Finding Text
2024-010 Material Weakness in Internal Control and Compliance over Major Programs Funding Agency: Department of Health and Human Services ALN: 93.600 Criteria Per 42 USC 9837, Head Start governing bodies are responsible for reviewing monthly financial statements, and approve the annual operating budget. Condition During our audit, we noted that the finance department was several months behind on financial reporting. While the board minutes noted that financial statements were presented monthly, the financial information often being presented was from several months prior, making it impossible for the governing body to have an accurate outlook of KCR’s financial position. We also noted that several statement of financial position accounts were not properly reconciled until the audit, meaning that any financial information presented to the governing body in 2024 would have been materially misrepresented. The 2024 operating budget was not approved until September 2024, more than halfway through the fiscal year. Questioned Costs None. Cause The governing body did not provide adequate oversight of KCR's financial management and internal control process. Effect Ineffective governance and monitoring over the Federal awards increased the risk that deficiencies in internal control over compliance may occur, and that there may be material weaknesses in internal controls over compliance that were not identified and corrected in a timely manner. Repeat Finding No. Recommendation We recommend KCR strengthen governance and oversight activities through the establishment of a finance committee with appropriate financial knowledge and experience to assist the governing body. Monthly meetings should be held to review annual operating budget, significant budget-to-actual variances, and report activities and recommendations to the entire Board. Views of Responsible Officials Management concurs with the finding and recommendation. Please see the attached corrective action plan.