Finding Text
2025-002 — Activities Allowed Federal program information: Funding Agency: U.S. Department of Health and Human Services Title: Head Start Assistance Listing Number : 93.600 Award Year: July 1, 2024 – July 31, 2025 Criteria: Funds may be used for development and administrative costs, subject to the limitation that no financial assistance shall be extended in any case in which the costs of developing and administering a program exceed 15 percent of the total costs, including the required nonfederal contributions to such costs. The term “development and administrative costs” means costs incurred in accordance with an approved Head Start budget that do not directly relate to the provision of program component services. Condition: Total administrative cost allocations and administrative salaries charged to the Head Start program totaled $1,526,131, which exceeded the 15% cap by approximately 4%. Context: Based on review of administrative costs and total costs charged to the program. Questioned Costs: None. Cause: Internal controls have not been implemented to ensure that SNMCAC is properly charging administrative costs to the program. Effect: SNMCAC is not in compliance with allowable activity requirements for the Head Start program. Auditor’s Recommendations: SNMCAC should review development and administrative costs charged to the program and develop internal controls to ensure they are meeting the 15% cap. All administrative costs charged should be reviewed and a determination should be made as to whether they fall under the definition of administrative costs. Documentation should be maintained evidencing program compliance. Management’s Response: SNMCAC acknowledges the finding related to administrative cost limitations under the Head Start program and accepts responsibility for ensuring compliance with the 15% administrative cost cap. During the grant period, SNMCAC followed guidance and direction provided by the Office of Head Start regarding the classification and allocation of certain program costs. This resulted in the inclusion of costs within administrative categories that contributed to exceeding the 15% threshold. While SNMCAC acted in accordance with guidance received from the granting agency, management recognizes that ultimate responsibility for compliance with federal cost limitations rests with the organization.