Finding Text
2024-002 (2023-001) – Equipment and Real Property Management – Material Weakness in Internal
Controls over Compliance (Repeat Finding)
Federal Program Information:
Funding Agency: U. S. Department of Health and Human Services
Title: Head Start
CFDA Number: 93.600
Federal Award Identification number: 06CH012005
Pass Through Entity: N/A
Award Year: 2024 & 2023
Condition: The Organization did not conduct a physical inventory in current year or prior year and, in
additional, requested reimbursement from the Department of Health and Human services for repair
costs for which insurance proceeds were received.
Criteria: Per Title 2 US Code of Federal Regulations Part 200.303a, non-federal entities must establish
and maintain effective internal control over the Federal award that provides reasonable assurance
that the non-Federal entity is managing the Federal award 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).
Per 2 CFR 200.313(d)(2), a physical inventory of program property must be taken and the results
reconciled with the property records at least once every 2 years.
2 CFR 200.406 requires that any recoveries on losses, such as insurance proceeds, be credited to the
Federal award as a cost reduction or a cash refund.
Questioned costs: $16,033
Effect: The Organization could dispose of, lose, or encumber federally funded equipment without
following Federal guidelines.
Cause: The Organization does not have policies and procedures to ensure that a physical inventory of
equipment is performed at a minimum frequency of every two years. Additionally, the Entity filed a
claim for damages to asset(s) purchased with Federal funds and did not offset the insurance proceeds
against the repair costs charged to the Federal program, resulting in reimbursement of unallowable
costs.