Finding Text
Criteria: 2 CFR section 200.303 states in part: “The non-Federal entity must establish and maintain effective internal control over Federal award that provides reasonable assurance that the non-Federal entity in managing the Federal awards 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).”
Condition: An effective internal control system was not in place to ensure compliance with requirements related to the grant agreement and the Cash Management compliance requirements.
Cause: Management is not utilizing the Head Start financial information from the general ledger and accounting software when preparing Head Start draws. Information used for the draws is compiled separately and no reconciliation between draws and the financial system occurs.
Effect: Expenditures charged to the Head Start programs could potentially not be included in the Head Start draws.
Recommendation: Each Head Start draw should be compiled and reconciled back to the financial statement and then reviewed by a secondary fiscal department employee.
Management’s Response: The Agency acknowledges this error and agrees with the recommendations. The Agency provides the additional context that it has been determined that where incorrect drawdowns were made - they were underdrawn, not overdrawn. No drawdowns were determined to include anything beyond known, justifiable, and allowable expenses. Previous T &TA support from the Office of Head Start and monitoring reviews from other fiscal agencies had not previously revealed this concern and recommendations were made to carry out drawdowns in this manner. The Finance department is actively working with the new recommendation from the auditors to use the accounting system (MIP) and to implement a new payroll and reconciliation procedure which will prevent future errors.