Finding 1115992 (2024-004)

Federal Agency: Department of Health and Human Services Federal Program Name: HeadStart Assistance Listing Number: 93.600 Federal Award Identification Number and Year: 03CH011220-04-00, 2023 03CH011220-05-00, 2024 Award Period: 9/1/2022-8/31/2023 9/1/2023-8/31/2024 Compliance Requirement: Reporting: Federal Funding Accountability and Transparency Act Type of Finding: Material Weakness in Internal Control over Compliance, Material Noncompliance Criteria or Specific Requirement: Compliance: Per the Federal Funding Accountability and Transparency Act (FFATA), prime (direct) recipients of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Reports must be filed in FSRS by the end of the month following the month in which the prime recipient awards any sub-grant greater than or equal to $30,000. If the initial award is below $30,000 but subsequent grant modifications result in a total award equal to or over $30,000, the award will be subject to the reporting requirements as of the date the award exceeds $30,000. If the initial award equals or exceeds $30,000 but funding is subsequently de-obligated such that the total award amount falls below $30,000, the award continues to be subject to FFATA reporting requirements. The following key data elements must be reported: Subawardee Name and Data Universal Numbering System (DUNS) number; Amount of Subaward (inclusive of modifications); Subaward Obligation/Action Date; Date of Report Submission; Subaward Number; Project Description; and Names and Compensation of Highly Compensated Officers. (Names and Compensation of Highly Compensated Officers must only be reported when the entity in the preceding fiscal year received 80 percent or more of its annual gross revenues in Federal awards; and $25,000,000 or more in annual gross revenues from Federal awards; and the public does not have access to this information about the compensation of the senior executives of the entity through periodic reports filed under section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. §§ 78m(a), 78o(d)) or section 6104 of the Internal Revenue Code of 1986.) Internal Control: Per 2 CFR section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should comply with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: The Department of Community and Human Services (DCHS) did not report subaward information to the FFATA Subaward Reporting System (FSRS) in accordance with Federal Funding Accountability and Transparency Act (FFATA) requirements. As the prime award recipient DCHS is responsible for ensuring that all reporting requirements are met within the required timeframe. Context: The sole fiscal year 2024 subaward issued by DCHS was not reported to FSRS. In addition, the Department was unable to produce documentation supporting their review and approval of the tested FFATA reports prior to submission in the FSRS system. Transactions Subaward Report not Subaward Subaward Tested not reported timely amount missing key incorrect elements 1 1 0 0 0 Dollar Amount Subaward Report not Subaward Subaward of Tested not reported timely amount missing key Transactions incorrect elements $2,822,089 $2,822,089 0 $0 $0 Cause: DCHS’ procedures and internal controls were not sufficient to ensure that the subaward reporting requirement was performed within the requirement time frame. Effect: DCHS is not in compliance with the FFATA reporting requirement. Questioned costs: None. Recommendation: We recommend that DCHS review procedures and internal controls to ensure that the required subawards are reported timely and accurately to FSRS no later than the end of the month following the month of issuance of each subaward. Documentation of supporting compliance should be readily available for review. Views of Responsible Officials: There is no disagreement with this finding. The reporting has been completed. New employees will be trained in the procedures and internal controls to ensure that the required subawards are reported timely and accurately to FSRS no later than the end of the month following the month of issuance of each subaward. Documentation will be available for review during the audit period.