Clayton Child Care, Inc. and Affiliates

Finding 2025‐002: Allowable costs and activities‐significant deficiency in internal controls over compliance. Twenty‐First Century Community Learning Centers Grant ALN 84.287C Criteria: Clayton Child Care, Inc.’s (Organization) internal control procedures over compliance specify that the Director of Finance approves payroll prior to payment. Section 200 of the Code of Federal Regulations requires recipients to implement robust internal controls to reduce the risk of noncompliance with cost principles for all activities allocated to the grant and to retain supporting documentation of control completion for three years from the date of submission of the expenditure request. Condition: During allowable activities for the Twenty‐First Century Community Learning Centers Grant, for 4 out of 26 payroll samples tested, the payroll was approved verbally and no documentation supporting the approval was retained. Cause: Internal control documentation was not being appropriately retained. Effect: Key internal control documentation was not properly retained and readily available to support the testing of key controls over the payroll process. Questioned Costs: None. Recommendation: In order to comply with the Code of Federal Regulations, we recommend the Organization’s policies be updated to require document retention for at least three years for all key control documentation. Management’s Response: See corrective action plan.