Office of the Legislative Auditor - Financial Audit Division

Report Summary

Management Letter

Department of Children, Families & Learning

Fiscal Year Ended June 30, 1999

Key Findings and Recommendations:

• The Department of Children, Families & Learning (CFL) did not properly record the date of liability for construction grant expenditures on the state's accounting system. We made an audit adjustment of $1.4 million on the state's financial statements to record the correct liability. CFL should ensure that the record date on the accounting system is the date the subrecipient incurs the liability for construction costs. (Finding 1, page 2)
• CFL did not disburse grant funds to subrecipients based on current needs for the Low Income Home Energy Assistance Program (CFDA # 93.568). The Cash Management Improvement Act requires recipients to minimize the time elapsing between drawing federal funds and the actual disbursement of these monies. (Finding 2, page 3)
• CFL did not draw federal funds in accordance with the approved method outlined in the Department of Finance's agreement with the U. S. Treasury. The agreement specifies that the state shall schedule receipt of federal funds in accordance with the approved clearance pattern. (Finding 3, page 4)
• Finally, CFL did not comply with certain federal and state indirect cost requirements. CFL should ensure that it uses the correct expenditure totals when calculating indirect cost charges to federal programs. CFL should also make statewide indirect cost payments quarterly. (Finding 4, page 4)

Management letters address internal control weaknesses and noncompliance issues found during our annual audit of the state's financial statements and federally funded programs. The scope of work in individual agencies is limited. During the fiscal year 1999 audit, our work at the Department of Children, Families & Learning focused on selected state educational aids and seven federal programs. The department's response to our recommendations is included in the report.