Finding Text
Finding Number: 2022-001 Agency: U.S. Department of Health and Human Services Administration of Children and Families Federal program: Head Start CFDA: 93.600 Category: Internal Control / Compliance Questioned Costs: None Repeat finding: No Condition: During our audit procedures, we noted that two items related to equipment were not capitalized according to internal control procedures of the entity and federal program requirements. Criteria: 45 CFR 75.2 defines equipment as tangible personal property having a useful life of more than one year and a per-unit acquisition cost which equals or exceeds the lesser of the capitalization level established by the non-Federal entity for financial statement purposes or $5,000. Cause: Management inadvertently were recording these transactions that exceeded the threshold as expense. Effect: The interim financial statements prepared could not reflect clearly the results of operations and may affect financial reporting for external parties or management decisions. Recommendation: We strongly recommend management to analyze the acquisitions of equipment and the aggregate of leasehold improvements to comply with federal regulations and internal controls. On a monthly basis, management could review the data entry of these type of transactions in order to improve the accuracy of balances and proper recording of assets.