BakerRipley

Finding #2025-001 – Significant Deficiency and Other Noncompliance. Applicable federal programs: Department of Health and Human Services, Assistance Listing #: 93.575 – Childcare and Development Block Grant (CCDF Cluster), Passed through Houston-Galveston Area Council, Contract Number: 13410, Contract Year: 10/01/24 - 09/30/25, Assistance Listing #: 93.596 – Child Care Mandatory and Matching Funds of the Child Care and Development Fund (CCDF Cluster), Passed through Houston-Galveston Area Council, Contract Number: 13410, Contract Year: 10/01/24 - 09/30/25. Criteria: Allowable costs – Section 200.303 of the Uniform Guidance indicates that the organization must 1) establish, document, and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award and 2) evaluate and monitor the compliance with statutes, regulations, and terms and conditions of the federal award. The non-federal entity must also take prompt action when instances of noncompliance are identified. Condition and context: During the planning phase of the audit, management disclosed that childcare providers were paid $3.6 million in duplicate childcare assistance payments in July 2025. As of May 15, 2026, $2.5 million of the duplicate payments have been recovered. Questioned costs: $1.1 million. Cause: BakerRipley’s state-required childcare assistance payment application was first implemented in January 2025 with software updates made by the state in July 2025. The updates impacted the final payment report on one payment batch, resulting in duplications of individual children listed on that report. A final reconciliation of the batch of childcare payments was not performed to identify any duplicated transactions at the time the batch was processed. Effect: Duplicate childcare provider payments were issued and charged to the grant. Recommendation: Implement prevention procedures to identify duplicate payments prior to payment. Views of responsible officials and planned corrective actions: Management agrees with the finding. See Corrective Action Plan.

Finding #2025-002 – Significant Deficiency and Other Noncompliance. Applicable federal programs: Department of Health and Human Services, Assistance Listing #: 93.575 – Childcare and Development Block Grant (CCDF Cluster), Passed through Houston-Galveston Area Council, Contract Number: 13410 and 20020, Contract Year: 10/01/24 – 09/30/25, 10/01/25 - 09/30/26, Assistance Listing #: 93.596 – Child Care Mandatory and Matching Funds of the Child Care and Development Fund (CCDF Cluster), Passed through Houston-Galveston Area Council, Contract Number: 13410 and 20020, Contract Year: 10/01/24 – 09/30/25, 10/01/25 - 09/30/26, Department of Agriculture, Assistance Listing #: 10.561 – State Administrative Matching Grants for the Supplemental Nutrition Assistance Program (SNAP Cluster), Passed through Houston-Galveston Area Council, Contract Number: 20020, Contract Year: 10/01/25 - 09/30/26. Criteria: Allowable costs – The Texas Workforce Commission (TWC) requires that childcare providers are paid for services to low-income families based upon approved rates. Condition and context: During our testing of 40 federal and state payments to childcare providers under the Houston-Galveston Area Council contract, we noted that 1 childcare provider was paid at an incorrect provider rate resulting in an overpayment of $9.10. Questioned costs: $9.10. Cause: BakerRipley’s procedures failed to identify that the childcare provider was being paid at the incorrect rate. Effect: Payments to childcare providers were overstated by the use of the incorrect rate resulting in unallowable costs under the impacted program and necessitating recoupment efforts. Recommendation: Re-emphasize training of personnel and adherence to BakerRipley’s and TWC’s policies and procedures. Views of responsible officials and planned corrective actions: Management agrees with the finding. See Corrective Action Plan.

Finding #2022-001 ? Significant Deficiency and Other Noncompliance Applicable federal programs: Department of Agriculture Assisting Listing: 10.558 ? Child and Adult Care Food Program Direct Federal Funding Contract Number: 02946 Contract Years: 10/01/21 ? 09/30/22 and 10/01/22 ? 09/30/23 Department of Housing and Urban Development Assistance Listing #: 14.218 ? COVID-19 Community Development Block Grants/Entitlement Grants ? CDBG ? Entitlement Grants Cluster Passed through Workforce Solutions Capital Area Board of Directors Contract Number: CCS 2019-2024 Contract Years: 10/01/21 ? 09/30/22 and 10/01/22 ? 09/30/23 Passed through the City of Houston Contract Number: 4600016329 Contract Year: 11/15/20 ? 10/31/22 Passed through Harris County Contract Number: B-20UW-48-0002 Contract Year: 03/01/22 ? 09/30/22 Department of Treasury Assistance Listing #: 21.023 ? Emergency Rental Assistance Program Passed through Harris County Contract Number: N/A Contract Year: 06/08/21 ? 12/31/22 Passed through Paso Del Norte Contract Number: N/A Contract Years: 12/01/21 ? 07/31/22 and 04/12/21 ? 12/31/22 Passed through City of Houston Contract Number: 4600016521 Contract Year: 02/12/21 ? 06/30/22 Department of Veterans Affairs Assistance Listing #: 64.033 ? VA Supportive Services for Veteran Families Program Direct Federal Funding Contract Years: 04/01/20 ? 09/30/22; 10/01/21 ? 09/30/23; 10/01/21 ? 09/30/22; 09/01/21 ? 09/30/23 Contract Numbers: 19-TX-290-21; 19-TX-290-22; 19-TX-290-HL; 19-TX-290SS Department of Education Assistance Listing #: 84.425D ? COVID-19 Education Stabilization Fund Passed through the Texas Education Agency Contract Number: 21521001101853 Contract Year: 06/17/21 ? 09/30/22 Assistance Listing #: 84.425U ? Education Stabilization Fund Passed through the Texas Education Agency Contract Number: 21528001101853 and 21528042101853 Contract Years: 06/21/21 ? 09/30/23 and 10/20/21 ? 08/31/24 Department of Health and Human Services Assistance Listing: 93.575 ? Child Care and Development Block Grant ? CCDF Cluster Passed through Houston-Galveston Area Council Contract Numbers: 302-22; 302-23; 302-23; 105-22; 105-23 Contract Years: 10/01/21 ? 09/30/22; 10/01/22 ? 09/30/23; 10/01/22 ? 03/31/23; 10/01/21 ? 09/30/22; 10/01/22 ? 09/30/23 Passed through the Coastal Bend Workforce Development Board Contract Numbers: 2021-22 BakerRipley and 2022-23 BakerRipley Contract Years: 10/01/21 ? 09/30/22 and 10/01/22 ? 09/30/23 Passed through Workforce Solutions Capital Board of Directors Contract Numbers: CCS 2019-2024 and CCS 2019-2024 Contract Years: 10/01/21 ? 09/30/22 and 10/01/22 ? 09/30/23 Passed through the East Texas Workforce Development Board Contract Numbers: BR-CCS-PY21-01 and BR-CCS-PY22-01 Contract Years: 10/01/21 ? 09/30/22 and 10/01/22 ? 09/30/23 Passed through Rural Capital Area Workforce Development Board, Inc. Contract Numbers: NCIWC CCS ? 4-22 and NCIWC CCS ? 5-2023 Contract Years: 10/01/21 ? 09/30/22 and 10/01/21 ? 09/30/23 Assistance Listing #: 93.596 ? Child Care Mandatory and Matching Funds of the Child Care and Development Fund Passed through the Coastal Bend Workforce Development Board Contract Numbers: 2021-22 BakerRipley and 2022-23 BakerRipley Contract Years: 10/01/21 ? 09/30/22 and 10/01/22 ? 09/30/23 Passed through the East Texas Workforce Development Board Contract Numbers: BR-CCS-PY21-01 and BR-CCS-PY22-01 Contract Years: 10/01/21 ? 09/30/22 and 10/01/22 ? 09/30/23 Passed Workforce Solutions Capital Area Board of Directors Contract Numbers: CCS 2019-2024 and CCS 2019-2024 Contract Years: 10/01/21 ? 09/30/22 and 10/01/22 ? 09/30/23 Passed through Houston-Galveston Area Council Contract Numbers: 302-22 and 302-23 Contract Years: 10/01/21 ? 09/30/22 and 10/01/22 ? 09/30/23 Passed through Rural Capital Area Workforce Development Board, Inc. Contract Numbers: NCIWC CCS 4-22 and NCIWC CCS 5-2023 Contract Years: 10/01/21 ? 09/30/22 and 10/01/22 ? 09/30/23 State Programs Texas Education Agency-Foundation School Program 302-22 and 302-23 Workforce Operations and Administrative ? Childcare DFPS 302-22 and 302-23 DFPS Relative/Other Caregiver Kinship 302-22 and 302-23 DFPS General Protective In Home 302-22 and 302-23 DFPS Foster Care ? Title IV-E 302-22 and 302-23 DFPS Foster Care ? Title IV-B 2021-22 BakerRipley and 2022-23 BakerRipley DFPS Relative/Other Caregiver Kinship 2021-22 BakerRipley and 2022-23 BakerRipley DFPS General Protective In Home 2021-22 BakerRipley and 2022-23 BakerRipley DFPS Foster Care ? Title IV-E 2021-22 BakerRipley and 2022-23 BakerRipley DFPS Childcare ? Title IV-B NCIWC CCS 4-22 and NCIWC CCS 5-23 DFPS Relative/Other Caregiver Kinship NCIWC CCS 4-22 and NCIWC CCS 5-23 DFPS General Protective In Home NCIWC CCS 4-22 and NCIWC CCS 5-23 DFPS Foster Care ? Title IV-E NCIWC CCS 4-22 and NCIWC CCS 5-23 DFPS Childcare ? Title IV-B BR-CCS-PY21-01 and BR-CCS-PY22-01 Management and Operations BR-CCS-PY21-01 and BR-CCS-PY22-01 DFPS Relative/Other Caregiver Kinship BR-CCS-PY21-01 and BR-CCS-PY22-01 DFPS General Protective In Home BR-CCS-PY21-01 and BR-CCS-PY22-01 DFPS Foster Care ? Title IV-E BR-CCS-PY21-01 and BR-CCS-PY22-01 DFPS Childcare ? Title IV-B CCS 2019-2024 DFPS Relative/Other Caregiver Kinship CCS 2019-2024 DFPS General Protective In Home CCS 2019-2024 DFPS Foster Care ? Title IV-E CCS 2019-2024 DFPS Childcare ? Title IV-B Criteria: Procurement ? Nonprofit organizations are required to conduct procurement transactions in a manner providing full and open competition consistent with standards prescribed in Uniform Guidance, Procurement Standards, Texas Grant Management Standards (TxGMS), and the Texas Education Code sec 12.1053 and conform to federal and state laws and regulations and other contractual requirements. Uniform Guidance, TxGMS, and the Texas Education Code require public notice for proposal requests for purchases over the Simplified Acquisition Threshold, as defined by the nonprofit organization?s policy, which is $250,000 for BakerRipley. Condition and context: During our testing of 25 transactions requiring procurement, 1 exception was noted for temporary staffing services in excess of $250,000 where sealed bid or competitive proposal procedures were not utilized. These services were charged to the Texas Education Agency-Foundation School Program. Questioned costs: Unknown Cause: BakerRipley?s personnel did not follow its procurement policies. Effect: Failure to follow established procurement policies may result in BakerRipley purchasing goods or services for more than would be necessary if required competitive procurement procedures had been followed. Recommendation: Re-emphasize to program personnel the procurement process and adherence to BakerRipley?s policies and procedures. Views of responsible officials and planned corrective actions: Management agrees with the finding. See Corrective Action Plan.

Finding #2021-001 ? Significant Deficiency and Other Noncompliance Applicable federal program: Department of the Treasury ? Internal Revenue Service Assistance Listing #: 21.019 ? Coronavirus Relief Fund Passed through Harris County Contract Number: SLT0119 Contract Year: 04/28/20 - 12/31/21 Passed through Paso del Norte Contract Number: N/A Contract Year: 07/30/20 - 11/30/20 Assistance Listing #: 21.023 ? Emergency Rental Assistance Program Passed through City of Houston Contract Number: 4600016521 Contract Year: 02/12/21 - 12/31/21 Passed through Harris County Contract Number: N/A Contract Years: 02/19/21 - 03/31/22 and 06/08/21 - 03/31/22 Passed through Paso Del Norte Contract Number: N/A Contract Years: 04/12/21 - 12/31/21; 12/01/21 - 07/31/22; 04/12/21 - 12/31/21 Criteria: Allowable Costs ? Section 200.303 of the Uniform Guidance indicates that the organization must 1) establish and maintain an effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal awards and 2) evaluate and monitor the compliance with statutes, regulations, and terms and conditions of the federal awards. Also, take prompt action when instances of noncompliance are identified. Condition and context: Landlords were paid $4.2 million in duplicate rental assistance payments during the months of November and December 2021. As of June 13, 2022, $4.0 million of the duplicate payments have been recovered. Questioned costs: $225,000 Cause: BakerRipley?s rental assistance payment application was programmed to prevent duplicate payments to landlords for the same client and service period. A BakerRipley employee overrode the error message when a duplicate payment was detected by the system and processed the payment anyway. The employee?s supervisor identified the employee?s lack of understanding of the system when supervising subsequent to the duplicate payments being made. Effect: Duplicate landlord payments were issued. Recommendation: Provide additional training to employees on the reason for error messages to prevent overrides and implement detection procedures for subsequent review of monthly transactions for duplicate payments. Views of responsible officials and planned corrective actions: Management agrees with the finding. See Corrective Action Plan.

Finding #2021-002 ? Significant Deficiency and Other Noncompliance Applicable federal programs: Department of Housing and Urban Development Assistance Listing #: 14.228 ? Community Development Block Grants/State?s Program and Non-Entitlement Grants in Hawaii Passed through City of Houston Contract Number: 4600016063 Contract Year: 06/01/20 - 05/31/22 Assistance Listing #: 14.228 ? COVID-19 ? Community Development Block Grants/State?s Program and Non- Entitlement Grants in Hawaii Passed through Texas Department of Housing and Community Affairs Contract Number: 70300001002 Contract Year: 06/15/21 - 06/14/22 Assistance Listing #: 14.231 ? COVID-19 ? Emergency Solutions Grant Program Passed through Harris County Contract Numbers: E-20-UC-48-0002; E-20-UW-48-0002; E-20-UW-48-0002 Contract Years: 09/29/20 - 02/28/21; 03/01/21 - 02/28/22; 05/25/21 ? 02/28/22 Assistance Listing #: 14.231 ? COVID-19 ? Emergency Solutions Grant Program Passed through City of Houston Contract Number: 4600016329 Contract Year: 11/15/20 - 10/31/22 Department of Agriculture Assistance Listing #: 10.558 ? Child and Adult Care Food Program (CACFP) Direct Funding Contract Number: 02946 Contract Years: 10/01/20 - 09/30/21 and 10/01/21 - 09/30/22 Department of Labor Assistance Listing #: 17.259 ? WIOA Youth Activities Passed through Houston-Galveston Area Council Contract Numbers: 302-21 and 302-22; 105-21 and 105-22 Contract Years: 10/01/20 - 09/30/21 and 10/01/21 - 09/30/22; 10/01/20 - 09/30/21 and 10/01/21 - 09/30/22 Assistance Listing #: 17.278 ? WIOA Dislocated Worker Formula Grants Passed through Houston-Galveston Area Council Contract Numbers: 302-21 and 302-22; 302-21; 105-21 and 105-22; 105-21 and 105-22; 302-21 Contract Years: 10/01/20 - 09/30/21 and 10/01/21 - 09/30/22; 10/01/20 - 08/31/21; 10/01/20 - 09/30/21 and 10/01/21 - 09/30/22; 10/01/20 - 09/30/21 and 10/01/21 - 08/31/22; 10/01/20 - 08/31/21 Assistance Listing #: 17.258 ? WIOA Adult Program Passed through Houston-Galveston Area Council Contract Numbers: 302-21 and 302-22; 302-21 Contract Years: 10/01/20 - 09/30/21 and 10/01/21 - 09/30/22; 10/01/20 - 06/30/21 Passed through the East Texas WorkForce Development Board Contract Numbers: BR-CCS-PY20-01 and BR-CCS-PY21-01 Contract Years: 10/01/20 - 09/30/21 and 10/01/21 - 09/30/22 Department of Health and Human Services Assistance Listing #: 93.356 ? Head Start Disaster Recovery and # 93.600 Head Start Direct Funding Contract Numbers: 06TD00011201-00; 06CH010977-03-02; 06CH10136-06-04; 06CH011966-01-02; 06HE00076101-01 (COVID-19) Contract Years: 05/01/20 - 04/30/22; 01/01/21 - 12/31/21; 03/01/20 - 02/28/21; 03/01/21 - 02/28/22; 04/01/21 - 03/31/23 Assistance Listing #: 93.558 ? Temporary Assistance for Needy Families (TANF) Passed through Houston-Galveston Area Council Contract Numbers: 302-21 and 302-22; 105-21 and 105-22 Contract Years: 10/01/20 - 09/30/21 and 10/01/21 - 09/30/22; 10/01/20 ? 09/30/21; 10/01/21 ? 09/30/22 State Programs 302-21 and 302-22 Administrative and Operations ? Childcare DFPS BR-CCS-PY20-21 and BR-CCS-PY21-22 Management and Operations Criteria: Procurement ? Nonprofit organizations are required to conduct procurement transactions in a manner providing full and open competition consistent with standards prescribed in Uniform Guidance, Subtitle III Procurement Standards and the State of Texas Uniform Grant Management Standards and conform to federal and state laws and regulations and other contractual requirements. Uniform Guidance, the State of Texas Uniform Grant Management Standards, as well as the Texas Workforce Commission, require public notice for proposal requests for purchases over the Simplified Acquisition Threshold, as defined by the nonprofit organization?s policy, which for BakerRipley is $250,000. Condition and context: During our testing of 43 transactions requiring procurement, 3 exceptions were noted. We noted that procurement of the following services in excess of $250,000 in costs was not performed by sealed bid or competitive proposal procedures: 1) short-term housing, 2) meal services for educational programs, and 3) virtual learning platforms. Questioned costs: Unknown Cause: BakerRipley?s personnel did not follow its procurement policies. Effect: Failure to follow established procurement policies may result in BakerRipley purchasing goods or services for more than would be necessary if required competitive procurement procedures had been followed. Recommendation: Re-emphasize to program personnel the procurement process and adherence to BakerRipley?s policies and procedures. Views of responsible officials and planned corrective actions: Management agrees with the finding. See Corrective Action Plan.

Finding #2021-003 ? Significant Deficiency and Other Noncompliance Applicable federal programs: Department of Health and Human Services Assistance Listing #: 93.558 ? Temporary Assistance for Needy Families ? TANF Passed through Houston-Galveston Area Council Contract Numbers: 105-21 and 105-22; 105-21 and 105-22 Contract Years: 10/01/20 - 09/30/21 and 10/01/21 - 09/30/22; 10/01/20 - 09/30/21 and 10/01/21 - 09/30/22 Department of Labor Assistance Listing #: 17.258 ? WIOA Adult Program Passed through Houston-Galveston Area Council Contract Numbers: 105-21 and 105-22 Contract Years: 10/01/20 - 09/30/21 and 10/01/21 - 09/30/22 Assistance Listing #: 17.259 ? WIOA Youth Activities Passed through Houston-Galveston Area Council Contract Numbers: 105-21 and 105-22; 105-21 and 105-22 Contract Years: 10/01/20 - 09/30/21 and 10/01/21 - 09/30/22; 10/01/20 - 09/30/21 and 10/01/21 - 09/30/22 Assistance Listing #: 17.278 ? WIOA Dislocated Worker Formula Grants Passed through Houston-Galveston Area Council Contract Numbers: 105-21 and 105-22 Contract Years: 10/01/20 - 09/30/21 and 10/01/21 - 09/30/22 Criteria: Allowable costs ? The Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, ?200.430 requires that charges to awards for salaries and wages, be based on records that accurately reflect the work performed. These records must 1) be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable and properly allocated; 2) reasonably reflect the total activity for which the employee is compensated; 3) comply with the established accounting policies and practices of the agency; and 4) support the distribution of the employee?s salary or wages among specific activities or cost objectives if the employee works on more than one activity. Condition and context: BakerRipley?s procedures for allocating Career Center costs are not sufficient to ensure that costs are appropriately allocated amongst federal and state funding streams. BakerRipley allocates certain Career Center payroll costs based on estimated time per type of client encounter and number of clients served. BakerRipley allocated payroll costs based on the number of clients served by activity for fiscal years 2019 and 2020. Cause: The finding occurred as a result of BakerRipley not updating its allocation percentages based on the number of clients served by activity in the fiscal year 2021 measurement period. Effect: Allocation of Career Center operations and administrative costs amongst funding streams may not properly reflect the time and effort expended on the specific funding stream activities. Questioned costs: Unknown Recommendation: BakerRipley should update its Career Center time studies at least annually. Views of responsible officials and planned corrective actions: Management agrees with the finding. See Corrective Action Plan.

Finding #2020-001 ? Other Noncompliance Applicable federal program: Department of Health and Human Services Passed through Texas Department of Housing and Community Affairs Assistance Listing #: 93.568 ? Low-Income Home Energy Assistance Program Contract Numbers: 81200003179, 58190002970, 81190003007 Contract Years: 01/01/20 ? 12/31/20, 01/01/19 ? 06/31/20, 01/01/19 ? 09/15/20 Criteria: Cash management ? Nonprofit organizations that receive advances must have written procedures to minimize the time elapsing between the transfer of funds and disbursement of payments as required in the Uniform Guidance, Subpart D ? Post Federal Award Requirements and the State of Texas Uniform Grant Management Standards. Advance payments to a non-Federal entity must be limited to the minimum amounts needed and timed to be in accordance with the actual, immediate cash requirements in carrying out the purpose of the approved program or project. The timing and amount of advance payments must be as close as is administratively feasible to the actual disbursements by the non-Federal entity for direct program or project costs and the proportionate share of any allowable indirect costs. Condition and context: During our testing of 43 months, we noted 6 months in which the cash on hand at month-end exceeded the following months? expenditures as follows: ? Contract #81200003179 ? March and April 2020?s cash on hand exceeded the amounts required for the subsequent months? expenditures by approximately $178,000 and $224,000, respectively. ? Contract #58190002970 ? May, June, and July 2020?s cash on hand exceeded the amounts required for the subsequent months? expenditures by approximately $65,000. ? Contract #81190003007 ? March, April, and May 2020?s cash on hand exceeded amounts required for subsequent month?s expenditures by approximately $116,000, $110,000 and $34,000, respectively. Cause: Between March 2020 and July 2020, the COVID-19 pandemic severely curtailed weatherization activity by BakerRipley due to safety precautions taken within the organization, and similar limitations on suppliers and contractors. Cash advances were not adjusted to factor in the unexpected consequences of the pandemic, nor were the funds returned. Effect: BakerRipley held cash in excess of immediate needs. Recommendation: Enhance procedures to identify excess cash advances for the Low-Income Home Energy Assistance Program contracts and for returning identified excess cash, and/or consider adding a clause in the contracts to waive the excess cash requirement in cases of declared emergencies. Views of responsible officials and planned corrective actions: Management agrees with the finding. See Corrective Action Plan.

Finding #2019-001 ? Significant deficiency and Other Noncompliance Applicable federal and state programs: Federal Programs: #5 Department of Veterans Affairs VA Supportive Services for Veteran Families Program 10/01/18 - 09/30/19 64.033 19-TX-290 10/01/19 - 09/30/20 64.033 19-TX-290 Department of Health and Human Services #10 Passed through Houston-Galveston Area Council Workforce Operations and Administrative Child Care and Development Block Grant ? CCDF Cluster 10/01/18 - 09/30/19 93.575 302-19 10/01/19 - 09/30/20 93.575 302-20 #11 Passed through Houston-Galveston Area Council Career Centers Operations and Administrative Child Care and Development Block Grant ? CCDF Cluster 10/01/18 - 09/30/19 93.575 105-19 10/01/19 - 09/30/20 93.575 105-20 #15 Passed through the Coastal Bend Workforce Development Board Management and Operations Child Care and Development Block Grant ? CCDF Cluster 10/01/18 - 09/30/19 93.575 2018-19 BakerRipley 10/01/19 - 09/30/20 93.575 2019-20 BakerRipley #17 Passed through the Rural Capital Area Workforce Development Board, Inc. Management and Operations Child Care Mandatory and Matching Funds of the Child Care and Development Fund ? CCDF Cluster 10/01/18 - 09/30/19 93.596 NCIWC CCS 1-19 10/01/19 - 09/30/20 93.596 NCIWC CCS 2-20 #19 Passed through the East Texas Workforce Development Board Management and Operations Child Care Mandatory and Matching Funds of the Child Care and Development Fund ? CCDF Cluster 10/01/18 - 09/30/19 93.596 BR-CCS-PY18-01 10/01/19 - 09/30/20 93.596 BR-CCS-PY19-01 #21 Passed through the WorkForce Solutions Capital Area Board of Directors Management and Operations Child Care Mandatory and Matching Funds of the Child Care and Development Fund ? CCDF Cluster 10/01/18 - 09/30/19 93.596 N/A 10/01/19 - 09/30/20 93.596 CCS 2019-2024 #21 Child Care Mandatory and Matching Funds of the Child Care and Development Fund ? CCDF Cluster Quality Fund (CCQ) 10/01/19 - 09/30/20 93.596 CCS 2019-2024 State Programs: #1 Passed through Houston-Galveston Area Council: Administrative and Operations 10/01/18 - 09/30/19 302-19 10/01/19 - 09/30/20 302-20 #7 Passed through the East Texas Workforce Development Board: Management and Operations 10/01/18 - 09/30/19 BR-CCS-PY18-01 10/01/19 - 09/30/20 BR-CCS-PY19-01 Criteria: Procurement ? Nonprofit organizations are required to conduct procurement transactions in a manner providing full and open competition consistent with standards prescribed in Uniform Guidance, Subtitle III Procurement Standards and the State of Texas Uniform Grant Management Standards and conform to federal and state laws and regulations and other contractual requirements. Such standards include following procurement methods as determined by purchasing dollar thresholds. Condition and context: During our testing of 40 transactions requiring procurement, we noted the following exceptions: ? Uniform Guidance, the State of Texas Uniform Grant Management Standards, as well as, the Texas Workforce Commission require public notice for proposal requests for purchases over the Simplified Acquisition Threshold as defined by the nonprofit organization?s policy, which for BakerRipley is $150,000. In our procurement sample of 40 items, we noted that the procurement for security alarm services and construction services did not undergo procurement by sealed bid or competitive proposal procedures. ? Uniform Guidance, the State of Texas Uniform Grant Management Standards, as well as, the Texas Workforce Commission require simple and informal procurement methods for purchases with a value less than the Simplified Acquisition Threshold which includes obtaining price or rate quotations from an adequate number of qualified sources. In our procurement sample of 40 items, we noted that purchases for office supplies and professional services did not undergo informal procurement methods. Questioned costs: Unknown Cause: BakerRipley?s personnel failed to follow its procurement policies. Effect: Failure to follow established procurement policies may result in BakerRipley purchasing goods or services for more than would be necessary if required competitive procurement procedures had been followed. Recommendation: Re-emphasize to program personnel the procurement process and adherence to BakerRipley?s policies and procedures. Views of responsible officials and planned corrective actions: Management agrees with the finding. See Corrective Action Plan.

Finding #2019-002 ? Significant Deficiency and Other Noncompliance Applicable federal and state programs: Federal Programs: Department of Health and Human Services Passed through Houston-Galveston Area Council Career Centers Operations and Administrative: #11 Child Care and Development Block Grant and Child Care Mandatory and Matching Funds of the Child Care and Development Fund ? CCDF Cluster 10/01/18 - 09/30/19 93.575 105-19 10/01/19 - 09/30/20 93.575 105-20 Criteria: Allowable costs ? The Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, ?200.430 requires that charges to awards for salaries and wages, be based on records that accurately reflect the work performed. These records must 1) be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable and properly allocated; 2) reasonably reflect the total activity for which the employee is compensated; 3) comply with the established accounting policies and practices of the agency; and 4) support the distribution of the employee?s salary or wages among specific activities or cost objectives if the employee works on more than one activity. BakerRipley?s procedures for allocating Career Center costs are not sufficient to ensure that costs are appropriately allocated amongst federal and state funding streams. Condition and context: There are no written policies and procedures related to the process of preparing and compiling the time studies utilized for allocating Career Center costs. Timesheets which form the allocation basis for Career Center operations and administrative costs to federal and state funding streams were pre-populated based on prior estimates of time and effort spent on each grant program rather than being based on actual estimated time and effort. This is a repeat of finding #2018-001, which was reported in 2018. Questioned costs: Unknown Cause: The finding occurred as a result of the lack of written policies and procedures for preparing and compiling Career Center time studies, and inappropriate procedures for allocating amongst federal and state funding streams. Effect: Allocation of the Career Center operations and administrative costs amongst funding streams may not properly reflect the time and effort expended on the specific funding streams. Recommendation: BakerRipley should establish written policies and procedures and provide training to its employees on the policies and procedures for preparing and compiling the Career Center time studies in accordance with Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, ?200.430. Views of responsible officials and planned corrective actions: Management agrees with the finding. See Corrective Action Plan.

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