Audit 363590

Federal Agency: Department of the Treasury Pass Through Entity: Child Care Aware of Kansas Program Name: Coronavirus State and Local Recovery Funds (COVID-19) Assistance Listing Number: 21.027 Award Period: March 12, 2020 – June 30, 2023 Criteria: According to 2 CFR 200.403, costs must be necessary and reasonable for the performance of the Federal award in order to be allowable. 2 CFR 200.317 states that procurement procedures must avoid the acquisition of unnecessary items. Condition: The Organization acquired a noncancelable software license for a term of ten years with federal funds in 2023. The software was utilized briefly in 2023 then abandoned and subsequently written off in 2024. Cause: As discussed at Finding 2024-001, the Organization’s policies and procedures do not ensure expenditures related to significant long-term commitments are reasonable and necessary and therefore allowable. Effect: Software was purchased without proper due diligence to determine whether it was necessary for the Organization leading to waste of federal funds. Questioned Costs: The cost of the 10-year license was $158,751, all of which was expended in 2023.Perspective: The expenditure occurred in 2023. The write-off of the software license occurred in 2024 and we became aware of it during the 2024 audit although this program was not currently audited as a major program. We do not consider the condition to be pervasive. Recommendation: Policies and procedures should be implemented for expenditures related to significant long-term commitments to undergo proper vetting to ensure the expense is necessary prior to purchase. Views of Responsible Officials: Management believes the expenditure was reasonable and necessary at the time the license was acquired. Subsequent staffing changes resulted in the software no longer benefitting the Organization to the extent originally intended without significant further investment for customization. Management notes that the questioned cost represents 3% of the federal award.

Federal Agency: Department of the Treasury Pass Through Entity: Child Care Aware of Kansas Program Name: Coronavirus State and Local Recovery Funds (COVID-19) Assistance Listing Number: 21.027 Award Period: March 12, 2020 – June 30, 2023 Criteria: According to 2 CFR 200.403, costs must be necessary and reasonable for the performance of the Federal award in order to be allowable. 2 CFR 200.317 states that procurement procedures must avoid the acquisition of unnecessary items. Condition: The Organization acquired a noncancelable software license for a term of ten years with federal funds in 2023. The software was utilized briefly in 2023 then abandoned and subsequently written off in 2024. Cause: As discussed at Finding 2024-001, the Organization’s policies and procedures do not ensure expenditures related to significant long-term commitments are reasonable and necessary and therefore allowable. Effect: Software was purchased without proper due diligence to determine whether it was necessary for the Organization leading to waste of federal funds. Questioned Costs: The cost of the 10-year license was $158,751, all of which was expended in 2023.Perspective: The expenditure occurred in 2023. The write-off of the software license occurred in 2024 and we became aware of it during the 2024 audit although this program was not currently audited as a major program. We do not consider the condition to be pervasive. Recommendation: Policies and procedures should be implemented for expenditures related to significant long-term commitments to undergo proper vetting to ensure the expense is necessary prior to purchase. Views of Responsible Officials: Management believes the expenditure was reasonable and necessary at the time the license was acquired. Subsequent staffing changes resulted in the software no longer benefitting the Organization to the extent originally intended without significant further investment for customization. Management notes that the questioned cost represents 3% of the federal award.