SCOTTDALE EARLY LEARNING, INC.

2023-002 Allowable Costs/Activities Allowed Funding Agency: U.S. Department of Health and Human Services Pass Through Grantor: Georgia Department of Early Care and Learning, Bright from the Start Grant: Early Head Start CFDA Number: 93.600 Grant Number: 469-G23-SEL-EHSCCP-017 and 469-G23-SEL-EHSCCP-018 Criteria: Funds spent under the grant must be allowed under Title 2 U.S. Code of Federal Regulations Part 200 Subpart E, Cost Principles (“Cost Principles”). Condition: During the course of the auditing procedures we noted that the Organization had one charge to the grant which did not follow Cost Principles. The cost was entered in the general ledger system used to apply for reimbursement at an amount greater than could be supported. Questioned costs: $4,607Context: Of forty expenditure samples, totaling $28,103, selected from a population of $171,344, we noted one which did not follow Cost Principles. Effect: The costs could be deemed to be unallowable and have to be returned to the grantor. Cause: Due to an ineffective review process of the charged costs compared to what is allowed under Cost Principles. Recommendation: Management should ensure all costs charged to the grant follow Cost Principles. Grantee Comment: Refer to Corrective Action Plan

2020-001: Audit Support and adjustments Criteria: Internal controls should be sufficient to ensure that financial statements are prepared in accordance with generally accepted accounting principles and reconciled with supporting documentation. Effect: During the audit process, there was considerable difficulty in obtaining accurate supporting documentation from Scottdale Early Learning, Inc. (the "Organization"). Many schedules, such as receivables, fixed assets and accounts payable, required additional analysis. Audit work was delayed while reconciling the information that was provided to supporting documentation. The Organization did not record prior year audit adjustments that decreased beginning net assets by approximately $414,000. The current year audit adjustments included a decrease in grants and contributions receivable and decrease in revenues of approximately $281,000; an increase in notes, accrued expenses, accounts payable and increase in expenses of $144,000. Cause: During the year ended June 30, 2020, the Organization had a small accounting staff and there was a break down in monthly reconciling procedures to ensure that accounts such as receivables, payables and fixed assets were complete and accurate. Recommendation: We recommend that the Organization acquire sufficient accounting resources and strengthen monthly closing procedures to reconcile and support balances in each account. Management response and planned corrective action: We agree with this finding and will update our processes.

2020-002: Schedule of Federal Expenditures Criteria: 2 CFR Section 200.510 requires that the auditee prepare financial statements that reflect its financial position, results of operations or changes in net assets, and, where appropriate, cash flows for the fiscal year audited. The auditee must also prepare a Schedule of Expenditures of Federal Awards for the period covered by the auditee's financial statements which must include the total federal awards expended as determined in accordance with ? 200.502. Effect: During 2020, the Organization's schedule of federal expenditures did not include all federal awards. Audit adjustments to the schedule of approximately $570,000 were made to include additional Early Headstart funds of approximately $159,000, Child Care and Development Block Grant funds of approximately $261,000 and an Economic Injury Disaster Loan of $150,000. Cause: Evaluation of pass-through awards was not performed to determine if the awards were subject to the Uniform Guidance. Recommendation: Management should evaluate each grant award to determine if the awards are subject to federal requirements. The evaluation should be documented and reviewed. Management response and planned corrective action: We agree with this finding and will update our process for identification of federal awards.