Finding 1147925 (2024-002)

Material Weakness Repeat Finding
Requirement
F
Questioned Costs
$1
Year
2024
Accepted
2025-07-16

AI Summary

  • Core Issue: The Organization failed to conduct a required physical inventory for two consecutive years and improperly requested reimbursement for repair costs after receiving insurance proceeds.
  • Impacted Requirements: This violates federal regulations requiring effective internal controls and regular inventory checks, as outlined in 2 CFR 200.303a and 2 CFR 200.313(d)(2).
  • Recommended Follow-Up: Establish and enforce policies for regular physical inventories and ensure that insurance recoveries are properly credited to the federal award to avoid unallowable costs.

Finding Text

2024-002 (2023-001) – Equipment and Real Property Management – Material Weakness in Internal Controls over Compliance (Repeat Finding) Federal Program Information: Funding Agency: U. S. Department of Health and Human Services Title: Head Start CFDA Number: 93.600 Federal Award Identification number: 06CH012005 Pass Through Entity: N/A Award Year: 2024 & 2023 Condition: The Organization did not conduct a physical inventory in current year or prior year and, in additional, requested reimbursement from the Department of Health and Human services for repair costs for which insurance proceeds were received. Criteria: Per Title 2 US Code of Federal Regulations Part 200.303a, non-federal entities 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 be in compliance 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). Per 2 CFR 200.313(d)(2), a physical inventory of program property must be taken and the results reconciled with the property records at least once every 2 years. 2 CFR 200.406 requires that any recoveries on losses, such as insurance proceeds, be credited to the Federal award as a cost reduction or a cash refund. Questioned costs: $16,033 Effect: The Organization could dispose of, lose, or encumber federally funded equipment without following Federal guidelines. Cause: The Organization does not have policies and procedures to ensure that a physical inventory of equipment is performed at a minimum frequency of every two years. Additionally, the Entity filed a claim for damages to asset(s) purchased with Federal funds and did not offset the insurance proceeds against the repair costs charged to the Federal program, resulting in reimbursement of unallowable costs.

Categories

Questioned Costs Equipment & Real Property Management Allowable Costs / Cost Principles

Other Findings in this Audit

  • 571481 2024-002
    Material Weakness Repeat
  • 571482 2024-003
    Significant Deficiency
  • 571483 2024-002
    Material Weakness Repeat
  • 571484 2024-003
    Significant Deficiency
  • 1147923 2024-002
    Material Weakness Repeat
  • 1147924 2024-003
    Significant Deficiency
  • 1147926 2024-003
    Significant Deficiency

Programs in Audit

ALN Program Name Expenditures
10.558 Child and Adult Care Food Program $327,971
93.600 Head Start $282,828
93.569 Community Services Block Grant $161,894