Finding Text
US Department of Health and Human Services
Passed through Omaha Public Schools
Federal Financial Assistance Listing #93.600
Head Start Cluster
Applicable Federal Award Number and Year – 07CH011832-03-00 11/1/2022 – 10/31/2023,
07CH011832-02-00 11/1/2021 – 10/31/2022
Activities Allowed or Unallowed and Allowable Costs/Cost Principles
Material Weakness in Internal Control Over Compliance
Material Noncompliance
Criteria: 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and conditions of the federal award.
Condition: The Organization requested drawdowns of grant funds in excess of amounts awarded for the grant years ended 10/31/2023 and 10/31/2022 that were denied by the passthrough agency, Omaha Public Schools, resulting in an overstatement in grant revenue and receivables, and federal awards expended included in the schedule of expenditures of federal awards.
Cause: Management was not effectively tracking expenditures applied to its grant award during the year.
Effect: Drawdowns submitted for reimbursement for the grant year ended 10/31/2023 in the amount of $203,096 and for the grant year ended 10/31/2022 in the amount of $102,927 were not approved resulting in grants receivable and revenue being overstated during the year. An entry was provided by management to write off the uncollectible amounts in the consolidated financial statements. The schedule of expenditures of Federal awards was adjusted to reduce federal awards expended for the amount of the overstatement during the current fiscal year.
Questioned Costs: $306,023.
Context: In testing the balances of grants receivable at June 30, 2024, it was noted that certain amounts were disallowed by the passthrough agency administering grant funds for the
Organization. Of the $390,226 written off as uncollectible, $306,023 was applicable to the Head Start grant.
Repeat Finding from Prior Years: No
Recommendation: We recommend that management continue to evaluate its processes and controls over its grant monitoring to ensure that expenditures applied to each grant award are complete and accurate.
Views of Responsible Officials: Management is aware of the deficiency in internal control over its grant monitoring. Management is in the process of reviewing its accounting policies and procedures over grant monitoring to ensure amounts are tracked appropriately.