Finding 43170 (2022-002)

Material Weakness
Requirement
B
Questioned Costs
$1
Year
2022
Accepted
2022-11-27
Audit: 44468
Organization: Youth & Family Services, Inc. (SD)

AI Summary

  • Core Issue: Audit adjustments revealed $55,615 in questioned costs due to improper recording of Head Start expenditures, risking financial misstatements.
  • Impacted Requirements: Compliance with allowable costs for federal programs, specifically regarding the treatment of prepaid expenses and grant periods.
  • Recommended Follow-Up: Adjust investments to actual, record prepaid contracts as assets, manage deferred revenue, and coordinate with Head Start to address the prepaid costs.

Finding Text

#2022-002 FINDING: Audit and SEFA Adjustments Federal Programs Affected: Head Start/ALN #93.600; Child and Adult Care Food Program (CACFP)/ALN #10.558 Compliance Requirement: Allowable Costs Questioned Costs: $55,615 known questioned costs. Condition and Cause: During the course of our engagement, we proposed material audit and SEFA adjustments. Criteria and Effect: These adjustments were not identified as a result of the Organization?s existing internal controls, and therefore, could have resulted in a material misstatement of the Organization?s consolidated financial statements or noncompliance with federal programs. One adjustment related to a Head Start expenditure for a cloud-based teaching curriculum subscription covering a 5-year period. Curriculum expenditures are allowable costs for Head Start, but Head Start agencies cannot charge 5 years of cost to one grant period. An audit adjustment was made to properly record the expenditure as a prepaid expense, and Head Start expenditures reported in the SEFA were also reduced by the $55,615 of prepaid costs. Repeat Finding from Prior Year: Yes, revision of prior year finding #2021-002. Recommendation: We recommend the following: ? Investments be adjusted to actual. ? Prepaid contracts be recorded as an asset upon payment and expensed over the life of the service contract. ? Record deferred revenue for unspent conditional funding ? The Organization work with Head Start representatives to return the funds drawn down for the prepaid costs or reduce future draw requests. Views of Responsible Officials: See Organization?s Corrective Action Plan

Categories

Questioned Costs Allowable Costs / Cost Principles Reporting Internal Control / Segregation of Duties

Other Findings in this Audit

  • 43163 2022-002
    Material Weakness
  • 43164 2022-003
    Significant Deficiency
  • 43165 2022-002
    Material Weakness
  • 43166 2022-003
    Significant Deficiency
  • 43167 2022-002
    Material Weakness
  • 43168 2022-002
    Material Weakness
  • 43169 2022-002
    Material Weakness
  • 619605 2022-002
    Material Weakness
  • 619606 2022-003
    Significant Deficiency
  • 619607 2022-002
    Material Weakness
  • 619608 2022-003
    Significant Deficiency
  • 619609 2022-002
    Material Weakness
  • 619610 2022-002
    Material Weakness
  • 619611 2022-002
    Material Weakness
  • 619612 2022-002
    Material Weakness

Programs in Audit

ALN Program Name Expenditures
93.600 Head Start $1.08M
93.086 Healthy Marriage Promotion and Responsible Fatherhood Grants $1.03M
84.287 Twenty-First Century Community Learning Centers $257,332
10.559 Summer Food Service Program for Children $176,562
93.575 Child Care and Development Block Grant $166,393
16.888 Consolidated and Technical Assistance Grant Program to Address Children and Youth Experiencing Domestic and Sexual Violence and Engage Men and Boys As Allies $147,283
93.276 Drug-Free Communities Support Program Grants $143,008
93.243 Substance Abuse and Mental Health Services_projects of Regional and National Significance $127,861
16.575 Crime Victim Assistance $92,309
10.575 Farm to School Grant Program $50,000
10.558 Child and Adult Care Food Program $44,389
93.110 Maternal and Child Health Federal Consolidated Programs $43,057
14.218 Community Development Block Grants/entitlement Grants $6,961