Audit 374665

FA 2024-001 Improve Controls over Financial Reporting Compliance Requirement: Reporting Internal Control Impact: Material Weakness Compliance Impact: Nonmaterial Noncompliance Federal Awarding Agency: U.S. Department of Health and Human Services Pass-Through Entity: Direct AL Number and Title: 93.600 – Head Start Federal Award Number: 04CH011758 (Year: 2020) Questioned Costs: None Identified Description: The policies and procedures of the School District were insufficient to provide adequate internal controls over Head Start program reporting requirements. Background Information: The Head Start program promotes school readiness by enhancing the cognitive, physical, behavioral, and social-emotional development of children through the provision of educational, health, nutritional, social, and other services to low-income children and families. The program is designed to involve parents in their child’s learning and development, and to help parents make progress toward their educational, literacy, and employment goals. Head Start funding was granted directly to the Randolph County Board of Education (School District) by the U.S. Department of Health and Human Services (HHS). HHS requires the School District to submit a Federal Financial Report (SF-425) annually to report Head Start expenditure and cash activity for each award period. Criteria: As a recipient of federal awards, the School District is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls. Condition: A review of the SF-425 report filed for the period under review was performed to determine if appropriate internal controls were implemented and applicable compliance requirements were met. Though the report was prepared accurately, auditors noted that the report did not reflect evidence of review or approval by management personnel. Cause: Management was unaware of the requirement to document internal control procedures associated with the annual SF-425 reporting. Effect or Potential Effect: The School District is not in compliance with the Uniform Guidance. Failure to review financial reports for accuracy and completeness could lead to missed deadlines, inaccurate reporting, or obtaining more or less federal funding than the School District was eligible to receive. Recommendation: The School District should establish procedures to ensure that annual financial reports submitted to HHS are supported by the accounting records and evidence of review and approval is obtained prior to the submission of the reports. Views of Responsible Officials: We concur with this finding