Finding Text
2024-009 Significant Deficiency in Internal Control and Compliance over Major Programs Funding Agency: Department of Health and Human Services ALN: 93.600 Criteria Head Start recipients are required to submit a mid-year and year-end SF-425 report. Recipients must submit financial information, per 2 CFR 200.328. Federal regulations require recipients of federal awards to maintain records that adequately support financial reports, demonstrate accountability for federal funds, and provide an audit trail sufficient to substantiate reported expenditures and other financial information submitted to federal agencies. Condition KCR submitted two SF-425 reports, for periods ending 6/30/2024 and 12/31/2024. When requested to provide the financial reports used to submit the financial information in both SF-425s, KCR was unable to locate the original reports. KCR attempted to recreate the reports in MIP but due to the many entries entered during fieldwork (reference 2024-001), the MIP generated reports were no longer tied to the SF-425 reports. KCR was unable to reconcile the differences between the MIP reports and SF-425. As a result, there was insufficient audit evidence to verify the accuracy and completeness of the financial information reported to the federal awarding agency. Questioned Costs None. Cause The organization did not maintain adequate records supporting the preparation of the SF-425 and lacked effective controls over the retention, organization, and preservation of financial reporting documentation. Effect Without adequate support for the SF-425 financial information submitted, there is significant risk that the SF-425s contained inaccurate or incomplete information. Repeat Finding No. Recommendation Management should establish and implement formal procedures to ensure that all financial reports submitted to federal agencies are supported by documented reconciliations and properly retained for future reference. Supporting records should be maintained in accordance with federal record retention requirements and should be sufficient to allow reported amounts to be independently traced to the accounting records and reproduced if needed. Views of Responsible Officials Management concurs with the finding and recommendation. Please see the attached corrective action plan.