ARKANSAS EARLY LEARNING, INC.Non-Profit

2019-002 ? Grants Management and Reporting Department of Health and Human Services CFDA #93.600 Head Start Federal Grantor/ Pass-Through Grantor Grant Number Grant Period U.S. Department of Health and Human Services 06CH010761-01 0 1/01/19 ? 12/31/19 U.S. Department of Health and Human Services 06CH7162-06 12/01/18 ? 11/30/19 U.S. Department of Health and Human Services 06CH011275-01 12/01/19 ? 11/30/20 U.S. Department of Health and Human Services 06HP0034-04 09/01/18 ? 08/31/19 U.S. Department of Health and Human Services 06HP000387-01 09/01/19 ? 08/31/20 U.S. Department of Health and Human Services 06HP000118-01 03/01/19 ? 02/29/20 Questioned Costs: None How were questioned costs computed: Not applicable Condition: Arkansas Early Learning, Inc. did not record certain grant revenues and expenses in a timely and accurate manner during the year ended December 31, 2019. Management relies on grant revenue and expenses as recorded in the general ledger to compare grant expenditures with budget amounts. Inaccurate recording of grant activity in the general ledger caused the agency to draw down more funds than were spent for grants that ended during the year. Arkansas Early Learning, Inc. did not accurately report federal expenditures on its final Federal Financial (SF-425) Reports since management believed the grants had been fully spent when, in fact, there were unobligated amounts available to spend. Criteria: The Uniform Administrative Requirements, Cost Principles, and Audit Requirements for HHS Awards, 45 CFR section 75.302(b)(1) states the financial management system of each non-Federal entity must provide for the following: (1) Identification, in its accounts, of all Federal awards received and expended and the Federal programs under which they were received? (2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in Sec. 75.341 and 75.342?.(3) Records that identify accurately the source and application of funds for federally-funded activities. These records must contain information pertaining to Federal awards, authorizations, obligations, unobligated balances, assets, expenditures, income and interest and be supported by source documentation, (4) Effective control over, and accountability for, all funds, property, and other assets?(5) Comparison of expenditures with budget amounts for each Federal award. Cause: Existing internal controls for the timely and accurate recording of grant expenditures were not properly implemented during the year. In addition, there was significant turnover in the accounting department resulting in difficulties processing transactions in an efficient and effective manner given the volume of transactions the department processes. Effect: Because of the above conditions, a material non-compliance and a material weakness in internal control over compliance exists. Recommendation: We recommend that Arkansas Early Learning, Inc. establish procedures to ensure grant expenditures are recorded and reported in an accurate and timely manner.

2019-003 ? Head Start Program Expenses Department of Health and Human Services CFDA #93.600 Head Start Federal Grantor/ Pass-Through Grantor Grant Number Grant Period U.S. Department of Health and Human Services 06CH010761-01 01/01/19 ? 12/31/19 U.S. Department of Health and Human Services 06CH011275-01 12/01/19 ? 11/30/20 U.S. Department of Health and Human Services 06HP000387-01 09/01/19 ? 08/31/20 U.S. Department of Health and Human Services 06HP000118-01 03/01/19 ? 02/29/20 Questioned Costs: $50,243 How were questioned costs computed: The questioned costs consist of the Child & Adult Care Food Program (CACFP) expenses incurred and paid for by the grants above in December 31, 2019. Condition: The December 2019 CACFP claim was not accepted by the Arkansas Department of Human Services because it was not submitted by Arkansas Early Learning, Inc. in a timely manner. As a result, Arkansas Early Learning, Inc. charged all food costs for the month of December 2019, including those that would have been covered by CACFP, to its Head Start and Early Head Start grants. Criteria: The Head Start Performance Standards, section 1302.44(b) states that a program must use funds from USDA Food, Nutrition, and Consumer Services child nutrition programs as the primary source of payment for meal services. Early Head Start and Head Start funds may be used to cover those allowable costs not covered by the USDA. In addition, the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for HHS Awards, 45 CFR section 75.403(a) states that in order for costs to be allowable, they must be necessary and reasonable for the performance of the Federal award. Arkansas Early Learning, Inc. did not utilize CACFP as the primary source of payment for the December 2019 meal services because of its late submission of the monthly report. It was determined these costs are not necessary costs to charge to Head Start since they could have been paid for by CACFP had the monthly report been properly submitted. Cause: The employee who submits the monthly CACFP claims was out of the office when the report was due to be submitted to the Arkansas Department of Human Services. A backup plan for submission of the December 2019 report was not implemented by Arkansas Early Learning, Inc. Effect: Because of the above conditions, Arkansas Early Learning, Inc. was not in compliance with program requirements for allowability of costs and a significant deficiency in internal control over compliance exists. Recommendation: We recommend that Arkansas Early Learning, Inc. establish procedures to ensure the monthly CACFP reports are submitted in a timely manner. View of Responsible Officials: Although Management agrees with the assessment in regard to the timeliness of the December 2019 CACFP claim, management does not agree that food costs charged to the federal Early Head Start and Head Start grants should be a finding of questioned costs. 45 CFR ? 1302.44(b) states that a program must use funds from USDA Food, Nutrition, and Consumer Services child nutrition programs as the primary source of payment for meal services. Early Head Start and Head Start funds may be used to cover those allowable costs not covered by the USDA. Absent of definition in the regulations, AEL used the first definition of "primary" found in Webster's dictionary "of chief importance; principal.", as in someone's "primary residence", or the dwelling where they usually live. AEL has met this standard because USDA funds were the primary source of payment for meal services in 2019 by a large margin. AEL principally and usually (primarily) expended USDA funds for payment of food costs and meal services. The standard at 45 CFR ? 1302.44(b) does not require meeting a test of "primary" on a month by month basis, but only to meet the test of "primary" before utilizing EHS or HS funds, which AEL asserts it did. Additionally, when considering standard 45 CFR ?75.403(a) for necessity and reasonableness for the performance of the Federal award, AEL believes food costs are by standard and precedent both reasonable and allowable; we believe they are even required. Regulation 45 CFR ? 1302.44(a)(2) states a program must: (ii) Ensure each child in a program that operates for six hours or more per day receives meals and snacks that provide one half to two thirds of the child?s daily nutritional needs, depending upon the length of the program day; (iii) Serve three- to five-year-olds meals and snacks that conform to USDA requirements in 7 CFR parts 210, 220, and 226, and are high in nutrients and low in fat, sugar, and salt; (iv) Feed infants and toddlers according to their individual developmental readiness and feeding skills as recommended in USDA requirements outlined in 7 CFR parts 210, 220, and 226, and ensure infants and young toddlers are fed on demand to the extent possible; and (vi) Serve all children in morning center-based settings who have not received breakfast upon arrival at the program a nourishing breakfast;. To meet these standards, AEL purchased food and related supplies in December 2019, prepared the food, and fed the food to the children enrolled in the Early Head Start and Head Start program, charging those food costs to the federal award. AEL believes this is an allowable, reasonable, and required charge to both the Head Start and Early Head Start grants and the costs to feed the children in the program should not be labeled as questionable costs. AEL acknowledges the ideal scenario would have been a timely submission of the December 2019 CACFP claim and Management has committed to a corrective action plan in regard to the timeliness of CACFP claims going forward.

GSA_MIGRATION

GSA_MIGRATION

GSA_MIGRATION