Licking Valley Community Action Program, Inc.

Criteria: In accordance with 2 CFR 200.206(d), non-federal entities are restricted from making contracts with parties that are debarred, suspended, or otherwise excluded from receiving federal awards or participating in federal awards. Condition: During our audit, we noted that the Agency did not review the debarment status of vendors prior to entering into a contract to purchase goods or services with those vendors. During the year ended June 30, 2024, the Agency spent approximately $190,000, with two vendors without performing a check on their debarment status. As part of the audit, we performed a debarment check and noted that neither vendor had been debarred. Cause: The Agency’s internal control system was not designed to incorporate debarment status checks for vendors with which the Agency is spending significant amounts of federal grant funding. Effect: The Agency could enter into a contract with a party that has been debarred, suspended, or otherwise excluded from receiving federal awards or participating in federal awards. Recommendation: We recommend that the Agency adopt an internal control policy that ensures that debarment status is checked prior to contracting with a party for the purchase of goods or services. Management’s response: Licking Valley Community Action Program, Inc. agrees with this finding. The executive director and finance officer will implement a debarment check with vendors with significant amounts of federal grant funding throughout the year to ensure debarment status. This will be added into the Internal Control Policy.

Finding 2020-005 ? CFDA 93.600 Head Start - Material Weakness ? Cash Management Criteria: In accordance with 200.344(d), The non-Federal entity must promptly refund any balances of unobligated cash that the Federal awarding agency or pass-through entity paid in advance or paid and that are not authorized to be retained by the non-Federal entity for use in other projects. Condition: During our testing of the Head Start program, we identified that reimbursement requests submitted exceeded costs incurred under the program. During the year ended June 30, 2020, reimbursements received under the Head Start program exceeded program costs by $209,148. The Agency?s Head Start grant was closed out in September 2020 and the Agency has not refunded the balance of unobligated cash to the Federal awarding agency. Cause: The Agency?s internal control system did not operate as designed and reimbursement requests were submitted to the grantor that exceeded the amount of allowable costs incurred under the program. Effect: The Agency received excess reimbursements under the Head Start program, which should function as a cost-reimbursement program. An adjusting entry was made to reclassify the excess reimbursement to deferred revenue on the statement of financial position, as of June 30, 2020. In addition, the Agency will likely be required to refund this unobligated cash to the Federal awarding agency. Recommendation: We recommend that the Agency implement procedures to ensure that reimbursement requests submitted to the grantor include only costs that have been paid or incurred by the Agency within that program. Management?s response: Licking Valley Community Action Program, Inc. agrees with this finding. The executive director and finance officer have reviewed the cash management and reimbursement request procedures previously used and revised it to properly ensure federal reimbursement requests equal the expenses incurred for the program benefitting. All costs will be charged to appropriate grants and not exceed the expenses incurred of the appropriate grants. The program has instituted new procedures to assure ongoing compliance with the Uniform Standards.

Finding 2019-004 ? CFDA 93.600 Head Start - Material Weakness ? Cash Management Criteria: In accordance with 48 CFR 52.216-7(b), for the purpose of reimbursing allowable costs, the term costs includes only those recorded costs that, at the time of the request for reimbursement, the entity has paid, or when the entity is not delinquent in paying costs in the ordinary course of business, costs incurred but not necessarily paid. Condition: During our testing of the Head Start program, we identified that reimbursement requests submitted under the program exceeded costs incurred under the program. During the year ended June 30, 2019, reimbursements received under the Head Start program exceeded costs within the program by $173,482. Cause: The Agency?s internal control system did not operate as designed and reimbursement requests were submitted to the grantor that exceeded the amount of allowable costs incurred under the program. Effect: The Agency received excess reimbursements under the Head Start program, which should function as a cost-reimbursement program. An adjusting entry was made to reclassify the excess reimbursement to deferred revenue on the statement of financial position, as of June 30, 2019. In addition, the grantor may determine that the Agency is required to return any excess reimbursement received within the program. Recommendation: We recommend that the Agency implement procedures to ensure that reimbursement requests submitted to the grantor include only costs that have been paid or incurred by the Agency within that program. Management?s response: Licking Valley Community Action Program, Inc. agrees with this finding. The executive director and finance officer have reviewed the cash management and reimbursement request procedures previously used and revised it to properly ensure federal reimbursement requests equal the expenses incurred for the program benefitting. All costs will be charged to appropriate grants and not exceed the expenses incurred of the appropriate grants. The program has instituted new procedures to assure ongoing compliance with the Uniform Standards.

Finding 2019-005 ? CFDA 93.600 Head Start ? Significant Deficiency - Allowable Costs Criteria: In accordance with Uniform Guidance, 2 CFR 200.405(d), if a cost benefits two or more projects or activities in proportions that can be determined without undue effort or cost, the cost must be allocated to the projects based on the proportional benefit. Condition: During our testing of Head Start transactions, we identified contractual expenses for administrative services that benefited all of the Agency?s programs but were allocated entirely to the Head Start program. Questioned costs: Questioned costs related to this finding are $46,957. Cause: The Agency did not properly allocate these costs to all of the programs of the Agency. Effect: Costs that should have been allocated to the various programs of the Agency were charged directly to the Head Start grant. Recommendation: We recommend that the Agency implement procedures to identify costs that benefit more than one program and ensure that these costs are allocated appropriately to the programs that benefit. The Agency should also maintain documentation of the method used for allocating these costs. Management?s response: Licking Valley Community Action Program, Inc. agrees with this finding. The executive director and finance officer have reviewed the cost allocation process previously used and revised it to properly allocate costs to the program benefitting, including staff time distribution, insurance, space, utilities, and supplies. All costs will be charged to appropriate grants. The program has instituted new procedures to assure ongoing compliance with the Uniform Standards.

Finding 2019-006 ? CFDA 93.600 Head Start ? Significant Deficiency - Allowable Costs Criteria: In accordance with Uniform Guidance, 2 CFR 200.403(f), a cost is not allowable if it included as a cost of any other federally financed program in either the current or a prior period.Condition: During our testing of Head Start transactions, we identified expenses for vehicle use that were charged to the Head Start program that were already included as a cost of another federally financed program of the Agency. Questioned costs: Questioned costs related to this finding are $50,677. Cause: The Agency charged the Head Start program for vehicle expenses associated with Head Start use of Agency vehicles. However, the fuel, maintenance and other expenses for maintaining those vehicles are not paid out of Agency funds but are charged to other federal programs of the Agency. Effect: Costs that are reported as expenses of another federally financed program of the Agency were charged to the Head Start program. Recommendation: We recommend that the Agency improve internal controls over the journal entry process to ensure that costs from one federal program are not charged to another federal program. Management?s response: Licking Valley Community Action Program, Inc. agrees with this finding. The executive director and finance officer have reviewed the cost allocation process previously used and revised it to properly allocate costs to the program benefitting without duplicating cost to another program. All costs will be charged to appropriate grants. The program has instituted new procedures to assure ongoing compliance with the Uniform Standards.

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