Finding Text
Finding #2023-002 – Material Weakness and Material Noncompliance. Applicable federal program: U. S. Department of Health and Human Services, Passed through the Texas Workforce Commission, Child Care and Development Block Grant, Child Care Business Training, Assistance Listing #: 93.575, Contract Number: 2920CCQ002, Contract Year: 12/01/19 – 06/30/24. Criteria: Allowable costs – Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, §200.406 requires that allowable costs should be net of all applicable credits, including adjustments of overpayments and erroneous charges. To the extent that any credits accruing to or received by the non-Federal entity relate to allowable costs, they must be credited to the Federal award either as a cost reduction or cash refund, as appropriate. Condition and context: Five vendor invoices totaling $137,893 representing professional services provided in 2022 were disputed by CFC due to lack of performance on the part of the vendor. These invoices were billed to Texas Workforce Commission (TWC) in 2022 under the Child Care Business Training contract, but had not yet been paid to the vendor by CFC. The invoices were subsequently credited by the vendor, but not credited back to TWC by CFC, resulting in an amount owed to TWC by CFC of $137,893 at December 31, 2023. Cause: The finding occurred as a result of an error made in reversing unpaid invoices from the accounting records without crediting the TWC contract for the amounts reversed. Effect: Amounts reimbursed by TWC to CFC under the Child Care Business Training contract are overstated by $137,893. Questioned costs: $137,893. Recommendation: CFC should implement policies and procedures to ensure that any applicable credits be credited to the Federal award either as a cost reduction or cash refund, as appropriate. Views of responsible officials and planned corrective actions: Management agrees with the finding. See Corrective Action Plan.