Finding 386435 (2022-002)

Material Weakness Repeat Finding
Requirement
AB
Questioned Costs
$1
Year
2022
Accepted
2024-03-27

AI Summary

  • Core Issue: The Unit lacks an effective internal control system, leading to noncompliance with federal grant requirements and inadequate documentation for expenditures.
  • Impacted Requirements: Compliance with 2 CFR section 200.303 regarding internal controls and allowable costs, including proper approval and documentation of expenditures.
  • Recommended Follow-Up: Implement a primary review process for all account payable claims and ensure all supporting documentation is maintained for expenditures, particularly for gift cards.

Finding Text

FINDING 2022-002 Information on the federal program: Subject: Head Start Cluster - Activities Allowed or Unallowed, Allowable Costs/Cost Principles 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 Compliance Requirement: Activities Allowed or Unallowed, Allowable Costs/Cost Principles Audit Finding: Material Weakness, Noncompliance, Other Matters 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 to ensure compliance with requirements related to the grant agreement and the activities allowed or unallowed and allowable costs/cost principle compliance requirements. The Unit did not have adequate documentation to support expenditures. Cause: The Unit's management had not developed a system of internal controls to ensure compliance with the compliance requirements listed above. 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: $35,110. Section III – Federal Award Findings and Questioned Costs (Continued) Context: During testing, we noted the following issues in a sample of sixty head start cluster account payable and payroll claims: • Two sample selections were not approved by a secondary individual. • One sample selection was not supported by appropriate documentation. The selection was for the purchase of gift cards for teachers to buy books for professional development and supplies for the classroom. However, there was no backup or support showing what the gift cards were used to purchase. The total of this purchase was $35,000. • The amount paid to one employee did not agree to the employee’s approved contract. The amount charged to the grant as $110 more than what the employee’s approved personnel file stated. Identification as a repeat finding, if applicable: This is a repeat finding from the immediately prior audit. The prior audit finding number was 2021-002. Recommendation: We recommend that the Unit establish a documented, primary review of all head start cluster account payable claims before they are paid. Additionally, we recommend the Unit maintain all supporting documentation to show what the gift cards were used to purchase to ensure they are used for allowable purposes. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.

Categories

Questioned Costs Internal Control / Segregation of Duties Allowable Costs / Cost Principles Material Weakness Procurement, Suspension & Debarment Matching / Level of Effort / Earmarking

Other Findings in this Audit

  • 386434 2022-002
    Material Weakness Repeat
  • 386436 2022-003
    Significant Deficiency Repeat
  • 386437 2022-003
    Significant Deficiency Repeat
  • 386438 2022-004
    Significant Deficiency Repeat
  • 386439 2022-004
    Significant Deficiency Repeat
  • 962876 2022-002
    Material Weakness Repeat
  • 962877 2022-002
    Material Weakness Repeat
  • 962878 2022-003
    Significant Deficiency Repeat
  • 962879 2022-003
    Significant Deficiency Repeat
  • 962880 2022-004
    Significant Deficiency Repeat
  • 962881 2022-004
    Significant Deficiency Repeat

Programs in Audit

ALN Program Name Expenditures
93.600 Head Start $9.45M
10.558 Child and Adult Care Food Program $732,789