Finding 394021 (2021-004)

Material Weakness

Requirement

Questioned Costs

Year

2021

Accepted

2024-04-22

Audit: 304152

Organization: Abilities Network, Inc. (MD)

Auditor: Cliftonlarsonallen LLP

AI Summary

Core Issue: There is a significant weakness in internal controls over compliance, leading to unsupported allocations of federal funds.
Impacted Requirements: Costs must be documented and allocated according to established methodologies, as per federal regulations (2 CFR sections 200.303 and 200.407).
Recommended Follow-Up: Implement and monitor effective internal controls for allocations and ensure proper documentation is maintained to support all charges to the grant.

Finding Text

Federal Agency: U.S. Department of Health and Human Services Federal Program Title: Child Care and Development Block Grant Assistance Listing Number: 93.575 Award Period: July 1, 2020 to June 30, 2021 Type of Finding: Material Weakness in Internal Control over Compliance and Material Non-Compliance Criteria: Recipients of federal funds are required to establish and maintain effective internal controls over federal funds received, per 2 CFR section 200.303. Allowable costs must be approved by the awarding agency (2 CFR section 200.407) and necessary and reasonable for the performance of the federal award and allocable under the principles of 2 CFR, Subpart E. Additionally, costs must be adequately documented. Condition: Direct costs incurred were allocated through journal entries to the grant without support of an allocation methodology. Management was unable to provide an understanding of how to trace the allocated amounts to a consistent methodology or to original source documentation. Additionally, time and effort documentation for actual time incurred should be maintained for payroll charges to the grant. Context: Of the general disbursement population, $67,985 of general disbursements were booked via unsupported journal entry (allocated). Of the payroll and fringe benefit disbursement population, $87,777 were booked via unsupported journal entry (allocated). Questioned Costs: $155,762 Cause: Internal controls surrounding allocations were not properly designed and implemented and an audit trail for allocation journal entries/source documentation was not maintained. Effect: The lack of evidence for audit trail and lack of effective internal controls over allocations provides an opportunity for noncompliance and errors. Repeat Finding: N/A Recommendation: We recommend that the Organization design, implement and monitor internal controls over allocations as well as maintain source documentation to support amounts charged to the grant. Views of Responsible Officials of the Auditee: There is no disagreement with the audit finding.

Corrective Action Plan

Recommendation: The auditors recommend the Organization design, implement, and monitor internal controls over allocations as well as maintain source documentation to support amounts charged to the grant. Explanation of disagreement with audit finding: There is no disagreement with the audit finding. Action taken in response to finding: Management will review the current internal controls over allocations and source documentation to identify any gaps or weaknesses and develop a plan to address any identified gaps or weaknesses, including updating policies and procedures as necessary. Management will also communicate the updated policies and procedures to all relevant employees and provide training as needed. Monitoring and testing procedures will be implemented to ensure that the updated policies and procedures are being followed. There will also be regular reviews and updates to the policies and procedures as needed to ensure ongoing effectiveness. Management will assign responsibility for maintaining source documentation to a specific individual or team and develop a system for organizing and storing source documentation, such as a centralized electronic database. Monitoring and testing procedures will be implemented to ensure that source documentation is being maintained and is readily accessible. Lastly, there will be regular reviews and updates to the system for organizing and storing source documentation as needed to ensure ongoing effectiveness. Name of the contact person responsible for corrective action: Lyn Elliot, CEO Planned completion date for corrective action plan: 4/1/2024

Other Findings in this Audit

394020 2021-003

Significant Deficiency
394022 2021-003

Significant Deficiency
394023 2021-004

Material Weakness
394024 2021-003

Significant Deficiency
394025 2021-004

Material Weakness
394026 2021-003

Significant Deficiency
394027 2021-004

Material Weakness
394028 2021-003

Significant Deficiency
394029 2021-004

Material Weakness
970462 2021-003

Significant Deficiency
970463 2021-004

Material Weakness
970464 2021-003

Significant Deficiency
970465 2021-004

Material Weakness
970466 2021-003

Significant Deficiency
970467 2021-004

Material Weakness
970468 2021-003

Significant Deficiency
970469 2021-004

Material Weakness
970470 2021-003

Significant Deficiency
970471 2021-004

Material Weakness

Programs in Audit

ALN	Program Name	Expenditures
93.870	Maternal, Infant and Early Childhood Home Visiting Grant	$317,516
93.575	Child Care and Development Block Grant	$90,599
14.218	Community Development Block Grants/entitlement Grants	$23,000
93.434	Every Student Succeeds Act/preschool Development Grants	$6,384