EIN: 521176416
UEI: U485RJEAJLM3
Data as of August 20, 2026
Management decision deadline — for entities that funded this organization
The FAC accepted this audit on October 10, 2019. Under 2 CFR 200.521(d), a pass-through entity that provided federal funds to this organization for this audit period must issue a management decision on these findings by April 10, 2020, which was (2324 days ago).
What is a management decision? →SECTION II FINDINGS AND QUESTIONED COSTS Finding 2019-001 Head Start ? CFDA #93.600 Grant #03CH010326-03; Grant Period ? Federal Fiscal Year 2018 Federal Award Finding Criteria: In accordance with 45 CFR 1302.15, a Head Start grant recipient must maintain its fully funded enrollment level and fill any vacancies within 30 days of the vacancy. No changes in scope are allowed unless prior approval from the Office of Head Start is received. Condition: During our review of the monthly enrollment levels of Head Start of Washington County, we noted the full enrollment level of 485 slots for the 2017-2018 school year and 480 slots for the 2018-2019 school year was not attained. The enrollment shortfall ranged from 9 to 13 slots for the 2017-2018 school year months of February 2018 through April 2018. The enrollment shortfall was 108 slots for the 2018-2019 school year months of September 2018 through January 2019. Cause: As a result of the local public-school system opening additional full-day pre-kindergarten classes, many of the children that were enrolled in part-day classes at the Organization withdrew and enrolled in the public-school system?s full-day program. In response, the Organization decided to convert existing part-day classrooms into full-day classes, which ultimately reduced available classroom capacity. Management submitted a change in scope agreement to the Office of Head Start in order to obtain approval for converting the part-day classrooms to full-day classes. However, management and the governing board did not wait until approval was received from the Office of Head Start before converting the classrooms. Effect: If Head Start of Washington County is unable to meet the full enrollment levels and initiates changes in scope without prior approval of the Office of Head Start, there is risk that funding may be cut in future awards. Questioned Costs: There were no questioned costs associated with this finding. Context: A review of the enrollment status summary report for the period of February 2018 to January 2019 was performed. This report summarizes the enrollment levels as of the last day of each month. Repeat Finding: This is a continuing finding from the prior year. See Finding 2018-005. Recommendation: We recommend the governing board receive training on the regulations applicable to the Head Start grant to ensure decisions are made in accordance with grant policies. We also recommend that Head Start of Washington County continue to work with the Office of Head Start to request a reduction in the required enrollment levels or develop a plan to obtain full enrollment.
The administrative staff researched and explored local and national nonprofit board structures, specifically, Head Start grantees known as single purpose agencies. The Board of Directors completed a restructuring in the spring of 2019 to reflect the revised Head Start Performance Standards as well as the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for HHS awards. A predominately new board received in depth governance training accompanied with copies of the regulations applicable to the Head Start grant. An under-enrollment plan was developed after consultation with the regional office and the Head Start Technical Assistant representative. The plan includes an increased recruitment effort for eligible 3-year olds and an expanded advertising campaign, including additional social media out reach. A Change in Scope Reduction and Change in Scope Conversion of HS to EHS slots has been submitted for review and critique by Regional Office representatives are being finalized to be reviewed and critiqued by Regional Office representatives. Both Change in Scope requests are an effort to meet and maintain full enrollment.
2018-005
Finding 2019-002 Head Start ? CFDA #93.600 Grant #03CH010326-03; Grant Period ? Federal Fiscal Year 2018 Federal Award Finding Criteria: In accordance with 45 CFR 75.439, prior approval from the HHS awarding agency must be obtained for the purchase of equipment and other capital expenditures. 45 CFR 75.2 defines capital expenditures as expenditures to acquire capital assets, or expenditures to make additions, improvements, modifications, replacements, rearrangements, reinstallations, renovations or alterations to capital assets that materially increase the assets value or useful life. Condition: During our review of equipment and real property additions made during fiscal year 2019, we noted the Organization applied a portion of the cost to upgrade the HVAC and lighting systems at one of their schools to the federal Head Start grant award without receiving prior approval from the HHS awarding agency. Cause: Management was uncertain as to what constitutes a capital expenditure requiring prior approval from the HHS awarding agency and what is considered a minor repair and maintenance activity allowable under the grant award. Management felt the HVAC and lighting upgrades were a minor repair and maintenance activity that did not require prior approval. Effect: Head Start of Washington County may have to return the funding received from the Head Start grant award for this unallowable activity if the HHS awarding agency requests reimbursement. Failure to comply with grant regulations may result in funding being cut in future awards. Questioned Costs: Questioned costs amount to $47,932. Questioned costs represent the 54% of the $88,763 total project cost that was charged to and funded by the federal Head Start grant award. Context: SEK reviewed the entire population of equipment and real property acquisitions made during fiscal year 2019 and identified the above expenditure that did not adhere to the regulations related to allowable activities and costs. Repeat Finding: Not a repeat finding from the prior year. Recommendation: We recommend management review the federal regulations regarding capital expenditures and gain an understanding of what constitutes a capital expenditure requiring HHS prior approval. In addition, when management is uncertain as to whether a transaction falls within the scope of their grant award, we recommend they discuss the transaction with the awarding agency prior to incurring costs to ensure grant compliance is achieved.
Although this expense was necessary and there was limited access to alternative funds, Management had incorrectly categorized the expense as a repair and maintenance activity rather than a capital expenditure requiring prior approval from the HHS awarding agency. Since then, the Organization has taken corrective actions to ensure that this finding will not occur again. A recent change in leadership and a reorganized Board of Directors will ensure that all questionable expenditures will be brought to the attention of the Regional Office. In particular, Management will seek guidance prior to incurring costs when there is any uncertainty as to whether the expense falls within the scope of the grant award. The Fiscal Manager and current Executive Director recently attended the Region III Fiscal Roundtable to gain deeper understanding about grant compliance requirements and which expenses require prior approval. Furthermore, the Board of Directors recently completed training sessions regarding the requirements of Head Start governance and the Head Start Program Performance Standards and are fully aware of its roles and responsibilities. The Board of Directors and Finance Committee recently added financial experts that are familiar with federal financial regulations including repairs versus capital expenditures. These financial experts will add another layer of accountability to ensure proper compliance with grant requirements. For example, fiscal policies and procedures have been updated and approved to include additional oversight by the Finance Committee. In addition, the Finance Committee will update the procurement thresholds and authorization limits set forth in the current purchasing policies. This will reduce the purchase threshold, allowing additional Board of Directors oversight and ensuring purchases exceeding a certain threshold amount will receive additional review and approval by the governing body. An additional second signatory has also been added to the bank accounts to add yet another layer of checks and balances.
Finding 2019-003 Head Start ? CFDA #93.600 Grant #03CH010326-03; Grant Period ? Federal Fiscal Year 2018 Federal Award Finding Criteria: Head Start grantees are required to file Form SF-425, Federal Financial Report, three times a year. The first report, known as the semi-annual report, includes cumulative transactions for the first six months of the fiscal year. The second report, known as the Annual report, includes cumulative transactions for the full fiscal year as of the last day of the fiscal year. The third report is known as the Final report and captures all transactions for the fiscal year as well as all transactions occurring in the 90-day period after year-end to close out the grant award. Part of the information reported on the SF-425 reports is the amount of federal expenditures and unobligated balance. The instructions for Form SF-425 state that the amount reported as the federal share of expenditures on line 10e should include the sum of cash disbursements for direct charges for property and services, the amount of indirect expense incurred and the net increase or decrease in accounts payable and other accruals. The federal share of unliquidated obligations reported on line 10f should include all obligations incurred, but for which an expenditure has not yet been recorded. The total federal share on line 10g and unobligated balance of federal funds on line 10h are automatically populated based upon the authorized amount of federal funds and the data entered the above-mentioned line items. Condition: During our review of the SF-425 reports filed for fiscal year 2019, we noted the amounts entered on lines 10e and 10f on the semi-annual and annual report were incorrect. On the semi-annual report, the federal share of expenditures was overstated by $68,321.46 and the federal share of unliquidated obligations was overstated by $161,146.34 This resulted in the reported total federal share being overstated by $229,467.80 and the unobligated balance of federal funds being understated by $229,467.80. On the annual report, the federal share of expenditures was overstated by $40,378.90 and the federal share of unliquidated obligations was understated by $40,378.90. The total federal share and unobligated balance of federal funds were properly stated. Cause: Management misunderstood what information was required to be reported on the line items for the federal share of expenditures and federal share of unliquidated obligations. The amount reported by management as the federal share of expenditures included all charges to the grant award, including encumbered liabilities for items ordered but not received. The value entered as the federal share of unliquidated obligations was calculated as the difference between the federal share of expenditures reported on line 10e and the federal cash disbursements reported on line 10b of the report. Effect: If required reporting is not properly completed, it will likely generate inquiries by the grantor during their review of the reports. As a result, the grantor may require the Organization to submit additional documentation with their submitted reports or the grantor may perform more frequent onsite monitoring. If incorrect reports are repeatedly filed, it may result in loss of future federal funding Questioned Costs: There were no questioned costs associated with this finding. Context: SEK reviewed all three SF-425 reports required to be filed for the Organization?s fiscal year 2019. No errors were noted on the final SF-425 report filed. Repeat Finding: Not a repeat finding from the prior year. Recommendation: We recommend management review the instructions for the SF-425 report while preparing the report. If management is uncertain of what is required to be reported on any of the line items, we recommend management contact their awarding agency prior to submitting the report. Also, we suggest management contact the Head Start awarding agency, notify them of the error and re-submit the semi-annual and annual SF-425 reports with the correct balances.
This finding partially occurred due to a timing difference between when the annual SF-425 report was submitted and information recorded in the Organization?s accounting system, which caused the discrepancies noted above. To avoid this issue from occurring again, Management has performed a detailed review of the instructions for preparing the SF-425 report and will, in the future, contact the awarding agency should questions arise at the time the report is due. In addition, Management sought further clarification from the Regional Office on the specifics of the report, due to differences in feedback from its auditor and federal reviewer regarding the nature of this reporting error. Regional Office has recently responded to Management with specific guidance requested. Accordingly, Management will correct and resubmit the SF-425 based on the feedback received from Regional Office. Furthermore, systems have been put in place to ensure timely and accurate completion of these reports going forward. Management has recently updated the Organization?s financial policies as well as created a Finance Committee. In particular, the updated financial policies and procedure includes a secondary review by a Finance Committee member of future financial reports prior to submission to avoid future reporting errors. This updated financial policy will be drafted and voted by the governing board. A procedure with detailed instructions regarding the completion of the SF-425 form itself has also been drafted for staff use.
Management decision deadline — for entities that funded this organization
The FAC accepted this audit on October 24, 2018. Under 2 CFR 200.521(d), a pass-through entity that provided federal funds to this organization for this audit period must issue a management decision on these findings by April 24, 2019, which was (2676 days ago).
What is a management decision? →GSA_MIGRATION
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Data source: This information comes from the Federal Audit Clearinghouse, the official repository of Single Audit data. All data is public domain. Verify this organization's audit history at fac.gov.
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