CLARE SWAN EARLY LEARNING CENTER, INC.Non-Profit

Finding 2021-001 Review of expenditure coding ? Noncompliance and Significant Deficiency in Internal Controls Over Allowable Costs/Cost Principles Identification of the federal program Assistance Listing Number 84.356 ? Alaska Native Educational Programs Agency U.S. Department of Education Award No. S356A180026-20 Year 2021 Criteria or specific requirement Uniform Guidance requires nonfederal entities to establish and maintain effective internal controls over compliance requirement over allowable costs/cost principles of a federal award. Condition During our test of controls over allowable cost and activities for the Alaska Native Educational Program, we noted instances where the review of expenses being coded to the program failed to catch errors in coding during a software conversion resulting in unallowable costs being charged to the program. Cause CSELC switched accounting software from Great Plains Dynamics to Sage Intacct. During this software conversion, the GL coding structure changed. There was a delay in updating the check requests available to program staff with the new coding structure. When program staff coded their expenses, they used the check request with the old structure and the error was not identified during the review. Effect or Potential Effect Adjustments had to be made to the expenses charged to the Alaska Native Educational Program. CSELC switched accounting software from Great Plains Dynamics to Sage Intacct. During this software conversion, the GL coding structure changed. There was a delay in updating the check requests available to program staff with the new coding structure. Old check requests were used in the new accounting system for the period of 10/5/2020-10/30/2020 resulting in unallowable expenses being charged to the program. Questioned costs None Context We tested 40 nonpayroll expenses charged to the Alaska Native Educational Program; 2 out of the 40 transactions tested were coded incorrectly to the Alaska Native Educational Program. Identification as a repeat finding Not Applicable Recommendation Clare Swan Early Learning Center, Inc. should adhere to policies and procedures put in place. A review of new processes should be added to avoid breakdown of controls. Views of Responsible Official and Planned Corrective Action: Management concurs with the finding. Management made an adjustment to the grant expenses based on a review of all expenses for the period of 10/5/2020-10/30/2020 charged to the program. See corrective action plan.