Community Action of Southern Indiana, Inc.Non-Profit

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.

Criteria: All Head Start recipients are required to submit financial reports that track the status of real property acquired or improved with federal funding. Additionally, any real property acquired or improved with federal funding must record a Notice of Federal Interest. Condition: In 2020, the previous administration appeared to use Head Start and other federal funds toward the purchase of a building without prior approval from Head Start and without recording a Notice of Federal Interest. This issue was voluntarily self-disclosed by the current administration. Cause: The previous administration disregarded compliance requirements of Head Start regarding purchasing real property Effect: The annual SF-429 filed was inaccurate and no Notice of Federal Interest was recorded. While the process has been hampered with the restructuring of the Head Start regional offices, current management is attempting to rectify with Head Start. Recommendation: It is recognized that this occurred under prior administration. There have been significant changes in staff and Board leadership as well as financial controls. Current management has should continue their pursuit to rectify this issue with Head Start. Management’s Response: The Agency acknowledges this error and agrees with the recommendations. The Agency provides the additional context that the referenced actions took place in 2020, more than four years before the current audit period. This issue is not reflective of CASI's current internal control environment and does not represent an active or ongoing failure. This was an isolated instance resulting from the actions of a previous administration, whose financial and compliance oversight practices have since been fully overhauled. Since then, CASI has undergone significant changes in staff and Board leadership, financial controls, and Head Start compliance procedures, which directly mitigate any recurrence of this issue. The current leadership has self-disclosed the issue and is actively working to resolve it. This matter was voluntarily identified and disclosed by current leadership to both the auditors and the Head Start Regional Office. Efforts are ongoing to correct the SF-429 and properly record a Notice of Federal Interest in collaboration with OHS, despite delays resulting from the broader federal restructuring of the Head Start regional offices.

Criteria: All Head Start recipients are required to submit financial reports detailing the expenditures incurred for their awards. The federal expenditures reported should be reported based on the basis of accounting selected. Condition: On the semi-annual SF-425 filing as of March 31, 2025, management denoted the basis of accounting as accrual. The Federal share of expenditures reported did not include all applicable accruals and did not reconcile to the general ledger. Cause: A combination of material adjustments (2025-001) and inadequate reconciliation of Head Start draws (2025-003). Effect: The semi-annual SF-425 filed was inaccurate. Recommendation: The Organization should amend its SF-425 filings to correctly report financial information. Management’s Response: The Agency acknowledges this error and agrees with the recommendations. It is the Agency's opinion that this finding is a direct outcome of the reconciliation issues outlined in Findings 2025-003. As those deficiencies are addressed systemically, the accuracy of SF-425 reports will be restored and maintained.

Criteria: The audit must be completed and the data collection form and reporting package must be submitted within the earlier of 30 calendar days after receipt of the auditor’s report(s), or nine months after the end of the audit period. Condition: The audit for the year ended March 31, 2024 was completed January 22, 2025 and the data collection form and reporting package was submitted later than nine months after the end of the audit period, December 31, 2024. Cause: Due to turnover in upper management, the prior audit for the year ended March 31, 2023 was not completed until September 17, 2024, thus delaying the start of the audit for the year ended March 31, 2024. See Summary Schedule of Prior Audit Findings for issues encountered that resulted in additional time needed to complete the audit for the year ended March 31, 2024. Effect: The data collection form and reporting package was submitted later than nine months after the end of the audit period. Recommendation: It is anticipated that the audit for March 31, 2025 will be completed and the data collection form and reporting package will be submitted within the earlier of 30 calendar days after receipt of the auditor’s report(s), or December 31, 2025. Management should implement recommendations relating to finding 2025-001 and 20252-002 to ensure accuracy of financial statements that will directly impact timely completion of future audits. Management’s Response: The Agency acknowledges this error and agrees with the recommendations. With the completion of this audit, the Agency will be caught up after completing four audits in an 18-month time period. This current audit will be submitted by the required deadline and the next regular audit is scheduled to begin shortly after the close of FY 25-26.

Criteria: As a condition of admission or continued occupancy, the Organization requires the tenant and other family members to provide necessary information, documentation, and releases for the Organization to verify income eligibility. Condition: Of a sample of 25 participants, 24 out of the 25 files were missing one or more various required documentation. The missing documentation included application, government photo identification, social security cards, birth certificates, declaration of citizenship, criminal history certification, verification of income, assets, expenses and allowances, and/or landlord documents for the period examined. Cause: The Organization periodically purges documentation. Effect: The Organization had inadequate documentation for participant eligibility for the period examined. Documentation from subsequent recertifications was used to conclude that the HAP vouchers paid for the period examined were reasonable. Recommendation: The Organization needs to maintain all required documentation to support the participants’ eligibility and calculation of the HAP voucher during the participants tenancy and up to three years from termination of assistance. Management’s Response: The Agency acknowledges this error and agrees with the recommendations. The Agency provides the additional context that the purge of records was carried out by a previous program staff member who was terminated from the Agency. The Agency has adopted a new Document Retention and Destruction Policy, and all program and administrative staff leadership has received training on the new policy.

Criteria: All Head Start recipients are required to submit financial reports detailing the expenditures incurred for their awards. The federal expenditures reported should be reported based on the basis of accounting selected. Condition: On the semi-annual SF-425 filing as of March 31, 2024, management denoted the basis of accounting as accrual. The Federal share of expenditures reported did not include all applicable accruals and did not reconcile to the general ledger. Cause: Due to the turnover in the CFO position, the SF-425 was not completed accurately and was not reviewed. Effect: The semi-annual SF-425 filed was inaccurate. Recommendation: The Organization should amend its SF-425 filings to correctly report financial information. Management’s Response: The Agency acknowledges this error and agrees with the recommendations. The Agency provides the additional context that this issue was related to a vacancy in the CFO’s position in early 2023. In response to this finding, the Agency will communicate with the Office of Head Start to determine if a revised report should be submitted.

Criteria: Funding from the U.S. Department of Health and Human Services (HHS) for CASI?s Head Start programs require certain reporting of expenditures incurred in order to substantiate the funding it receives. These federal financial reports (FFRs) include quarterly and semi-annual reports that are due 30 days from the end of each quarter, and an annual report due 90 days from the end of the grant year. Statement of Condition: It was noted that certain of these reports were filed past the required due dates. Cause of Condition: The inability of CASI to process and post accounting transactions and prepare timely and accurate financial reports, including the FFRs, was a result of the loss and changes in accounting staff as discussed in Finding No. 2020-001. Effect of Condition: Certain reports were not completed and filed in accordance with the terms of the grant agreement. Such non-compliance of required quarterly, semi-annual, and annual reports may result in delays and/or reductions in funding. Recommendation: Management should review it procedures over the accurate and timely completion and submission of its required quarterly, semi-annual, and annual reports under the HHS Head Start grant agreement. We noted that CASI has hired a new CFO and additional staffing to better insure compliance in the future. Views of Responsible Officials: Management agrees with the finding and has hired a new CFO and accounting staff to insure future compliance with required grant reporting requirements.

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