Not All of the Young Women's Christian Association of Metropolitan St. Louis Head Start Expenditures Were Allowable

The Young Women's Christian Association of Metropolitan St. Louis (YWCA) did not always properly account for Head Start grant funds in accordance with Federal regulations and the terms of the grant. In addition, YWCA did not always safeguard its grant funds. With respect to its accounting for Head Start grant funds, YWCA improperly used part of its grant year (GY) 2009 grant award to pay for GY 2008 overspending, improperly used interfund transfers to temporarily pay for United States Department of Agriculture and State of Missouri program expenditures and improperly allocated Federal Head Start grant funds to fund the non-Federal share of salaries at one of its Head Start centers, and applied in-kind costs that were not always allowable and were inadequately documented to meet its non-Federal matching share of Head Start program costs. In addition, YWCA did not always safeguard its Head Start grant funds because it maintained those funds in bank accounts with balances that exceeded the Federal Deposit Insurance Corporation (FDIC)-insured limits.

As a result of these weaknesses, YWCA claimed $337,000 in unallowable expenditures, improperly drew down funds that created increased borrowing costs to the Federal Government, increased the risk of loss of grant funds in the event of a bank failure, and may not have met its required 20 percent non-Federal matching share requirement. YWCA's policies and procedures were not adequate to ensure that the costs it incurred were allowable.

We recommended that the Administration for Children and Families, Office of Head Start (OHS) (1) recover the improperly spent grant funds from the GY 2009 award totaling $337,000; (2) ensure that YWCA improves its policies and procedures for tracking unobligated balances so that those balances are properly accounted for; (3) improve policies and procedures to ensure that it recaptures unobligated balances from YWCA and other grantees in a timely manner; (4) ensure that YWCA improves its policies and procedures so that its drawdowns of Head Start grant funds are timed and limited to actual program costs for the execution of approved program activities; (5) review and, as necessary, modify policy guidance regarding interfund transfers to ensure that it conforms to Federal regulations; (6) ensure that YWCA strengthens and, where necessary, implements policies and procedures to ensure that in-kind donations are allowable and are recognized in the appropriate accounting period, and that YWCA maintains adequate supporting documentation that identifies the contents and the basis for valuation of in-kind donations; and (7) ensure that YWCA improves its policies and procedures so that its account cash balances of Head Start grant funds do not exceed the FDIC-insured limits. YWCA described corrective actions that it had taken or planned to take in response to most of our findings, and OHS generally agreed with our findings and recommendations.