Chicano Federation of San Diego County

2025-001 Recognition of Federal Program Revenue Program : Child and Adult Care Food Care Program (CACFP) AL#10.558 and Barrio Center CSPP Condition: During the review of operating cost allocations for the CACFP Barrio Childcare Center (Vendor # Q1180Z), it was noted that federal revenue recognized for CACFP was not supported by sufficient documentation of related operating costs. Revenue was recorded based on number of meals served for Barrio Childcare Center of $61,389 with corresponding expenses of $25,289. Criteria: Under 2 CFR Part 200 – Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, recipients must maintain adequate documentation to support costs charged to federal programs. Costs must be allowable, allocable, and reasonable under the terms and conditions of the award. Cause: The error was caused due to lack of formal cost allocation methodology for all the Organization’s Federal program. Effect: This condition resulted in questioned costs of approximately $36,100 as federal revenue may have been overstated or unsupported. This could lead to repayment obligations. Questioned Costs - $36,100 revenue not supported by eligible costs Recommendation: Management should prepare and conduct an annual review of a formal cost allocation plan to ensure all costs are allocated accurately and in compliance with federal requirements. The plan should clearly define allocation methodologies and ensure they are applied consistently across all programs. Further, we recommend management evaluate the design of internal controls over the revenue recognition process to ensure all federal revenue is matched with allowable and documented operating costs. Views of the responsible official and planned corrective action: Management concurs and provided a Corrective Action Plan which is included at the end of this report.

Programs: Barrio Center CSPP and Child and Food Care Program (CFCC) Condition: During the current year, the yearend fiscal report that was submitted to the California Department of Education (CDE) and California Department of Social Services (CDSS) did not agree with the claims and internal profit and loss statement for each program. Criteria: The fiscal report has to agree with the internal profit and loss statement and claims. Cause: The error was caused due to adjustments made to claims and general ledger that did not get captured in the fiscal report. Effect: Revenue and expense reporting to the CDE and CDSS was incorrect. Questioned Costs – There were no questioned costs. Views of the responsible official and planned corrective action: The Federation agrees with the finding and will adhere to the planned corrective action plan shown on page 46.

Programs: All federal and state programs Condition: During the current year, rent expense allocations did not agree with the approved cost allocation schedule that was effective for the fiscal year. Criteria: The Federation has approved cost allocation tables for rent expenses that need to be followed to allocate expenses between the programs. Cause: The error was caused due to a clerical error in the entering of the allocation. Effect: The result is an over allocation to Nutrition Program, Infant and Toddler Program and Headstart program, and under allocation the Barrio Nutrition Program and Barrio Child Care Center Program. No adjustments were made to the claims that were reported to these funding agencies after the findings. Questioned Costs – The Federation has the following questioned costs: • Nutrition Program - $1,824 of known rent expense that was over-allocated to the program. • Headstart - $402 of known rent expense that was over-allocated to the program. • Barrio Nutrition - $853 of known rent expense that was under-allocated to the program. • Barrio Child Care Center - $385 of known rent expense that was under-allocated to the program. • Infant Toddler Program - $2,985 of known rent expense that was over-allocated to the program. Recommendation – We recommend that the cost allocations should be reviewed more carefully to ensure accuracy and to avoid clerical errors. Views of the responsible official and planned corrective action: The Federation agrees with the finding and will adhere to the planned corrective action plan shown on page 47.

Programs: Barrio Center CSPP Condition: During the current year, the yearend fiscal report that was submitted to the California Department of Education did not agree with the claims and internal profit and loss statement for each program. Criteria: The fiscal report has to agree with the internal profit and loss statement and claims. Cause: The error was caused due to adjustments made to claims and general ledger that did not get captured in the fiscal report. Effect: Revenue and expense reporting to the California Department of Education was incorrect. Questioned Costs – There were no questioned costs. Recommendation – We recommend that the fiscal reporting be reviewed more closely to ensure costs reported agree with claims and internal records of the Federation. Views of the responsible official and planned corrective action: The Federation agrees with the finding and will adhere to the planned corrective action plan shown on page 49.

Programs: All federal and state programs Condition: Schedule of expenditures of federal awards (SEFA) provided by the Federation did not include all federal programs. Criteria: SEFA has to include all federal and state funded programs in accordance with Uniform Guidance. Cause: The error was caused due to a lack of understanding of the requirements of SEFA. Effect: SEFA provided for the audit by the Federation was incorrect. Questioned Costs – There were no questioned costs. Recommendation – We recommend that the accounting staff are made aware of the requirements of SEFA. Views of the responsible official and planned corrective action: The Federation agrees with the finding and will adhere to the planned corrective action plan shown on page 47.

2021-001 ? Segregation of duties Programs: All programs Criteria or Specific Requirement: No one employee should have access to both physical assets and related accounting records, or to multiple phases of a transaction. Condition: During a six month period during the fiscal year there was an unexpected accounting staff vacancy, the Accounting Manager and Accounting Supervisor performed multiple accounting and reconciliation functions. This was a prior year finding that was corrected in the current fiscal year by the hiring of an outside CPA in February of 2021. Cause: The Organization?s accounting department is small and staff turnover during the year inadvertently put too many accounting functions with two staff persons. Effect: The lack of segregation of duties increases the possibility that a material misstatement in the entity?s financial statements will not be prevented or detected and corrected on a timely basis. Questioned costs: There were no questioned costs. View of the responsible official and planned corrective action: The Organization agrees with the finding and has corrected the problem within the year ended June 30, 2021.

2020-001 ? Reconciliation and Closing Procedures Programs: All programs Condition: We noted several general ledger accounts that did not reconcile to supporting documentation. This appears to be the result of reconciliation and closing procedure not being followed. Criteria: The Federation is required to perform monthly reconciliation procedures to ensure a proper close. Cause: This was caused by high staff turnover in key accounting positions. Effect: The Federation was required to make a material number of journal entries in order to properly reconcile account balances for their financial statements for the year ended June 30, 2020. Questioned Costs ? There are no questioned costs as a result of this finding. Recommendation ? We recommend that the Federation follow monthly closing procedures and account reconciliations in order to adequately detect and correct any misstatements in the Federation?s general ledger in a timely basis.

2020-002 ? Segregation of duties Programs: All programs Criteria or Specific Requirement: No one employee should have access to both physical assets and related accounting records, or to multiple phases of a transaction. Condition: During a period in which there was an unexpected accounting staff vacancy, the Accounting Manager and Accounting Supervisor performed multiple accounting and reconciliation functions which increases the probability that the control process may be circumvented. Cause: The Organization?s accounting department is small and staff turnover during the year inadvertently put too many accounting functions with two staff persons. Effect: The lack of segregation of duties increases the possibility that a material misstatement in the entity?s financial statements will not be prevented or detected and corrected on a timely basis. Questioned costs: There were no questioned costs.

2019-001 ? Reconciliation and Closing Procedures Programs: All programs Condition: We noted several general ledger accounts that did not reconcile to supporting documentation. This appears to be the result of reconciliation and closing procedure not being followed. Cause: This was caused by high staff turnover in key accounting positions. Effect: The Federation was required to make a material number of journal entries in order to properly reconcile account balances for their financial statements for the year ended June 30, 2019. Questioned Costs ? There are no questioned costs as a result of this finding. Recommendation ? We recommend that the Federation follow monthly closing procedures and account reconciliations in order to adequately detect and correct any misstatements in the Federation?s general ledger in a timely basis. Views of the responsible official and planned corrective action: The Federation agrees with the finding and will adhere to the planned corrective action plan shown on page 39 of the financial report.

2019-002 ? Salary Allocations Programs: Barrio Child Care Center (CSPP 8442) and Barrio Headstart Condition: During the current year, the timesheets for one employee selected for testing did not match the labor distribution schedule used to allocate salary expense. A small portion of the employee?s time was allocated to another program. Cause: The error was caused due to a clerical error in the entering of the allocation. Effect: The result is an over allocation to the Barrio Headstart program and under allocation to the Barrio Child Care Center Program. No adjustments were made to the claims that were reported to these funding agencies after the findings. Questioned Costs ? The Federation has the following questioned costs: ? Barrio Child Care Center - $82 of known payroll expenses that were under-allocated to the program. If extrapolated to the total population of payroll expenses charged to the program, the likely amount of questioned costs for this program would be approximately $793. ? Barrio Headstart - $82 of known payroll expenses that were over allocated to the program. If extrapolated to the total population of payroll expenses charged to the program, the likely amount of questioned costs for this program would be approximately $1,093. Recommendation ? We recommend that the timesheets should be reviewed more carefully to ensure accuracy and to avoid clerical errors. Views of the responsible official and planned corrective action: The Federation agrees with the finding and will adhere to the planned corrective action plan shown on page 39 of the financial report.

2019-004 ? Credit Cards Programs: All programs Condition: During the audit, we noted a former employee?s business credit card was being used by a current employee of the organization for some purchases. Cause: This was caused by turnover in the accounting department and difficulty getting a new credit card issued in the current employee?s name. Effect: The credit card was being used for some program related expenses. However, the organization?s policy and controls over credit cards were not followed. Questioned Costs ? There are no questioned costs as a result of this finding. Recommendation ? We recommend that the Federation follow their credit card policy and immediately cancel business credit card of former employees. Views of the responsible official and planned corrective action: The Federation agrees with the finding and will adhere to the planned corrective action plan shown on page 39 of the financial report.

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