FAC Explorer

Finding 45031 (2022-001)

Significant Deficiency
Requirement
B
Questioned Costs
-
Year
2022
Accepted
2022-12-23
Audit: 40407
Organization: Paladin, Inc. (IN)
Auditor: Applegate & Company CPAS

AI Summary

  • Core Issue: Paladin, Inc. lacks an effective internal control system for compliance with cost principles, specifically regarding mileage reimbursement rates.
  • Impacted Requirements: This finding relates to 2 CFR 200.475(a), which outlines allowable travel costs and the need for consistent reimbursement policies.
  • Recommended Follow-Up: Management should implement a robust internal control system to ensure compliance with cost principles and prevent mismanagement of federal funds.

Finding Text

FINDING 2022-001 Subject: Headstart Cluster ? Allowable Costs/Cost Principles Federal Agency: Department of Health and Human Services Federal Program: Headstart CFDA Number: 93.600 Compliance Requirement: Allowable Costs/Cost Principles Audit Findings: Significant Deficiency Condition: An effective internal control system was not in place at Paladin, Inc. in order to ensure compliance with requirements related to theCost Principles/compliance requirements. Paladin, Inc. had not designed an adequate policy or procedure to ensure that the mileage rate used for reimbursement matched Paladin?s rate. Context: The lack of sufficient internal controls was an isolated issue involving two employees sporadically during the audit period Criteria: 2 CFR 200.475(a) states in part: ?Travel costs are the expenses for transportation, lodging, subsistence, and related items incurred by employees who are in travel status on official business of the non-Federal entity. Such costs may be charged on an actual cost basis, on a per diem or mileage basis? provided the method used results in charges consistent with those normally allowed in like circumstances in the non-Federal entity?s non-federally-funded activities and in accordance with non-Federal entity?s written travel reimbursement policies?? Cause: Management of Paladin, Inc. had not developed or implemented 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 Paladin, Inc. at risk of noncompliance with the compliance requirements listed above. A lack of consistent oversight within an internal control system could have also allowed noncompliance with the compliance requirements and could have allowed the mismanagement of Federal funds and assets by lacking proper oversight, reviews, and approvals over the activities of the programs. Questioned Costs: There were no questioned costs identified. Recommendation: We recommend Paladin Inc.?s management establish a system of internal controls to ensure compliance with thecost Principles compliance requirements. Views of Responsible Officials: For the views of responsible officials, refer to the Corrective Action Plan that is part of this report

Corrective Action Plan

Audit Finding Number: 2022-01 Finding Details: An effective internal control system was not in place to ensure compliance with the requirements related to the Cost Principles/compliance requirements. Recommendation: We recommend that Paladin Inc.?s management revise a system of internal controls to ensure compliance with the grant agreement and the Special Tests and Provisions Principles compliance requirements. Taken or to be Taken: Revision of the Paladin Travel Reimbursement procedure was made to the procedure already in place. If already taken, date of completion: Paladin has revised detailed procedures for processes involved with the Head Start grant. Staffing processes have been modified to accommodate the additional review of travel reimbursement prior to draws from the grant. If to be taken, estimated date of completion: Revised procedure completed 11-1-2022. Accounting staff completed a review of Head Start draws for travel reimbursement back to 7/1/22 (FY23) to be sure that draws from the grant were correct. Additional Comments: Paladin CFO stated that Paladin did have a procedure in place for processing travel reimbursements; however, it did not have a secondary procedure review in place prior to draws from the federal grant. Paladin contact person(s) responsible for findings. Name and title: Evelyn Marvel, Financial Officer

Categories

Allowable Costs / Cost Principles Internal Control / Segregation of Duties

Other Findings in this Audit

  • 621473 2022-001
    Significant Deficiency

Programs in Audit

ALN Program Name Expenditures
93.600 Head Start $249,243
93.575 Child Care and Development Block Grant $99,459
20.513 Enhanced Mobility of Seniors and Individuals with Disabilities $36,418
10.558 Child and Adult Care Food Program $21,522