Finding Text
FINDING 2023-003
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
Federal Award Numbers and Years (or Other Identifying Numbers): 05CH011249, 05HP000285, 05HE000044
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.
Section III – Federal Award Findings and Questioned Costs (Continued)
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 the three federal financial reports in a sample of three 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: This is a repeat finding from the immediately prior audit. The prior audit finding number was 2022-004.
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.