Audit 52407

Finding 2022-001: Internal Control over Reporting (Significant deficiency, Compliance Finding) Federal Agency: U.S. Department of Health and Human Services Pass-Through Agency: N/A ? Direct Award Program Name: Head Start Cluster Assistance Listing Number:93.600 Award Numbers: 05CH01205802, 05HE00139001C6, 05HP00044002 Category of Finding: Reporting Criteria: Under the requirements of the Federal Funding Accountability and Transparency Act (FFATA), as codified in 2 CFR Part 170, direct recipients of grants are required to report first-tier subawards of $30,000 or more to the FFATA Subaward Reporting System (FSRS) no later than the end of the month following the month in which the subaward obligation was made. The Center is also required to file form SF-429 Real Property Status Report annually. Condition/Context: During testing of reporting compliance requirement related to Head Start, it was determined that FFATA reporting to FSRS was not done for the subgrants awarded. "See Schedule of Findings and Questionend Costs for chart/table". Additionally, the Form SF-429 Real Property Status Report is required to be filed annually with the SF-425. The Center does not have any reportable real property, but instructions require that the form be completed regardless. Cause: The Center?s internal controls did not detect that FFATA and Form SF-429 reporting was required and not been performed. Effect: Failure to submit the required FFATA reports by the end of the month following an award given to a subrecipient results in noncompliance with 2CFR Part 170. Failure to submit annual SF-429 report results in noncompliance with requirements. Questioned costs: None Repeat Finding: No Recommendation: The Center should evaluate each award for applicability of FFATA and Form SF-429 reporting and develop processes and internal controls to ensure proper submission of reports by the end of the month following an award given to a subrecipient in the case of FFATA reporting, and ensure the SF-429 is filed when the Form SF-425 is submitted. Management?s response: Management agrees with this finding. Please see corrective action plan.

Federal Agency: U.S. Department of Health and Human Services Pass-Through Agency: N/A ? Direct Award Program Name: Head Start Cluster Assistance Listing Number:93.600 Award Numbers: 05CH01205802, 05HE00139001C6, 05HP00044002 Category of Finding: Allowable Costs/Cost Principles Criteria: Reports reflecting the distribution of activity of each employee much be maintained for all staff members whose compensation is charged, in whole or in part, directly to awards in accordance with the Uniform Guidance CFR Section 200.430 ? Compensation ? personal Services. Charges to Federal awards must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable and properly allocated and incorporated into the official records of the Center. These records much also support the distribution of the employee?s salary or wages among specific activities or cost objectives if the employee works on more than one program or activity. Condition/Context: The Center uses the Time Recording module of its Human Resources Information System (HRIS) to allocate gross wages for all employees. Management asserts that the HRIS is populated with labor allocations reflect of program benefit for each employee and four times during each fiscal year, Management re-evaluates labor allocation for potential changes. During fiscal year 2022, spreadsheets were used, outside of HRIS data tables, for tracking labor allocations. The use of spreadsheets did not provide for a consistent documented procedure that could be effectively tested to demonstrate that a system of internal controls was in place to provide reasonable assurance changes to allocations were supported, accurate and allowable. Cause: The Center?s significant growth, along with staff challenges during COVID recovery, and the transition to a new HIRS resulted in extensive use of spreadsheets for the tracking of labor allocations and changes to allocations during the year and internal control processes that were not fully developed to address these changes. Effect: The Center?s use of spreadsheets for labor allocations did not provide a documented system of internal control that could be used to test changes to allocations made during the year. Questioned Costs: None. Repeat Finding: No Recommendation: Management should review the written fiscal policy and procedures as it relates to the allocation of salaries and ensure that what is documented is reflective of internal controls and processes in place to provide reasonable assurance that the charges are accurate, allowable and properly allocated and incorporated into the official records of the Center. We recommend that the HIRS Time Recording module be used to maintain records of daily entries for exempt staff. The reporting capability of the HIRS should be the only source used to generate the calculation of wage allocations entered into the general ledgers. The allocation reviews performed throughout the year of program benefit assigned to each position should be documented and approved such that there is the ability to track determinations and related support. We noted that Management has taken several steps to improve this process by the end of the fiscal year. Management?s response: Management agrees with this finding. Please see corrective action plan.

Finding 2022-001: Internal Control over Reporting (Significant deficiency, Compliance Finding) Federal Agency: U.S. Department of Health and Human Services Pass-Through Agency: N/A ? Direct Award Program Name: Head Start Cluster Assistance Listing Number:93.600 Award Numbers: 05CH01205802, 05HE00139001C6, 05HP00044002 Category of Finding: Reporting Criteria: Under the requirements of the Federal Funding Accountability and Transparency Act (FFATA), as codified in 2 CFR Part 170, direct recipients of grants are required to report first-tier subawards of $30,000 or more to the FFATA Subaward Reporting System (FSRS) no later than the end of the month following the month in which the subaward obligation was made. The Center is also required to file form SF-429 Real Property Status Report annually. Condition/Context: During testing of reporting compliance requirement related to Head Start, it was determined that FFATA reporting to FSRS was not done for the subgrants awarded. "See Schedule of Findings and Questionend Costs for chart/table". Additionally, the Form SF-429 Real Property Status Report is required to be filed annually with the SF-425. The Center does not have any reportable real property, but instructions require that the form be completed regardless. Cause: The Center?s internal controls did not detect that FFATA and Form SF-429 reporting was required and not been performed. Effect: Failure to submit the required FFATA reports by the end of the month following an award given to a subrecipient results in noncompliance with 2CFR Part 170. Failure to submit annual SF-429 report results in noncompliance with requirements. Questioned costs: None Repeat Finding: No Recommendation: The Center should evaluate each award for applicability of FFATA and Form SF-429 reporting and develop processes and internal controls to ensure proper submission of reports by the end of the month following an award given to a subrecipient in the case of FFATA reporting, and ensure the SF-429 is filed when the Form SF-425 is submitted. Management?s response: Management agrees with this finding. Please see corrective action plan.

Federal Agency: U.S. Department of Health and Human Services Pass-Through Agency: N/A ? Direct Award Program Name: Head Start Cluster Assistance Listing Number:93.600 Award Numbers: 05CH01205802, 05HE00139001C6, 05HP00044002 Category of Finding: Allowable Costs/Cost Principles Criteria: Reports reflecting the distribution of activity of each employee much be maintained for all staff members whose compensation is charged, in whole or in part, directly to awards in accordance with the Uniform Guidance CFR Section 200.430 ? Compensation ? personal Services. Charges to Federal awards must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable and properly allocated and incorporated into the official records of the Center. These records much also support the distribution of the employee?s salary or wages among specific activities or cost objectives if the employee works on more than one program or activity. Condition/Context: The Center uses the Time Recording module of its Human Resources Information System (HRIS) to allocate gross wages for all employees. Management asserts that the HRIS is populated with labor allocations reflect of program benefit for each employee and four times during each fiscal year, Management re-evaluates labor allocation for potential changes. During fiscal year 2022, spreadsheets were used, outside of HRIS data tables, for tracking labor allocations. The use of spreadsheets did not provide for a consistent documented procedure that could be effectively tested to demonstrate that a system of internal controls was in place to provide reasonable assurance changes to allocations were supported, accurate and allowable. Cause: The Center?s significant growth, along with staff challenges during COVID recovery, and the transition to a new HIRS resulted in extensive use of spreadsheets for the tracking of labor allocations and changes to allocations during the year and internal control processes that were not fully developed to address these changes. Effect: The Center?s use of spreadsheets for labor allocations did not provide a documented system of internal control that could be used to test changes to allocations made during the year. Questioned Costs: None. Repeat Finding: No Recommendation: Management should review the written fiscal policy and procedures as it relates to the allocation of salaries and ensure that what is documented is reflective of internal controls and processes in place to provide reasonable assurance that the charges are accurate, allowable and properly allocated and incorporated into the official records of the Center. We recommend that the HIRS Time Recording module be used to maintain records of daily entries for exempt staff. The reporting capability of the HIRS should be the only source used to generate the calculation of wage allocations entered into the general ledgers. The allocation reviews performed throughout the year of program benefit assigned to each position should be documented and approved such that there is the ability to track determinations and related support. We noted that Management has taken several steps to improve this process by the end of the fiscal year. Management?s response: Management agrees with this finding. Please see corrective action plan.