Audit 405658

Special Test and Provisions-Monthly Board Financial Reporting and Budgetary Comparisons Condition and Criteria: Head Start agencies are required to provide accurate and regular financial information to the Governing Body and Policy Council, including monthly financial statements, credit card expenditures, and audit information (42 USC 9837(d)(2)(A) and (E)). The Governing Body is responsible for overseeing financial management and reporting, including approval of major expenditures, annual budgets, and monitoring compliance with financial reporting requirements (42 USC 9837(c)(1)(E)(iv)(VII)(aa)-(dd)). During the current year, the Agency did not maintain current budget-to-actual financial reports and was unable to provide documentation demonstrating that financial reports were regularly presented to the Board of Directors. Effect: Without accurate and timely financial reporting, the Board of Directors are unable to effectively perform their fiscal oversight responsibilities. This increases the risk that budget variances, unallowable costs, financial management deficiencies, or compliance issues may not be identified and addressed in a timely manner. Auditor’s Recommendation: We recommend that management establish formal procedures requiring the preparation and review of monthly budget-to-actual financial reports and ensure that accurate financial statements are presented to the Board of Directors on a regular basis. Documentation of financial reports presented, discussions held, and actions taken should be maintained in meeting records to demonstrate compliance with Head Start governance and financial oversight requirements. Organization’s Response: Management acknowledges the finding related to governance reporting requirements not being consistently presented to the Board during fiscal year 2025 in report form. The Board had more robust discussions regarding financial statements, concentrated around the time of drawdowns and the use of funds. Effective 2026, management will implement a structured monthly reporting process to ensure the Board and Finance Committee receive timely financial statements, budget-to-actual reports, grant expenditure reports, and other required compliance updates. Board meeting agendas will include financial oversight as a standing item, and meeting minutes document the Board’s review and acceptance. The Finance Director and CEO are responsible for monitoring compliance with this process to ensure the condition does not recur.

Special Test and Provisions-Monthly Board Financial Reporting and Budgetary Comparisons Condition and Criteria: Head Start agencies are required to provide accurate and regular financial information to the Governing Body and Policy Council, including monthly financial statements, credit card expenditures, and audit information (42 USC 9837(d)(2)(A) and (E)). The Governing Body is responsible for overseeing financial management and reporting, including approval of major expenditures, annual budgets, and monitoring compliance with financial reporting requirements (42 USC 9837(c)(1)(E)(iv)(VII)(aa)-(dd)). During the current year, the Agency did not maintain current budget-to-actual financial reports and was unable to provide documentation demonstrating that financial reports were regularly presented to the Board of Directors. Effect: Without accurate and timely financial reporting, the Board of Directors are unable to effectively perform their fiscal oversight responsibilities. This increases the risk that budget variances, unallowable costs, financial management deficiencies, or compliance issues may not be identified and addressed in a timely manner. Auditor’s Recommendation: We recommend that management establish formal procedures requiring the preparation and review of monthly budget-to-actual financial reports and ensure that accurate financial statements are presented to the Board of Directors on a regular basis. Documentation of financial reports presented, discussions held, and actions taken should be maintained in meeting records to demonstrate compliance with Head Start governance and financial oversight requirements. Organization’s Response: Management acknowledges the finding related to governance reporting requirements not being consistently presented to the Board during fiscal year 2025 in report form. The Board had more robust discussions regarding financial statements, concentrated around the time of drawdowns and the use of funds. Effective 2026, management will implement a structured monthly reporting process to ensure the Board and Finance Committee receive timely financial statements, budget-to-actual reports, grant expenditure reports, and other required compliance updates. Board meeting agendas will include financial oversight as a standing item, and meeting minutes document the Board’s review and acceptance. The Finance Director and CEO are responsible for monitoring compliance with this process to ensure the condition does not recur.