Finding 1221282 (2025-004)

Material Weakness Repeat Finding
Requirement
AB
Questioned Costs
-
Year
2025
Accepted
2026-06-30

AI Summary

  • Core Issue: There are gaps in documentation and approval for costs charged to the Head Start program, leading to potential noncompliance.
  • Impacted Requirements: Allowable costs must be properly documented and approved according to federal standards.
  • Recommended Follow-Up: Standardize documentation processes and conduct regular reviews to ensure compliance with cost principles.

Finding Text

2025-004 – Internal Controls over Compliance and Compliance with Allowable Costs/Cost Principles Federal Agency: U.S. Department of Health and Human Services Federal Program Title: Head Start/Early Head Start Assistance Listing Number: 93.600 Type of Finding: Material Weakness over Internal Control over Compliance and Compliance Criteria: Allowable costs must be supported by documentation and meet general allowability standards, including being adequately documented and consistent with the award terms and cost principles. Condition and Context: Out of 42 charges to the Head Start program, we noted 8 instances where evidence of appropriate approvals was not consistently maintained for costs charged to the Head Start program. We noted 3 out of 42 charges did not have proper supporting documentation maintained by the Center to validate the allowability of the charges. Questioned Costs: Known Questioned Costs: $2,510 Effect: The deficiency increases the risk that costs charged to Head Start may not be adequately supported and could be determined unallowable upon review, and that noncompliance may not be prevented or detected and corrected on a timely basis. Cause: The Center’s policies and procedures did not consistently require, or management did not consistently evidence, documented supervisory review/approval and retention of support for allowability and allocation decisions for Head Start charges. Recommendation: We recommend the Center: 1. Implement standardized documentation and approval requirements for Head Start charges (e.g., checklists or electronic approval workflows) to evidence allowability, allocation basis, and supervisory review. 2. Conduct periodic internal monitoring of Head Start expenditures focusing on documentation sufficiency and compliance with allowability criteria. Grantee Comment: Management agrees with the finding and has prepared a corrective action plan.

Corrective Action Plan

Corrective Action Plan: Management concurs with the findings. Sheltering Arms has strengthened controls to ensure that all Head Start/ Early Head Start charges are adequately documented, properly approved, and reviewed for compliance with allowable cost requirements. The Organization has implemented processes requiring documented approval for Head Start/Early Head Start charges. Required support includes invoices or payroll documentation, allocation support when applicable, evidence of allowability, and documented supervisory approval. Finance will verify that required support is complete before costs are charged to the program. Periodic internal monitoring procedures are currently being performed to review Head Start/ Early Head Start expenditures for documentation sufficiency, evidence of approval, and compliance with allowable cost principles. Any deficiencies identified will be corrected timely, and recurring issues will be addressed through staff training or process improvements. Management will review the questioned costs identified in the audit and determine the appropriate corrective action, including obtaining additional supporting documentation or reclassifying costs, as needed. Responsible Party: Chief Financial Officer, with support from the Finance Team and Head Start Program Leadership. Anticipated Completion Date: Updated processes have been implemented and are currently in operation to mitigate the risk of future findings. Monitoring Plan: Management will perform quarterly reviews of Head Start/ Early Head Start expenditures. Results will be reviewed with the CFO and Program Leadership, and any corrective actions will be documented and tracked through resolution.

Categories

Allowable Costs / Cost Principles

Other Findings in this Audit

  • 1221281 2025-003
    Material Weakness Repeat

Programs in Audit

ALN Program Name Expenditures
93.600 HEAD START $11.89M
10.558 CHILD AND ADULT CARE FOOD PROGRAM $1.53M