Review of Selected Head Start Costs at Harambee Child Development Center, Inc.

EXECUTIVE SUMMARY:

We found that the Harambee Child Development Council Inc. (HCDC) claimed $225,126 of Head Start costs that were unallowable. The costs included: non-Federal matching ($190,840), payments for compensatory time ($30,186), and travel ($4,100). In addition, contrary to Federal regulations, HCDC drew down $45,737 Head Start funds in excess of immediate cash needs.

Unallowable costs were claimed because HCDC did not have adequate internal controls relative to the cost area as reviewed. The HCDC drew cash in excess of needs in anticipation of making its annual contribution to the pension fund.

We are recommending that HCDC refund $270,863 to the Federal Government. We are also making certain procedural recommendations to strengthen HCDC's internal controls. In their written response, HCDC disagreed with our findings and recommendations.