff have been hired to help with this. Community Action Partnership of Mercer County does not foresee this happening again in the future.