Finding 582605 (2021-005)

CLAYTON COUNTY COMMUNITY SERVICES AUTHORITY, INC. SCHEDULE OF FINDINGS AND QUESTIONED COSTS Federal Award Findings and Questioned Costs June 30, 2021 Comment # 2021-005 INTERNAL CONTROLS OVER DISBURSEMENTS OF FEDERAL FUNDS MUST BE IMPROVED HEAD START AND EARLY HEAD START PROGRAMS Federal Assistance Listing # 93.600 (Questioned Costs - Undetermined) Condition: In connection with audit of the Authority, we performed risk assessment of the Authority’s significant financial transactions, material account balances, and other significant risk areas and each applicable relevant assertion of each area, and we designed and perform substantive procedures and test of internal controls to determine what level of reliance that could be placed on the system of internal control of the Authority. Using auditor’s judgment, we selected various transactions for testings the system of internal control and the appropriateness and reasonableness of the expenditures. During our audit, we performed the following procedures: We selected twenty- five (25) transactions using auditor’s judgement with the following exceptions noted as respects to the Head Start and Early Head Start Programs: 1. There were fifteen (15) transactions with missing check request documents and\or purchase orders to support the disbursements. 2 Four (4) transactions with only one signature on the cancelled checks. 3. There were fourteen (14) transactions missing evidence of support as required by the procurement policies and procedures of the Authority. 4. There was one (1) transaction for the purchase of a truck that was not in agreement with bid documentation provided by the Authority. Further, we noted no specific authorization of such transaction in the notice of award for the purchase during the budget period of the acquisition. We selected fifteen (15) transactions using auditor’s judgement with the following exceptions noted as respect to the indirect cost pool: 1. There were fourteen (14) transactions with missing check request documents and\or purchase orders to support the disbursements. 2 Two (2) transactions with only one signature on the cancelled checks. 3. There were one (1) transactions missing evidence of support as required by the procurement policies and procedures of the Authority. The aforementioned exceptions were not resolved as of the date the audit report, September 8, 2023. Context: We selected 25 transactions haphazardly from the disbursement records of the Head Start and Early Head Start Programs. We selected 15 transactions haphazardly from the disbursement records of the indirect cost pool Criteria: Internal policy of the Authority, generally accepted accounting principles, Government Auditing Standards and the Uniform Guidance. The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of the Uniform Guidance (UG), 2 CFR §200.318 General procurement standards for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in 2 CFR §200.317 through 200.327. Effect: The transaction could result in cost not allowed under federal and state regulations and the provisions of the grant agreement. Cause: The failure of the Authority to follow its written procurement policies and procedures and to update the existing procedures to conform to federal and state laws. Management and the board of directors must have proper oversight and governance of the purchase and procurement procedures. Recommendation: We recommend that the board of directors and management immediately review all the transactions outlined in this finding and determine if the exceptions noted can be resolved and corrected. Further action should be taken to prevent, eliminate and properly remediate other exceptions similar in nature as those described in this finding. Policies and procedures should be reviewed and updated to conform to 2 CFR §200.318 General procurement standards. The Authority should add additional staff with the proper accounting skills, knowledge and experience with grant accounting. Views of Responsible Officials and Planned Corrective Actions: The management of Clayton County Community Services Authority, Inc. has reviewed the above referenced finding and takes exception to several of the items listed. For example, some of the transactions listed that were missing check requests (both Head Start/Early Head Start and Indirect Cost Pool) were for monthly expenditures like utility bills, insurance, rent and other contractual obligations. Management has not in the past issued a check request each month for these transactions as they are part of the ongoing operation of the programs listed. Transactions listed with only one signature occurred as an oversight as the banking authority only requires one signature while our policy may indicate two signatures. Management feels the purchase of the truck was procured in agreement with approvals from the funding agency and board as required. Proper documentation was provided and is currently available for further review. Management continues to follow the proper guidelines regarding procurement and purchases related to the policies and procedures of the agency as well as micro purchase guidelines set forth by the Federal awarding agency. The Board of Directors also approved a revision to the policies and procedures requiring two “live” signatures on all checks issued by the agency. There is also an ongoing review of the current policies and procedures and recommendations for changes and updates are forthcoming. Management reserves the right for further review of these findings with the audit firm for additional documentation and resolution.