COMMUNITY ACTION ORGANIZATION OF WESTERN NEW YORK, INC. AND SUBSIDIARIES

Inaccurate and Late Reporting Material Weakness U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES ALN #: 93.600 Head Start Cluster Federal Award Identification #: 02HP000535, 02CH012111, 02CH012104 Condition: During the audit of the Head Start Cluster major program, we tested CAO’s federal financial reporting (SF-425). During this testing and our testing of internal control over compliance for allowable activities, we had determined CAO had drawn funds in excess of expenditures by a material amount. This resulted in the SF-425 reports having material differences to the underlying support for cash receipts and disbursements and other differences including the recipient share of expenditures. Additionally, the SF-425 reports were submitted late. Criteria: 45 CFR Part 75.302(b) Questioned Costs: $0 Context: During the audit, the SF-425 reporting was tested for three grant agreements. For the agreements, we noted that the reported amount for cash disbursements was incorrect based on the support provided for the expenditures. These incorrect disbursements were due to CAO drawing funds that were listed as available to draw without corresponding expenses having been incurred, and because the funds were drawn CAO had reported them as disbursements. The three SF-425 reports were also submitted untimely, between 31-33 days late. Cause: Staff turnover Effect: Noncompliance with reporting requirements Identification as repeat finding, if applicable: Not applicable Recommendation: We recommend reporting be prepared based on incurred expenditures and the related draws be made only after the incurred expenses have been reviewed for accuracy. Views of Responsible Officials and Planned Corrective Action: Management agrees with the finding. See corrective action plan.

Federal Financial Accountability and Transparency Act (FFATA) Reporting U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES ALN #: 93.600 Federal Award Identification #: 02CH010329 Condition: The Organization did not report the subgrant awards to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Criteria: 2 CFR Part 170 Questioned Costs: $0 Context: The Organization provided approximately $2 million to one subrecipient from March 2021 through August 2021 when the Head Start agreement 02CH010329 ended. The Organization no longer has subrecipients as part of their Head Start program. Cause: The Organization was not familiar with the reporting requirements Effect: Non-compliance with requirements Identification as repeat finding, if applicable: not applicable Recommendation: Even though the Organization no longer has subrecipients for the Head Start program, we recommend that the Organization put policies in place to complete FFATA reporting if in the future they have subrecipients. Views of Responsible Officials and Planned Corrective Action: Management agrees with the finding. See corrective action plan.

US Dept of HHS 2021-001 Federal Program - CFDA 93.600 (Head Start Program) pass through program. Criteria - Under 45 CFR 75.309, CAO's subrecipient must liquidate all obligations incurred under the award no later than 90 days after the end of the funding period to coincide with the submission of the Federal Financial Report (FFR). Condition - CAO's sub-recipient recognized computer equipment purchases as of Feb 28, 2021 that had not been liquidated as of May 31, 2021. Questioned costs - $57,177. Cause/effect of condition- CAO did not have procedures in place to ensure that all obligations were liquidated by the sub-recipient prior to the end of the funding report. As a result, the subrecipient recorded the computer equipment purchases as Head Start expenses during the year ended Feb 28, 2021. Recommendations - We recommend that CAO institute procedures to monitor that all obligations by the sub-recipient are liquidated within the 90 day period or an appropriate waiver is obtained by the awarding agency. Views of responsible officials and planned corrective actions - refer to the separate corrective action plan.

Section III-Federal Award Findings and Questioned Costs, U.S. Department of Health and Human Services, 2019-001, Federal Program - CPDA 93.600 (Head Start Program) pass-through program, Criteria - Under the E-Rate Program, the Organization's sub-recipient received reimbursements of 90% of the cost of telephone, cable and internet services. Condition - The Organization's sub-recipient recognized telephone, cable and internet expenditures as Head Start expenses during the year ended February 28, 2019 despite the fact that E-Rate reimbursed 90% of these costs. Questioned costs - $39,128, Cause/Effect of Condition - CAO did not have procedures in place to ensure that telephone, cable and internet expenditures reimbursed by E-Rate were recorded as a reduction of Head Start grants. As a result, CAO recorded 100% of telephone, cable and internet expenditures as Head Start grants rather than the net amount after E-Rate reimbursement during the year ended February 28,2019. Recommendations - We recommend that CAO institute procedures to monitor the processing f E-Rate reimbursements to ensure that they are recorded as reductions of Head Start grants. Views of Responsible Officials and Planned Corrective Actions - Refer to the separate corrective action plan.

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