ST. PHILIP'S CHILD DEVELOPMENT CENTER

Federal Agency : United States Department of Health and Human Services (HHS) program Assistance Listing Number: 93.575 Federal Program: Child Care and Development Block Grant Type of Finding: Material Weakness Condition: Documentation of verification of eligibility for the tuition subsidy from OSSE could not be provided for all children in the program. Criteria: The Center is a Level II provider, which delegates the Center the function of determining eligibility of the children receiving the tuition subsidy. Eligibility for the program must be redetermined for every child every 12 months. Cause: The current staff at the Center were not able to locate certain eligibility related records. Effect: There was missing documentation required by OSSE, which could negatively impact licensing and/or future funding. Repeat Finding: Yes Known Questioned Costs: None Recommendations: The Center should maintain copies of the eligibility information provided by the families each year during initial determination for the tuition assistance and any subsequent redetermination. Thus information should be retained by the Center in each child’s file. View of Responsible Officials and Planned Corrective Action: See Management Response

Federal agency : United States Department of Health and Human Services (HHS) program Assistance Listing Number: 93.575 Federal Program: Child Care and Development Block Grant Type of Finding: Material Weaknesses Condition: The 2024 OMB Compliance Supplement states that providers must comply with all applicable health and safety requirements, which includes trainings in eleven specific areas for employees. Criteria: All employees are required to complete annual applicable health and safety trainings in accordance with the grant agreement. Cause: Employees either did not receive their annual trainings or the documentation was not retained. Effect: There was missing documentation required by OSSE and the compliance supplement, which could negatively impact licensing and/or future funding. Repeat Finding: Yes Known Questioned Costs: None Recommendations: The Center should maintain a checklist of the required annual trainings for each employee and enter the date each training is completed. The Center should also continuously monitor the trainings during the year to ensure that each employee is staying up to date on the requirements. View of Responsible Officials and Planned Corrective Action: See Management Response

2023-001 Audit Adjustments Condition: Several audit adjustments were made to the financial statements during the audit process that were not initially identified by the Center’s internal control. The majority of entries identified during the audit process were due to improper revenue cutoff and incorrect calculations for year-end accruals. Criteria: Internal controls should be in place that provide reasonable assurance that all significant transactions are recorded in the proper period and significant accruals are calculated correctly. Material adjustments should be identified by the Center’s internal control in the normal course of employees performing their assigned functions. Cause: Revenue transactions are being recorded on a cash basis. Year-end accruals are not being reviewed for accuracy. The Center’s internal control process did not identify certain adjustments prior to the audit process. Effect: The entries identified during the audit process increased total assets by $37,413, decreased total liabilities by $118,918, increased beginning and ending net assets by $39,082 and $195,413, respectively, and increased net income by $117,249. Recommendation: Procedures should be implemented requiring transactions to be recorded based on accrual accounting. Significant accounts and transactions should be reviewed by an individual with sufficient experience in accrual accounting to be able to identify misstatements. View of Responsible Officials and Planned Corrective Actions: The Center agrees with the finding. The Center hired a consultant during 2023 to assist with the accounting function. The consultant will assist with implementing these recommendations.

Condition: Payroll documentation, including W-4s, I-9s, employee offer letters, direct deposit authorization forms, and current salary approval, could not be located for a sample of employees. Timesheets could not be provided for periods selected for testing during our audit procedures Criteria: Procedures should be in place to obtain required personnel documentation during the hiring process. Approved salary changes should be documented and retained in personnel files. Timesheets should be approved by the employee’s supervisor and retained. Cause: There are incomplete procedures in place for the hiring process and no policies in place related to document retention. Effect: Personnel files are incomplete and have missing information. Recommendation: Procedures should be implemented for the hiring process and policies should be implemented for document retention. Current personnel files should be reviewed to determine if any documentation is missing. Pay rate changes and timesheets should be approved by the appropriate personnel and retained. View of Responsible Officials and Planned Corrective Actions: The Center agrees with the finding. The Center is in the process of implementing the recommendation.

Condition: The Provider Agreement with the District of Columbia Office of the State Superintendent of Education (OSSE) and related policy manuals require the Center to maintain specific documentation for employees providing services under the grant agreement, and for children receiving the subsidy. There was missing documentation from both the employee files and the children files. Criteria: OSSE provides policy manuals and checklist that detail the documentation required for employees and enrolled children. Cause: There are incomplete procedures in place for the hiring process and enrollment process and no policies in place related to document retention. Effect: There is missing documentation required by OSSE, which could lead to licensing or funding consequences. Recommendation: Procedures should be implemented for the hiring process and enrollment process and policies should be implemented for document retention. Current personnel files and children files should be reviewed to determine that all documentation required by OSSE is present. View of Responsible Officials and Planned Corrective Actions: The Center agrees with the finding. The Center is in the process of implementing the recommendation.

Condition: There were differences between attendance submitted to OSSE and attendance paid by OSSE. There were also instances of incorrect tuition rates paid. Criteria: Per the provider agreement, OSSE requires the Center to review and reconcile the monthly attendance reports and the monthly pay statement and notify OSSE of any discrepancies. Cause: The Center did not maintain a schedule for OSSE tuition revenue and no reconciliation was performed between amounts billed and amounts received. The Center is currently recording revenue based on the deposits received from OSSE. Effect: We tested 17% of attendance revenue and found the Center was underpaid by $1,892. The Center was overpaid by $4,877 related to incorrect tuition rates paid. Recommendation: The Center should maintain a schedule each month that shows each child, their attendance and their rate; and should record revenue and receivable each month based on this billing. The Center should reconcile payments received to amounts billed and follow up with OSSE on any discrepancies. View of Responsible Officials and Planned Corrective Actions: The Center agrees with the finding. The Center is in the process of implementing the recommendation.

Condition: Private pay tuition revenue is being recorded based on payments received instead of services performed. There is no documentation of private pay tuition rates by child or contracts with the families. Criteria: Procedures should be in place to properly record revenue and receivables for tuition. OSSE requires a schedule of private pay tuition rates. Cause: The Center did not maintain a schedule for private pay tuition revenue and no reconciliation was performed between amounts billed and amounts received. The Center is currently recording revenue based on the deposits received. The previous Director determined tuition rates and did not keep records of the rates or copies of current contracts. Effect: The Center could be understating revenue and receivables related to private pay tuition. The Center could be unaware of unpaid tuition. The Center has no documentation to support the private pay tuition rates charged or how they were calculated. Recommendation: The Center should record revenue and a corresponding receivable by child each month. The Center should create a schedule of tuition rates by program. Contracts should be maintained with each family with current tuition rates. View of Responsible Officials and Planned Corrective Actions: The Center agrees with the finding. The Center is in the process of implementing the recommendation.

Condition: Grant agreements are reviewed and grant revenue is monitored by one or more Board members, but complete grant documentation is not provided to accounting personnel to ensure proper revenue recognition under grant agreements. Criteria: Internal controls should be in place to allow grant revenue and expenses to be properly recorded in the correct reporting period. Cause: Grant agreements are not provided to Center account personnel. Effect: There were several audit adjustments to record grant revenue in the correct period. Recommendation: Provide grant agreements and grant documentation to the accounting staff to ensure proper revenue recognition under grant agreements. View of Responsible Officials and Planned Corrective Actions: The Center agrees with the finding. The Center implemented the recommendation.

Condition: Documentation of verification of eligibility for the tuition subsidy from OSSE could not be provided for all children in the program. Criteria: The Center is a Level II provider, which delegates the Center the function of determining eligibility of the children receiving the tuition subsidy. Eligibility for the program must be redetermined for every child every 12 months. Eligibility determination includes the following: • Family income does not exceed 85% of state median income for a family of the same size • Child must reside with a parent who is working or attending a job-training or education program, or are in need of or are receiving protective services • Redetermine eligibility every 12 months • Must establish a sliding fee scale, based on family size, income, and other appropriate factors, that provides for cost sharing by families that receive CCDF child care services Cause: The individuals responsible for performing the eligibility function are no longer working with the Center. The current staff at the Center were not able to locate certain eligibility documentation and determination. Effect: There is missing documentation required by OSSE, which could lead to licensing or funding consequences. Recommendation: The Center should maintain copies of the eligibility information provided by the families each year during initial determination and subsequent redetermination and retain the information in each child’s file View of Responsible Officials and Planned Corrective Actions: The Center agrees with the finding. The Center is in the process of implementing the recommendation.

Condition: Providers must comply with all applicable health and safety requirements, which includes trainings in eleven specific areas for employees. Documentation for required employee trainings was missing for several employees tested. Criteria: The compliance supplement states that providers must comply with all applicable health and safety requirements, which includes trainings in eleven specific areas for employees. Cause: Employees either did not receive their annual trainings or the documentation was not retained. Effect: There is missing documentation required by OSSE and the compliance supplement, which could lead to licensing or funding consequences. Recommendation: The Center should maintain a checklist of the required annual trainings for each employee and enter the date each training is completed. The Center should be continuously monitoring the trainings during the year to ensure each employee is staying up to date on the requirements. View of Responsible Officials and Planned Corrective Actions: The Center agrees with the finding. The Center is in the process of implementing the recommendation.

Condition: The Center was unable to provide approved invoices and payment support for a sample of expenditures. Criteria: For expenditures of federal awards, costs must be supported by adequate documentation. Cause: The expenditures were made on a debit card by a previous employee. The invoices and receipts were not retained by the Center. Effect: The expenditures may be disallowed. Context/Questioned Costs: A sample of 25 expenditures totaling $118,810 was selected for audit from a population of 440 expenditures totaling $281,781. The test found 7 expenditures that did not have adequate support, with questioned costs totaling $12,122. Recommendation: The Center should implement a policy regarding debit and credit card transactions that requires approved invoices and receipts to be submitted to the bookkeeper. View of Responsible Officials and Planned Corrective Actions: The Center agrees with the finding. The Center is in the process of implementing the recommendation.