Finding 1228512 (2023-005)

Material Weakness Repeat Finding

Requirement

Questioned Costs

Year

2023

Accepted

2026-08-31

Audit: 410150

Organization: Developmental Opportunities INC Dba Starpoint (CO)

Auditor: WIPFLI LLP

AI Summary

Core Issue: The Organization failed to maintain complete and accurate records for federally funded equipment and did not conduct required physical inventories.
Impacted Requirements: Noncompliance with Uniform Guidance (2 CFR §200.313(d)), which mandates detailed property records and biennial physical inventories.
Recommended Follow-up: Implement stronger internal controls to ensure accurate record-keeping, conduct regular documented inventories, and assign responsibility for compliance monitoring.

Finding Text

2023-005 Head Start Equipment Management Federal Program Information: Funding agency: Department of Health and Human Services Title: Head Start Cluster AL number: 93.600 Questioned Costs: None Criteria – Uniform Guidance (2 CFR §200.313(d)) requires recipients and subrecipients to maintain property records for federally funded equipment that include, at a minimum, a description of the property, serial number or other identifying number, funding source, acquisition date and cost, percentage of federal participation, location, use and condition, and disposition information. The Uniform Guidance also requires a physical inventory of equipment to be conducted and reconciled to property records at least once every two years. Condition – The Organization did not maintain complete and accurate equipment records for equipment purchased with federal funds. In addition, the Organization did not perform a documented physical inventory of grant-funded equipment during the audit period, nor were inventory results reconciled to the equipment listing. As a result, management could not demonstrate compliance with Uniform Guidance equipment management requirements. Cause – Management did not establish or consistently implement adequate internal control procedures to ensure: -Equipment records contained all information required by Uniform Guidance. -Periodic physical inventories of grant-funded equipment were performed and documented. -Inventory results were reconciled to equipment records and investigated for discrepancies. -Responsibility for monitoring compliance with equipment management requirements was assigned and reviewed. Effect – The Organization is at increased risk that equipment purchased with federal funds may be lost, stolen, disposed of improperly, or omitted from inventory records without timely detection. Additionally, incomplete records and the lack of periodic inventories may result in noncompliance with federal award requirements and impair management's ability to account for federally funded assets.

Corrective Action Plan

Finding 2023-005 Head Start Equipment Management Contact person responsible for corrective action: Bryana Marsicano, Chief Executive Officer Anticipated completion date: December 31, 2026 Corrective Action: Management agrees with the finding and will implement the following procedures for equipment acquired with federal funds: • Maintain a property record for each item of federally funded equipment containing every element required by 2 CFR 200.313(d)(1), including a description of the property, the serial number or other identification number, the source of funding and the Assistance Listing number, who holds title, the acquisition date and cost, the percentage of federal participation in the project cost, the location, the use and condition of the property, and any ultimate disposition data. • Perform and document a physical inventory of federally funded equipment and reconcile the results to the property records at least once every two years. • Document any discrepancy identified between the physical inventory and the property records, investigate the cause, and record the resolution. • Adopt a written equipment management policy that assigns responsibility for maintaining property records, conducting periodic physical inventories, and approving dispositions, and that establishes control procedures adequate to safeguard equipment against loss, damage, or theft in accordance with 2 CFR 200.313(d)(3). • Obtain written approval from the awarding agency before disposing of federally funded equipment where such approval is required. • Perform supervisory review of the equipment records at each fiscal year end to confirm completeness and agreement with the general ledger. Corrective action already taken: A physical review of equipment has been completed, asset retirements have been confirmed, and the fixed asset records have been rebuilt and reconciled to the general ledger. Equipment acquired with Head Start funds is being separately identified within those records so that the percentage of federal participation can be documented for each item.

Other Findings in this Audit

1228507 2023-003

Material Weakness Repeat
1228508 2023-004

Material Weakness Repeat
1228509 2023-005

Material Weakness Repeat
1228510 2023-003

Material Weakness Repeat
1228511 2023-004

Material Weakness Repeat

Programs in Audit

ALN	Program Name	Expenditures
93.778	MEDICAL ASSISTANCE PROGRAM	$642,122
93.600	HEAD START	$112,311
10.558	CHILD AND ADULT CARE FOOD PROGRAM	$56,062
93.590	COMMUNITY-BASED CHILD ABUSE PREVENTION GRANTS	$37,329
93.556	MARYLEE ALLEN PROMOTING SAFE AND STABLE FAMILIES PROGRAM	$33,514
84.181	SPECIAL EDUCATION-GRANTS FOR INFANTS AND FAMILIES	$17,349