Finding 371100 (2023-001)

Material Weakness Repeat Finding

Requirement

L

Questioned Costs

-

Year

2023

Accepted

2024-02-28

Audit: 292742

Organization: Umatilla Morrow Head Start, Inc. (OR)

Auditor: Wipfli LLP

AI Summary

Core Issue: Umatilla-Morrow Head Start, Inc. has not reconciled all account balances, leading to a material weakness in internal controls over financial reporting.
Impacted Requirements: Federal Regulation 2 CFR 200.302(4) mandates effective control and accountability for all funds and assets.
Recommended Follow-Up: Monthly reconciliations should be conducted, with timely adjustments made, and management should enhance oversight and closing procedures in the business office.

Finding Text

2023-001: Reconciliations and Material Adjustments Questioned Costs: None How the questioned costs were computed: N/A Grant Funding Source Grant Period Head Start U.S. Department of Health 06/01/2022 - 05/31/2023 10CH010945-04 and Human Services Early Head Start U.S. Department of Health 07/01/2022 - 06/30/2023 Child Care Partnerships and Human Services 10HP000422-03 COVID-19 Head Start U.S. Department of Health 04/01/2021 - 03/31/2024 10HE000845-01 and Human Services COVID-19 Early Head U.S. Department of Health 07/01/2021 - 06/30/2022 Start Child Care and Human Services Partnerships 10HP000422-02-C3 Condition: At the time of audit fieldwork, Umatilla-Morrow Head Start, Inc. had not reconciled all account balances. As a result, Wipfli, LLP proposed and management posted adjusting journal entries to contributions receivable, grants receivable, refundable advance, property and equipment, grant revenue, and in-kind. During our tests of controls over bank reconciliations we also noted one individual is responsible for preparing the bank reconciliation, this individual also has the ability to post journal entries and there is no review of the completed bank reconciliation. As Umatilla-Morrow Head Start, Inc.’s internal controls did not discover these adjustments prior to our audit and as there is a lack of segregation of duties within the bank reconciliation process, a material weakness exists in Umatilla-Morrow Head Start, Inc.’s internal controls over financial reporting. Criteria: Federal Regulation 2 CFR 200.302(4) requires that an organization have…Effective control over, and accountability for, all funds, property, and other assets. Cause: During the audit year, Umatilla-Morrow Head Start, Inc. experienced turnover in its business office which contributed to the lack of timely reconciliations, review of reconciliations performed, and subsequent adjustments to account balances. Effect: As a result of the lack of segregation of duties surrounding bank reconciliations and not reconciling all account balances resulting in subsequent adjustments to accounts, a material weakness exists in internal controls over financial reporting. Recommendation: Accounts should be reconciled monthly with the adjustments posted timely so that management is relying on accurate financial information to make decisions. We recommend management and those charged with governance evaluate the operation of the business office and implement adequate and timely closing procedures to ensure that financial statement amounts are being reconciled, reviewed, and adjusted in a timely manner. View of Responsible Officials: Management agrees with the assessment and subsequent to year end, steps were taken to correct the matter.

Corrective Action Plan

Reconciliations and Material Adjustments Corrective Action Plan Umatilla Morrow Head Start, Inc. (UMHS, Inc.) partnered with an independent accounting firm to streamline processes and develop templates for year-end closure. The agency used this opportunity to increase knowledge and understanding of needs associated with this task. As the fiscal department moves forward, systems and tools have been implemented to ensure timely closing and accurate tracking of this process. UMHS will continue to utilize the checklists put in place last fiscal year to guide month-end processes and reconciliations. Fiscal Management will review, monthly, the completion of said duties and will address any issues with staff immediately. Ongoing training will be done to ensure all fiscal staff members understand their role and duties within the agency. Bank reconciliations will continue to be completed monthly. The Executive Director, Director of Finance, Treasurer of the Board of Directors, or Other Designee will review the information and approval will be documented. UMHS will focus on segregation of duties within the fiscal department and ensure proper documentation is maintained. Person(s) Responsible: Executive Director, Director of Finance, Treasurer of the Board of Directors, or Other Designee Timing for Implementation: Immediately and Ongoing Reconciliations and Material Adjustments Corrective Action Plan Umatilla Morrow Head Start, Inc. (UMHS, Inc.) partnered with an independent accounting firm to streamline processes and develop templates for year-end closure. The agency used this opportunity to increase knowledge and understanding of needs associated with this task. As the fiscal department moves forward, systems and tools have been implemented to ensure timely closing and accurate tracking of this process. UMHS will continue to utilize the checklists put in place last fiscal year to guide month-end processes and reconciliations. Fiscal Management will review, monthly, the completion of said duties and will address any issues with staff immediately. Ongoing training will be done to ensure all fiscal staff members understand their role and duties within the agency. Bank reconciliations will continue to be completed monthly. The Executive Director, Director of Finance, Treasurer of the Board of Directors, or Other Designee will review the information and approval will be documented. UMHS will focus on segregation of duties within the fiscal department and ensure proper documentation is maintained. Person(s) Responsible: Executive Director, Director of Finance, Treasurer of the Board of Directors, or Other Designee Timing for Implementation: Immediately and Ongoing Reconciliations and Material Adjustments Corrective Action Plan Umatilla Morrow Head Start, Inc. (UMHS, Inc.) partnered with an independent accounting firm to streamline processes and develop templates for year-end closure. The agency used this opportunity to increase knowledge and understanding of needs associated with this task. As the fiscal department moves forward, systems and tools have been implemented to ensure timely closing and accurate tracking of this process. UMHS will continue to utilize the checklists put in place last fiscal year to guide month-end processes and reconciliations. Fiscal Management will review, monthly, the completion of said duties and will address any issues with staff immediately. Ongoing training will be done to ensure all fiscal staff members understand their role and duties within the agency. Bank reconciliations will continue to be completed monthly. The Executive Director, Director of Finance, Treasurer of the Board of Directors, or Other Designee will review the information and approval will be documented. UMHS will focus on segregation of duties within the fiscal department and ensure proper documentation is maintained. Person(s) Responsible: Executive Director, Director of Finance, Treasurer of the Board of Directors, or Other Designee Timing for Implementation: Immediately and Ongoing

Programs in Audit

ALN	Program Name	Expenditures
10.557	Special Supplemental Nutrition Program for Women, Infants, and Children	$571,357
93.596	Child Care Mandatory and Matching Funds of the Child Care and Development Fund	$435,736
93.600	Head Start	$432,625
93.870	Maternal, Infant and Early Childhood Home Visiting Grant	$254,648
10.558	Child and Adult Care Food Program	$214,662
93.575	Child Care and Development Block Grant	$9,795
93.489	Child Care Disaster Relief (a)	$9,547
93.778	Medical Assistance Program	$4,258

Finding 371100 (2023-001)

AI Summary

Finding Text

Corrective Action Plan

Categories

Other Findings in this Audit

Programs in Audit