Finding Text
on the federal program:
Subject: Head Start Cluster - Internal Controls
Federal Agency: Department of Health and Human Services
Federal Program: Head Start Cluster
Assistance Listing Number: 93.600
Compliance Requirement: Activities Allowed or Unallowed, Allowable Costs/Cost Principles
Audit Finding: Material Weakness
Criteria: 2 CFR section 200.303 states in part: "The non-Federal entity must:
(a) Establish and maintain effective internal control over Federal award that provides reasonable assurance
that the non-Federal entity is managing the Federal awards in compliance with Federal statutes,
regulations, and the terms and conditions of the Federal award. These internal controls should be in
compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the
Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the
Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ."
Condition: An effective internal control system was not in place at the Unit to ensure compliance with
requirements related to the grant agreement and the activities allowed or unallowed and allowable
costs/cost principle compliance requirements. The Unit did not have adequate documentation to support
expenditures.
Cause: The Unit's management had not developed a system of internal controls to ensure compliance with
the compliance requirements listed above.
Effect: The failure to establish an effective internal control system placed the Unit at risk of noncompliance
with the grant agreement and the compliance requirements. A lack of segregation of duties within an internal
control system could have also allowed noncompliance with the compliance requirements and allowed the
misuse and mismanagement of federal funds and assets by not having proper oversight, reviews, and
approvals over the activities of the programs.
Questioned Costs: $23,700.
Context: We noted that there was no primary, documented review for one of the seventeen sample vendor
head start cluster accounts payable vouchers. Additionally, one of the vouchers was not supported by
appropriate documentation. The voucher was for the purchase of gift cards for teachers to buy books for
professional development. However, there was no backup or support showing what the gift cards were
used to purchase. The total of this voucher was $23,700.
Identification as a repeat finding, if applicable: No.
Recommendation: We recommend that the Unit establish a documented, primary review of all head start
cluster account payable claims before they are paid. Additionally, we recommend the Unit maintain all
supporting documentation to show what the gift cards were used to purchase to ensure they are used for
allowable purposes.
Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding
and has prepared a corrective action plan.