Texas Association for the Education of Young Children, Inc.

Finding 2025-002: Allowable costs and activities – Significant deficiency in internal controls over compliance. ALN 93.575 Child Care and Development Block Grant Criteria: Section 200 of the Code of Federal Regulations requires recipients to implement robust internal controls to reduce the risk of noncompliance with allowable cost principles for all transactions allocated to the grant. Management’s response: See corrective action plan. Condition: During allowable cost and activities other cost testing for the program, 7 out of 40 samples did not include approval of the invoice prior to being allocated to the grant activities. Cause: As of May 31, 2025, the Organization does not have a standard procedure in place to ensure proper controls over allowable costs and activities allocated to federal grants. Effect: Internal controls over the program were not properly designed to reduce the risk of noncompliance. Questioned Costs: None. Recommendation: In order to comply with the Code of Federal Regulations, we recommend the Organization implement a prior approval process of all grant expenditures. In addition, support of approval should be documented and kept on file.

Finding 2025-003: Allowable costs and activities – Significant deficiency in internal controls over compliance and compliance finding. ALN 93.575 Child Care and Development Block Grant Criteria: Section 200 of the Code of Federal Regulations requires recipients to implement robust internal controls to ensure compliance with allowable cost principles for all transactions allocated to the grant. Condition: During allowable cost testing for federal grants, for 13 out of 40 transactions tested, the amount charged to the grant did not agree to the cost allocation plan. Cause: Funding percentages in the accounting system did not match the cost allocation plan. Effect: The cumulative effect of the exceptions noted during testing resulted in the grants being overcharged by the Organization by a nominal amount. Questioned Costs: None. Recommendation: Management should ensure amount charged to the grants agree to the approved percentage per the cost allocation plan. Management’s response: See corrective action plan.

Criteria: The Organization’s internal control procedures over compliance stipulates that all time sheets be approved by the appropriate level of management. Condition: During allowable cost testing for federal grants, 3 out of the 70 payroll transactions tested did not have adequate time sheet approvals. These time sheets were self approved. Cause: The Organization had not implemented a segregation of duties surrounding time sheet approvals. Effect: The Organization’s reporting of time and effort was not fully documented, in accordance with internal control over compliance procedures. Questioned costs: None Recommendation: The Organization should segregate duties for time sheet approvals so that no time sheets are self approved. Management’s response: See corrective action plan.

Criteria: Section 200 of the Code of Federal Regulations requires recipients to implement robust internal controls to ensure compliance with cost principles for all transactions charged to the grant. Condition: During allowable cost testing for federal grants, for 43 out of 77 transactions tested, the amount charged to the grant did not agree to the cost allocation plan. Cause: Funding percentages in the accounting system did not match the cost allocation plan. Effect: The cumulative effect of the exceptions noted during testing resulted in the grants being undercharged by the Organization. Questioned Costs: None Recommendation: Management should ensure amount charged to the grants agree to the approved percentage per the cost allocation plan.

Procurement – Material weakness in internal control over compliance and compliance finding.

Criteria: Organization is required to comply with procurement principles as detailed in Section 200.320 of the Code of Federal Regulations.

Condition: During procurement testing it was noted that the Organization did not issue a request for proposal or obtain multiple proposals for a contract in excess of the $250,000 formal procurement requirement threshold.

Effect: The Organization was not in compliance with federal procurement principles.

Recommendation: The Organization should implement controls to ensure compliance with federal procurement policies including a checklist for large purchases that mirrors federal procurement requirements.

Management’s Response: See corrective action plan.