Parents as Teachers National Center, Inc.Non-Profit

Criteria: The Maternal, Infant and Early Childhood Home Visiting Program requires that costs charged to a federal award must be allocable in accordance with 2 CFR § 75.405, meaning they are incurred for the Federal award, benefit the award in proportion to the relative benefit, and are necessary to the overall operation of the non-federal entity. Condition: A test of 60 payroll items for program year 2025 revealed that accrued vacation amounts were being calculated by the Center through a spreadsheet with a formula error that resulted in incorrect rates being applied to certain accrued vacation totals. The net variance totaled $2,291. Cause: The spreadsheet formula used to calculate accrued vacation costs referenced employee last names instead of unique identifiers, which did not account for employees with common last names. The error was not detected during the review process, as testing procedures relied on agreement to the spreadsheet calculation without validating the underlying formula logic. This caused certain personnel costs to be inaccurately allocated to the federal award, which is not consistent with 2 CFR § 75.405. Questioned Cost: $-0- Effect: Personnel costs charged to the federal award could be misstated and not properly allocable under 2 CFR § 75.405. Recommendation: We recommend that the Center management strengthen oversight of payroll allocation processes and review spreadsheet calculations to ensure formulas properly reference unique employee identifiers. This will help prevent errors in applying hourly rates and ensure personnel costs charged to the federal award are correctly allocable under 2 CFR § 75.405. Classification: Compliance finding and control deficiency in internal controls.

Criteria: The Maternal, Infant and Early Childhood Home Visiting Program requires that costs charged to a federal award must be allocable in accordance with 2 CFR § 75.405, meaning they are incurred for the Federal award, benefit the award in proportion to the relative benefit, and are necessary to the overall operation of the non-Federal entity. Condition: A test of 60 non-payroll expenses revealed that expenses are first reserved through an internal funding request, with each line item assigned to a program code, while each funding request could be comprised of multiple programs. When actual expenses are incurred, they are allocated to programs based on the original funding request percentages rather than the actual costs. While individual over and under allocations occurred, the net variance across the sample was $20. The review of the total population indicates that the offsetting effect of over and under allocations is consistent, limiting the overall financial impact. Cause: The allocation process relied on percentages from the original internal funding request rather than actual expenses incurred for each program. This process design did not include the inclusion of actual program costs, resulting in misallocated expenses that are not fully consistent with 2 CFR § 75.405, which requires costs charged to a federal award to be allocable based on the relative benefits received by the program. Questioned Cost: $-0- Effect: Expenses may be charged to the program despite not actually incurring them, leading to allocations that are not fully reflective of actual program costs. While the net financial impact is minimal, the allocation methodology does not fully comply with 2 CFR § 75.405 requirements for allocable costs. Recommendation: We recommend that the Center’s management review and revise the expense allocation process to ensure that actual costs are allocated to programs based on expenses actually incurred. This will help prevent misallocations and ensure that costs charged to Federal awards are properly allocable under 2 CFR § 75.405. Classification: Compliance finding and control deficiency in internal controls.

Type of Finding: Significant Deficiency in Compliance and Internal Control over Compliance Federal agency: U.S. Department of Health and Human Services Federal program title: Maternal, Infant and Early Childhood Home Visiting Program - WY Assistance Listing Number: 93.870 Award Period: October 1, 2020 – September 30, 2022 Award Period: May 1, 2021 – September 30, 2023 Award Period: December 1, 2021 – September 30, 2024 Reporting Criteria: The grant agreements with the U.S. Department of Health and Human Services requires Federal financial reports to be filed within 90 days of the reporting period end date. Condition: During audit testing of compliance and internal controls over compliance, it was discovered that required Federal financial reports were not submitted on a timely basis. Additionally, there was no review and approval of the process for verifying that required reports are submitted on time. Cause: Changes in personnel responsible for completing and submitting the reports resulted in delays in filing. Effect: Failure to comply with reporting requirements could result in grant termination and loss of future awards. Recommendation: Management should implement procedures to ensure required reports are submitted on time. It is recommended that management establish and enforce review and approval procedures for reporting to ensure required reports are submitted timely. Views of Responsible Officials and Planned Corrective Actions: The prior CFO certified all reports submitted to the federal PMS and EHB. This lost step resulted in notifications not being forwarded to the Director of Accounting, but instead to program staff. The Organization agrees with the finding and has put procedures in place to ensure required reports are submitted on time.