n e hsa national and regional findings

8/13/2019 N E HSA National and Regional Findings

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2013 Top National Fiscal Findings

FY13 Reports Signed Through May 2013

OHS On-Site Fiscal Monitoring Protocol

http://eclkc.ohs.acf.hhs.gov/hslc/mr/monitoring/FY201

3-index.htmlhttp://eclkc.ohs.acf.hhs.gov/hslc/mr/monitoring/fy201

3pdf/FY2013_OHS_On-Site_Review_Protocol.pdf

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http://eclkc.ohs.acf.hhs.gov/hslc/mr/monitoring/FY2013-index.htmlhttp://eclkc.ohs.acf.hhs.gov/hslc/mr/monitoring/FY2013-index.htmlhttp://eclkc.ohs.acf.hhs.gov/hslc/mr/monitoring/fy2013pdf/FY2013_OHS_On-Site_Review_Protocol.pdfhttp://eclkc.ohs.acf.hhs.gov/hslc/mr/monitoring/fy2013pdf/FY2013_OHS_On-Site_Review_Protocol.pdfhttp://eclkc.ohs.acf.hhs.gov/hslc/mr/monitoring/fy2013pdf/FY2013_OHS_On-Site_Review_Protocol.pdfhttp://eclkc.ohs.acf.hhs.gov/hslc/mr/monitoring/fy2013pdf/FY2013_OHS_On-Site_Review_Protocol.pdfhttp://eclkc.ohs.acf.hhs.gov/hslc/mr/monitoring/fy2013pdf/FY2013_OHS_On-Site_Review_Protocol.pdfhttp://eclkc.ohs.acf.hhs.gov/hslc/mr/monitoring/fy2013pdf/FY2013_OHS_On-Site_Review_Protocol.pdfhttp://eclkc.ohs.acf.hhs.gov/hslc/mr/monitoring/FY2013-index.htmlhttp://eclkc.ohs.acf.hhs.gov/hslc/mr/monitoring/FY2013-index.htmlhttp://eclkc.ohs.acf.hhs.gov/hslc/mr/monitoring/FY2013-index.htmlhttp://eclkc.ohs.acf.hhs.gov/hslc/mr/monitoring/FY2013-index.html


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Reporting and Internal Controls

Reporting Issues

Mostly around monthly reporting of Head Start

expenditures and credit card expenditures. (Sec.

642(d)(2)(A)) of the Head Start Act.

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Reporting and Internal Controls

Internal Controls

General requirement to maintain control over Federal

funds (45 CFR 92.20(b)(3))

Frequent issues include

Bank reconciliations not timely

Financial procedures not followed

Segregation of duties not adequate - one person has

too much responsibility

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Administrative Costs

Administrative Costs

Grantees administrative costs exceeded 15% of total

approved costs (45 CFR 1301.32(a)(1))

Financial records didnt separately identify admin costs(45 CFR 1301.32(a)(1))

Indirect costs not included as administrative costs (45

1301.32(e)(1))

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Grantee Owned Space

Cost of Grantee-owned Space

Head Start charged more than depreciation or use

allowance for building owned by grantee (2 CFR 225,

App B(11))

Head Start charged more than depreciation or use

allowance for building owned by related party (2 CFR

225, App B(37)(c))

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Equipment Management

Equipment Management (45 CFR 74.31 or 45 CFR92.32)

Equipment records were not up to date (didnt reflect

new purchases or recent disposals)

Equipment records didnt include all required information(e.g. award number, serial number)

Grantee didnt perform inventory and/or didnt reconcile

between the inventory and the equipment records)

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Cost Allocation

Cost Allocation Grantee didnt have records to show how shared costs

were allocated between Head Start and other programs

(2 CFR 225, App A(C)(3)(a))

Grantee did not have personnel activity reports showingthe actual activity of employees whose salaries was split

between Head Start and other programs (2 CFR 225,

App (B)(8))

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Documentation of Costs

Documentation of Costs

Charge to Head Start not supported by an invoice or

contract (225, App (A)(C)(1)(j))

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Region I Fiscal Findings

Period of 10/1/2012 9/17/2013

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Cost Allocation

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The grantee provided Head Start, Early Head Startand State funded child care services. Administrativestaff acknowledged providing services that benefittedthe Early Head Start program, but no part of thesalary and benefits of the staff members was

allocated to the Early Head Start program. Expensesmust be allocated based on the benefit each programreceives from the shared expense.

2 CFR 230 App. A(A)(4)(a)(2). A cost is allocable to aparticular cost objective, such as a grant, contract,project, service, or other activity, in accordance withthe relative benefits received. A cost is allocable to aFederal award if it is treated consistently with othercosts incurred for the same purpose in likecircumstances and if it benefits both the award andother work and can be distributed in reasonable

proportion to the benefits received, or


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Cost Principles

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The grantee leased a Head Start facility through a less-than-

arms-length lease arrangement with a related party. Thegrantee charged its Head Start grant for the full amount of rentpayable under the lease arrangement. Charges for less-than-arms-length lease arrangements are limited to depreciation oruse allowance.

2 CFR 230 App. B(43)(c). Rental costs under "less-than-arms-length" leases are allowable only up to the amount that wouldbe allowed had title to the property vested in the non-profitorganization. For this purpose, a less-than-arms-length leaseis one under which one party to the lease agreement is able tocontrol or substantially influence the actions of the other. Suchleases include, but are not limited to those between divisionsof a non-profit organization; non-profit organizations undercommon control through common officers, directors, ormembers; and a non-profit organization and a director, trustee,officer, or key employee of the non-profit organization or hisimmediate family, either directly or through corporations,trusts, or similar arrangements in which they hold a controllinginterest. For example, a non-profit organization may establish


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Delay of Payments

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Payments to vendors were substantially delayed.Some vendors had limited or discontinued the

grantees access to goods and services.

45 CFR 74.21(b)(3): Effective control over and

accountability for all funds, property and other

assets. Recipients shall adequately safeguard all

such assets and assure they are used solely for

authorized purposes.


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Pledge of Assets

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The grantee obtained a line of credit from a localbank. The line of credit required a blanket

security agreement including all of the programs

funds and assets. The grantee did not exercise

control of Head Start assets due to pledge of theprograms assets as collateral which put the

assets at risk of loss.

45 CFR 74.21(b)(3). Effective control over and

accountability for all funds, property and otherassets. Recipients shall adequately safeguard all

such assets and assure they are used solely for

authorized purposes.


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Nonfederal Share (2)

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The grantee claimed donated space asnonfederal share. The amount claimed was the

difference between estimated fair rental value and

actual rent paid. The fair rental value estimate

was provided by a real estate professional. Thevalue of donated space must be determined by a

licensed appraiser.

45 CFR 74.23(h)(3). The value of donated space

shall not exceed the fair rental value ofcomparable space as established by an

independent appraisal of comparable space and

facilities in a privately-owned building in the same

locality 45 CFR 74.23(h)(1)... e.g. certified real


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Record Keeping

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The grantee claimed nonfederal share for thirdparty in-kind provided by volunteer services.

Volunteer records were sampled for two months.

Of the records sampled 87% did not describe the

volunteer services.

45 CFR 74.23(a)(1). To be accepted, all cost

sharing or matching contributions, including cash

and third party in-kind, must be verifiable from the

recipient's records


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Employee Recognition

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The grantee engaged in a practice of recognizingemployees and boosting employee morale by

providing individual gift cards to chosen

employees.

2 CFR 225 App. B(20). Goods or services for

personal use. Costs of goods or services for

personal use of employees are unallowable

regardless of whether the cost is reported as

taxable income to the employees.


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Annual Report to the Public (2)

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Annual report to the public did not include requiredfinancial information about the Head Start or EarlyHead Start program.

Head Start Act Sec. 644(a)(2)(A)-(H): Each HeadStart agency shall make available to the public a

report published at least once in each fiscal year thatdiscloses the following information from the mostrecently concluded fiscal year, except that reportingsuch information shall not reveal personallyidentifiable information about an individual child orparent (A) The total amount of public and private funds received

and the amount from each source. (B) An explanation of budgetary expenditures and

proposed budget for the fiscal year. (D) The results of the most recent review by the

Secretary and the financial audit.


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Credit Cards

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Credit card information for all agency credit cardswas not reported to the governing body and

policy council.

Head Start Act Sec. 642(d) (2) CONDUCT OF

RESPONSIBILITIES- Each Head Start agencyshall ensure the sharing of accurate and regular

information for use by the governing body and the

policy council, about program planning, policies,

and Head Start agency operations, including--

(A) monthly financial statements, including credit

card expenditures


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Annual Audit

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The Policy Council did not receive a copy of theagencys annual audit.

Head Start Act Sec. 642(d) ( 2) CONDUCT OF

RESPONSIBILITIES- Each Head Start agency

shall ensure the sharing of accurate and regularinformation for use by the governing body and the

policy council, about program planning, policies,

and Head Start agency operations, including--

(E) the financial audit

n e hsa national and regional findings

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