LEARN & PLAY, INC. D/B/A PLAY AND LEARN CENTERS AND AFFILIATENon-Profit

2021-002 Deficiency in Internal Control and Compliance over Allowable Costs and Activities Related to Non-Payroll Expenditures Federal Agency: U.S. Department of the Treasury Federal Program: 21.019, Coronavirus Relief Fund Criteria or Specific Requirement - OMB Circular A-122, Costs Principles for Non-Profit Organizations requires specific compliance with the provisions of allowable costs and activities. The Organization is responsible for having internal controls designed to ensure compliance with this provision. Condition - During our testing of non-payroll expenditures, we identified an expenditure for which appropriate approval for incurring the cost was not documented and included in final reports submitted to the pass-through agency. Cause - The organization did not maintain proper internal controls over the federal program as it relates to obtaining and documenting approvals for expenditures allocated to federal awards. This included allocating costs incurred to the federal program, for which documentation of internal review and approval do not exist. Effect - Noncompliance with the allowable costs and activities of the federal award as described in both the award contract and OMB Circular A-122, Cost Principles for Non-Profit Organizations, could result in reimbursement denials and ultimately lead to the payback of costs or loss of future funding. Questioned Costs - Immaterial amount. Context - As part of our audit procedures, we sampled a total of 40 non-payroll expenditures incurred to test internal controls over compliance and compliance with the allowable costs and activities of federal awards. During our testing of non-payroll expenditures, we noted the following deviations: - One selection in our statistically valid sample included costs incurred for which documented review and approval of the costs did not exist. Recommendation - We recommend procedures be implemented by the Organization requiring department supervisors to document evidence of their review and approval of expenditures and related invoices, prior to entry in the accounts payable ledger. Additionally, subsequent payment of invoices lacking documented approvals, should not be paid until all related documentation has been obtained. Views of Responsible Officials and Planned Corrective Actions - Learn & Play agrees with the auditor?s recommendation. Learn & Play currently has a policy requiring director review and approval of expenditures and related invoices. In order to pay invoices timely, accounts payable supervisor was not enforcing the current policy consistently. Going forward the accounts payable supervisor will ensure that all invoices are reviewed and approved by the director or appropriate staff before entering expenditures into the accounts payable ledger to be paid. Accounts Payable Supervisor will enforce the current policy requiring directors to review and approve all expenditures before they are entered into the accounts payable system and paid. If the director is unavailable to review and approve an expenditure a regional manager or a member of the executive management team can review and approve to ensure that invoices are paid timely.

2021-003 Significant Deficiency in Internal Control and Compliance over Allowable Costs and Activities Related to Payroll Expenditures Federal Agency: U.S. Department of the Treasury Federal Program: 21.019, Coronavirus Relief Fund Criteria or Specific Requirement - OMB Circular A-122, Costs Principles for Non-Profit Organizations requires specific compliance with the provisions of allowable costs and activities. The Organization is responsible for having internal controls designed to ensure compliance with this provision. Condition - During our testing of payroll expenditures, we identified deficiencies in the internal control and compliance over allowable costs related to payroll expenditures related to the following: - documentation did not exist to support that required supervisor review and approval of staff timesheets occurred on certain of our sample selections; and - certain selections included payroll expenditures incurred outside of the period of performance required under the grant. Cause - The Organization was inconsistent in its application of internal controls over the federal program as it relates to the review of payroll expenditures. Effect - Noncompliance with the allowable costs and activities of the federal award as described in both the award contract and OMB Circular A-122, Cost Principles for Non-Profit Organizations, could result in reimbursement denials and ultimately lead to the payback of costs or loss of future funding. Questioned Costs - Immaterial amount. Context - As part of our audit procedures, we sampled a total of six payroll expenditures incurred to test internal controls over compliance and compliance with the allowable costs and activities of federal awards, which covered 42 staff pay periods out of 141 pay periods allocated to the federal program. During our testing of payroll expenditures, we noted the following deviations: - Three selections in our statistically valid sample (four out of 42 pay periods examined) included payments of salaries and wages for which documented review and approval of staff timesheets did not exist. - Six selections in our statistically valid sample (six out of 42 pay periods examined) included payments of salaries and wages for service dates occurring outside of the grant period but allocated to the federal program. Recommendation - We recommend that the Organization review its internal controls over processes surrounding the staff timesheet approval process. Department supervisors should document evidence of their review and approval of staff timesheets, prior to payroll being submitted for payment. Additionally, management should apply appropriate cutoff procedures when allocating expenditures to grants with specified performance periods. Views of Responsible Officials and Planned Corrective Actions - Learn & Play agrees with the auditor?s recommendation. Learn & Play?s current policy requires a supervisor review and approval of timesheets. Learn & Play will reevaluate the policy to ensure proper review and approval going forward. Learn & Play will also ensure that appropriate cutoff procedures are in place when allocating expenditures to grants with specified performance periods. Learn & Play will make changes to the current policy. The current policy requires a director or supervisor to review and approve timesheets. Going forward the payroll supervisor will follow up with the director or supervisor to review and approve timesheets before the payroll is submitted. If the director or supervisor is not available, a regional manager or executive team member can approve the timesheet to make sure payroll is process on time. Timesheets must be reviewed and approved by director or supervisor upon their return. Learn & Play is working on a more comprehensive closing procedure, which will require more timely account reconciliations and management review. Going forward the controller will prepare the allocation for grant expenditures. The CFO will review and approve expenditures to ensure appropriate cutoff procedures are applied when allocating expenditures to grants.