2022 ? 001: Financial Statement Preparation and Adjusting Journal Entries Type of Finding: ? Significant Deficiency in Internal Control over Financial Reporting Condition: The organization does not have a policy in place to provide reasonable assurance that financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP); therefore, the potential exists that a material misstatement of the annual financial statements could occur and not be prevented, or detected and corrected, by the organization?s internal controls. While performing audit procedures, it was noted that there were adjustments necessary to the financial statements. Criteria or specific requirement: Internal controls should be in place to provide reasonable assurance that financial statements are prepared in accordance with U.S. GAAP. Effect: The lack of controls in place over the financial reporting function increases the risk of misstatements, fraud, or errors occurring and not being detected and corrected. Cause: The organization has not adopted a policy to provide reasonable assurance that financial statements are prepared in accordance with U.S. GAAP; however, management has reviewed and approved the annual financial statements and related notes, as prepared by the audit firm, and has accepted responsibility for those financial statements. Repeat Finding: Yes ? 2021-001. Recommendation: The organization should evaluate their financial reporting processes and controls, including the expertise of its internal staff, to determine whether additional controls over the preparation of annual financial statements can be implemented to provide reasonable assurance that financial statements are prepared in accordance with U.S. GAAP. Views of responsible officials and planned corrective actions: Management will continue to rely on the audit firm to draft the financial statements and the related notes to the financial statements, and will review, approve, and accept responsibility for the annual financial statements prior to their issuance.
2022 ? 002: Segregation of Duties Type of Finding: ? Significant Deficiency in Internal Control over Financial Reporting Condition: The organization does not have appropriate segregation of duties and review procedures in place to provide reasonable assurance that financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP); therefore, the potential exists that a material misstatement of the annual financial statements could occur and not be prevented, or detected and corrected, by the organization?s internal controls. Criteria or specific requirement: Internal controls should be in place to provide reasonable assurance that financial statements are prepared in accordance with U.S. GAAP. Effect: The lack of controls and review procedures in place over the financial reporting function increases the risk of misstatements, fraud, or errors occurring and not being detected and corrected. Cause: While performing audit procedures, it was noted that due to staffing turnover and changes, management does not have appropriate segregation of duties and review procedures in place as the President/CEO is completing and overseeing a significant amount of the financial reporting function during a portion of the year. Repeat Finding: Yes ? 2021-002. Recommendation: The organization should evaluate their financial reporting processes and controls, including the segregation of duties among its internal staff (including the number of internal staff), to determine whether additional controls over the financial reporting function can be implemented to provide reasonable assurance that financial statements are prepared in accordance with U.S. GAAP. Views of responsible officials and planned corrective actions: Management will continue to rely on a third party service provider to assist with the financial reporting function and will review, approve, and accept responsibility for the work performed by the third party servicer.
2022 ? 003: Allowable Costs Federal Agency: U.S. Department of Education Federal Program Name: Innovative Approaches to Literacy; Full-Service Community Schools; and Promise Neighborhoods Assistance Listing Number: 84.215J Federal Award Identification Number and Year: U215J200111 Award Period: January 1, 2022 ? December 31, 2022 Type of Finding: ? Material Weakness in Internal Control over Compliance ? Other Matters Criteria or specific requirement: The Compliance Supplement requires that compensation for personal services be charged to the federal grant based upon approved actual time worked on the program and not based on an allocation or budget. The Compliance Supplement requires that expenditures charged to the federal grant be supported by documentation as to the nature of the expenditure. Condition: While performing audit procedures, it was noted that payroll expenses for salary positions were charged to the grant program based upon an allocation and not on approved and/or certified time worked in the program. Also, it was noted that two payroll expenses (of the sixty expenses selected for testing) charged to the grant were over charged due to an error in pay rate for overtime and an employee transition to full time. Questioned costs: $948 Context: During the process of obtaining an understanding of internal controls and processing of payroll expenditures, we noted payroll was not reviewed to ensure the expense charged to the grants was accurate based upon approved actual time spent in the program and accurate pay rates. Cause: Salary figures for salaried employees were charged to the federal grant based on unapproved work actually performed for the program and inaccurate pay rates were utilized for overtime and an employee transition to full time. Effect: The organization has not fully followed compliance attributes with the allowable costs principles set forth by the Compliance Supplement related to allocation of salaries being charged based on approved time worked for a program and other expenses being adequately documented to support the details of the expense charged to the grant. Personnel need to reinforce policies to ensure control procedures are in place to ensure salaries charged to a grant are appropriately based on approved time worked in a program and accurate approved rates are utilized for wages charged to the grant. Repeat Finding: Yes ? 2021-003. Recommendation: We recommend the organization charge compensation for personnel services to the federal grant based on approved hours worked in the program. Also, we recommend controls be put in place to ensure all wage rates are reviewed for accuracy prior to payroll being processed and charged to the grant. Views of responsible officials: There is no disagreement with the audit finding.
2022 ? 004: Reporting Federal Agency: U.S. Department of Education Federal Program Name: Innovative Approaches to Literacy; Full-Service Community Schools; and Promise Neighborhoods Assistance Listing Number: 84.215J Federal Award Identification Number and Year: U215J200111 Award Period: January 1, 2022 ? December 31, 2022 Type of Finding: ? Significant Deficiency in Internal Control over Compliance ? Other Matters Criteria or specific requirement: Per Uniform Guidance 2 CFR 200.303, non-federal entities receiving federal awards are required to establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations and program compliance requirements. Condition: While performing audit procedures, it was noted that bi-annual performance reports for the six-month period ending March 31, 2022 was submitted June 15, 2022, were not supported by organizations records as the underlying performance reporting files were unable to be provided for testing on accuracy of reporting. Questioned costs: None Context: A control system to prevent and detect errors in the reporting process was not created to ensure all required reporting compliance was fully supported by organizational records. Cause: During the process of obtaining an understanding of internal controls and procedures surrounding competing reporting requirements, we noted that due to significant changes in personnel the supporting Martindale Brightwood Education Zone performance reporting file was not retained to support the bi-annual report. Effect: The organization has not fully followed compliance attributes with the reporting requirements set forth by the Compliance Supplement and grant agreement. Personnel need to reinforce policies to ensure control procedures are in place to ensure accurate and timely reporting is completed and supported by organizational records. Repeat Finding: No. Recommendation: We recommend that the organization review their policies and procedures surrounding federal grants administration and ensure a review process is in place to ensure that all necessary compliance requirements are met and the organization?s records are complete to support all reporting requirements. Views of responsible officials: There is no disagreement with the audit finding.
2022 ? 001: Financial Statement Preparation and Adjusting Journal Entries Type of Finding: ? Significant Deficiency in Internal Control over Financial Reporting Condition: The organization does not have a policy in place to provide reasonable assurance that financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP); therefore, the potential exists that a material misstatement of the annual financial statements could occur and not be prevented, or detected and corrected, by the organization?s internal controls. While performing audit procedures, it was noted that there were adjustments necessary to the financial statements. Criteria or specific requirement: Internal controls should be in place to provide reasonable assurance that financial statements are prepared in accordance with U.S. GAAP. Effect: The lack of controls in place over the financial reporting function increases the risk of misstatements, fraud, or errors occurring and not being detected and corrected. Cause: The organization has not adopted a policy to provide reasonable assurance that financial statements are prepared in accordance with U.S. GAAP; however, management has reviewed and approved the annual financial statements and related notes, as prepared by the audit firm, and has accepted responsibility for those financial statements. Repeat Finding: Yes ? 2021-001. Recommendation: The organization should evaluate their financial reporting processes and controls, including the expertise of its internal staff, to determine whether additional controls over the preparation of annual financial statements can be implemented to provide reasonable assurance that financial statements are prepared in accordance with U.S. GAAP. Views of responsible officials and planned corrective actions: Management will continue to rely on the audit firm to draft the financial statements and the related notes to the financial statements, and will review, approve, and accept responsibility for the annual financial statements prior to their issuance.
2022 ? 002: Segregation of Duties Type of Finding: ? Significant Deficiency in Internal Control over Financial Reporting Condition: The organization does not have appropriate segregation of duties and review procedures in place to provide reasonable assurance that financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP); therefore, the potential exists that a material misstatement of the annual financial statements could occur and not be prevented, or detected and corrected, by the organization?s internal controls. Criteria or specific requirement: Internal controls should be in place to provide reasonable assurance that financial statements are prepared in accordance with U.S. GAAP. Effect: The lack of controls and review procedures in place over the financial reporting function increases the risk of misstatements, fraud, or errors occurring and not being detected and corrected. Cause: While performing audit procedures, it was noted that due to staffing turnover and changes, management does not have appropriate segregation of duties and review procedures in place as the President/CEO is completing and overseeing a significant amount of the financial reporting function during a portion of the year. Repeat Finding: Yes ? 2021-002. Recommendation: The organization should evaluate their financial reporting processes and controls, including the segregation of duties among its internal staff (including the number of internal staff), to determine whether additional controls over the financial reporting function can be implemented to provide reasonable assurance that financial statements are prepared in accordance with U.S. GAAP. Views of responsible officials and planned corrective actions: Management will continue to rely on a third party service provider to assist with the financial reporting function and will review, approve, and accept responsibility for the work performed by the third party servicer.
2022 ? 003: Allowable Costs Federal Agency: U.S. Department of Education Federal Program Name: Innovative Approaches to Literacy; Full-Service Community Schools; and Promise Neighborhoods Assistance Listing Number: 84.215J Federal Award Identification Number and Year: U215J200111 Award Period: January 1, 2022 ? December 31, 2022 Type of Finding: ? Material Weakness in Internal Control over Compliance ? Other Matters Criteria or specific requirement: The Compliance Supplement requires that compensation for personal services be charged to the federal grant based upon approved actual time worked on the program and not based on an allocation or budget. The Compliance Supplement requires that expenditures charged to the federal grant be supported by documentation as to the nature of the expenditure. Condition: While performing audit procedures, it was noted that payroll expenses for salary positions were charged to the grant program based upon an allocation and not on approved and/or certified time worked in the program. Also, it was noted that two payroll expenses (of the sixty expenses selected for testing) charged to the grant were over charged due to an error in pay rate for overtime and an employee transition to full time. Questioned costs: $948 Context: During the process of obtaining an understanding of internal controls and processing of payroll expenditures, we noted payroll was not reviewed to ensure the expense charged to the grants was accurate based upon approved actual time spent in the program and accurate pay rates. Cause: Salary figures for salaried employees were charged to the federal grant based on unapproved work actually performed for the program and inaccurate pay rates were utilized for overtime and an employee transition to full time. Effect: The organization has not fully followed compliance attributes with the allowable costs principles set forth by the Compliance Supplement related to allocation of salaries being charged based on approved time worked for a program and other expenses being adequately documented to support the details of the expense charged to the grant. Personnel need to reinforce policies to ensure control procedures are in place to ensure salaries charged to a grant are appropriately based on approved time worked in a program and accurate approved rates are utilized for wages charged to the grant. Repeat Finding: Yes ? 2021-003. Recommendation: We recommend the organization charge compensation for personnel services to the federal grant based on approved hours worked in the program. Also, we recommend controls be put in place to ensure all wage rates are reviewed for accuracy prior to payroll being processed and charged to the grant. Views of responsible officials: There is no disagreement with the audit finding.
2022 ? 004: Reporting Federal Agency: U.S. Department of Education Federal Program Name: Innovative Approaches to Literacy; Full-Service Community Schools; and Promise Neighborhoods Assistance Listing Number: 84.215J Federal Award Identification Number and Year: U215J200111 Award Period: January 1, 2022 ? December 31, 2022 Type of Finding: ? Significant Deficiency in Internal Control over Compliance ? Other Matters Criteria or specific requirement: Per Uniform Guidance 2 CFR 200.303, non-federal entities receiving federal awards are required to establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations and program compliance requirements. Condition: While performing audit procedures, it was noted that bi-annual performance reports for the six-month period ending March 31, 2022 was submitted June 15, 2022, were not supported by organizations records as the underlying performance reporting files were unable to be provided for testing on accuracy of reporting. Questioned costs: None Context: A control system to prevent and detect errors in the reporting process was not created to ensure all required reporting compliance was fully supported by organizational records. Cause: During the process of obtaining an understanding of internal controls and procedures surrounding competing reporting requirements, we noted that due to significant changes in personnel the supporting Martindale Brightwood Education Zone performance reporting file was not retained to support the bi-annual report. Effect: The organization has not fully followed compliance attributes with the reporting requirements set forth by the Compliance Supplement and grant agreement. Personnel need to reinforce policies to ensure control procedures are in place to ensure accurate and timely reporting is completed and supported by organizational records. Repeat Finding: No. Recommendation: We recommend that the organization review their policies and procedures surrounding federal grants administration and ensure a review process is in place to ensure that all necessary compliance requirements are met and the organization?s records are complete to support all reporting requirements. Views of responsible officials: There is no disagreement with the audit finding.