Technology for Rural Enhancement of Communities

#2024-001 FINDING: Activities Allowed or Unallowed Federal Program Affected: Head Start (ALN 93.600) Compliance Requirement: Activities Allowed or Unallowed Questioned Costs: No known or likely questioned costs exceeding $25,000. Condition and Cause: The Program requires the Organization to accurately monitor and allocate administrative costs charged to the grant. During the year, the Organization allocated 15.4 percent of total grant costs to administrative expenses. This exceeds the allowable limit of 15 percent, as specified by the grant requirements. Criteria and Effect: These excess administrative costs were not identified as a result of the Organization’s existing internal controls, and therefore, resulted in noncompliance with the federal program. However, this did not result in a material misstatement of the Organization’s financial statements. Repeat Finding from Prior Year: N/A Recommendation: We recommend the Organization review and revise its current administrative cost allocations to ensure they reflect actual operations. Allocations should also be updated to account for any changes in employee responsibilities. Additionally, management should perform thorough reviews of administrative cost allocations throughout the grant period to ensure accuracy and compliance with program requirements. Response/Corrective Action Plan: The Organization agrees with the above finding. See Corrective Action Plan.

#2022-001 FINDING: Audit and Schedule of Expenditures of Federal Awards (SEFA) Financial Statement Preparation and Adjustments Federal Program Affected: Head Start/ALN #93.600 Compliance Requirement: Reporting Questioned Costs: N/A Condition and Cause: Turnover occurred in the third-party accountant used to adjust the accounting records to full accrual basis and assist with audit preparation. As such, the Organization requested we draft the audited financial statements and related footnote disclosures and perform certain adjusting entries in addition to our regular audit services. As a result, we proposed material audit and SEFA adjustments, had minor reconciling differences, and prepared the Organization?s SEFA and financial statements. Criteria and Effect: These adjustments were not identified as a result of the Organization?s existing internal controls, and therefore, could have resulted in a material misstatement of the Organization?s financial statements or noncompliance with the federal programs. It also resulted in significant additional audit time and expense. Repeat Finding from Prior Year: No Recommendation: We recommend the Organization hire a third party with adequate accrual accounting experience to prepare year-end accruals, reconcile accounts, and prepare the SEFA and financial statements. Management should also review the financial statements for accuracy at year-end. Response/Corrective Action Plan: The Organization agrees with the above finding. See Corrective Action Plan.