Unaccompanied Alien Children – AL #93.676, Allowed Costs Condition In review of budget to actual expenditure amounts for the year under audit, the auditor noted three line items that exceeded the allowed budget amount for the year. While in some instances a budget amendment was complete, there were still overages. Criteria Annual budgets are approved by the grantor agency and amendments must be submitted for approval to alter the original budget if needed. Cause For all three line items, the original budget as approved was exceeded. In one line item, the budget amendment, while approved, was requested after June 30, 2025. On another, the budget amendment contained errors, showed an overage as of June 30, 2025. And in the third line item, the budget details salary information at the job description level and the actual exceeded the budget for this position. Management stated that a budget amendment was not required for this level of information; however, no support for this statement was provided in writing. It appears that monitoring is not sufficient to prevent budget overages from occurring, nor to detect them timely to rectify the grantor. Effect enCircle violated their grant terms by exceeding their approved budget. Questioned Cost Amount $12,906.20 Recommendation Management should implement procedures that allow for proper reviews of budget to actual information for grants to verify amounts expended and amounts remaining for expenditure monthly. Additionally, grant management personnel and financial personnel need to work on better communication regarding financial status of grants. View of Responsible Officials and Planned Corrective Action enCircle has developed a new budget tracking tool at the correct budget line items to ensure all categories do not go over budget before budget amendments are submitted and approved. Included in this tool is predictive analytics to determine where budget amendments might be needed proactively instead of reactively.
Unaccompanied Alien Children – AL #93.676, Activities Allowed/Unallowed, Allowable Costs Condition During our testing of 25 disbursements for the program, we noted one disbursement for which an invoice did not support the amount of reimbursement for insurance premiums. We noted one instance where the expenditure was not a direct expense of the major program. We also noted 3 instances where $200 gift cards were purchased for clothing. These gift cards were not well tracked to ensure they were properly given to foster families and subsequently used for clothing. In one of the gift card instances, items other than clothing were included on the support. On this same gift card, an unspent balance on the gift card was not accounted for. In another of the gift card instances, there was no support for the use of the gift card and the gift card was never assigned to a specific child for clothing. In the third instance, the support for the use of the gift card was for a different retail store and none of the support showed payment being made in the form of a gift card, and therefore the actual use of the gift card is unknown. Criteria All disbursements should be properly supported by adequate documentation, made within program established guidelines. Cause Documented allowance for clothing was not followed in 3 instances tested. Support was for less than actual expenditures for one disbursement tested. One expenditure was not directly related to the major program. Unallowed items were purchased in one disbursement tested. Effect Disbursements that weren’t allowable under the program were made in several instances because amounts were not adequately tracked or for an unallowed item. Additionally, unsupported items could not be verified for allowability due to lack of details as to what was purchased. Questioned Cost Amount $569.65 from the sample tested and projected to be approximately $75,000 of the total expenditures. Perspective Information 5 of 25 items selected for testing. Recommendation We recommend that stronger reviews and oversight is put in place to make sure that allowances for clothing are followed for all children in foster care. Additionally, if the program is going to continue use of gift cards as a means of providing funds for clothing purchases, then receipts for the use of those funds should be received to verify they were spent appropriately and controls over unspent gift cards must be put in place.View of Responsible Officials and Planned Corrective Action enCircle has officially adopted the policy that gift cards provided to foster parents will not be submitted for reimbursement until the receipts are returned by the parents. If they do not spend the entire amount, only the amount spent will be requested for reimbursement and enCircle will cover the difference from non-federal funds. enCircle is also considering other methods of helping parents purchase clothes for foster placements. Further, enCircle has evaluated the use of all allocation methods for expenses that impact federal grants and will be limiting allocations to only clearly explicit expenses to ensure only programmatic costs are billed. Further, enCircle has created a new service code within its Chart of Accounts to track programmatic administration costs separate from overall administration costs.
Unaccompanied Alien Children – AL #93.676, Controls over Compliance (Material Weakness) Condition In our testing of the Unaccompanied Children Program, we noted several compliance matters as noted in findings 2025-001 and 2025-002 that stem in part from either a failure of or a lack of controls to prevent, or detect and correct, matters for Federal awards. Many of the errors seem to stem from the entity’s use of manual spreadsheets to complete many allocations, communication issues between program managers and financial personnel, and errors that were not noted and corrected in a timely manner. As a result of a lack of strong controls, the budget was exceeded, unallowed items were reimbursed, and amendments were not requested promptly for budget overages. There were also identified errors with the current year and prior year Schedule of Expenditures of Federal Awards that were not timely identified. Criteria Strong controls over Federal programs are necessary to ensure that fund are used appropriately, managed appropriately internally and accurate reporting is maintained that can be made available to all interested parties within the entity and to the grantor as required. Grantee entities are to be responsible stewards of funds and should have strong monitoring and controls in place to ensure that is met. Cause Errors in understanding allowable amounts per child, errors in understanding allowable items, lack of controls and processes to monitor gift cards, over-reliance on many manual processes and spreadsheets, and lack of communication appears to be creating some disconnect and issues that is allowing this breakdown in monitoring and reporting to occur. Effect As a result of the control concerns, we do believe that a larger error or several smaller issues that total a larger error could occur and not be timely noted and/or corrected by the entity. Recommendation We recommend enCircle work on controls that put in place monitoring over program usage of funds by independent individuals to verify gift cards, and other similar items are being appropriately monitored. We also recommend that enCircle investigate whether their current accounting system can help with the allocation of personnel and invoices across programs so there is less reliance on manual processes and journal entries. Additionally, we recommend that stronger monitoring and review processes be put in place for all programs to ensure budgetary and reporting compliance.View of Responsible Officials and Planned Corrective Action enCircle believes the measures taken for 2025-001 and 2025-002 are sufficient to address this finding. Further the measures taken for 2025-003 alleviate control and reporting issues related to the Schedule of Expenditures of Federal Awards. Finally, enCircle on top of already occurring monthly program financial reviews is adding a monthly budget review for each federal grant with the programmatic staff.
Unaccompanied Alien Children – AL #93.676, Controls over SEFA (Material Weakness) Condition In our testing of the current year SEFA, we noted $64,589 in expenditures were erroneously excluded. We also noted that $72,562 of expenditures from the prior year were also not previously captured in the prior year SEFA. Criteria Strong controls over SEFA preparation are necessary to ensure that funds are accurately reported. Cause Errors in capturing all expenditures from the general ledger to properly complete the SEFA. Effect As a result of the control concerns, we do believe that a larger error or several smaller issues that total a larger error could occur and not be timely noted and/or corrected by the entity. Recommendation We recommend enCircle work on controls that put in place monitoring over reporting of expenditures and SEFA preparation. View of Responsible Officials and Planned Corrective Action enCircle noted during the audit that federal expenditures were being billed into multiple revenue accounts depending on the nature of the expenditure (internal expense, client reimbursable expense, foster parent payments). These accounts have all been consolidated into one account to ensure internal and external reporting does not exclude billed expenditures.