Finding Text
Compliance Requirement B. Allowable Costs Finding Type Material Weakness in Internal Control Over Compliance and Compliance Finding 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 audit procedures, we noted expenditures were charged to the federal funding source via adjusting journal entry for which adequate supporting documentation could not be provided. Cause: The Organization lacks established procedures which provide formal evidence that the accuracy and completeness of supporting documentation used to support journal entries recorded in the general ledger was accurate, verified, reviewed and approved before posting such entries within the books and records of the Organization. Effect: Several adjusting journal entries to reclassify expenditures from another funding source was recorded on the Organization's books and records at year end instead of throughout the year. As a result, the reports used in supporting draw down of funds were not accurately stated. Inaccurate financial reporting of expenditures resulted in the Organization's reimbursement requests exceeding total program expenditures. Questioned Costs: $ 272,731 Identification as a Repeat Finding: N/A - this was not reported as a finding in the prior audit report. Recommendations: We recommend the Organization implement procedures to review and approve all adjusting journal entries before they are posted to the Organization's accounts to ensure they are being charged to the correct funding source and supported by appropriate documentation. View of Responsible Officials: The Organization agrees with this audit finding.