HEAD START OF LANE COUNTY

U.S Department of Health and Human Services - Head Start Cluster - AL #93.600 Grant Number: 10CH01165004 Grant Period: July 1, 2023 to June 30, 2024 Questioned Costs: $1,558,000 How the questioned costs were computed: Our analysis determined that costs were estimated to be overallocated during the program period. Condition – During the audit fieldwork, Wipfli, LLP noted that Head Start of Lane County had a documented cost allocation plan that described how costs were to allocated between grant programs, specifically allocation of costs based on slots and square footage. During our testing, we noted that Head Start of Lane County was unable to provide supporting documentation that costs were allocated based on the documented plan. This is a repeat finding from prior year. Criteria – Per 2 CFR 200.405, costs charged to federal awards must be allocable based on the relative benefits received and assigned using a reasonable methodology. In addition, Section 200.400 (d) of Uniform Guidance states the accounting practices of the recipient must be consistent with these cost principles and support the accumulation of costs as required by these cost principles, including maintaining adequate documentation to support costs charged to the Federal award. Cause – During the audit year, there was turnover in Head Start of Lane County’s business office which contributed to the lack of support available for the allocation. Head Start of Lane County is working on streamlining and implementing processes to address the deficiency noted in the condition paragraph. Effect - As a result of not having documentation to support the application of the cost allocation plan, a material weakness exists in internal controls over allocation of costs. Recommendation - We recommend management and those charged with governance evaluate the operation of the finance department and implement procedures to ensure that costs are allocated in accordance with the documented cost allocation plan. View of Responsible Officials - Management agrees with the assessment and has committed to a corrective action plan.

As of the 24-25 fiscal year, the agency has created a sustainable cost allocation process that will be in place moving forward. New policies were created, including a system for analysis of allocations throughout the year.

2023-002

U.S Department of Health and Human Services - Head Start Cluster - AL #93.600 Grant Number: 10CH01165004 Grant Period: July 1, 2023 to June 30, 2024 Questioned Costs: None How the questioned costs were computed: N/A Condition – Under Uniform Guidance, Head Start of Lane County's audited financial statements for the year ended June 30, 2024 were due to the federal single audit clearinghouse by March 31, 2025.  Head Start of Lane County's June 30, 2024 audited financial statements were not completed for submission to the federal audit clearinghouse until after March 31, 2025. This is a repeat finding from the prior year. Criteria – Uniform Guidance requires audited financial statements to be submitted to the federal audit clearinghouse within nine-months after an entity’s year-end. Cause – During the audit year, there was turnover in Head Start of Lane County’s business office which contributed to the lack of timely submission. In addition, the circumstances surrounding the COVID-19 pandemic continued to affect the timeliness of the submission process. Head Start of Lane County is working on streamlining and implementing processes to address the deficiency noted in the condition paragraph. Effect – A significant deficiency in internal control over compliance and an instance of noncompliance exists due to failure to provide financial statements in a timely manner in order to meet audit submission deadlines. Recommendation - We recommend management and those charged with governance evaluate the operation of the finance department and implement procedures to ensure that required reports are filed in a timely manner. View of Responsible Officials - Management agrees with the assessment and has committed to a corrective action plan.

The agency has created new policies and implemented fails saifs, including board involvement, to ensure the deadlines for all required filings are met.

2023-003

U.S Department of Health and Human Services - Head Start Cluster - AL #93.600Grant Number: 10CH01165003 Grant Period: July 1, 2022 to June 30, 2023 Questioned Costs: Costs were estimated to the approximately None How the questioned costs were computed: Our analysis determined that costs were estimated to be underallocated during the program period. Condition – During the audit fieldwork, Wipfli, LLP. noted that Head Start of Lane County had a documented cost allocation plan that described how costs were to allocated between grant programs, specifically allocation of costs based on slots and square footage. During our testing, we noted that Head Start of Lane County was unable to provide supporting documentation that costs were allocated based on the documented plan. This is a repeat finding from prior year. Criteria – Per 2 CFR 200.405, costs charged to federal awards must be allocable based on the relative benefits received and assigned using a reasonable methodology. In addition, Section 200.400 (d) of Uniform Guidance states the accounting practices of the recipient must be consistent with these cost principles and support the accumulation of costs as required by these cost principles, including maintaining adequate documentation to support costs charged to the Federal award. Cause – During the audit year, there was turnover in Head Start of Lane County’s business office which contributed to the lack of support available for the allocation. Head Start of Lane County is working on streamlining and implementing processes to address the deficiency noted in the condition paragraph. Effect - As a result of not having documentation to support the application of the cost allocation plan, a material weakness exists in internal controls over allocation of costs. Recommendation - We recommend management and those charged with governance evaluate the operation of the finance department and implement procedures to ensure that costs are allocated in accordance with the documented cost allocation plan. View of Responsible Officials - Management agrees with the assessment and has committed to a corrective action plan.

As of the 2024-2025 fiscal year, the agency has created a sustainable cost allocation process that will be in place moving forward. New policies were created, including a system for analysis of allocations throughout the year. Person(s) Responsible: Claire Versaw, CFO Timing for Implementation: Currently in place as of 7/1/2024

2022-002

U.S Department of Health and Human Services - Head Start Cluster - AL #93.600 Grant Number: 10CH01165003 Grant Period: July 1, 2022 to June 30, 2023 Questioned Costs: None How the questioned costs were computed: N/A Condition – Under Uniform Guidance, Head Start of Lane County's audited financial statements for the year ended June 30, 2023 were due to the federal single audit clearinghouse by March 31, 2024. Head Start of Lane County's June 30, 2023 audited financial statements were not completed for submission to the federal audit clearinghouse until after March 31, 2024. This is a repeat finding from the prior year. Criteria – Uniform Guidance requires audited financial statements to be submitted to the federal audit clearinghouse within nine-months after an entity’s year-end. Cause – During the audit year, there was turnover in Head Start of Lane County’s business office which contributed to the lack of timely submission. In addition, the circumstances surrounding the COVID-19 pandemic continued to affect the timeliness of the submission process. Head Start of Lane County is working on streamlining and implementing processes to address the deficiency noted in the condition paragraph. Effect - A significant deficiency in internal control over compliance and an instance of noncompliance exists due to failure to provide financial statements in a timely manner in order to meet audit submission deadlines. Recommendation - We recommend management and those charged with governance evaluate the operation of the finance department and implement procedures to ensure that required reports are filed in a timely manner. View of Responsible Officials - Management agrees with the assessment and has committed to a corrective action plan.

The agency has created new policies and implemented fail saifs, including board involvement, to ensure the deadlines for all required filing are met. Person(s) Responsible: Claire Versaw, CFO Timing for Implementation: Currently in place as of 7/1/2024

2022-003

.S Department of Health and Human Services - Head Start Cluster - AL #93.600Grant Number: 10CH01165001/10CH01165002/10CH01165001C5/10CH01165001C6 Grant Period: July 1, 2021 to June 30, 2022 Questioned Costs: Costs were estimated to the approximately $645,000 How the questioned costs were computed: Recreation of allocation comparing actual allocations versus allocations that should have been made based on cost allocation plan. Condition – During the audit fieldwork, Wipfli, LLP. noted that Head Start of Lane County had a documented cost allocation plan that described how costs were to allocated between grant programs. During our testing, we noted that Head Start of Lane County was unable to provide supporting documentation that costs were allocated based on the documented plan. Criteria – Section 200.400 (d) of Uniform Guidance states the accounting practices of the recipient must be consistent with these cost principles and support the accumulation of costs as required by these cost principles, including maintaining adequate documentation to support costs charged to the Federal award. Schedule of Findings and Questioned Costs Year Ended June 30, 2022 Section III - Financial Award Findings and Questioned Costs: (Continued) 2022-002 - Application of Cost Allocation Plan - (Continued) Cause – During the audit year, there was turnover in Head Start of Lane County’s business office which contributed to the lack of support available for the allocation. Head Start of Lane County is working on streamlining and implementing processes to address the deficiency noted in the condition paragraph. Effect - As a result of having documentation to support the application of the cost allocation plan, a material weakness exists in internal controls over allocation of costs. Recommendation - We recommend management and those charged with governance evaluate the operation of the finance department and implement procedures to ensure that costs are allocated in accordance with the documented cost allocation plan. View of Responsible Officials - Management agrees with the assessment and has committed to a corrective action plan.

Head Start of Lane County has created a paln with assitance of Wipfli to complete outstanding audits. See corrective action item 2022-004 for more details. The agency has implemented a yearly closeout starting in the year 2024-2025 going forward. This will allow for timely audit preparation, reconciliations and adjustments to occur

U.S Department of Health and Human Services - Head Start Cluster - AL #93.600 Grant Number: 10CH01165001/10CH01165002/10CH01165001C5/10CH01165001C6 Grant Period: July 1, 2021 to June 30, 2022 Questioned Costs: None How the questioned costs were computed: N/A Condition – During the audit fieldwork, Wipfli, LLP. observed that Form SF 425 Federal Financial Report and SF-429 Notice of Federal Interest for real property were not filed timely. Criteria – Section 200.237 of Uniform Guidance states that financial reports must be submitted with the frequency required by the terms and conditions of the Federal Award Cause – Head Start of Lane County did not file the required financial and real property reports for the above grants in a timely manner. Effect - As a result of not filing Form SF-425 Federal Financial Report and Form SF-429 Notice of Federal Interest for real property in a timely manner, a significant deficiency exists in internal control of reporting. Recommendation - We recommend management and those charged with governance evaluate the operation of the finance department and implement procedures to ensure that required reports are filed in a timely manner. View of Responsible Officials - Management agrees with the assessment and has committed to a corrective action plan.

The agency has created new policies and implmented fail safes to ensure the deadline for all required filiings.