Finding Text
Information 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: Reporting
Audit Finding: Significant Deficiency
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 in order to ensure compliance
with requirements related to the grant agreement and the reporting compliance requirement.
Cause: The Unit's management had not developed a system of internal controls to ensure compliance with
the reporting requirements.
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: None.
Context: We noted that for two federal financial reports in a sample of two reports, the Supervisor prepared
the report without a secondary, documented review before the submission of the report to ensure the
accuracy of the report. The amounts reported agreed to the supporting records without error.
Identification as a repeat finding, if applicable: No.
Recommendation: We recommended that the Unit implement a documented, formal review of the reports
before they are submitted.
Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding
and has prepared a corrective action plan.