Family FocusNon-Profit

Early Head Start and Head Start Program ? 93.600 U.S. Department of Health and Human Services Award Numbers ? 33334, 33369, 25EHS, 22HS Criteria or specific requirement ? The program requirements of Head Start indicate that an entity must share accurate and regular financial information with the governing body and the policy council, including monthly financial statements, including credit card expenditures and the financial audit. Condition ? 2 months of financial information being provided to the Board of Directors were selected for testing. 1 out of the 2 months of financial information did not include supporting monthly consolidated financial statements available for review by the governing body. Questioned costs ? Not applicable. Context ? 2 months of financial information out of the required 12 months of financial statements were selected for internal control testing over program governance. For 1 out of the 2 months tested, evidence that the Board of Directors had obtained monthly consolidated financial statements could not be provided. In addition, it was noted that the governing body had been reviewing the Society?s financial information on a quarterly basis rather than monthly as required throughout most of the fiscal year until March 2020. Effect ? Not providing accurate and regular financial information, as defined in the compliance requirement, has resulted in the Society not being in compliance with grant requirements. Cause ? The Society did not have procedures in place to delegate the responsibilities of executive management. In addition, the Society did not implement procedures to review and hold management accountable for their responsibilities as it relates to the financial reporting and compliance environment and structure of the Society. Identification as a repeat finding ? 2019-005 Recommendation ? We recommend that the Society implement policies and procedures to ensure that management is providing accurate and timely financial information to the Board of Directors on a monthly basis. Views of responsible officials and planned corrective actions ? Monthly financial reporting to both the Parent Policy Council and the Finance Committee of the Board of Directors has been implemented.

Early Head Start and Head Start Program ? 93.600 U.S. Department of Health and Human Services Award Numbers ? 33334, 33369, 25EHS, 22HS Criteria or specific requirement ? An entity may only charge to a federal award allowable costs. Adequate source documentation should be retained to support amounts and items reported in order to ensure compliance with allowable cost requirements. Condition ? Certain amounts selected for testing did not agree with supporting documentation. In all instances of amounts sampled, portions charged to the grant were less than the actual amount expended per the supporting documentation. Questioned costs ? None. Context ? 21 out of the 40 expenditures charged to the grant that were selected for testing within the months of November 2019 and May 2020 had amounts that were less than the actual amount expended per supporting documentation. For personnel-related expenditures, amounts charged to the grant had been computed without fully and properly reconciled substantiation behind such computation, resulting in certain allowable personnel-related deductions and benefits to be improperly excluded and inconsistent with source documentation. Effect ? Mismatch between expenditures charged to the grant and actual expended amounts has resulted in the Society being unable to fully and properly reconcile its grant vouchers to the general ledger and the Society?s financial reporting system. As a result, the Society did not fully recoup eligible expenditures that were allowed to be charged to the grant. Cause ? The Society did not have any procedures in place to review the preparation of allowable costs charged to the grant. Identification as a repeat finding ? 2019-006 Recommendation ? We recommend that the Society implement policies and procedures to ensure that expenditures charged to the grant are consistent with source documentation and that accurate and timely reconciliations be implemented and reviewed such that program-related expenditures align with the Society?s financial information. Views of responsible officials and planned corrective actions ? Historically, the Company?s accounting platform was not structured to capture the data necessary to perform specific allocations of certain benefit costs like medical insurance by participant. The vouchering process used an allocation of total costs to estimate reimbursable expenditures. The historical estimating process used to allocate costs to CCCS?s grants and contracts was reviewed and allowed by both government and independent auditors. CCCS has implemented the necessary changes to its general ledger structure to produce a detailed allocation of expenditures agreeing directly to source documents to assure that maximum allowable contract reimbursement is accomplished.

Special Test and Provision ? Program Governance Early Head Start and Head Start Program ? 93.600 U.S. Department of Health and Human Services Award Numbers ? 33334, 33369, 25EHS, 22HS Criteria or specific requirement ? The program requirements of Head Start indicate that an entity must share accurate and regular financial information with the governing body and the policy council, including monthly financial statements, including credit card expenditures and the financial audit. Condition ? 2 months of financial information being provided to the Board of Directors were selected for testing. Such financial information did not include supporting monthly consolidated financial statements available for review by the governing body. Questioned costs ? Not applicable. Context ? 2 months of financial information out of the required 12 months of financial statements were selected for internal control testing over program governance. Such financial information included the consolidated statement of activities but excluded the consolidated statement of financial position for both months tested. In addition, it was noted that the Board of Directors are reviewing the Society?s financial information on a quarterly basis rather than monthly as required. Effect ? Not providing accurate and regular financial information, as defined in the compliance requirement, has resulted in the Society not being in compliance with grant requirements. Cause ? The Society did not have procedures in place to delegate the responsibilities of executive management. In addition, the Society did not implement procedures to review and hold management accountable for their responsibilities as it relates to the financial reporting and compliance environment and structure of the Society. Identification as a repeat finding ? Not applicable. Recommendation ? We recommend that the Society implement policies and procedures to ensure that management is providing accurate and timely financial information to the Board of Directors on a monthly basis. Views of responsible officials and planned corrective actions ? Management concurs with this finding. CCCS is now providing the Finance Committee of the Board of Directors monthly financial statements that include Statements of Operations and Financial Position. CCCS has restructured the reporting functions in the general ledger to allow for discreet reporting of Head Start/Early Head Start financial operations for dissemination to the Parent Policy Council ? including credit card activity.

Allowable Costs Early Head Start and Head Start Program ? 93.600 U.S. Department of Health and Human Services Award Numbers ? 33334, 33369, 25EHS, 22HS Criteria or specific requirement ? An entity may only charge to a federal award allowable costs. Adequate source documentation should be retained to support amounts and items reported in order to ensure compliance with allowable cost requirements. Condition ? Certain amounts selected for testing did not agree with supporting documentation. In all instances of amounts sampled, portions charged to the grant were less than the actual amount expended per the supporting documentation. Questioned costs ? None. Context ? 40 out of the 40 expenditures charged to the grant that were selected for testing had amounts that were less than the actual amount expended per supporting documentation. For personnel-related expenditures, amounts charged to the grant had been computed without fully and properly reconciled substantiation behind such computation, resulting in certain allowable personnel-related deductions and benefits to be improperly excluded and inconsistent with source documentation. Effect ? Mismatch between expenditures charged to the grant and actual expended amounts has resulted in the Society being unable to fully and properly reconcile its grant vouchers to the general ledger and the Society?s financial reporting system. As a result, the Society did not fully recoup eligible expenditures that were allowed to be charged to the grant. Cause ? The Society did not have any procedures in place to review the preparation of allowable costs charged to the grant. Identification as a repeat finding ? Not applicable. Recommendation ? We recommend that the Society implement policies and procedures to ensure that expenditures charged to the grant are consistent with source documentation and that accurate and timely reconciliations be implemented and reviewed such that program-related expenditures align with the Society?s financial information. Views of responsible officials and planned corrective actions ? Management concurs with this finding. CCCS has restructured the general ledger to allow discreet capture of allowable costs by grant/contract to ensure appropriate allocation of allowable costs. Further, CCCS has implemented internal control structures that include review and approval of vouchers submitted to all funders by senior leadership independent of the voucher preparation process.

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