Finding Text
Finding 2025-001: Reporting Federal award agency: U.S. Department of Health and Human Services, Administration for Children and Families Pass-through granting agency: n/a Program name and ALN: Head Start, 93.600 Federal award identification number: 07HP0000560-01 Federal award year: August 1, 2024 to July 31, 2025 Criteria: Pursuant to the reporting requirements for the Head Start Program (Assistance Listing 93.600), Futures First is required to prepare and submit accurate and timely Federal Financial Reports (SF-425) in accordance with the terms and conditions of its federal award and guidance issued by the Office of Head Start and the Administration for Children and Families (ACF). The SF-425 must accurately report cumulative expenditures and other required financial information and be supported by the Agency’s accounting records. Federal reporting requirements are established by 2 CFR Part 200, the Notice of Award, and applicable Head Start program instructions. Failure to submit accurate and timely SF-425 reports constitutes noncompliance with Compliance Requirement L – Reporting. Condition: During testing, we identified that the annual Federal Financial Reporting (SF-425) was not submitted by the reporting deadline prescribed in the grant terms and conditions and Office of Head Start reporting requirements. As a result, the Agency did not comply with federal reporting requirements applicable to the program. Cause: Management did not maintain effective internal controls to ensure compliance with federal reporting requirements. Specifically, controls over the monitoring of reporting deadlines and timely preparation and submission of the SF-425 were not operating effectively. The Agency lacked sufficient procedures to track reporting due dates and verify completion of required filings before the applicable deadline. Additionally, there was a change in upper level management/turnover during the grant period. Effect or potential effect: Failure to comply with requirements would result in return of unallowable costs and a breach in agreement and may be basis to recover grant funds by grantor. Failure to submit required federal reports timely may impede the ability of the federal awarding agency to monitor program expenditures and compliance with award requirements. Additionally, untimely reporting could result in increased oversight by the awarding agency and may affect the Agency’s standing with the federal grantor. Questioned costs: None. The finding relates to timeliness of reporting submission. Context: We identified that of the 4 reports required to be filed annually, we tested 1 report that was not timely. As such, the Agency‘s controls were not operating effectively to ensure timely submission. Repeat finding: No. Recommendation: We recommend management strengthen controls over federal reporting by implementing formal procedures to monitor reporting deadlines, including maintaining a reporting calendar, assigning responsibility for report preparation and review, and documenting management review and approval prior to submission. Management should periodically review upcoming reporting requirements to ensure all federal reports are submitted completely and timely in accordance with grant terms and conditions. Views of responsible officials: Management agrees with this finding. See corrective action plan.