Finding 1124407 (2024-002)

Compliance Requirement - Costs Allowed or Allowable Finding Type - Material Weakness Federal Agency - U.S. Department of Health and Human Services Federal Program Title - Administration for Children & Families - Head Start Assistance Listing Number - 93.600 Criteria: The Organization is required to maintain books and records to include all revenues and expenditures, and adjusting journal entries as deemed necessary, to prevent the Organization’s books and records from being materially misstated. Journal entries are to be made, when appropriate, to adjust account balances including those relating to the federal and state grant assistance funding sources. Condition: During the audit several adjusting journal entries were proposed. These entries would have a material effect on the financial statements if not proposed and recorded. We consider this to be a material weakness. Questioned Costs: $ - 0 - Cause: Due to inadequate staffing and lack of resources, regular/monthly reconciliations and review of the Organization's general ledger accounts caused various journal entries to be proposed during the audit. These entries affected various statement of financial position, revenues, and expenditure accounts. Effect: The financial statements of the Organization would have been materially misstated if these journal entries were not proposed and recorded. Recommendations: We recommend the Organization implement procedures to review the general ledger more carefully, including the statement of financial position, revenues and expenditure accounts. This review should include reconciliations where deemed necessary so that all amounts are recorded accurately, and on a timely basis. View of Responsible Officials: There is no disagreement with the audit finding. The supplies that were ordered were not obligated correctly to the programs. The various journal entries to be proposed were to correct the cost allocations of the supplies, but there were still confusions as to what programs. The general ledger, balance sheet and expenditures are to be reviewed on a timely basis.