Finding 2022-001 Financial Close Process Type of Finding: Material Weakness in Internal Control over Financial Reporting Condition and Context: The auditors noted a lack of a strong financial close process which led to several material audit adjustments that were proposed during the audit and recorded by the client to properly reflect various financial statement accounts. Criteria: Management is responsible for adopting sound accounting policies and establishing and maintaining a system of internal control for the fair presentation of the basis financial statements in accordance with accounting principles generally accepted in the United States of America. Cause: Personnel responsible for the month-end close and financial statement reporting process lack the necessary skills, knowledge, and experience regarding the applicable requirements dictated under accounting principles generally accepted in the United States of America. Effect: The impact resulting from an inadequate financial close process has several profound effects. First, the deficiency compromises the reliability and integrity of financial statements, raising concerns about the accuracy of reported financial data and information. Second, the lack of an effective financial close process contributes to delays in the preparation and issuance of financial statements, impeding the organization's ability to provide financial statement users with timely information. Third, inaccurate financial reporting hinders effective resource allocation and budgeting, potentially leading to misguided financial decisions and mismanagement of funds. Finally, inadequate financial reporting processes could lead to non-compliance with federal reporting requirements and regulations. Questioned Costs: There were no questioned costs identified. Recommendation: We recommend that the Organization review their current financial statement close process paying special attention to all balance sheet reconciliations and general ledger review of expense transactions. Considering the amount of activity on a monthly basis we recommend reconciling balance sheet accounts on a monthly or quarterly basis. Views of Responsible Officials: The Organization?s Board and Executive Team consisting of the Chief Executive Officer (?CEO?) and the Chief Operating Officer (?COO?) recognize the existence of gaps in the financial accounting practices at the organization during the year ending 2022. A transition occurred between independent bookkeepers during the year causing these discrepancies. The Executive Team recognized the need to hire staff and put new policies and processes in place. The Organization began this process in October of 2022 with the hiring of a Finance Manager. Additionally, a transition occurred in the first quarter of 2023 to a new independent bookkeeper with strong training in nonprofit accounting. The Organization will adopt all GAAP nonprofit accounting practices in 2023. New processes have been adopted to reconcile the financial statements weekly. The Finance Manager and Bookkeeper meet weekly for additional oversight. Balance sheet accounts are reconciled monthly and presented to the COO and Board Treasurer.
Finding 2022-002 Schedule of Expenditures of Federal Awards Preparation Type of Finding: Material Weakness over Financial Reporting. Condition and Context: During the audit, it was identified that the Organization encountered deficiencies in preparing an accurate and complete Schedule of Expenditures of Federal Awards (?SEFA?). The SEFA is a critical component of the organization's reporting process, as it provides a summary of federal funds expended and aids in assessing compliance with federal regulations. The Organization's failure to ensure the accuracy and completeness of the SEFA indicates shortcomings in its reporting practices. It was observed that the SEFA presented inaccuracies and omissions, compromising the completeness and reliability of reported information. The SEFA did not accurately reflect all federal awards received and expended during the audit period, and relevant details such as award numbers, funding sources, and program titles were either missing or misstated. These deficiencies reflect a lack of adherence to reporting requirements. Criteria: Federal regulations and accounting principles generally accepted in the United States of America ("GAAP") mandate the preparation of a comprehensive and accurate SEFA, which provides transparent disclosure of federal funds expended, including the source of funds, program titles, award numbers, and expenditure amounts. Cause: Personnel responsible for SEFA preparation and reporting lack the necessary skills, knowledge, and experience regarding federal reporting requirements. Effect: Failure to prepare an accurate SEFA has several implications. First, the discrepancies in the SEFA could lead to misrepresentation of the extent and nature of federal funds received and expended, potentially misleading stakeholders. Second, the failure to accurately report federal awards and expenditures could result in non-compliance with federal reporting requirements, jeopardizing the organization's eligibility for future federal funding. Finally, an incomplete SEFA hinders transparency and accountability by obscuring the sources of federal funds and the programs they support, making it difficult to track the organization's use of grant funds. Questioned Costs: There were no questioned costs identified. Recommendation: We recommended that the Organization's management establish documented procedures for the preparation, review, and validation of the SEFA to ensure consistency and accuracy in future reporting. Second, management should implement controls to ensure accurate and complete recording of federal awards and corresponding expenditures in the SEFA. Finally, the Organization should procure training for personnel responsible for financial reporting, emphasizing the importance of accurate SEFA preparation and compliance with federal reporting requirements. Views of Responsible Officials: The Organization?s Board and Executive Team consisting of the CEO and the COO acknowledge the finding related to the preparation of the SEFA. Leadership is confident the addition of a staff person dedicated to grants management will ensure the proper tracking of federal awards and reporting for preparation of the SEFA in future audits. The new Grants Manager will be acquiring training and knowledge to develop an appropriate tracking mechanism.
Finding 2022-003 Expenditure of Funds Outside Contract Period Type of Finding: Noncompliance and Material Weakness in Internal Control over Compliance. Condition and Context: In the course of testing direct disbursements for adherence to appropriate cutoffs concerning the contract's period of performance, it was discovered that the Organization incurred a substantial amount of expenditures on contracts prior to the official contract start date. These disbursements took place without acquiring proper authorization for making disbursements prior to the contract's commencement. Despite the unique nature of Naloxone inventory being treated as a prepaid asset due to its delayed usage, the majority, if not all, of the Naloxone units were fully expended before the contract officially commenced. Criteria: Federal regulations and GAAP mandate adherence to specific expenditure periods aligned with the contract's performance period. Proper internal controls require organizations to establish effective mechanisms to prevent disbursements outside of the contract's valid timeframe and to obtain necessary approvals when deviations occur. Cause: The Organization lacks a robust control environment that emphasizes the importance of adhering to contract periods and obtaining proper authorizations for expenditures outside of these periods. Additionally, the Organization lacks regular monitoring and review processes for disbursements that prevents the Organization to identify and address untimely expenditures. Effect: The combination of expending funds outside of the contract period could carry several repercussions. Incurring expenses prematurely might result in the improper utilization of funds, potentially leading to the organization's inability to meet programmatic objectives. Further, incurring expenses ahead of contract initiation can lead to misalignment between costs and program activities, skewing financial reporting and program evaluation. Questioned Costs: Known questioned costs of $297,944 were identified. Recommendation: Based on our findings, we recommend that the auditee implement robust internal controls to prevent expenditures outside of contract periods by developing mechanisms to ensure that disbursements align with contract start and end dates. If operational necessity dictates that funds be spent prior to a contract?s commencement, the Organization should establish a clear and documented approval process to obtain formal approval from the pass-through entity. Views of Responsible Officials: The Organization?s Board and Executive Team consisting of the CEO and COO acknowledge the finding of expending funds outside the contract period. This finding is connected to the purchase of the emergency medication naloxone. The Organization decided to purchase with no assurance of reimbursement in order to eliminate the lack of emergency medication in an overdose epidemic. The Organization had verbal approval but did not secure approval in writing. Numerous policies will be adopted in 2023 to ensure this does not occur again. Some of these policies include the transition to an experienced nonprofit bookkeeper, training for Finance and Grants Management and tracking mechanisms, monthly grants tracking meetings to ensure inventory and spending, and the adoption of a clear and documented approval process should spending, outside a contract period, be required.
Finding 2022-004 Failure to Establish Documented Procurement Policy Type of Finding: Material Weakness in Internal Control over Procurement. Condition and Context: The Organization failed to have a formal, documented procurement policy. There was no written policy in place that detailed the steps to be followed for procurement processes, including requirements for soliciting bids or proposals, evaluating vendor qualifications, selecting vendors, and ensuring compliance with relevant laws and regulations. A comprehensive procurement policy is a crucial internal control mechanism that governs the acquisition of goods and services. This deficiency indicates a gap in the organization's internal controls and compliance framework, potentially leading to increased risks related to procurement activities. Criteria: Federal regulations and GAAP require organizations that receive federal funds to establish and maintain effective internal controls, including a documented procurement policy. A procurement policy outlines the procedures, thresholds, and guidelines for acquiring goods and services, ensuring transparency, competition, and cost-effectiveness while preventing fraud, waste, and abuse. Cause: The Organization had not recognized the significance of a well-structured procurement policy in safeguarding federal funds and ensuring compliance. This lack of awareness led to inadequate attention being given to the establishment of such a policy. Effect: The absence of a documented procurement policy exposes the Organization to several risks and potential consequences. First, without established guidelines, there is a higher likelihood of inconsistent procurement practices, leading to inefficiencies and increased costs. Second, the absence of a defined procurement process could result in a lack of transparency and accountability in vendor selection and contract award decisions. Third, failure to adhere to federal regulations and GAAP regarding procurement procedures could lead to noncompliance issues and potential loss of federal funding. Finally, the lack of a procurement policy increases the Organization's vulnerability to fraudulent activities, collusion, and other misuse of funds. Questioned Costs: There were no questioned costs identified. Recommendation: It is recommended that the Organization promptly develop and implement a comprehensive procurement policy in line with federal regulations and GAAP. The policy should address key aspects of procurement, including vendor selection, competitive bidding, conflict of interest, approval processes, contract management, and compliance with relevant laws and regulations. The policy should also outline roles and responsibilities for personnel involved in the procurement process. Views of Responsible Officials: The Organization?s Board and Executive Team consisting of the CEO and COO acknowledge the finding related to a procurement policy. In 2023 the Organization adopted a comprehensive procurement policy in line with federal regulations and GAAP.
Finding 2022-005 Internal Control Over Debarment Type of Finding: Material Weakness in Internal Control over Compliance. Condition and Context: An effective internal control system was not in place at the Organization to ensure compliance with requirements related to reviewing the debarment and suspension status of qualifying vendors before issuing federal funds. Criteria: Management is responsible for establishing internal controls to prevent making cumulative payments in excess of $25,000 to any party which is debarred, suspended, otherwise excluded from, or ineligible for participation in Federal assistance programs by any Federal department or agency. Cause: The Organization had not established an effective system of internal controls that would have ensured compliance with the grant agreement and the requirement to review federal debarment or suspended status for all qualifying vendors in excess of this threshold. Effect: The failure to establish an internal control system could enable noncompliance to go undetected. Noncompliance with the grant agreement leading to payments made to debarred entities could have resulted in the loss of federal funds to the Organization. Questioned Costs: There were no questioned costs identified. Recommendation: We recommended that the Organization's management establish and implement a system of internal controls and maintain adequate supporting documentation to ensure all qualifying vendors are reviewed for federal debarment and suspension status before payments are paid to the vendors. Views of Responsible Officials: The Organization?s Board and Executive Team consisting of the CEO and COO acknowledge the finding related to an internal control to prevent payments to any vendor that is debarred, suspended or otherwise ineligible to receive federal funding. In 2023 the Organization adopted a process to ensure all potential vendors are qualified utilizing the SAM.gov system and internal tracking and record keeping.
Finding 2022-006 Report Preparation and Submission Type of Finding: Noncompliance and Material Weakness in Internal Control over Compliance. Condition and Context: It was discovered that the Organization demonstrated deficiencies in reporting accuracy and completeness, as well as a failure to comply with state law by not filing a required annual report. Upon review of the Organization?s reporting practices, it was observed that three out of the five reports selected for testing contained discrepancies, inaccuracies, or incomplete reporting metrics. These discrepancies raise concerns about the reliability of the Organization's reported data, which can impact decision-making, program effectiveness, and the organization's ability to fulfill its fiduciary responsibilities. Furthermore, the Organization failed to file the mandatory annual report as required by Indiana Code 5-11-1-4, further indicating a deficiency in compliance with local regulations. Criteria: Federal regulations and GAAP require organizations that receive federal funds to maintain accurate and complete records and reports. Additionally, state laws and regulations dictate the filing of annual reports to ensure transparency, accountability, and compliance with local requirements. Cause: The Organization lacks well-defined and standardized reporting procedures, leading to inconsistencies in data collection, compilation, and reporting. Further, the Organization lacks robust mechanisms to verify and validate the accuracy and completeness of the data before it is included in reports. Effect: The combination of inaccurate and incomplete reporting metrics and the failure to file the annual report has several implications for the Organization. First, inaccurate and incomplete reporting metrics undermine the credibility of the Organization's financial and programmatic information, potentially leading to misinformed decisions and jeopardizing stakeholder trust. Second, inaccurate reporting may hinder the organization's ability to effectively manage its programs, evaluate outcomes, and allocate resources appropriately. Third, the failure to file the required annual report constitutes non-compliance with state law, which could result in legal penalties, loss of privileges, and reputational damage. Finally, incomplete reporting obscures the Organization's financial and operational performance, impeding transparency and accountability to both internal and external stakeholders. Questioned Costs: There were no questioned costs identified. Recommendation: It is recommended that the Organization promptly develop and implement a reporting review process, which should identify the necessary reporting metrics dictated by the terms and conditions of their federal award documents. Second, the Organization should establish robust procedures for verifying and validating data before it is included in reports. Third, the Organization should immediately rectify the failure to file the annual report and implement procedures to ensure timely and compliant submission of all required reports in the future. Finally, the Organization should strengthen internal controls related to reporting to prevent recurrence of inaccuracies and incomplete metrics and ensure compliance with state reporting requirements. Views of Responsible Officials: The Organization?s Board and Executive Team consisting of the CEO and COO acknowledge the finding related to reporting deficiencies. The Organization has adopted internal policies to address this to include a grants management tracking system that records reporting requirements and a checks and balance system. The required annual report process has been initiated and a 2023 report will be filed in the month of October 2023.
Finding 2022-001 Financial Close Process Type of Finding: Material Weakness in Internal Control over Financial Reporting Condition and Context: The auditors noted a lack of a strong financial close process which led to several material audit adjustments that were proposed during the audit and recorded by the client to properly reflect various financial statement accounts. Criteria: Management is responsible for adopting sound accounting policies and establishing and maintaining a system of internal control for the fair presentation of the basis financial statements in accordance with accounting principles generally accepted in the United States of America. Cause: Personnel responsible for the month-end close and financial statement reporting process lack the necessary skills, knowledge, and experience regarding the applicable requirements dictated under accounting principles generally accepted in the United States of America. Effect: The impact resulting from an inadequate financial close process has several profound effects. First, the deficiency compromises the reliability and integrity of financial statements, raising concerns about the accuracy of reported financial data and information. Second, the lack of an effective financial close process contributes to delays in the preparation and issuance of financial statements, impeding the organization's ability to provide financial statement users with timely information. Third, inaccurate financial reporting hinders effective resource allocation and budgeting, potentially leading to misguided financial decisions and mismanagement of funds. Finally, inadequate financial reporting processes could lead to non-compliance with federal reporting requirements and regulations. Questioned Costs: There were no questioned costs identified. Recommendation: We recommend that the Organization review their current financial statement close process paying special attention to all balance sheet reconciliations and general ledger review of expense transactions. Considering the amount of activity on a monthly basis we recommend reconciling balance sheet accounts on a monthly or quarterly basis. Views of Responsible Officials: The Organization?s Board and Executive Team consisting of the Chief Executive Officer (?CEO?) and the Chief Operating Officer (?COO?) recognize the existence of gaps in the financial accounting practices at the organization during the year ending 2022. A transition occurred between independent bookkeepers during the year causing these discrepancies. The Executive Team recognized the need to hire staff and put new policies and processes in place. The Organization began this process in October of 2022 with the hiring of a Finance Manager. Additionally, a transition occurred in the first quarter of 2023 to a new independent bookkeeper with strong training in nonprofit accounting. The Organization will adopt all GAAP nonprofit accounting practices in 2023. New processes have been adopted to reconcile the financial statements weekly. The Finance Manager and Bookkeeper meet weekly for additional oversight. Balance sheet accounts are reconciled monthly and presented to the COO and Board Treasurer.
Finding 2022-002 Schedule of Expenditures of Federal Awards Preparation Type of Finding: Material Weakness over Financial Reporting. Condition and Context: During the audit, it was identified that the Organization encountered deficiencies in preparing an accurate and complete Schedule of Expenditures of Federal Awards (?SEFA?). The SEFA is a critical component of the organization's reporting process, as it provides a summary of federal funds expended and aids in assessing compliance with federal regulations. The Organization's failure to ensure the accuracy and completeness of the SEFA indicates shortcomings in its reporting practices. It was observed that the SEFA presented inaccuracies and omissions, compromising the completeness and reliability of reported information. The SEFA did not accurately reflect all federal awards received and expended during the audit period, and relevant details such as award numbers, funding sources, and program titles were either missing or misstated. These deficiencies reflect a lack of adherence to reporting requirements. Criteria: Federal regulations and accounting principles generally accepted in the United States of America ("GAAP") mandate the preparation of a comprehensive and accurate SEFA, which provides transparent disclosure of federal funds expended, including the source of funds, program titles, award numbers, and expenditure amounts. Cause: Personnel responsible for SEFA preparation and reporting lack the necessary skills, knowledge, and experience regarding federal reporting requirements. Effect: Failure to prepare an accurate SEFA has several implications. First, the discrepancies in the SEFA could lead to misrepresentation of the extent and nature of federal funds received and expended, potentially misleading stakeholders. Second, the failure to accurately report federal awards and expenditures could result in non-compliance with federal reporting requirements, jeopardizing the organization's eligibility for future federal funding. Finally, an incomplete SEFA hinders transparency and accountability by obscuring the sources of federal funds and the programs they support, making it difficult to track the organization's use of grant funds. Questioned Costs: There were no questioned costs identified. Recommendation: We recommended that the Organization's management establish documented procedures for the preparation, review, and validation of the SEFA to ensure consistency and accuracy in future reporting. Second, management should implement controls to ensure accurate and complete recording of federal awards and corresponding expenditures in the SEFA. Finally, the Organization should procure training for personnel responsible for financial reporting, emphasizing the importance of accurate SEFA preparation and compliance with federal reporting requirements. Views of Responsible Officials: The Organization?s Board and Executive Team consisting of the CEO and the COO acknowledge the finding related to the preparation of the SEFA. Leadership is confident the addition of a staff person dedicated to grants management will ensure the proper tracking of federal awards and reporting for preparation of the SEFA in future audits. The new Grants Manager will be acquiring training and knowledge to develop an appropriate tracking mechanism.
Finding 2022-003 Expenditure of Funds Outside Contract Period Type of Finding: Noncompliance and Material Weakness in Internal Control over Compliance. Condition and Context: In the course of testing direct disbursements for adherence to appropriate cutoffs concerning the contract's period of performance, it was discovered that the Organization incurred a substantial amount of expenditures on contracts prior to the official contract start date. These disbursements took place without acquiring proper authorization for making disbursements prior to the contract's commencement. Despite the unique nature of Naloxone inventory being treated as a prepaid asset due to its delayed usage, the majority, if not all, of the Naloxone units were fully expended before the contract officially commenced. Criteria: Federal regulations and GAAP mandate adherence to specific expenditure periods aligned with the contract's performance period. Proper internal controls require organizations to establish effective mechanisms to prevent disbursements outside of the contract's valid timeframe and to obtain necessary approvals when deviations occur. Cause: The Organization lacks a robust control environment that emphasizes the importance of adhering to contract periods and obtaining proper authorizations for expenditures outside of these periods. Additionally, the Organization lacks regular monitoring and review processes for disbursements that prevents the Organization to identify and address untimely expenditures. Effect: The combination of expending funds outside of the contract period could carry several repercussions. Incurring expenses prematurely might result in the improper utilization of funds, potentially leading to the organization's inability to meet programmatic objectives. Further, incurring expenses ahead of contract initiation can lead to misalignment between costs and program activities, skewing financial reporting and program evaluation. Questioned Costs: Known questioned costs of $297,944 were identified. Recommendation: Based on our findings, we recommend that the auditee implement robust internal controls to prevent expenditures outside of contract periods by developing mechanisms to ensure that disbursements align with contract start and end dates. If operational necessity dictates that funds be spent prior to a contract?s commencement, the Organization should establish a clear and documented approval process to obtain formal approval from the pass-through entity. Views of Responsible Officials: The Organization?s Board and Executive Team consisting of the CEO and COO acknowledge the finding of expending funds outside the contract period. This finding is connected to the purchase of the emergency medication naloxone. The Organization decided to purchase with no assurance of reimbursement in order to eliminate the lack of emergency medication in an overdose epidemic. The Organization had verbal approval but did not secure approval in writing. Numerous policies will be adopted in 2023 to ensure this does not occur again. Some of these policies include the transition to an experienced nonprofit bookkeeper, training for Finance and Grants Management and tracking mechanisms, monthly grants tracking meetings to ensure inventory and spending, and the adoption of a clear and documented approval process should spending, outside a contract period, be required.
Finding 2022-004 Failure to Establish Documented Procurement Policy Type of Finding: Material Weakness in Internal Control over Procurement. Condition and Context: The Organization failed to have a formal, documented procurement policy. There was no written policy in place that detailed the steps to be followed for procurement processes, including requirements for soliciting bids or proposals, evaluating vendor qualifications, selecting vendors, and ensuring compliance with relevant laws and regulations. A comprehensive procurement policy is a crucial internal control mechanism that governs the acquisition of goods and services. This deficiency indicates a gap in the organization's internal controls and compliance framework, potentially leading to increased risks related to procurement activities. Criteria: Federal regulations and GAAP require organizations that receive federal funds to establish and maintain effective internal controls, including a documented procurement policy. A procurement policy outlines the procedures, thresholds, and guidelines for acquiring goods and services, ensuring transparency, competition, and cost-effectiveness while preventing fraud, waste, and abuse. Cause: The Organization had not recognized the significance of a well-structured procurement policy in safeguarding federal funds and ensuring compliance. This lack of awareness led to inadequate attention being given to the establishment of such a policy. Effect: The absence of a documented procurement policy exposes the Organization to several risks and potential consequences. First, without established guidelines, there is a higher likelihood of inconsistent procurement practices, leading to inefficiencies and increased costs. Second, the absence of a defined procurement process could result in a lack of transparency and accountability in vendor selection and contract award decisions. Third, failure to adhere to federal regulations and GAAP regarding procurement procedures could lead to noncompliance issues and potential loss of federal funding. Finally, the lack of a procurement policy increases the Organization's vulnerability to fraudulent activities, collusion, and other misuse of funds. Questioned Costs: There were no questioned costs identified. Recommendation: It is recommended that the Organization promptly develop and implement a comprehensive procurement policy in line with federal regulations and GAAP. The policy should address key aspects of procurement, including vendor selection, competitive bidding, conflict of interest, approval processes, contract management, and compliance with relevant laws and regulations. The policy should also outline roles and responsibilities for personnel involved in the procurement process. Views of Responsible Officials: The Organization?s Board and Executive Team consisting of the CEO and COO acknowledge the finding related to a procurement policy. In 2023 the Organization adopted a comprehensive procurement policy in line with federal regulations and GAAP.
Finding 2022-005 Internal Control Over Debarment Type of Finding: Material Weakness in Internal Control over Compliance. Condition and Context: An effective internal control system was not in place at the Organization to ensure compliance with requirements related to reviewing the debarment and suspension status of qualifying vendors before issuing federal funds. Criteria: Management is responsible for establishing internal controls to prevent making cumulative payments in excess of $25,000 to any party which is debarred, suspended, otherwise excluded from, or ineligible for participation in Federal assistance programs by any Federal department or agency. Cause: The Organization had not established an effective system of internal controls that would have ensured compliance with the grant agreement and the requirement to review federal debarment or suspended status for all qualifying vendors in excess of this threshold. Effect: The failure to establish an internal control system could enable noncompliance to go undetected. Noncompliance with the grant agreement leading to payments made to debarred entities could have resulted in the loss of federal funds to the Organization. Questioned Costs: There were no questioned costs identified. Recommendation: We recommended that the Organization's management establish and implement a system of internal controls and maintain adequate supporting documentation to ensure all qualifying vendors are reviewed for federal debarment and suspension status before payments are paid to the vendors. Views of Responsible Officials: The Organization?s Board and Executive Team consisting of the CEO and COO acknowledge the finding related to an internal control to prevent payments to any vendor that is debarred, suspended or otherwise ineligible to receive federal funding. In 2023 the Organization adopted a process to ensure all potential vendors are qualified utilizing the SAM.gov system and internal tracking and record keeping.
Finding 2022-006 Report Preparation and Submission Type of Finding: Noncompliance and Material Weakness in Internal Control over Compliance. Condition and Context: It was discovered that the Organization demonstrated deficiencies in reporting accuracy and completeness, as well as a failure to comply with state law by not filing a required annual report. Upon review of the Organization?s reporting practices, it was observed that three out of the five reports selected for testing contained discrepancies, inaccuracies, or incomplete reporting metrics. These discrepancies raise concerns about the reliability of the Organization's reported data, which can impact decision-making, program effectiveness, and the organization's ability to fulfill its fiduciary responsibilities. Furthermore, the Organization failed to file the mandatory annual report as required by Indiana Code 5-11-1-4, further indicating a deficiency in compliance with local regulations. Criteria: Federal regulations and GAAP require organizations that receive federal funds to maintain accurate and complete records and reports. Additionally, state laws and regulations dictate the filing of annual reports to ensure transparency, accountability, and compliance with local requirements. Cause: The Organization lacks well-defined and standardized reporting procedures, leading to inconsistencies in data collection, compilation, and reporting. Further, the Organization lacks robust mechanisms to verify and validate the accuracy and completeness of the data before it is included in reports. Effect: The combination of inaccurate and incomplete reporting metrics and the failure to file the annual report has several implications for the Organization. First, inaccurate and incomplete reporting metrics undermine the credibility of the Organization's financial and programmatic information, potentially leading to misinformed decisions and jeopardizing stakeholder trust. Second, inaccurate reporting may hinder the organization's ability to effectively manage its programs, evaluate outcomes, and allocate resources appropriately. Third, the failure to file the required annual report constitutes non-compliance with state law, which could result in legal penalties, loss of privileges, and reputational damage. Finally, incomplete reporting obscures the Organization's financial and operational performance, impeding transparency and accountability to both internal and external stakeholders. Questioned Costs: There were no questioned costs identified. Recommendation: It is recommended that the Organization promptly develop and implement a reporting review process, which should identify the necessary reporting metrics dictated by the terms and conditions of their federal award documents. Second, the Organization should establish robust procedures for verifying and validating data before it is included in reports. Third, the Organization should immediately rectify the failure to file the annual report and implement procedures to ensure timely and compliant submission of all required reports in the future. Finally, the Organization should strengthen internal controls related to reporting to prevent recurrence of inaccuracies and incomplete metrics and ensure compliance with state reporting requirements. Views of Responsible Officials: The Organization?s Board and Executive Team consisting of the CEO and COO acknowledge the finding related to reporting deficiencies. The Organization has adopted internal policies to address this to include a grants management tracking system that records reporting requirements and a checks and balance system. The required annual report process has been initiated and a 2023 report will be filed in the month of October 2023.