Durham's Partnership for Children

Name of Federal Agency: United States Department of Health and Human Services Federal Program Name: Early Head Start (EHS) Assistance Listing Number 93.600 Federal Award Identification Number and Year: 04CH011372-04 - 2023 04CH011372-05 - 2024 Name of Pass-through Entity: N/A Criteria Program regulations and contracts require timely submission of SF-425 FFR reports to the regulatory agent as specified in 2 CFR section 200.328. Condition Durham’s Partnership for Children did not submit timely SF-425 FFR reports related to ongoing 2023 and 2024 EHS grants. Cause Management does not have controls in place to ensure timely data compilation and reporting. Effect or Potential Effect Management is not in compliance with the program guidelines requiring timely reporting to the regulatory agent. Questioned Costs: None Context During testing of the reporting compliance requirement for EHS, it was noted that there were severe delays in submission of all required reports for the current year. Identification of Repeat Finding: This finding is a repeat finding (see prior year finding number 2024-002). Recommendation Management should implement procedures to ensure timely submission of required reports to the regulatory agent. Reporting Views of Responsible Officials The Partnership has hired a new Chief Financial Officer with experience in federal grant management and reporting, including Early Head Start. All reporting requirements for the continuing EHS grants have been completed and submitted timely. Head Start system alerts are reviewed as they are received, and the CFO actively monitors upcoming reporting due dates on a monthly basis to ensure continued compliance. In addition, for fiscal year 2025–26 the Chief Financial Officer has updated financial policies and procedures, re-established a Finance Committee for oversight, and implemented monthly financial reporting to the Board of Directors. These actions strengthen governance, improve compliance monitoring, and are expected to result in the finding being fully resolved in future audits.

Item 2024-002 - Reporting - Significant Deficiency Name of Federal Agency: United States Department of Health and Human Services Federal Program Name: Early Head Start (EHS) Assistance Listing Number 93.600 Federal Award Identification Number and Year: 04HP000377-04-2023 04CH011372-04-2023 04HE001247-001-2023 Criteria Program regulations and contracts require timely submission of SF-425 FFR reports to the regulatory agent as specified in 2 CFR section 200.328. Condition Durham’s Partnership for Children did not submit timely SF-425 FFR reports related to ongoing 2023 EHS grants. Cause Management does not have controls in place to ensure timely data compilation and reporting. Effect or Potential Effect Management is not in compliance with the program guidelines requiring timely reporting to the regulatory agent. Questioned Costs: N/A Context During testing of the reporting compliance requirement for EHS, it was noted that there were severe delays in submission of all required reports from the current year. The delay in timing of the report filings relates to the availability of accurate financial data (Finding No. 2024-001). Identification of Repeat Finding: Not a repeat finding. Recommendation Management should implement procedures to ensure timely submission of required reports to the regulatory agent. Reporting Views of Responsible Officials The finance director has been replaced by a qualified CPA. Support from an external content specialist was secured to train the current CFO on the proper preparation of the SF-425 reports. Reporting has been brought current. Alert emails from HSES are being reviewed by leadership and the HSES website is being monitored for submission deadlines. Priority is given to ensure timely deliverables.

Section III ? Federal Award Findings and Questioned Costs Item 2022-001 U.S. Department of Health and Human Services, NC Department of Health and Human Services: Award 42001 Temporary Assistance for Needy Families (TANF): Federal Assistance Listing Number 93.558 Compliance Requirement: Reporting Criteria Uniform Guidance requires the Schedule of Expenditures of Federal Awards to include all sources of grants which originate at the Federal Level. Condition The initial preparation of the Schedule of Expenditures of Federal Awards did not identify all of the Federal awards received and expended for the Temporary Assistance for Needy Families and Child Care and Development Block Grant programs during fiscal year 2022. Cause Management did not have controls in place to ensure proper inclusion of all Federal awards through grantors for the Temporary Assistance for Needy Families and Child Care and Development Block Grant programs on the Schedule of Expenditures of Federal Awards. Effect or Potential Effect Management is not in compliance with the Uniform Guidance requirement to report all sources of grants which originate at the Federal level for the Temporary Assistance for Needy Families and Child Care and Development Block Grant programs on the Schedule of Expenditures of Federal Awards. Questioned Costs None. Context During out testing for completeness of the Schedule, it was determined that $721,724 of Federal funds for the Temporary Assistance for Needy Families and Child Care and Development Block Grant programs were omitted and required adjustment to properly state the Schedule of Expenditures of Federal Awards. Identification as a Repeat Finding No. Recommendation Management should institute procedures and controls to ensure that the Schedule of Expenditures of Federal Awards includes all sources of grants which originate at the Federal level. Views of Responsible Officials We agree with our auditor's finding. Our contract with the NC Department of Health and Human Services Division of Child Development and Early Education is comprised of both State and Federal funding. Throughout the year as funds are received, our agency does not know the origin on the funding. As such, we record the funding as State funds when received. At the end of the year, we receive a spreadsheet indicating the composition of the funding. Reclassification journal entries are prepared to allocate the funding to the various funding components of the contract. The funds in question were received in July 2022 and recorded as State funds when in fact they were Federal funds. We will ensure that at the end of each fiscal year that we are reclassifying funds in accordance with the spreadsheet. Once the journal entries have been posted, a MIP report will be created and reconciled to the spreadsheet. This will ensure the funds are properly recorded the correct funding source.

Item 2021-001, Reporting, U.S. Department of Health and Human Services, Head Start Cluster: CFDA 93.600 Criteria or Specific Requirement: Under the requirements of the Federal Funding Accountability and Transparency Act (?Transparency Act?) that are codified in 2 CFR Part 170, recipients (i.e. direct recipients) of grants or cooperative agreements who make a first tier subaward of $30,000 or more are required to register in the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS) and report subaward data through FSRS. Statement of Condition and Context: During our testing of the reporting compliance requirement, it was noted that Durham's Partnership for Children has two first tier subawards that are required to be reported in the FSRS. Durham's Partnership for Children did not report the subawards information as required. The two subaward contracts totaled $604,492 for the year ended June 30, 2021. Statement of Cause: Management was not aware that they have to register and report subaward information in the FSRS related to the first tier subawards given to another entity that were over $30,000. Effect: Durham's Partnership for Children did not comply with the reporting compliance requirement as required by the Transparency Act. Questioned Costs: None. Identification of Repeat Finding: No. Recommendation: We recommend that Durham's Partnership for Children register in the FSRS and timely report the required subaward information as required by the Transparency Act. Views of Responsible Official: We agree with our auditor?s finding. We did not complete the required filing under the Federal Funding Accountability and Transparency Act related to the first-tier sub award given to another entity that was over $30,000. While the contractual relationship with the delegate is no longer in place, we have implemented steps to ensure that if we enter into such agreements in the future, first tier sub awards are identified so that the required reporting is performed on a timely basis.