- The Washington Times - Sunday, July 30, 2006

A prominent Arlington nonprofit organization that has received millions of dollars to administer federal Head Start child care services for low-income families has shut down after government auditors uncovered sloppy accounting practices.

The Arlington Community Action Program Inc. mismanaged hundreds of thousands of dollars in federal grant money, according to an audit last week by the Office of Inspector General for the U.S. Department of Health and Human Services.

Citing “a failure to implement sound fiscal policies and procedures,” the inspector general is demanding that the nonprofit group refund more than $340,000 for “unallowable or unsupportable costs,” including salaries unrelated to the program and improper travel expenses.

Community Action claimed $2.05 million in grant money in fiscal 2005 as the county’s Head Start program to serve 293 children at four sites, according to the audit.

The group, which began in 1964 and also has provided job placement, health care and senior services, did not respond to phone calls last week. A recording on an answering machine said the group is “permanently closed” but will be responding to administrative calls.

Two board members, James Graham and Lora Rinker, reached by phone yesterday declined to discuss the situation. Other staff and board members could not be reached yesterday.

In June 2005, the group was deemed “high risk” for “failure to maintain proper internal controls to safeguard Head Start assets,” auditors said.

“A high-risk organization is one whose management practices raise questions about its ability to assure proper … financial stewardship of grant funds,” the auditors wrote.

The report found no evidence of fraud, but auditors found the group withheld taxes from employees yet never turned over the money to the Internal Revenue Service. The group also exceeded the allowable per diem for travel, made questionable claims for food supplies and lacked vouchers, invoices and check stubs to support numerous expenditures, auditors found.

The auditors questioned more than $5,000 for out-of-town travel, including expenses for airline tickets, hotels and meals that were either unrelated to Head Start, unsupported or duplicative.

The group has had cash-flow problems for years, tax returns show.

In 2004, the most recent year for which tax information was available yesterday, Community Action had $3.7 million in revenue but operated at a tight profit of $121,528. The group ran a $50,244 deficit the previous year.

The Arlington County government has moved to take over many of Community Action’s grants, while the Head Start services have been transferred to another group under contract with the county’s Department of Health and Human Services, government records show.

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