Results of Limited Scope Review at La Peninsula Community Organization, Inc.

We reviewed the financial conditions at La Peninsula Community Organization, Inc. (La Pen), as part of a nationwide series of reviews requested by the Administration for Children and Families (ACF), Office of Head Start as part of its overall assessment of Head Start grantees that have applied for additional funding under the Recovery Act.

We found that La Pen cannot ensure the continuing viability of the organization as a going concern unless it restructures its debt or receives additional funding. Also, La Pen's financial management system does not adequately manage and account for Federal funds. As a result, Federal Head Start funds were used to pay for nonfederal expenditures, accounting records were not properly maintained and reconciled, budget controls were lacking, and financial reports included inaccurate data. In written comments on our draft report, La Pen stated that it has struggled to meet its fiscal obligations and agreed with most of our findings regarding its financial management system. In addition, La Pen indicated steps it has taken to adequately account for Federal funds.

We recommend that ACF, in determining whether La Pen should be awarded additional Head Start and Recovery Act grant funding, consider the information presented in this report in assessing La Pen's financial condition.