Audit 408239

Finding 2025-001: Financial Statement Preparation and Schedule of Expenditures of Federal Awards (SEFA) Federal Program Affected: U.S. Department of Health and Human Services Head Start and Early Head Start Program (ALN #93.600) Compliance Requirement: Reporting Questioned Costs: None known or likely over $25,000 Condition and Cause: As a matter of practicality and efficiency, we have assisted in drafting the financial statements and SEFA, in both form and content, based on information provided by management during the audit. Criteria and Effect: Management and those charged with governance are ultimately responsible for preparing and presenting the financial statements and SEFA in accordance with the applicable financial reporting framework. The auditor’s responsibility for the financial statements and SEFA is to express an opinion on them based on the audit evidence obtained. Repeat Finding from Prior Year: N/A Recommendation: Management and governance should review the financial statements and SEFA for accuracy of account balances and context of note disclosures. Management and governance should inquire of the auditors about any balances or disclosures which management does not understand or cannot reconcile to internal records prior to signing the management representation letter. Response/Corrective Action Plan: The Organization agrees with the above finding. See Corrective Action Plan.

Finding 2025-003: Payroll Error Federal Program Affected: U.S. Department of Health and Human Services Head Start and Early Head Start Program (ALN #93.600) Compliance Requirement: Allowable Costs/Cost Principles Questioned Costs: None known or likely over $25,000 Condition and Cause: During testing of payroll charged to the federal program, we noted the Organization overpaid an employee $26 due to a payroll calculation error. The existing payroll review process did not identify the error. Criteria and Effect: Under the Uniform Guidance, costs charged to a federal award must be allowable, allocable, reasonable, and adequately documented. The Organization is also required to maintain effective internal controls over federal awards to provide reasonable assurance that charges to federal programs are accurate and comply with applicable cost principles and award requirements. Although the dollar amount was immaterial, the error indicates that payroll review controls did not operate with sufficient precision to prevent or detect the error prior to processing. Repeat Finding from Prior Year: No Recommendation: We recommend that management reinforce its payroll review procedures to ensure payroll charges to federal awards are reviewed for accuracy before processing and that any identified errors are timely corrected. Response/Corrective Action Plan: The Organization agrees with the above Finding. See Corrective Action Plan.