Martin Luther King, Jr. Child Care Center Association, Inc.Non-Profit

2025-003 Ineffective Internal Controls over Authorization of ACH Payments of Federal Expenditures (Material Weakness) Federal Agency: U.S. Department of Education Pass through entity: Kansas Department of Education Program Name: Child and Adult Care Food Program Assistance Listing Number: 10.558 Award Period: June 30, 2025 Criteria: Management is responsible for implementing effective internal controls to ensure proper segregation of duties exist over ACH payment authorization of federal expenditure. Condition: During the course of our audit, we noted that ACH payments of federal expenditures did not have proper approval from the board. Context: During our testing of provider payments, it was noted that ACH payments from July 1, 2024 to November 2024 did not reflect the authorization and review of ACH payments. However, testing of ACH payments from December 2024 to June 30, 2025 confirmed that the newly implemented review procedures were consistently followed with no further exceptions noted. Cause: The Organization’s policies and procedures prior to December 2024 lacked specific processes that provide segregation of duties and proper authorization and review of ACH payments of federal expenditures. The deficiency was addressed mid-year through the adoption of updated internal control procedures. Effect: The executive director inputs the ACH transactions of federal expenditures into the general ledger, approves transactions and reconcile the bank statements with little to no external monitoring. This increases the likelihood of noncompliance and/or misappropriation of federal funds. Recommendation: We recommend that the board approve the ACH payments of federal expenditure with evidence of approval. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding. The Organization has implemented formal policies and procedures starting December 1, 2024. A board member now reviews and approves all ACH payments monthly, and the evidence of this review is documented via signing of the ACH reports. The procedure ensures proper segregation of duties.

2024-003 Ineffective Internal Controls over Authorization of ACH Payments of Federal Expenditures (Material Weakness) Federal Agency: U.S. Department of Education Pass through entity: Kansas Department of Education Program Name: Child and Adult Care Food Program Assistance Listing Number: 10.558 Award Period: June 30, 2024 Criteria: Management is responsible for implementing effective internal controls to ensure proper segregation of duties exist over ACH payment authorization of federal expenditure. Condition: During the course of our audit, we noted that ACH payments of federal expenditures did not have proper approval from the board. Cause: The Organization’s policies and procedures lack processes that provide segregation of duties and proper authorization and review of ACH payments of federal expenditures. Effect: The executive director inputs the ACH transactions of federal expenditures into the general ledger, approves transactions and reconcile the bank statements with little to no external monitoring. This increases the likelihood of noncompliance and/or misappropriation of federal funds. Recommendation: We recommend that the board approve the ACH payments of federal expenditures with evidence of approval. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and plans to develop proper policies and procedures for proper review and approval of ACH payments of federal expenditures.

Significant Deficiencies: FINDING 2019-001: Preparation of Financial Statements. Condition: Our firm has been asked to prepare the financial statements, related notes, and the schedule of expenditures of federal awards for Martin Luther King, Jr. Child Care Center Association, Inc.; however, our firm cannot be considered part of the internal control structure of the Organization in regard to the preparation of the financial statements, related notes, and the schedule of expenditures of federal awards. Criteria: Martin Luther King, Jr. Child Care Center Association, Inc. prepares its financial statements and related notes in accordance with a basis of accounting other than accounting principles generally accepted in the United States of America. The Organization prepares the schedule of expenditures of federal awards in accordance with the Uniform Guidance. Effect: We consider this condition relating to the preparation of the financial statements, related notes, and the schedule of expenditures of federal awards to be a significant deficiency under the standards established by the American Institute of Certified Public Accountants. Cause: Organization personnel do have the skills, knowledge, and experience to process all financial transactions and the ability to issue internal financial statements needed to provide appropriate budget and operating information to the Organization governing body on an as needed basis. However, the Organization relies on auditor assistance to prepare the necessary documents in the prescribed formats. Recommendation: To strengthen internal control over financial statement preparation, we recommend obtaining a current copy of Accounting and Auditing Guide for Nonprofits, and for the Organization personnel to stay current on knowledge concerning the modified cash basis of accounting other than accounting principles generally accepted in the United States of America.