Audit 17089

Finding 2022-002: Internal Control over Financial Reporting and Account Adjustments Criteria: Auditing standards continue to place emphasis on determining an entity?s ability to fully prepare their own external financial statements, including the posting of all adjustments necessary to present financial statements in accordance with accounting principles generally accepted in the United States of America (GAAP) and evaluating the need for all necessary financial statement disclosures. Condition: During the audit process, several material adjustments involving capital asset additions, depreciation expense, student tuition and fees, federal and local grant revenue and unearned revenue, leases, prepaids, and payroll liabilities were proposed by the auditors in order that the financial statements could be prepared in accordance with GAAP. Then, using the information provided by management, the auditors prepared the GAAP financial statements, which were subsequently reviewed by management. These adjustments were necessary to properly reflect current year operations and account balances as of the year-end. Cause: EC3 has experienced key personnel turnover within the Finance Department. Effect: Adjustments were required to be recorded in order for the financial statements to be prepared in accordance with GAAP. Questioned costs: None Recommendation: We recommend that management evaluate the internal controls over the financial reporting process to ensure that the financial statements can be prepared internally in accordance with GAAP. Ideally, this would include ensuring that account balances are properly recorded and the supporting reconciliations are kept up to date to support the activity from month to month to ensure that accurate account information is being produced.

Finding 2022-003: Internal Control and Compliance over Procurement Federal Agency: Department of the Treasury Program: Coronavirus State and Local Fiscal Recovery Funds: 21.027 Criteria: In accordance with Uniform Guidance procurement requirements found in 2 CFR Part 200.318 through 200.237, EC3 is required to ensure that procurement methods used for purchases are appropriate based on the dollar amount of the purchase. Condition: EC3 could not provide evidence that the purchase of 300 laptops for an aggregate purchase price of $362,004 followed formal procurement procedures. The purchase exceeded both the $30,000 procurement threshold for competitive bids set by EC3?s purchasing policy and the Uniform Guidance simplified acquisition threshold of $250,000. In addition, in accordance with the Uniform Guidance, a purchase price from the Commonwealth of Pennsylvania COSTARS cooperative purchasing program is considered to be only one competitive price proposal and it cannot replace a full procurement process. Cause: Procedures in place to ensure that the proper procurement process is followed were not adequate. Effect: EC3 was not in compliance with the procurement requirements of the Uniform Guidance. Questioned costs: $362,004 based on invoice for purchase of 300 laptops applied to the program. Recommendation: We recommend that EC3 establish procedures to ensure that their purchasing policy is followed including the use of competitive bids or proposals, when appropriate.

Finding 2022-002: Internal Control over Financial Reporting and Account Adjustments Criteria: Auditing standards continue to place emphasis on determining an entity?s ability to fully prepare their own external financial statements, including the posting of all adjustments necessary to present financial statements in accordance with accounting principles generally accepted in the United States of America (GAAP) and evaluating the need for all necessary financial statement disclosures. Condition: During the audit process, several material adjustments involving capital asset additions, depreciation expense, student tuition and fees, federal and local grant revenue and unearned revenue, leases, prepaids, and payroll liabilities were proposed by the auditors in order that the financial statements could be prepared in accordance with GAAP. Then, using the information provided by management, the auditors prepared the GAAP financial statements, which were subsequently reviewed by management. These adjustments were necessary to properly reflect current year operations and account balances as of the year-end. Cause: EC3 has experienced key personnel turnover within the Finance Department. Effect: Adjustments were required to be recorded in order for the financial statements to be prepared in accordance with GAAP. Questioned costs: None Recommendation: We recommend that management evaluate the internal controls over the financial reporting process to ensure that the financial statements can be prepared internally in accordance with GAAP. Ideally, this would include ensuring that account balances are properly recorded and the supporting reconciliations are kept up to date to support the activity from month to month to ensure that accurate account information is being produced.

Finding 2022-003: Internal Control and Compliance over Procurement Federal Agency: Department of the Treasury Program: Coronavirus State and Local Fiscal Recovery Funds: 21.027 Criteria: In accordance with Uniform Guidance procurement requirements found in 2 CFR Part 200.318 through 200.237, EC3 is required to ensure that procurement methods used for purchases are appropriate based on the dollar amount of the purchase. Condition: EC3 could not provide evidence that the purchase of 300 laptops for an aggregate purchase price of $362,004 followed formal procurement procedures. The purchase exceeded both the $30,000 procurement threshold for competitive bids set by EC3?s purchasing policy and the Uniform Guidance simplified acquisition threshold of $250,000. In addition, in accordance with the Uniform Guidance, a purchase price from the Commonwealth of Pennsylvania COSTARS cooperative purchasing program is considered to be only one competitive price proposal and it cannot replace a full procurement process. Cause: Procedures in place to ensure that the proper procurement process is followed were not adequate. Effect: EC3 was not in compliance with the procurement requirements of the Uniform Guidance. Questioned costs: $362,004 based on invoice for purchase of 300 laptops applied to the program. Recommendation: We recommend that EC3 establish procedures to ensure that their purchasing policy is followed including the use of competitive bids or proposals, when appropriate.