Finding Text
Criteria
Per the Compliance Supplement for 2020 for the Head Start Cluster, an agency administering Head Start programs must have a governing body that includes not less than one member with a background and expertise in fiscal management or accounting and not less than one licensed attorney familiar with issues that come before the governing body or consultants with the requisite skills and experience to work with the governing body. Additionally, an agency administering Head Start programs must share accurate and regular financial information with its governing body and policy council, including monthly financial statements, including credit card expenditures and the financial audit (42 USC 9837(d)(2)(A) and (E)).
Condition
Monthly financial statements were not being prepared and the financial audit was not performed in a timely manner.
Cause
Management was not aware of the governance compliance requirements specific to the Head Start Cluster. Additionally, SCCC did not have a process in place to produce monthly financial statements on an accrual basis to be available for audit.
Effect
SCCC was out of compliance with governance requirements, financial reporting requirements, and audit requirements. Noncompliance with these requirements could result in the suspension of funding from the City of Chicago until compliance is met.
Recommendation
We recommend that SCCC implement policies and procedures to ensure that monthly accrual-based financial statements are prepared on a timely basis for review by management and the governing body. We further recommend that SCCC’s management implement a process of reviewing compliance requirements as detailed in the Compliance Supplement for each year to ensure that all compliance requirements are being met.
Management Response
See corrective action plan.