Finding 2025.002 - Reporting - Material Weakness Name of Federal Agency: U.S. Department of Health and Human Services Federal Program Name and Assistance Listing Number: Head Start Cluster, 93.600 Federal Award Identification Number and Year: 01CH011268-05-01 (2024), 01CH012890-01-01 (2024), 01CH011268-05-03 (2024) Name of Pass-through Entity (if applicable): N/A Criteria In accordance with §200.328 Financial Reporting and 200.329, Monitoring and Reporting Program Performance, recipients and subrecipients must submit financial and performance reports as required by the award. Under the requirements of the Federal Funding Accountability and Transparency Act (“FFATA”) that are codified in 2 CFR Part 170, recipients (i.e., direct recipients) of grants or cooperative agreements are required to identify awards subject to FFATA, collect and report information on each first tier subaward or amendment of $30,000 or more in federal funds in the FFATA Subaward Reporting System. Condition A SF-425 report was not properly supported by accounting records or reviewed prior to filing. Additionally, the Federal Funding Accountability and Transparency Act ("FFATA") report for the subrecipient was not filed. Cause CLC lacks sufficiently documented policies and procedures related to the grant's reporting requirements. CLC experienced a change in personnel. Management did not maintain supporting documentation for the SF-425 report and did not have the report reviewed prior to submission. Additionally, management was unaware of the FFATA reporting requirement. Effect or Potential Effect Inadequate documentation of policies and procedures for reporting requirements and controls over the preparation and review of reports resulted in the untimely filing of required reports causing there to be noncompliance with the reporting requirement set forth by the Uniform Guidance. Lack of review and support may result in the improper reporting of activity to the granting agency. Questioned Costs None Context One of two SF-425 reports was tested. The report tested did not have supporting documentation or evidence of review. The entity was required to submit 1 FFATA report, which was not submitted. Identification as a Repeat Finding This is not a repeat finding. Recommendation We recommend that management establish and formally document comprehensive policies and procedures for the reporting process. These policies and procedures should clearly outline all required reports, filing timelines, and the method for maintaining supporting documentation. We recommend that CLC develop and implement a standardized checklist outlining all required grant compliance requirements. The checklist should clearly identify the individual responsible for preparation and the individual responsible for review. Additionally, both the preparer and reviewer should document their completion of the review to provide evidence that compliance requirements have been appropriately verified. Views of Responsible Officials Children’s Learning Centers of Fairfield County, Inc. concurs with this finding. Management will establish and formally document grant reporting policies and procedures for the Head Start Cluster, including a centralized compliance calendar, required deliverables list, and a standardized checklist for each reporting package (including SF-425 and FFATA subaward reporting, as applicable). All reports will be supported by underlying accounting records, retained in a centralized repository, and subject to documented preparer and independent reviewer sign-off prior to submission. CLC will provide staff training and cross-training to maintain continuity during personnel changes.
Finding 2025.003 - Subrecipient Monitoring - Material Weakness Name of Federal Agency: U.S. Department of Health and Human Services Federal Program Name and Assistance Listing Number: Head Start Cluster, 93.600 Federal Award Identification Number and Year: 01CH011268-05-01 (2024), 01CH012890-01-01 (2024), 01CH011268-05-03 (2024) Name of Pass-through Entity (if applicable): N/A Criteria Per 2 CFR 200.332 (Requirements for pass-through entities) a pass through entity must, among other things, evaluate each subrecipient's risk of noncompliance for purposes of determining the appropriate subrecipient monitoring related to the subaward and monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward; and that subaward performance goals are achieved. Condition CLC did not properly monitor its subrecipient in accordance with Uniform Guidance requirements. The agreement with the subrecipient referred to outdated polices that were replaced by the Uniform Guidance (Circulars A-87, A-110, A-133) and did not include all required elements which included, but is not limited, to the Assistance Listing Number, Unique Identifying Number. A review was not performed of the use of program funds or the subrecipient's audited financial statements and Uniform Guidance report. Cause The Financial Policies and Procedures Manual was not followed. The manual also needs to be updated to include the updated requirements of the Uniform Guidance and require documentation of review of compliance with requirements. Effect or Potential Effect Failure to perform required risk assessments and to adequately monitor subrecipients may result in the subrecipient not properly administering the federal program in accordance with laws, regulations, and the grant agreement. Questioned Costs None Context During our testing, we noted CLC did not perform subrecipient monitoring procedures over subrecipients with respect to the Head Start Cluster Program during the year ended June 30, 2025. Amounts passed through to subrecipients totaled $284,791 for the year ended June 30, 2025. Identification as a Repeat Finding This is not a repeat finding. Recommendation Management should review the Uniform Guidance requirements for subrecipient monitoring and update their policy manual as appropriate. We recommend CLC develop and implement a standardized checklist that outlines all subrecipient monitoring compliance requirements. The checklist should clearly identify the individual responsible for implementing each requirement and the individual responsible for reviewing compliance, along with documentation of that review. Views of Responsible Officials Children’s Learning Centers of Fairfield County, Inc. concurs with this finding. Management will update its Financial Policies and Procedures Manual and subaward templates to align with current Uniform Guidance requirements, including all required subaward elements (such as Assistance Listing Number, UEI, award identification, and applicable compliance requirements). CLC will implement a standardized subrecipient monitoring checklist covering risk assessment, review of invoices and programmatic reports, verification of allowable costs, confirmation and review of subrecipient audit requirements and Uniform Guidance reports (as applicable), and documentation of management review. Monitoring will be documented and reviewed by senior management on at least an annual basis and more frequently based on risk.