Criteria: Journal entries should have the proper documentation and supporting backup
Condition: Journal entries did not have proper documentation to support the entry. Journal entries were not approved by management or board.
Cause: Unknown
Effect: Without proper backup for adjustments made to the trial balance, it would be easy for material amounts of improper recognition to occur.
Recommendation: The Company should implement a system for recording journal entries and the necessary backup for those journal entries. Management Response: The Company is working on developing a system of documenting journal entries, with proper back-up and support. They have hired a CPA to handle their bookkeeping going forward.
The Company does not have the experience and training needed to –
‐ Prepare all its year end reconciliations and journal entries and prepare financial statements, complete with notes, in accordance with accounting principles generally accepted in the United States of America. Accordingly, the Town is unable to, and has not established internal controls over the preparation of year-end reconciliations and journal entries and the preparation of the financial statements.
‐ Select and apply accounting principles that are in conformity with accounting principles generally accepted in the United States of America. Accordingly, the Town is unable to, and has not established, internal controls over the selection and application of accounting principles.
Criteria - Under SAS 115, an internal control deficiency exists when management does not possess the financial expertise to prepare end reconciliations and prepare financial statements in accordance with generally accepted accounting principles.
Condition: Management lack the expertise to prepare the financial statements in accordance with GAAP.
Cause: Unknown
Effect: Because management lacks expertise in financial accounting and reporting, there is more than a remote likelihood that a misstatement of the entity’s financial statements that is more than inconsequential will not be prevented or detected under the provisions of SAS 115.
During the course of our audit it was noted that grant reimbursement request is not being conducted timely.
Criteria: Grant reimbursements should be requested timely. This also makes calculating expenditures related to possible single audits to be reconciled.
Condition: Management was not requesting grant reimbursement timely when expenditures were incurred.
Cause: Unknown
Effect: Makes it very difficult for cash flow and revenue recognition to be completed timely and accurately.
– During the course of our audit it was noted that payroll timesheets and grant allocation was not being follow properly. Time for employees was allocated to grants based on budget/scheduled time rather than actual time via a timesheet. Management could not justify time spent to specific grants by specific employees. The Company also could not support multiple invoices requested for review for audit evidence.
Criteria: Grants require time to be allocated to them based on specific time spent rather than budget. Grants require backup for reimbursement.
Condition: No timesheets were kept or approved
Effect: Grant compliance was not followed.
Criteria: Boards are required to meeting a regularly to provide guidance and support to management
Condition: There were no board meeting prior to August 5, 2022 or other documentation of board exercising their fiduciary responsibility to oversee the Company’s operations.
Effect: Little to no board oversight.
Criteria: The Rural Behavioral Health Workforce Coordinating Centers – Northern Border Region grant award requires a SF-424a and an annual Federal Financial Report (FFR). A data collection form is required to be filed within 9 months after year end.
Condition: No documentation was available to determine that the SF-424a or annual Federal Financial Report (FFR) for the year ended June 30, 2022 has been filed. The data collection form was not filed within 9 months after year end.
Cause: There were no procedures in place for timely filing of reports or retention polices for grant reporting.
Effect: Without documentation for reporting and untimely filing of the data collection form, the Company is not in compliance with the reporting requirements.
Criteria: The Company is required to hold documentation of each drawdown of grant revenue.
Condition: Management could not provide documentation of the drawdowns of grant revenue.
Effect: Lack of documentation of draw down approval and evidence of reimbursement.
Criteria: The financial statements and Schedule of Federal Awards required material adjustments in order for an opinion to be issued.
Condition: Many accounts required material adjustments to comply with GAAP.
Effect: The financial statements and Schedule of Federal Awards had multiple errors that required material adjustments
Criteria: The financial statements require adequate backup and support.
Condition: Management did not have adequate support/documentation for audit procedures.
Effect: During the course of the audit multiple items required took substantial time to locate and provide to the auditors for audit backup and support. This required multiple delays in the audit and ultimately resulted in a disclaimer of opinion
Condition: Prior to November 14, 2022, invoices paid did not require documentation of
approval. The former executive director paid invoices with no review or
approval. Invoices to support the expenditures was not consistently
retained.
Criteria: Internal controls should be in place to provide that expenditures are only
paid after they are reviewed and approved. Invoices or other documentation
should be retained to support expenditures.
Cause: There were no procedures in place to require authorization of expenditures
or filing of invoices to support expenditures.
Effect: Because of the failure to require approval and the lack of documentation to
support expenditures, there is more than a remote possibility that material
misstatements could occur without detection. Because of the failure to
retain evidence for expenses, it wasn’t possible to issue an opinion about
the existence and carrying amount of expenses.
Criteria: Proper segregation of duties should be impamented to prevent various duties to be completed without review
Condition: The Company operates a small office limiting the ability for segregation of duties to be in place. Many of the accounting functions are performed by one employee with the review of a second employee. A deficiency will occur when staffs are away for vacation, sick days and other events which cause various duties to be completed without review.
Effect: Lack of segregation of duties
Block Grants for Prevention and Treatment of Substance Abuse (Recovery Support and Training – CFDA #96.959; Passed thru State of Vermont Department of Health Grant #403420-08911 Grant period – Year ended June 30, 2022, Vermont Alcohol and Drug Information Clearinghouse – CFDA #93.959; Passed thru the State of Vermont Department of Health Grant #03420-08889 – Year ended June 30, 2022, Rural Behavioral Health Workforce Coordinating Centers – Northern Border Region – CFDA #93.912; Grant #1 U2SRH43523-01-00 – Year ended August 31, 2022)
Criteria: Allowable cost criteria in 2 CFR part 200 require federal payments to be made for payroll based on actual time allocated. Activities allowed
Condition: The Company could not provide any back-up for the allocated time requested for reimbursement of payroll.
Cause:Proper timesheets were not kept.
Effect: The federal grant was incorrectly charged without support.
Questioned Costs: $405,190
Context: The Company was audited by the Office of Inspector General for Substance Abuse and Mental Health Services Administration programs. Multiple infractions were noted.
Block Grants for Prevention and Treatment of Substance Abuse (Recovery Support and Training – CFDA #96.959; Passed thru State of Vermont Department of Health Grant #403420-08911 Grant period – Year ended June 30, 2022, Vermont Alcohol and Drug Information Clearinghouse – CFDA #93.959; Passed thru the State of Vermont Department of Health Grant #03420-08889 – Year ended June 30, 2022
Material Weaknesses in Internal Control over Compliance: See findings 2022-2, 2022-3, 2022-4, 2022-5, 2022-7, and 2022-9
Rural Behavioral Health Workforce Coordinating Centers – Northern Border Region – CFDA #93.912; Grant #1 U2SRH43523-01-00 – Year ended August 31, 2022)
Material Weakness in Internal Control over Compliance: See findings 2022-2, 2022-3, 2022-4, 2022-5, 2022-6, 2022-7, 2022-9, 2022-10
Rural Behavioral Health Workforce Coordinating Centers – Northern Border Region – CFDA #93.912; Grant #1 U2SRH43523-01-00 – Year ended August 31, 2022)
Criteria: According to 2 CFR section 200.305(b), non-federal entities must minimize the time elapsed between the transfer of federal funds and disbursement by the non-federal entity for direct program costs.
Condition: Drawdown reports were not available for testing and financial reports weren’t available to determine that the time elapsed between the transfer of federal funds and disbursement by the non-federal entity for direct program costs was minimized.
Effect: The entity may not be in compliance with the cash management requirements.
Questioned Costs: $0
Context: There was a significant amount of turnover within the organization. Due to the turnover and the lack of record retention policies and procedures, records of drawdowns and documentation to support compliance with cash management requirements couldn’t be located. On November 14, 2022, the Company adopted new records management policies and procedures.
Criteria: Journal entries should have the proper documentation and supporting backup
Condition: Journal entries did not have proper documentation to support the entry. Journal entries were not approved by management or board.
Cause: Unknown
Effect: Without proper backup for adjustments made to the trial balance, it would be easy for material amounts of improper recognition to occur.
Recommendation: The Company should implement a system for recording journal entries and the necessary backup for those journal entries. Management Response: The Company is working on developing a system of documenting journal entries, with proper back-up and support. They have hired a CPA to handle their bookkeeping going forward.
The Company does not have the experience and training needed to –
‐ Prepare all its year end reconciliations and journal entries and prepare financial statements, complete with notes, in accordance with accounting principles generally accepted in the United States of America. Accordingly, the Town is unable to, and has not established internal controls over the preparation of year-end reconciliations and journal entries and the preparation of the financial statements.
‐ Select and apply accounting principles that are in conformity with accounting principles generally accepted in the United States of America. Accordingly, the Town is unable to, and has not established, internal controls over the selection and application of accounting principles.
Criteria - Under SAS 115, an internal control deficiency exists when management does not possess the financial expertise to prepare end reconciliations and prepare financial statements in accordance with generally accepted accounting principles.
Condition: Management lack the expertise to prepare the financial statements in accordance with GAAP.
Cause: Unknown
Effect: Because management lacks expertise in financial accounting and reporting, there is more than a remote likelihood that a misstatement of the entity’s financial statements that is more than inconsequential will not be prevented or detected under the provisions of SAS 115.
During the course of our audit it was noted that grant reimbursement request is not being conducted timely.
Criteria: Grant reimbursements should be requested timely. This also makes calculating expenditures related to possible single audits to be reconciled.
Condition: Management was not requesting grant reimbursement timely when expenditures were incurred.
Cause: Unknown
Effect: Makes it very difficult for cash flow and revenue recognition to be completed timely and accurately.
– During the course of our audit it was noted that payroll timesheets and grant allocation was not being follow properly. Time for employees was allocated to grants based on budget/scheduled time rather than actual time via a timesheet. Management could not justify time spent to specific grants by specific employees. The Company also could not support multiple invoices requested for review for audit evidence.
Criteria: Grants require time to be allocated to them based on specific time spent rather than budget. Grants require backup for reimbursement.
Condition: No timesheets were kept or approved
Effect: Grant compliance was not followed.
Criteria: Boards are required to meeting a regularly to provide guidance and support to management
Condition: There were no board meeting prior to August 5, 2022 or other documentation of board exercising their fiduciary responsibility to oversee the Company’s operations.
Effect: Little to no board oversight.
Criteria: The Rural Behavioral Health Workforce Coordinating Centers – Northern Border Region grant award requires a SF-424a and an annual Federal Financial Report (FFR). A data collection form is required to be filed within 9 months after year end.
Condition: No documentation was available to determine that the SF-424a or annual Federal Financial Report (FFR) for the year ended June 30, 2022 has been filed. The data collection form was not filed within 9 months after year end.
Cause: There were no procedures in place for timely filing of reports or retention polices for grant reporting.
Effect: Without documentation for reporting and untimely filing of the data collection form, the Company is not in compliance with the reporting requirements.
Criteria: The Company is required to hold documentation of each drawdown of grant revenue.
Condition: Management could not provide documentation of the drawdowns of grant revenue.
Effect: Lack of documentation of draw down approval and evidence of reimbursement.
Criteria: The financial statements and Schedule of Federal Awards required material adjustments in order for an opinion to be issued.
Condition: Many accounts required material adjustments to comply with GAAP.
Effect: The financial statements and Schedule of Federal Awards had multiple errors that required material adjustments
Criteria: The financial statements require adequate backup and support.
Condition: Management did not have adequate support/documentation for audit procedures.
Effect: During the course of the audit multiple items required took substantial time to locate and provide to the auditors for audit backup and support. This required multiple delays in the audit and ultimately resulted in a disclaimer of opinion
Condition: Prior to November 14, 2022, invoices paid did not require documentation of
approval. The former executive director paid invoices with no review or
approval. Invoices to support the expenditures was not consistently
retained.
Criteria: Internal controls should be in place to provide that expenditures are only
paid after they are reviewed and approved. Invoices or other documentation
should be retained to support expenditures.
Cause: There were no procedures in place to require authorization of expenditures
or filing of invoices to support expenditures.
Effect: Because of the failure to require approval and the lack of documentation to
support expenditures, there is more than a remote possibility that material
misstatements could occur without detection. Because of the failure to
retain evidence for expenses, it wasn’t possible to issue an opinion about
the existence and carrying amount of expenses.
Criteria: Proper segregation of duties should be impamented to prevent various duties to be completed without review
Condition: The Company operates a small office limiting the ability for segregation of duties to be in place. Many of the accounting functions are performed by one employee with the review of a second employee. A deficiency will occur when staffs are away for vacation, sick days and other events which cause various duties to be completed without review.
Effect: Lack of segregation of duties
Block Grants for Prevention and Treatment of Substance Abuse (Recovery Support and Training – CFDA #96.959; Passed thru State of Vermont Department of Health Grant #403420-08911 Grant period – Year ended June 30, 2022, Vermont Alcohol and Drug Information Clearinghouse – CFDA #93.959; Passed thru the State of Vermont Department of Health Grant #03420-08889 – Year ended June 30, 2022, Rural Behavioral Health Workforce Coordinating Centers – Northern Border Region – CFDA #93.912; Grant #1 U2SRH43523-01-00 – Year ended August 31, 2022)
Criteria: Allowable cost criteria in 2 CFR part 200 require federal payments to be made for payroll based on actual time allocated. Activities allowed
Condition: The Company could not provide any back-up for the allocated time requested for reimbursement of payroll.
Cause:Proper timesheets were not kept.
Effect: The federal grant was incorrectly charged without support.
Questioned Costs: $405,190
Context: The Company was audited by the Office of Inspector General for Substance Abuse and Mental Health Services Administration programs. Multiple infractions were noted.
Block Grants for Prevention and Treatment of Substance Abuse (Recovery Support and Training – CFDA #96.959; Passed thru State of Vermont Department of Health Grant #403420-08911 Grant period – Year ended June 30, 2022, Vermont Alcohol and Drug Information Clearinghouse – CFDA #93.959; Passed thru the State of Vermont Department of Health Grant #03420-08889 – Year ended June 30, 2022
Material Weaknesses in Internal Control over Compliance: See findings 2022-2, 2022-3, 2022-4, 2022-5, 2022-7, and 2022-9
Rural Behavioral Health Workforce Coordinating Centers – Northern Border Region – CFDA #93.912; Grant #1 U2SRH43523-01-00 – Year ended August 31, 2022)
Material Weakness in Internal Control over Compliance: See findings 2022-2, 2022-3, 2022-4, 2022-5, 2022-6, 2022-7, 2022-9, 2022-10
Rural Behavioral Health Workforce Coordinating Centers – Northern Border Region – CFDA #93.912; Grant #1 U2SRH43523-01-00 – Year ended August 31, 2022)
Criteria: According to 2 CFR section 200.305(b), non-federal entities must minimize the time elapsed between the transfer of federal funds and disbursement by the non-federal entity for direct program costs.
Condition: Drawdown reports were not available for testing and financial reports weren’t available to determine that the time elapsed between the transfer of federal funds and disbursement by the non-federal entity for direct program costs was minimized.
Effect: The entity may not be in compliance with the cash management requirements.
Questioned Costs: $0
Context: There was a significant amount of turnover within the organization. Due to the turnover and the lack of record retention policies and procedures, records of drawdowns and documentation to support compliance with cash management requirements couldn’t be located. On November 14, 2022, the Company adopted new records management policies and procedures.
Criteria: Journal entries should have the proper documentation and supporting backup
Condition: Journal entries did not have proper documentation to support the entry. Journal entries were not approved by management or board.
Cause: Unknown
Effect: Without proper backup for adjustments made to the trial balance, it would be easy for material amounts of improper recognition to occur.
Recommendation: The Company should implement a system for recording journal entries and the necessary backup for those journal entries. Management Response: The Company is working on developing a system of documenting journal entries, with proper back-up and support. They have hired a CPA to handle their bookkeeping going forward.
The Company does not have the experience and training needed to –
‐ Prepare all its year end reconciliations and journal entries and prepare financial statements, complete with notes, in accordance with accounting principles generally accepted in the United States of America. Accordingly, the Town is unable to, and has not established internal controls over the preparation of year-end reconciliations and journal entries and the preparation of the financial statements.
‐ Select and apply accounting principles that are in conformity with accounting principles generally accepted in the United States of America. Accordingly, the Town is unable to, and has not established, internal controls over the selection and application of accounting principles.
Criteria - Under SAS 115, an internal control deficiency exists when management does not possess the financial expertise to prepare end reconciliations and prepare financial statements in accordance with generally accepted accounting principles.
Condition: Management lack the expertise to prepare the financial statements in accordance with GAAP.
Cause: Unknown
Effect: Because management lacks expertise in financial accounting and reporting, there is more than a remote likelihood that a misstatement of the entity’s financial statements that is more than inconsequential will not be prevented or detected under the provisions of SAS 115.
During the course of our audit it was noted that grant reimbursement request is not being conducted timely.
Criteria: Grant reimbursements should be requested timely. This also makes calculating expenditures related to possible single audits to be reconciled.
Condition: Management was not requesting grant reimbursement timely when expenditures were incurred.
Cause: Unknown
Effect: Makes it very difficult for cash flow and revenue recognition to be completed timely and accurately.
– During the course of our audit it was noted that payroll timesheets and grant allocation was not being follow properly. Time for employees was allocated to grants based on budget/scheduled time rather than actual time via a timesheet. Management could not justify time spent to specific grants by specific employees. The Company also could not support multiple invoices requested for review for audit evidence.
Criteria: Grants require time to be allocated to them based on specific time spent rather than budget. Grants require backup for reimbursement.
Condition: No timesheets were kept or approved
Effect: Grant compliance was not followed.
Criteria: Boards are required to meeting a regularly to provide guidance and support to management
Condition: There were no board meeting prior to August 5, 2022 or other documentation of board exercising their fiduciary responsibility to oversee the Company’s operations.
Effect: Little to no board oversight.
Criteria: The Rural Behavioral Health Workforce Coordinating Centers – Northern Border Region grant award requires a SF-424a and an annual Federal Financial Report (FFR). A data collection form is required to be filed within 9 months after year end.
Condition: No documentation was available to determine that the SF-424a or annual Federal Financial Report (FFR) for the year ended June 30, 2022 has been filed. The data collection form was not filed within 9 months after year end.
Cause: There were no procedures in place for timely filing of reports or retention polices for grant reporting.
Effect: Without documentation for reporting and untimely filing of the data collection form, the Company is not in compliance with the reporting requirements.
Criteria: The Company is required to hold documentation of each drawdown of grant revenue.
Condition: Management could not provide documentation of the drawdowns of grant revenue.
Effect: Lack of documentation of draw down approval and evidence of reimbursement.
Criteria: The financial statements and Schedule of Federal Awards required material adjustments in order for an opinion to be issued.
Condition: Many accounts required material adjustments to comply with GAAP.
Effect: The financial statements and Schedule of Federal Awards had multiple errors that required material adjustments
Criteria: The financial statements require adequate backup and support.
Condition: Management did not have adequate support/documentation for audit procedures.
Effect: During the course of the audit multiple items required took substantial time to locate and provide to the auditors for audit backup and support. This required multiple delays in the audit and ultimately resulted in a disclaimer of opinion
Condition: Prior to November 14, 2022, invoices paid did not require documentation of
approval. The former executive director paid invoices with no review or
approval. Invoices to support the expenditures was not consistently
retained.
Criteria: Internal controls should be in place to provide that expenditures are only
paid after they are reviewed and approved. Invoices or other documentation
should be retained to support expenditures.
Cause: There were no procedures in place to require authorization of expenditures
or filing of invoices to support expenditures.
Effect: Because of the failure to require approval and the lack of documentation to
support expenditures, there is more than a remote possibility that material
misstatements could occur without detection. Because of the failure to
retain evidence for expenses, it wasn’t possible to issue an opinion about
the existence and carrying amount of expenses.
Criteria: Proper segregation of duties should be impamented to prevent various duties to be completed without review
Condition: The Company operates a small office limiting the ability for segregation of duties to be in place. Many of the accounting functions are performed by one employee with the review of a second employee. A deficiency will occur when staffs are away for vacation, sick days and other events which cause various duties to be completed without review.
Effect: Lack of segregation of duties
Block Grants for Prevention and Treatment of Substance Abuse (Recovery Support and Training – CFDA #96.959; Passed thru State of Vermont Department of Health Grant #403420-08911 Grant period – Year ended June 30, 2022, Vermont Alcohol and Drug Information Clearinghouse – CFDA #93.959; Passed thru the State of Vermont Department of Health Grant #03420-08889 – Year ended June 30, 2022, Rural Behavioral Health Workforce Coordinating Centers – Northern Border Region – CFDA #93.912; Grant #1 U2SRH43523-01-00 – Year ended August 31, 2022)
Criteria: Allowable cost criteria in 2 CFR part 200 require federal payments to be made for payroll based on actual time allocated. Activities allowed
Condition: The Company could not provide any back-up for the allocated time requested for reimbursement of payroll.
Cause:Proper timesheets were not kept.
Effect: The federal grant was incorrectly charged without support.
Questioned Costs: $405,190
Context: The Company was audited by the Office of Inspector General for Substance Abuse and Mental Health Services Administration programs. Multiple infractions were noted.
Block Grants for Prevention and Treatment of Substance Abuse (Recovery Support and Training – CFDA #96.959; Passed thru State of Vermont Department of Health Grant #403420-08911 Grant period – Year ended June 30, 2022, Vermont Alcohol and Drug Information Clearinghouse – CFDA #93.959; Passed thru the State of Vermont Department of Health Grant #03420-08889 – Year ended June 30, 2022
Material Weaknesses in Internal Control over Compliance: See findings 2022-2, 2022-3, 2022-4, 2022-5, 2022-7, and 2022-9
Rural Behavioral Health Workforce Coordinating Centers – Northern Border Region – CFDA #93.912; Grant #1 U2SRH43523-01-00 – Year ended August 31, 2022)
Material Weakness in Internal Control over Compliance: See findings 2022-2, 2022-3, 2022-4, 2022-5, 2022-6, 2022-7, 2022-9, 2022-10
Rural Behavioral Health Workforce Coordinating Centers – Northern Border Region – CFDA #93.912; Grant #1 U2SRH43523-01-00 – Year ended August 31, 2022)
Criteria: According to 2 CFR section 200.305(b), non-federal entities must minimize the time elapsed between the transfer of federal funds and disbursement by the non-federal entity for direct program costs.
Condition: Drawdown reports were not available for testing and financial reports weren’t available to determine that the time elapsed between the transfer of federal funds and disbursement by the non-federal entity for direct program costs was minimized.
Effect: The entity may not be in compliance with the cash management requirements.
Questioned Costs: $0
Context: There was a significant amount of turnover within the organization. Due to the turnover and the lack of record retention policies and procedures, records of drawdowns and documentation to support compliance with cash management requirements couldn’t be located. On November 14, 2022, the Company adopted new records management policies and procedures.
Criteria: Journal entries should have the proper documentation and supporting backup
Condition: Journal entries did not have proper documentation to support the entry. Journal entries were not approved by management or board.
Cause: Unknown
Effect: Without proper backup for adjustments made to the trial balance, it would be easy for material amounts of improper recognition to occur.
Recommendation: The Company should implement a system for recording journal entries and the necessary backup for those journal entries. Management Response: The Company is working on developing a system of documenting journal entries, with proper back-up and support. They have hired a CPA to handle their bookkeeping going forward.
The Company does not have the experience and training needed to –
‐ Prepare all its year end reconciliations and journal entries and prepare financial statements, complete with notes, in accordance with accounting principles generally accepted in the United States of America. Accordingly, the Town is unable to, and has not established internal controls over the preparation of year-end reconciliations and journal entries and the preparation of the financial statements.
‐ Select and apply accounting principles that are in conformity with accounting principles generally accepted in the United States of America. Accordingly, the Town is unable to, and has not established, internal controls over the selection and application of accounting principles.
Criteria - Under SAS 115, an internal control deficiency exists when management does not possess the financial expertise to prepare end reconciliations and prepare financial statements in accordance with generally accepted accounting principles.
Condition: Management lack the expertise to prepare the financial statements in accordance with GAAP.
Cause: Unknown
Effect: Because management lacks expertise in financial accounting and reporting, there is more than a remote likelihood that a misstatement of the entity’s financial statements that is more than inconsequential will not be prevented or detected under the provisions of SAS 115.
During the course of our audit it was noted that grant reimbursement request is not being conducted timely.
Criteria: Grant reimbursements should be requested timely. This also makes calculating expenditures related to possible single audits to be reconciled.
Condition: Management was not requesting grant reimbursement timely when expenditures were incurred.
Cause: Unknown
Effect: Makes it very difficult for cash flow and revenue recognition to be completed timely and accurately.
– During the course of our audit it was noted that payroll timesheets and grant allocation was not being follow properly. Time for employees was allocated to grants based on budget/scheduled time rather than actual time via a timesheet. Management could not justify time spent to specific grants by specific employees. The Company also could not support multiple invoices requested for review for audit evidence.
Criteria: Grants require time to be allocated to them based on specific time spent rather than budget. Grants require backup for reimbursement.
Condition: No timesheets were kept or approved
Effect: Grant compliance was not followed.
Criteria: Boards are required to meeting a regularly to provide guidance and support to management
Condition: There were no board meeting prior to August 5, 2022 or other documentation of board exercising their fiduciary responsibility to oversee the Company’s operations.
Effect: Little to no board oversight.
Criteria: The Rural Behavioral Health Workforce Coordinating Centers – Northern Border Region grant award requires a SF-424a and an annual Federal Financial Report (FFR). A data collection form is required to be filed within 9 months after year end.
Condition: No documentation was available to determine that the SF-424a or annual Federal Financial Report (FFR) for the year ended June 30, 2022 has been filed. The data collection form was not filed within 9 months after year end.
Cause: There were no procedures in place for timely filing of reports or retention polices for grant reporting.
Effect: Without documentation for reporting and untimely filing of the data collection form, the Company is not in compliance with the reporting requirements.
Criteria: The Company is required to hold documentation of each drawdown of grant revenue.
Condition: Management could not provide documentation of the drawdowns of grant revenue.
Effect: Lack of documentation of draw down approval and evidence of reimbursement.
Criteria: The financial statements and Schedule of Federal Awards required material adjustments in order for an opinion to be issued.
Condition: Many accounts required material adjustments to comply with GAAP.
Effect: The financial statements and Schedule of Federal Awards had multiple errors that required material adjustments
Criteria: The financial statements require adequate backup and support.
Condition: Management did not have adequate support/documentation for audit procedures.
Effect: During the course of the audit multiple items required took substantial time to locate and provide to the auditors for audit backup and support. This required multiple delays in the audit and ultimately resulted in a disclaimer of opinion
Condition: Prior to November 14, 2022, invoices paid did not require documentation of
approval. The former executive director paid invoices with no review or
approval. Invoices to support the expenditures was not consistently
retained.
Criteria: Internal controls should be in place to provide that expenditures are only
paid after they are reviewed and approved. Invoices or other documentation
should be retained to support expenditures.
Cause: There were no procedures in place to require authorization of expenditures
or filing of invoices to support expenditures.
Effect: Because of the failure to require approval and the lack of documentation to
support expenditures, there is more than a remote possibility that material
misstatements could occur without detection. Because of the failure to
retain evidence for expenses, it wasn’t possible to issue an opinion about
the existence and carrying amount of expenses.
Criteria: Proper segregation of duties should be impamented to prevent various duties to be completed without review
Condition: The Company operates a small office limiting the ability for segregation of duties to be in place. Many of the accounting functions are performed by one employee with the review of a second employee. A deficiency will occur when staffs are away for vacation, sick days and other events which cause various duties to be completed without review.
Effect: Lack of segregation of duties
Block Grants for Prevention and Treatment of Substance Abuse (Recovery Support and Training – CFDA #96.959; Passed thru State of Vermont Department of Health Grant #403420-08911 Grant period – Year ended June 30, 2022, Vermont Alcohol and Drug Information Clearinghouse – CFDA #93.959; Passed thru the State of Vermont Department of Health Grant #03420-08889 – Year ended June 30, 2022, Rural Behavioral Health Workforce Coordinating Centers – Northern Border Region – CFDA #93.912; Grant #1 U2SRH43523-01-00 – Year ended August 31, 2022)
Criteria: Allowable cost criteria in 2 CFR part 200 require federal payments to be made for payroll based on actual time allocated. Activities allowed
Condition: The Company could not provide any back-up for the allocated time requested for reimbursement of payroll.
Cause:Proper timesheets were not kept.
Effect: The federal grant was incorrectly charged without support.
Questioned Costs: $405,190
Context: The Company was audited by the Office of Inspector General for Substance Abuse and Mental Health Services Administration programs. Multiple infractions were noted.
Block Grants for Prevention and Treatment of Substance Abuse (Recovery Support and Training – CFDA #96.959; Passed thru State of Vermont Department of Health Grant #403420-08911 Grant period – Year ended June 30, 2022, Vermont Alcohol and Drug Information Clearinghouse – CFDA #93.959; Passed thru the State of Vermont Department of Health Grant #03420-08889 – Year ended June 30, 2022
Material Weaknesses in Internal Control over Compliance: See findings 2022-2, 2022-3, 2022-4, 2022-5, 2022-7, and 2022-9
Rural Behavioral Health Workforce Coordinating Centers – Northern Border Region – CFDA #93.912; Grant #1 U2SRH43523-01-00 – Year ended August 31, 2022)
Material Weakness in Internal Control over Compliance: See findings 2022-2, 2022-3, 2022-4, 2022-5, 2022-6, 2022-7, 2022-9, 2022-10
Rural Behavioral Health Workforce Coordinating Centers – Northern Border Region – CFDA #93.912; Grant #1 U2SRH43523-01-00 – Year ended August 31, 2022)
Criteria: According to 2 CFR section 200.305(b), non-federal entities must minimize the time elapsed between the transfer of federal funds and disbursement by the non-federal entity for direct program costs.
Condition: Drawdown reports were not available for testing and financial reports weren’t available to determine that the time elapsed between the transfer of federal funds and disbursement by the non-federal entity for direct program costs was minimized.
Effect: The entity may not be in compliance with the cash management requirements.
Questioned Costs: $0
Context: There was a significant amount of turnover within the organization. Due to the turnover and the lack of record retention policies and procedures, records of drawdowns and documentation to support compliance with cash management requirements couldn’t be located. On November 14, 2022, the Company adopted new records management policies and procedures.
Criteria: Journal entries should have the proper documentation and supporting backup
Condition: Journal entries did not have proper documentation to support the entry. Journal entries were not approved by management or board.
Cause: Unknown
Effect: Without proper backup for adjustments made to the trial balance, it would be easy for material amounts of improper recognition to occur.
Recommendation: The Company should implement a system for recording journal entries and the necessary backup for those journal entries. Management Response: The Company is working on developing a system of documenting journal entries, with proper back-up and support. They have hired a CPA to handle their bookkeeping going forward.
The Company does not have the experience and training needed to –
‐ Prepare all its year end reconciliations and journal entries and prepare financial statements, complete with notes, in accordance with accounting principles generally accepted in the United States of America. Accordingly, the Town is unable to, and has not established internal controls over the preparation of year-end reconciliations and journal entries and the preparation of the financial statements.
‐ Select and apply accounting principles that are in conformity with accounting principles generally accepted in the United States of America. Accordingly, the Town is unable to, and has not established, internal controls over the selection and application of accounting principles.
Criteria - Under SAS 115, an internal control deficiency exists when management does not possess the financial expertise to prepare end reconciliations and prepare financial statements in accordance with generally accepted accounting principles.
Condition: Management lack the expertise to prepare the financial statements in accordance with GAAP.
Cause: Unknown
Effect: Because management lacks expertise in financial accounting and reporting, there is more than a remote likelihood that a misstatement of the entity’s financial statements that is more than inconsequential will not be prevented or detected under the provisions of SAS 115.
During the course of our audit it was noted that grant reimbursement request is not being conducted timely.
Criteria: Grant reimbursements should be requested timely. This also makes calculating expenditures related to possible single audits to be reconciled.
Condition: Management was not requesting grant reimbursement timely when expenditures were incurred.
Cause: Unknown
Effect: Makes it very difficult for cash flow and revenue recognition to be completed timely and accurately.
– During the course of our audit it was noted that payroll timesheets and grant allocation was not being follow properly. Time for employees was allocated to grants based on budget/scheduled time rather than actual time via a timesheet. Management could not justify time spent to specific grants by specific employees. The Company also could not support multiple invoices requested for review for audit evidence.
Criteria: Grants require time to be allocated to them based on specific time spent rather than budget. Grants require backup for reimbursement.
Condition: No timesheets were kept or approved
Effect: Grant compliance was not followed.
Criteria: Boards are required to meeting a regularly to provide guidance and support to management
Condition: There were no board meeting prior to August 5, 2022 or other documentation of board exercising their fiduciary responsibility to oversee the Company’s operations.
Effect: Little to no board oversight.
Criteria: The Rural Behavioral Health Workforce Coordinating Centers – Northern Border Region grant award requires a SF-424a and an annual Federal Financial Report (FFR). A data collection form is required to be filed within 9 months after year end.
Condition: No documentation was available to determine that the SF-424a or annual Federal Financial Report (FFR) for the year ended June 30, 2022 has been filed. The data collection form was not filed within 9 months after year end.
Cause: There were no procedures in place for timely filing of reports or retention polices for grant reporting.
Effect: Without documentation for reporting and untimely filing of the data collection form, the Company is not in compliance with the reporting requirements.
Criteria: The Company is required to hold documentation of each drawdown of grant revenue.
Condition: Management could not provide documentation of the drawdowns of grant revenue.
Effect: Lack of documentation of draw down approval and evidence of reimbursement.
Criteria: The financial statements and Schedule of Federal Awards required material adjustments in order for an opinion to be issued.
Condition: Many accounts required material adjustments to comply with GAAP.
Effect: The financial statements and Schedule of Federal Awards had multiple errors that required material adjustments
Criteria: The financial statements require adequate backup and support.
Condition: Management did not have adequate support/documentation for audit procedures.
Effect: During the course of the audit multiple items required took substantial time to locate and provide to the auditors for audit backup and support. This required multiple delays in the audit and ultimately resulted in a disclaimer of opinion
Condition: Prior to November 14, 2022, invoices paid did not require documentation of
approval. The former executive director paid invoices with no review or
approval. Invoices to support the expenditures was not consistently
retained.
Criteria: Internal controls should be in place to provide that expenditures are only
paid after they are reviewed and approved. Invoices or other documentation
should be retained to support expenditures.
Cause: There were no procedures in place to require authorization of expenditures
or filing of invoices to support expenditures.
Effect: Because of the failure to require approval and the lack of documentation to
support expenditures, there is more than a remote possibility that material
misstatements could occur without detection. Because of the failure to
retain evidence for expenses, it wasn’t possible to issue an opinion about
the existence and carrying amount of expenses.
Criteria: Proper segregation of duties should be impamented to prevent various duties to be completed without review
Condition: The Company operates a small office limiting the ability for segregation of duties to be in place. Many of the accounting functions are performed by one employee with the review of a second employee. A deficiency will occur when staffs are away for vacation, sick days and other events which cause various duties to be completed without review.
Effect: Lack of segregation of duties
Block Grants for Prevention and Treatment of Substance Abuse (Recovery Support and Training – CFDA #96.959; Passed thru State of Vermont Department of Health Grant #403420-08911 Grant period – Year ended June 30, 2022, Vermont Alcohol and Drug Information Clearinghouse – CFDA #93.959; Passed thru the State of Vermont Department of Health Grant #03420-08889 – Year ended June 30, 2022, Rural Behavioral Health Workforce Coordinating Centers – Northern Border Region – CFDA #93.912; Grant #1 U2SRH43523-01-00 – Year ended August 31, 2022)
Criteria: Allowable cost criteria in 2 CFR part 200 require federal payments to be made for payroll based on actual time allocated. Activities allowed
Condition: The Company could not provide any back-up for the allocated time requested for reimbursement of payroll.
Cause:Proper timesheets were not kept.
Effect: The federal grant was incorrectly charged without support.
Questioned Costs: $405,190
Context: The Company was audited by the Office of Inspector General for Substance Abuse and Mental Health Services Administration programs. Multiple infractions were noted.
Block Grants for Prevention and Treatment of Substance Abuse (Recovery Support and Training – CFDA #96.959; Passed thru State of Vermont Department of Health Grant #403420-08911 Grant period – Year ended June 30, 2022, Vermont Alcohol and Drug Information Clearinghouse – CFDA #93.959; Passed thru the State of Vermont Department of Health Grant #03420-08889 – Year ended June 30, 2022
Material Weaknesses in Internal Control over Compliance: See findings 2022-2, 2022-3, 2022-4, 2022-5, 2022-7, and 2022-9
Rural Behavioral Health Workforce Coordinating Centers – Northern Border Region – CFDA #93.912; Grant #1 U2SRH43523-01-00 – Year ended August 31, 2022)
Material Weakness in Internal Control over Compliance: See findings 2022-2, 2022-3, 2022-4, 2022-5, 2022-6, 2022-7, 2022-9, 2022-10
Rural Behavioral Health Workforce Coordinating Centers – Northern Border Region – CFDA #93.912; Grant #1 U2SRH43523-01-00 – Year ended August 31, 2022)
Criteria: According to 2 CFR section 200.305(b), non-federal entities must minimize the time elapsed between the transfer of federal funds and disbursement by the non-federal entity for direct program costs.
Condition: Drawdown reports were not available for testing and financial reports weren’t available to determine that the time elapsed between the transfer of federal funds and disbursement by the non-federal entity for direct program costs was minimized.
Effect: The entity may not be in compliance with the cash management requirements.
Questioned Costs: $0
Context: There was a significant amount of turnover within the organization. Due to the turnover and the lack of record retention policies and procedures, records of drawdowns and documentation to support compliance with cash management requirements couldn’t be located. On November 14, 2022, the Company adopted new records management policies and procedures.
Criteria: Journal entries should have the proper documentation and supporting backup
Condition: Journal entries did not have proper documentation to support the entry. Journal entries were not approved by management or board.
Cause: Unknown
Effect: Without proper backup for adjustments made to the trial balance, it would be easy for material amounts of improper recognition to occur.
Recommendation: The Company should implement a system for recording journal entries and the necessary backup for those journal entries. Management Response: The Company is working on developing a system of documenting journal entries, with proper back-up and support. They have hired a CPA to handle their bookkeeping going forward.
The Company does not have the experience and training needed to –
‐ Prepare all its year end reconciliations and journal entries and prepare financial statements, complete with notes, in accordance with accounting principles generally accepted in the United States of America. Accordingly, the Town is unable to, and has not established internal controls over the preparation of year-end reconciliations and journal entries and the preparation of the financial statements.
‐ Select and apply accounting principles that are in conformity with accounting principles generally accepted in the United States of America. Accordingly, the Town is unable to, and has not established, internal controls over the selection and application of accounting principles.
Criteria - Under SAS 115, an internal control deficiency exists when management does not possess the financial expertise to prepare end reconciliations and prepare financial statements in accordance with generally accepted accounting principles.
Condition: Management lack the expertise to prepare the financial statements in accordance with GAAP.
Cause: Unknown
Effect: Because management lacks expertise in financial accounting and reporting, there is more than a remote likelihood that a misstatement of the entity’s financial statements that is more than inconsequential will not be prevented or detected under the provisions of SAS 115.
During the course of our audit it was noted that grant reimbursement request is not being conducted timely.
Criteria: Grant reimbursements should be requested timely. This also makes calculating expenditures related to possible single audits to be reconciled.
Condition: Management was not requesting grant reimbursement timely when expenditures were incurred.
Cause: Unknown
Effect: Makes it very difficult for cash flow and revenue recognition to be completed timely and accurately.
– During the course of our audit it was noted that payroll timesheets and grant allocation was not being follow properly. Time for employees was allocated to grants based on budget/scheduled time rather than actual time via a timesheet. Management could not justify time spent to specific grants by specific employees. The Company also could not support multiple invoices requested for review for audit evidence.
Criteria: Grants require time to be allocated to them based on specific time spent rather than budget. Grants require backup for reimbursement.
Condition: No timesheets were kept or approved
Effect: Grant compliance was not followed.
Criteria: Boards are required to meeting a regularly to provide guidance and support to management
Condition: There were no board meeting prior to August 5, 2022 or other documentation of board exercising their fiduciary responsibility to oversee the Company’s operations.
Effect: Little to no board oversight.
Criteria: The Rural Behavioral Health Workforce Coordinating Centers – Northern Border Region grant award requires a SF-424a and an annual Federal Financial Report (FFR). A data collection form is required to be filed within 9 months after year end.
Condition: No documentation was available to determine that the SF-424a or annual Federal Financial Report (FFR) for the year ended June 30, 2022 has been filed. The data collection form was not filed within 9 months after year end.
Cause: There were no procedures in place for timely filing of reports or retention polices for grant reporting.
Effect: Without documentation for reporting and untimely filing of the data collection form, the Company is not in compliance with the reporting requirements.
Criteria: The Company is required to hold documentation of each drawdown of grant revenue.
Condition: Management could not provide documentation of the drawdowns of grant revenue.
Effect: Lack of documentation of draw down approval and evidence of reimbursement.
Criteria: The financial statements and Schedule of Federal Awards required material adjustments in order for an opinion to be issued.
Condition: Many accounts required material adjustments to comply with GAAP.
Effect: The financial statements and Schedule of Federal Awards had multiple errors that required material adjustments
Criteria: The financial statements require adequate backup and support.
Condition: Management did not have adequate support/documentation for audit procedures.
Effect: During the course of the audit multiple items required took substantial time to locate and provide to the auditors for audit backup and support. This required multiple delays in the audit and ultimately resulted in a disclaimer of opinion
Condition: Prior to November 14, 2022, invoices paid did not require documentation of
approval. The former executive director paid invoices with no review or
approval. Invoices to support the expenditures was not consistently
retained.
Criteria: Internal controls should be in place to provide that expenditures are only
paid after they are reviewed and approved. Invoices or other documentation
should be retained to support expenditures.
Cause: There were no procedures in place to require authorization of expenditures
or filing of invoices to support expenditures.
Effect: Because of the failure to require approval and the lack of documentation to
support expenditures, there is more than a remote possibility that material
misstatements could occur without detection. Because of the failure to
retain evidence for expenses, it wasn’t possible to issue an opinion about
the existence and carrying amount of expenses.
Criteria: Proper segregation of duties should be impamented to prevent various duties to be completed without review
Condition: The Company operates a small office limiting the ability for segregation of duties to be in place. Many of the accounting functions are performed by one employee with the review of a second employee. A deficiency will occur when staffs are away for vacation, sick days and other events which cause various duties to be completed without review.
Effect: Lack of segregation of duties
Block Grants for Prevention and Treatment of Substance Abuse (Recovery Support and Training – CFDA #96.959; Passed thru State of Vermont Department of Health Grant #403420-08911 Grant period – Year ended June 30, 2022, Vermont Alcohol and Drug Information Clearinghouse – CFDA #93.959; Passed thru the State of Vermont Department of Health Grant #03420-08889 – Year ended June 30, 2022, Rural Behavioral Health Workforce Coordinating Centers – Northern Border Region – CFDA #93.912; Grant #1 U2SRH43523-01-00 – Year ended August 31, 2022)
Criteria: Allowable cost criteria in 2 CFR part 200 require federal payments to be made for payroll based on actual time allocated. Activities allowed
Condition: The Company could not provide any back-up for the allocated time requested for reimbursement of payroll.
Cause:Proper timesheets were not kept.
Effect: The federal grant was incorrectly charged without support.
Questioned Costs: $405,190
Context: The Company was audited by the Office of Inspector General for Substance Abuse and Mental Health Services Administration programs. Multiple infractions were noted.
Block Grants for Prevention and Treatment of Substance Abuse (Recovery Support and Training – CFDA #96.959; Passed thru State of Vermont Department of Health Grant #403420-08911 Grant period – Year ended June 30, 2022, Vermont Alcohol and Drug Information Clearinghouse – CFDA #93.959; Passed thru the State of Vermont Department of Health Grant #03420-08889 – Year ended June 30, 2022
Material Weaknesses in Internal Control over Compliance: See findings 2022-2, 2022-3, 2022-4, 2022-5, 2022-7, and 2022-9
Rural Behavioral Health Workforce Coordinating Centers – Northern Border Region – CFDA #93.912; Grant #1 U2SRH43523-01-00 – Year ended August 31, 2022)
Material Weakness in Internal Control over Compliance: See findings 2022-2, 2022-3, 2022-4, 2022-5, 2022-6, 2022-7, 2022-9, 2022-10
Rural Behavioral Health Workforce Coordinating Centers – Northern Border Region – CFDA #93.912; Grant #1 U2SRH43523-01-00 – Year ended August 31, 2022)
Criteria: According to 2 CFR section 200.305(b), non-federal entities must minimize the time elapsed between the transfer of federal funds and disbursement by the non-federal entity for direct program costs.
Condition: Drawdown reports were not available for testing and financial reports weren’t available to determine that the time elapsed between the transfer of federal funds and disbursement by the non-federal entity for direct program costs was minimized.
Effect: The entity may not be in compliance with the cash management requirements.
Questioned Costs: $0
Context: There was a significant amount of turnover within the organization. Due to the turnover and the lack of record retention policies and procedures, records of drawdowns and documentation to support compliance with cash management requirements couldn’t be located. On November 14, 2022, the Company adopted new records management policies and procedures.
Criteria: Journal entries should have the proper documentation and supporting backup
Condition: Journal entries did not have proper documentation to support the entry. Journal entries were not approved by management or board.
Cause: Unknown
Effect: Without proper backup for adjustments made to the trial balance, it would be easy for material amounts of improper recognition to occur.
Recommendation: The Company should implement a system for recording journal entries and the necessary backup for those journal entries. Management Response: The Company is working on developing a system of documenting journal entries, with proper back-up and support. They have hired a CPA to handle their bookkeeping going forward.
The Company does not have the experience and training needed to –
‐ Prepare all its year end reconciliations and journal entries and prepare financial statements, complete with notes, in accordance with accounting principles generally accepted in the United States of America. Accordingly, the Town is unable to, and has not established internal controls over the preparation of year-end reconciliations and journal entries and the preparation of the financial statements.
‐ Select and apply accounting principles that are in conformity with accounting principles generally accepted in the United States of America. Accordingly, the Town is unable to, and has not established, internal controls over the selection and application of accounting principles.
Criteria - Under SAS 115, an internal control deficiency exists when management does not possess the financial expertise to prepare end reconciliations and prepare financial statements in accordance with generally accepted accounting principles.
Condition: Management lack the expertise to prepare the financial statements in accordance with GAAP.
Cause: Unknown
Effect: Because management lacks expertise in financial accounting and reporting, there is more than a remote likelihood that a misstatement of the entity’s financial statements that is more than inconsequential will not be prevented or detected under the provisions of SAS 115.
During the course of our audit it was noted that grant reimbursement request is not being conducted timely.
Criteria: Grant reimbursements should be requested timely. This also makes calculating expenditures related to possible single audits to be reconciled.
Condition: Management was not requesting grant reimbursement timely when expenditures were incurred.
Cause: Unknown
Effect: Makes it very difficult for cash flow and revenue recognition to be completed timely and accurately.
– During the course of our audit it was noted that payroll timesheets and grant allocation was not being follow properly. Time for employees was allocated to grants based on budget/scheduled time rather than actual time via a timesheet. Management could not justify time spent to specific grants by specific employees. The Company also could not support multiple invoices requested for review for audit evidence.
Criteria: Grants require time to be allocated to them based on specific time spent rather than budget. Grants require backup for reimbursement.
Condition: No timesheets were kept or approved
Effect: Grant compliance was not followed.
Criteria: Boards are required to meeting a regularly to provide guidance and support to management
Condition: There were no board meeting prior to August 5, 2022 or other documentation of board exercising their fiduciary responsibility to oversee the Company’s operations.
Effect: Little to no board oversight.
Criteria: The Rural Behavioral Health Workforce Coordinating Centers – Northern Border Region grant award requires a SF-424a and an annual Federal Financial Report (FFR). A data collection form is required to be filed within 9 months after year end.
Condition: No documentation was available to determine that the SF-424a or annual Federal Financial Report (FFR) for the year ended June 30, 2022 has been filed. The data collection form was not filed within 9 months after year end.
Cause: There were no procedures in place for timely filing of reports or retention polices for grant reporting.
Effect: Without documentation for reporting and untimely filing of the data collection form, the Company is not in compliance with the reporting requirements.
Criteria: The Company is required to hold documentation of each drawdown of grant revenue.
Condition: Management could not provide documentation of the drawdowns of grant revenue.
Effect: Lack of documentation of draw down approval and evidence of reimbursement.
Criteria: The financial statements and Schedule of Federal Awards required material adjustments in order for an opinion to be issued.
Condition: Many accounts required material adjustments to comply with GAAP.
Effect: The financial statements and Schedule of Federal Awards had multiple errors that required material adjustments
Criteria: The financial statements require adequate backup and support.
Condition: Management did not have adequate support/documentation for audit procedures.
Effect: During the course of the audit multiple items required took substantial time to locate and provide to the auditors for audit backup and support. This required multiple delays in the audit and ultimately resulted in a disclaimer of opinion
Condition: Prior to November 14, 2022, invoices paid did not require documentation of
approval. The former executive director paid invoices with no review or
approval. Invoices to support the expenditures was not consistently
retained.
Criteria: Internal controls should be in place to provide that expenditures are only
paid after they are reviewed and approved. Invoices or other documentation
should be retained to support expenditures.
Cause: There were no procedures in place to require authorization of expenditures
or filing of invoices to support expenditures.
Effect: Because of the failure to require approval and the lack of documentation to
support expenditures, there is more than a remote possibility that material
misstatements could occur without detection. Because of the failure to
retain evidence for expenses, it wasn’t possible to issue an opinion about
the existence and carrying amount of expenses.
Criteria: Proper segregation of duties should be impamented to prevent various duties to be completed without review
Condition: The Company operates a small office limiting the ability for segregation of duties to be in place. Many of the accounting functions are performed by one employee with the review of a second employee. A deficiency will occur when staffs are away for vacation, sick days and other events which cause various duties to be completed without review.
Effect: Lack of segregation of duties
Block Grants for Prevention and Treatment of Substance Abuse (Recovery Support and Training – CFDA #96.959; Passed thru State of Vermont Department of Health Grant #403420-08911 Grant period – Year ended June 30, 2022, Vermont Alcohol and Drug Information Clearinghouse – CFDA #93.959; Passed thru the State of Vermont Department of Health Grant #03420-08889 – Year ended June 30, 2022, Rural Behavioral Health Workforce Coordinating Centers – Northern Border Region – CFDA #93.912; Grant #1 U2SRH43523-01-00 – Year ended August 31, 2022)
Criteria: Allowable cost criteria in 2 CFR part 200 require federal payments to be made for payroll based on actual time allocated. Activities allowed
Condition: The Company could not provide any back-up for the allocated time requested for reimbursement of payroll.
Cause:Proper timesheets were not kept.
Effect: The federal grant was incorrectly charged without support.
Questioned Costs: $405,190
Context: The Company was audited by the Office of Inspector General for Substance Abuse and Mental Health Services Administration programs. Multiple infractions were noted.
Block Grants for Prevention and Treatment of Substance Abuse (Recovery Support and Training – CFDA #96.959; Passed thru State of Vermont Department of Health Grant #403420-08911 Grant period – Year ended June 30, 2022, Vermont Alcohol and Drug Information Clearinghouse – CFDA #93.959; Passed thru the State of Vermont Department of Health Grant #03420-08889 – Year ended June 30, 2022
Material Weaknesses in Internal Control over Compliance: See findings 2022-2, 2022-3, 2022-4, 2022-5, 2022-7, and 2022-9
Rural Behavioral Health Workforce Coordinating Centers – Northern Border Region – CFDA #93.912; Grant #1 U2SRH43523-01-00 – Year ended August 31, 2022)
Material Weakness in Internal Control over Compliance: See findings 2022-2, 2022-3, 2022-4, 2022-5, 2022-6, 2022-7, 2022-9, 2022-10
Rural Behavioral Health Workforce Coordinating Centers – Northern Border Region – CFDA #93.912; Grant #1 U2SRH43523-01-00 – Year ended August 31, 2022)
Criteria: According to 2 CFR section 200.305(b), non-federal entities must minimize the time elapsed between the transfer of federal funds and disbursement by the non-federal entity for direct program costs.
Condition: Drawdown reports were not available for testing and financial reports weren’t available to determine that the time elapsed between the transfer of federal funds and disbursement by the non-federal entity for direct program costs was minimized.
Effect: The entity may not be in compliance with the cash management requirements.
Questioned Costs: $0
Context: There was a significant amount of turnover within the organization. Due to the turnover and the lack of record retention policies and procedures, records of drawdowns and documentation to support compliance with cash management requirements couldn’t be located. On November 14, 2022, the Company adopted new records management policies and procedures.
Criteria: Journal entries should have the proper documentation and supporting backup
Condition: Journal entries did not have proper documentation to support the entry. Journal entries were not approved by management or board.
Cause: Unknown
Effect: Without proper backup for adjustments made to the trial balance, it would be easy for material amounts of improper recognition to occur.
Recommendation: The Company should implement a system for recording journal entries and the necessary backup for those journal entries. Management Response: The Company is working on developing a system of documenting journal entries, with proper back-up and support. They have hired a CPA to handle their bookkeeping going forward.
The Company does not have the experience and training needed to –
‐ Prepare all its year end reconciliations and journal entries and prepare financial statements, complete with notes, in accordance with accounting principles generally accepted in the United States of America. Accordingly, the Town is unable to, and has not established internal controls over the preparation of year-end reconciliations and journal entries and the preparation of the financial statements.
‐ Select and apply accounting principles that are in conformity with accounting principles generally accepted in the United States of America. Accordingly, the Town is unable to, and has not established, internal controls over the selection and application of accounting principles.
Criteria - Under SAS 115, an internal control deficiency exists when management does not possess the financial expertise to prepare end reconciliations and prepare financial statements in accordance with generally accepted accounting principles.
Condition: Management lack the expertise to prepare the financial statements in accordance with GAAP.
Cause: Unknown
Effect: Because management lacks expertise in financial accounting and reporting, there is more than a remote likelihood that a misstatement of the entity’s financial statements that is more than inconsequential will not be prevented or detected under the provisions of SAS 115.
During the course of our audit it was noted that grant reimbursement request is not being conducted timely.
Criteria: Grant reimbursements should be requested timely. This also makes calculating expenditures related to possible single audits to be reconciled.
Condition: Management was not requesting grant reimbursement timely when expenditures were incurred.
Cause: Unknown
Effect: Makes it very difficult for cash flow and revenue recognition to be completed timely and accurately.
– During the course of our audit it was noted that payroll timesheets and grant allocation was not being follow properly. Time for employees was allocated to grants based on budget/scheduled time rather than actual time via a timesheet. Management could not justify time spent to specific grants by specific employees. The Company also could not support multiple invoices requested for review for audit evidence.
Criteria: Grants require time to be allocated to them based on specific time spent rather than budget. Grants require backup for reimbursement.
Condition: No timesheets were kept or approved
Effect: Grant compliance was not followed.
Criteria: Boards are required to meeting a regularly to provide guidance and support to management
Condition: There were no board meeting prior to August 5, 2022 or other documentation of board exercising their fiduciary responsibility to oversee the Company’s operations.
Effect: Little to no board oversight.
Criteria: The Rural Behavioral Health Workforce Coordinating Centers – Northern Border Region grant award requires a SF-424a and an annual Federal Financial Report (FFR). A data collection form is required to be filed within 9 months after year end.
Condition: No documentation was available to determine that the SF-424a or annual Federal Financial Report (FFR) for the year ended June 30, 2022 has been filed. The data collection form was not filed within 9 months after year end.
Cause: There were no procedures in place for timely filing of reports or retention polices for grant reporting.
Effect: Without documentation for reporting and untimely filing of the data collection form, the Company is not in compliance with the reporting requirements.
Criteria: The Company is required to hold documentation of each drawdown of grant revenue.
Condition: Management could not provide documentation of the drawdowns of grant revenue.
Effect: Lack of documentation of draw down approval and evidence of reimbursement.
Criteria: The financial statements and Schedule of Federal Awards required material adjustments in order for an opinion to be issued.
Condition: Many accounts required material adjustments to comply with GAAP.
Effect: The financial statements and Schedule of Federal Awards had multiple errors that required material adjustments
Criteria: The financial statements require adequate backup and support.
Condition: Management did not have adequate support/documentation for audit procedures.
Effect: During the course of the audit multiple items required took substantial time to locate and provide to the auditors for audit backup and support. This required multiple delays in the audit and ultimately resulted in a disclaimer of opinion
Condition: Prior to November 14, 2022, invoices paid did not require documentation of
approval. The former executive director paid invoices with no review or
approval. Invoices to support the expenditures was not consistently
retained.
Criteria: Internal controls should be in place to provide that expenditures are only
paid after they are reviewed and approved. Invoices or other documentation
should be retained to support expenditures.
Cause: There were no procedures in place to require authorization of expenditures
or filing of invoices to support expenditures.
Effect: Because of the failure to require approval and the lack of documentation to
support expenditures, there is more than a remote possibility that material
misstatements could occur without detection. Because of the failure to
retain evidence for expenses, it wasn’t possible to issue an opinion about
the existence and carrying amount of expenses.
Criteria: Proper segregation of duties should be impamented to prevent various duties to be completed without review
Condition: The Company operates a small office limiting the ability for segregation of duties to be in place. Many of the accounting functions are performed by one employee with the review of a second employee. A deficiency will occur when staffs are away for vacation, sick days and other events which cause various duties to be completed without review.
Effect: Lack of segregation of duties
Block Grants for Prevention and Treatment of Substance Abuse (Recovery Support and Training – CFDA #96.959; Passed thru State of Vermont Department of Health Grant #403420-08911 Grant period – Year ended June 30, 2022, Vermont Alcohol and Drug Information Clearinghouse – CFDA #93.959; Passed thru the State of Vermont Department of Health Grant #03420-08889 – Year ended June 30, 2022, Rural Behavioral Health Workforce Coordinating Centers – Northern Border Region – CFDA #93.912; Grant #1 U2SRH43523-01-00 – Year ended August 31, 2022)
Criteria: Allowable cost criteria in 2 CFR part 200 require federal payments to be made for payroll based on actual time allocated. Activities allowed
Condition: The Company could not provide any back-up for the allocated time requested for reimbursement of payroll.
Cause:Proper timesheets were not kept.
Effect: The federal grant was incorrectly charged without support.
Questioned Costs: $405,190
Context: The Company was audited by the Office of Inspector General for Substance Abuse and Mental Health Services Administration programs. Multiple infractions were noted.
Block Grants for Prevention and Treatment of Substance Abuse (Recovery Support and Training – CFDA #96.959; Passed thru State of Vermont Department of Health Grant #403420-08911 Grant period – Year ended June 30, 2022, Vermont Alcohol and Drug Information Clearinghouse – CFDA #93.959; Passed thru the State of Vermont Department of Health Grant #03420-08889 – Year ended June 30, 2022
Material Weaknesses in Internal Control over Compliance: See findings 2022-2, 2022-3, 2022-4, 2022-5, 2022-7, and 2022-9
Rural Behavioral Health Workforce Coordinating Centers – Northern Border Region – CFDA #93.912; Grant #1 U2SRH43523-01-00 – Year ended August 31, 2022)
Material Weakness in Internal Control over Compliance: See findings 2022-2, 2022-3, 2022-4, 2022-5, 2022-6, 2022-7, 2022-9, 2022-10
Rural Behavioral Health Workforce Coordinating Centers – Northern Border Region – CFDA #93.912; Grant #1 U2SRH43523-01-00 – Year ended August 31, 2022)
Criteria: According to 2 CFR section 200.305(b), non-federal entities must minimize the time elapsed between the transfer of federal funds and disbursement by the non-federal entity for direct program costs.
Condition: Drawdown reports were not available for testing and financial reports weren’t available to determine that the time elapsed between the transfer of federal funds and disbursement by the non-federal entity for direct program costs was minimized.
Effect: The entity may not be in compliance with the cash management requirements.
Questioned Costs: $0
Context: There was a significant amount of turnover within the organization. Due to the turnover and the lack of record retention policies and procedures, records of drawdowns and documentation to support compliance with cash management requirements couldn’t be located. On November 14, 2022, the Company adopted new records management policies and procedures.