Finding Text
FINDING 2022-008
FEDERAL PROGRAM HEAD START (ASSISTANCE LISTING NO. 93.600) DEPARTMENT OF HEALTH AND HUMAN SERVICES
CATEGORY INTERNAL CONTROL-MATERIAL WEAKNESS
NONCOMPLIANCE CASH MANAGEMENT-BANK OVERDRAFT
CONDITIONS The Head Start Program has a negative book balance of $46,490 as of June 30, 2022.
CRITERIA The 45 CFR, Subpart C, §92.20 states that the grantees and subgrantees must maintain effective controls and accountability for all grant and subgrant cash, real and personal property, and other assets, sufficient to permit the tracing of funds to a level of expenditures adequate to establish that such funds have not been used in violation of the restriction and prohibitions of applicable statutes and that the financial reporting must be accurate, current, and complete disclosure of the financial results in accordance with the financial reporting requirements of the grant or subgrant.
CAUSE The Program did not have sufficient cash balances to cover all the checks written and released before June 30, 2022. The Administration of the program told us that on June 27, 2022, they requested through the PMS system the disbursement of the corresponding funds, but that as of June 30, 2022, the PMS system indicated that there is a hold in the account awaiting approval.
EFFECT This caused the financial statement of the Head Start program to show a bank overdraft and ran the risk of issuing checks that would not be honored by its bank. Additional bank charges may also be imposed on the program with each overdraft.
RECOMMENDATION The Program and the Finance department should implement adequate internal control procedures to ensure that there are sufficient funds in the bank account before releasing the checks.
QUESTIONED COSTS None
PRIOR YEAR Not Applicable
VIEWS OF RESPONSIBLE
OFFICIALS AND PLANNED
CORRECTIVE ACTION The finding was corrected. The payer of the Concessionaire, which has access to the system, was appointed. According to internal procedure, she does not issue payments until she is sure that the account has a budget.
RESPONSIBLE PERSON Mr. Angel Vélez-Program Director
787-894-9191