Finding Text
Federal Agency: Department of Health and Human Services
Federal Program Name: Child Care and Development Programs
Assistance Listing Number: 93.575
Federal Award Identification Number and Year: 19-S225-00-2 – 2022
Pass-Through Agency: California Department of Education
Pass-Through Number: 10163
Award Period: 7/1/2022-6/30/2023
Compliance Requirement Affected: H - period of availability/performance
Type of Finding: Significant Deficiency
Criteria or specific requirement: A non-federal entity may charge only allowable costs incurred during the approved budget period of a federal award's period of performance and any costs incurred before the federal awarding agency or pass-through entity made the federal award that were authorized by the federal awarding agency or pass-through entity (2 CFR sections 200.308 200.309 and 200.403(h)). A period of performance may contain one or more budget periods.
Condition: During test of non-payroll expenditures charged to the Child Care and Development Programs, one of the supporting documents indicated that costs in the amount of $1,625 charged to program was paid in the award period, but was incurred prior to the award period.
Cause: The invoice was paid in the award year and internal controls over compliance failed to identify the ineligibility of the expense.
Effect: $1,625 of ineligible expenses were charged to the federal program.
Questioned Costs: $1,625 of known and likely cost.
Repeat finding: Not a repeat finding.
Recommendation: We recommend the Organization review its internal control processes over compliance to ensure adequate review of period of performance.
Views of responsible officials and Corrective Action Plan:
Background and Contributing Factors:
At the time of the expenditure in question, our organization was relying on Charter Impact to manage our accounting and grant reporting. Unfortunately, Charter Impact did not fulfill its contractual obligations, including timely submission of grant reports and ensuring compliance with federal guidelines. Their failure to submit accurate and timely grant reports, contributed to the lapse in internal controls that led to the ineligible expense being charged to the federal program.
2023-002 Internal Control over Compliance (Continued) 500
Corrective Action Plan:
1. Implementation of Sage Accounting Software:
We have since implemented a comprehensive financial accounting software system, Sage, which allows us to track expenditures more accurately and ensure compliance with federal grant requirements. The system includes built-in safeguards to flag non-compliant expenditures.
2. Review and Strengthening of Internal Controls:
Life Source International Charter School will be implementing additional internal control systems & processes that include an additional review of back up documents before monthly reports are filed. A copy of all backup documents in support of all monthly reports will be kept at both Life Source International Charter School and the outside entities providing services and making reports on behalf of Life Source International Charter School.
3. Staff Training and Capacity Building:
Our staff has received training on federal grant compliance, including the specific criteria governing the period of performance and allowable costs under federal awards. Additionally, with the Sage system in place, staff are now better equipped to manage compliance and reporting accurately.
4. Commitment to Ongoing Compliance:
We are committed to continually improving our internal control processes to ensure compliance with all federal regulations.
Findings and Questioned Costs – State Compliance
There were no findings or questioned costs related to state awards for June 30, 2023.