Finding Text
Finding No. 2022-006
Federal Agency: U.S. Department of Health and Human Services
Assistance Listing No. and Title: 93.356/93.600 Head Start Cluster
Area: Allowable Costs/Cost Principles
Questioned Costs: $132,591
Criteria:
2 CFR 200.403 (g) provides that costs must be adequately documented.
42 U.S. Code (USC) § 9839 (g) and (h) provide that with prior written approval from the Administration for Children and Families (ACF), Head Start Agencies (HSAs) may use funds for capital expenditures (including paying the cost of amortizing the principal, and paying interest on, loans), such as construction of new facilities, purchase of new or existing facilities, major renovations of existing facilities, and purchase of vehicles used for programs conducted at the Head Start facilities.
42 USC 9839 (c) provides that shared and indirect costs attributable to common or joint use of personnel, facilities, or services by Head Start programs and other programs must be fairly allocated among the various programs that utilize such services.
2 CFR 200.439(b) provides that capital expenditures for general purpose equipment, buildings, and land; special purpose equipment with a unit cost of $5,000 or more; and, improvements to land, buildings, or equipment which materially increase their value or useful life, are unallowable as direct charges, except with the prior written approval of the Federal awarding agency or pass-through entity.
Condition:
1. For 1 (or 2%) out of 40 payroll transactions tested totaling $45,917 out of $3,036,667 in total Program payroll costs, gross wages of $1,101 were incurred by the program under FAIN 09CH01116703 for Employee No. 21199 during the pay period ended 06/18/2022. No evidence of fair allocation of the employee’s payroll cost was provided.
2. For 2 (or 40%) out of 5 samples totaling $131,490 out of $165,367 of equipment tested, no evidence of prior approval from the federal agency was provided for equipment acquisitions PS-067026-US and PS-078607-US, which were acquired within fiscal year 2022 under FAIN COVID-19 09HE0009410C6.
Cause:
PSS failed to ensure that costs charged to the grant are adequately supported.
Effect:
PSS is in noncompliance with applicable allowable costs/cost principles requirements. The reportable questioned cost is $132,591.
Recommendation:
PSS should strengthen recordkeeping procedures so that documents are readily available to substantiate costs charged to the grant.
Views of responsible officials:
The PSS Corrective Action Plan provides a detailed rationale for disagreement with the findings.
Auditor response:
Condition 1 – The evidence of fair allocation was not provided. The condition remains.
Condition 2 – The evidence of prior approval was not received. The condition remains.