Finding 2022-004
Internal controls over compliance – Material Weakness
Criteria: The 2 CFR section 200.303 requires that non-federal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the non- federal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards.
Condition: The Organization has not developed a strong system of controls and oversight specifically related to the federal award activity that takes into consideration the control environment, risk assessment, control activities, information and communication and monitoring. This is exemplified by number of deficiencies that follow in this report.
Cause: The year ended December 31, 2022 is the Organization’s first year receiving and expending federal funds in excess of $750,000. Therefore when they received the new funding in 2022, they were unaware of all the additional expectations for oversight that are necessary related to federal funding.
Effect: Due to lack of oversight management and those charged with governance did not identify material errors in the federal activities or risks to the award.
Questioned Costs: Not applicable.
Repeat Finding: Not applicable as the Organization is a first time auditee.
Recommendation: Those charged with governance and management of the organization should evaluate their current internal control processes and levels of oversight as they relate to federal awards and ensure that more robust policies and practices are implemented.
Views of Responsible Official: See Corrective Action Plan.
"Finding 2022-005
Activities Allowed, Allowable Costs, and Period of Performance – Material Weakness.
Criteria: The 2 CFR section 200.400 requires that the Organization must take responsibility for administering the Federal funds in a manner consistent with the underlying agreements, program objectives, and the terms and the conditions of the award. This includes implementing internal controls to ensure that costs are related to activities allowed, the costs are allowable, and the cost are incurred in the period of performance.
Condition: The Organization does not have strong document retention policies to demonstrate that costs are for activities allowed, costs are allowable, and incurred in the period of performance. In addition, they did not have systems of controls in place to ensure that expenditures meet the appropriate criteria under Activities Allowed, Allowable Costs, and Period of Performance. The result is that there were several instances in which support for expenditures was not found. In addition, for all transactions that we tested, even though most of the underlying expenditures were allowed, allowable and within the period of performance, there was no system of controls operating at the client to ensure that the costs were consistently appropriate.
Cause: The year ended December 31, 2022 was the Organization’s first year receiving federal funding. In addition, there was a lot of turnover in the employees who were involved in processing the transactions related to the award, and a lack of sufficient training.
Effect: For 4 selections out of 60 had no available support in the sample that tested activities allowed, allowable costs, and period of performance. The total value of those 4 selections is included in the questioned costs below and these items resulted in the qualified opinion for the Report on Compliance for Each Major Federal Program. Further there were multiple other sample selections that were missing evidence of supervisor approval, had incomplete information, or were inconsistently processed.
Questioned Costs: $46,871 of costs that has no available support as described above.
Repeat Finding: Not applicable as the Organization is a first time auditee.
Recommendation: We recommend that the Organization provide additional training to employees to ensure that controls operate effectively so that only allowable costs are authorized to be charged to the federal awards. Further, we recommend that document retention controls are implemented to support that charges to the federal award are meet the criteria of Activities Allowed and Allowable Costs and Period of Performance.
Views of Responsible Official: See Corrective Action Plan."
Finding 2022-006
Procurement, Suspension, and Debarment – Material Weakness.
Criteria: In accordance with §200.318, the non-federal entity must use its own documented procurement procedures which reflect applicable laws and regulations, provided that the procurements conform to applicable federal law and the standards identified. Additionally, the nonfederal entity must maintain records sufficient to detail the history of the procurement. These records are required to include but are not necessarily limited to the following: rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. All procurement transactions must be conducted in in accordance with §200.317 through §200.327.
In accordance with §200.214 non-federal entities cannot enter into awards, subawards, or contracts with certain parties that are debarred, suspended, or otherwise excluded from or ineligible for participation in federal assistance programs or activities. Non-federal entities must either check for exclusions in the System for Award Management (SAM); collect a certification from the entity or add a clause or condition to the covered transaction with the entity prior to entering into a covered transaction with a non-federal entity.
Condition: The Organization also has standard procurement procedures in place guiding purchasing decisions. However, due to need for expediency in choosing a contract that is partially funded by the federal award, the board of directors approved waiving the normal bidding process. The Organization also did not perform or document suspension and debarment checks on prospective vendors and subrecipients.
Cause: The Organization’s personnel did not ensure to follow documented policies and procedures for selecting a contractor that were in compliance with the CFR 200. Additionally, the Organization did not have adequate internal controls in place to identify the need to ensure a check for suspended or debarred vendors on contractors occurred and was documented prior to entering into those agreements.
Effect: Failure to maintain policies for vendor selection process and failure to obtain vendor solicitation for procurements is noncompliance with federal regulations. This leads to the possibility that resources were purchased from vendors who were suspended and/or debarred.
Questioned Costs: Unknown
Repeat Finding: Not applicable as the Organization is a first time auditee.
Recommendation: Standard forms should be updated to incorporate procurement and suspension and debarment criteria for both vendors and subrecipients. Controls should be implemented to ensure that the procurement decisions and suspension and debarment checks are reviewed by an appropriate member of management and are properly stored for future reference.
Views of Responsible Official: See Corrective Action Plan.
"Finding 2022-007
Reporting – Significant Deficiency.
Criteria: 2 CFR section 200.328 states that information must be collected with the frequency required by the terms and conditions of the Federal award. The Organization’s Project Service Agreement indicates that invoices for monthly financial reporting are due to the pass-through entity by the tenth business day of the month for the previous calendar month, except for the last invoice of the 2022 calendar year which was due on January 10, 2023.
Questioned Costs: Not applicable.
Repeat Finding: Not applicable as the Organization is a first time auditee.
Recommendation: We recommend that the Organization develop more effective policies and controls to ensure that the reports are remitted within the time frame specified in the agreements.
Views of Responsible Official: See Corrective Action Plan.
Condition: In our sample of four monthly invoices, all four were submitted after the deadline prescribed in the agreement.
Cause: The Organization has no controls in place to ensure that reports are remitted on a timely basis. Effect: The effect is minimal since the pass-through entity still accepted the reports and reimbursed the
Organization for the majority of the requested funds."
"Finding 2022-008
Deadline for Federal Single Audit – Significant Deficiency.
Criteria: 2 CFR section 200.512(a) states that the data collection form and reporting package must be submitted the earlier of 30 calendar days after receipt of the auditor’s reports or nine months after the end of the audit period to the Federal Audit Clearinghouse (FAC). If the due date falls on a Saturday, Sunday, or federal holiday, the reporting package is due the next business day. The Uniform Guidance does not have a provision addressing whether the cognizant or oversight agencies may extend due dates.
Condition: The single audit report was not submitted by September 30, 2023.
Cause: The Organization’s audit for the year ended December 31, 2022 did not begin until August of 2023. This was a first time audit, and by the time that the audit commenced it was common knowledge that they would not meet the deadline of September 30, 2023. The Organization communicated the delay to the appropriate parties. Further delays were experienced due to multiple errors which required further time to quantify the appropriate adjustments to the books.
Effect: The Schedule of Expenditures of Federal Awards were not available in a timely manner in order to allow for timely submission of the data collection form.
Questioned Costs: None
Repeat Finding: Not applicable as the Organization is a first time auditee.
Recommendation: We recommend that the data collection form is filed timely in the future. In order to do so, steps should be taken to ensure that the next audit commences earlier and that the books are appropriately reconciled to decrease the chances of missing the deadline in the future.
Views of Responsible Official: See Corrective Action Plan."
Finding 2022-004
Internal controls over compliance – Material Weakness
Criteria: The 2 CFR section 200.303 requires that non-federal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the non- federal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards.
Condition: The Organization has not developed a strong system of controls and oversight specifically related to the federal award activity that takes into consideration the control environment, risk assessment, control activities, information and communication and monitoring. This is exemplified by number of deficiencies that follow in this report.
Cause: The year ended December 31, 2022 is the Organization’s first year receiving and expending federal funds in excess of $750,000. Therefore when they received the new funding in 2022, they were unaware of all the additional expectations for oversight that are necessary related to federal funding.
Effect: Due to lack of oversight management and those charged with governance did not identify material errors in the federal activities or risks to the award.
Questioned Costs: Not applicable.
Repeat Finding: Not applicable as the Organization is a first time auditee.
Recommendation: Those charged with governance and management of the organization should evaluate their current internal control processes and levels of oversight as they relate to federal awards and ensure that more robust policies and practices are implemented.
Views of Responsible Official: See Corrective Action Plan.
"Finding 2022-005
Activities Allowed, Allowable Costs, and Period of Performance – Material Weakness.
Criteria: The 2 CFR section 200.400 requires that the Organization must take responsibility for administering the Federal funds in a manner consistent with the underlying agreements, program objectives, and the terms and the conditions of the award. This includes implementing internal controls to ensure that costs are related to activities allowed, the costs are allowable, and the cost are incurred in the period of performance.
Condition: The Organization does not have strong document retention policies to demonstrate that costs are for activities allowed, costs are allowable, and incurred in the period of performance. In addition, they did not have systems of controls in place to ensure that expenditures meet the appropriate criteria under Activities Allowed, Allowable Costs, and Period of Performance. The result is that there were several instances in which support for expenditures was not found. In addition, for all transactions that we tested, even though most of the underlying expenditures were allowed, allowable and within the period of performance, there was no system of controls operating at the client to ensure that the costs were consistently appropriate.
Cause: The year ended December 31, 2022 was the Organization’s first year receiving federal funding. In addition, there was a lot of turnover in the employees who were involved in processing the transactions related to the award, and a lack of sufficient training.
Effect: For 4 selections out of 60 had no available support in the sample that tested activities allowed, allowable costs, and period of performance. The total value of those 4 selections is included in the questioned costs below and these items resulted in the qualified opinion for the Report on Compliance for Each Major Federal Program. Further there were multiple other sample selections that were missing evidence of supervisor approval, had incomplete information, or were inconsistently processed.
Questioned Costs: $46,871 of costs that has no available support as described above.
Repeat Finding: Not applicable as the Organization is a first time auditee.
Recommendation: We recommend that the Organization provide additional training to employees to ensure that controls operate effectively so that only allowable costs are authorized to be charged to the federal awards. Further, we recommend that document retention controls are implemented to support that charges to the federal award are meet the criteria of Activities Allowed and Allowable Costs and Period of Performance.
Views of Responsible Official: See Corrective Action Plan."
Finding 2022-006
Procurement, Suspension, and Debarment – Material Weakness.
Criteria: In accordance with §200.318, the non-federal entity must use its own documented procurement procedures which reflect applicable laws and regulations, provided that the procurements conform to applicable federal law and the standards identified. Additionally, the nonfederal entity must maintain records sufficient to detail the history of the procurement. These records are required to include but are not necessarily limited to the following: rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. All procurement transactions must be conducted in in accordance with §200.317 through §200.327.
In accordance with §200.214 non-federal entities cannot enter into awards, subawards, or contracts with certain parties that are debarred, suspended, or otherwise excluded from or ineligible for participation in federal assistance programs or activities. Non-federal entities must either check for exclusions in the System for Award Management (SAM); collect a certification from the entity or add a clause or condition to the covered transaction with the entity prior to entering into a covered transaction with a non-federal entity.
Condition: The Organization also has standard procurement procedures in place guiding purchasing decisions. However, due to need for expediency in choosing a contract that is partially funded by the federal award, the board of directors approved waiving the normal bidding process. The Organization also did not perform or document suspension and debarment checks on prospective vendors and subrecipients.
Cause: The Organization’s personnel did not ensure to follow documented policies and procedures for selecting a contractor that were in compliance with the CFR 200. Additionally, the Organization did not have adequate internal controls in place to identify the need to ensure a check for suspended or debarred vendors on contractors occurred and was documented prior to entering into those agreements.
Effect: Failure to maintain policies for vendor selection process and failure to obtain vendor solicitation for procurements is noncompliance with federal regulations. This leads to the possibility that resources were purchased from vendors who were suspended and/or debarred.
Questioned Costs: Unknown
Repeat Finding: Not applicable as the Organization is a first time auditee.
Recommendation: Standard forms should be updated to incorporate procurement and suspension and debarment criteria for both vendors and subrecipients. Controls should be implemented to ensure that the procurement decisions and suspension and debarment checks are reviewed by an appropriate member of management and are properly stored for future reference.
Views of Responsible Official: See Corrective Action Plan.
"Finding 2022-007
Reporting – Significant Deficiency.
Criteria: 2 CFR section 200.328 states that information must be collected with the frequency required by the terms and conditions of the Federal award. The Organization’s Project Service Agreement indicates that invoices for monthly financial reporting are due to the pass-through entity by the tenth business day of the month for the previous calendar month, except for the last invoice of the 2022 calendar year which was due on January 10, 2023.
Questioned Costs: Not applicable.
Repeat Finding: Not applicable as the Organization is a first time auditee.
Recommendation: We recommend that the Organization develop more effective policies and controls to ensure that the reports are remitted within the time frame specified in the agreements.
Views of Responsible Official: See Corrective Action Plan.
Condition: In our sample of four monthly invoices, all four were submitted after the deadline prescribed in the agreement.
Cause: The Organization has no controls in place to ensure that reports are remitted on a timely basis. Effect: The effect is minimal since the pass-through entity still accepted the reports and reimbursed the
Organization for the majority of the requested funds."
"Finding 2022-008
Deadline for Federal Single Audit – Significant Deficiency.
Criteria: 2 CFR section 200.512(a) states that the data collection form and reporting package must be submitted the earlier of 30 calendar days after receipt of the auditor’s reports or nine months after the end of the audit period to the Federal Audit Clearinghouse (FAC). If the due date falls on a Saturday, Sunday, or federal holiday, the reporting package is due the next business day. The Uniform Guidance does not have a provision addressing whether the cognizant or oversight agencies may extend due dates.
Condition: The single audit report was not submitted by September 30, 2023.
Cause: The Organization’s audit for the year ended December 31, 2022 did not begin until August of 2023. This was a first time audit, and by the time that the audit commenced it was common knowledge that they would not meet the deadline of September 30, 2023. The Organization communicated the delay to the appropriate parties. Further delays were experienced due to multiple errors which required further time to quantify the appropriate adjustments to the books.
Effect: The Schedule of Expenditures of Federal Awards were not available in a timely manner in order to allow for timely submission of the data collection form.
Questioned Costs: None
Repeat Finding: Not applicable as the Organization is a first time auditee.
Recommendation: We recommend that the data collection form is filed timely in the future. In order to do so, steps should be taken to ensure that the next audit commences earlier and that the books are appropriately reconciled to decrease the chances of missing the deadline in the future.
Views of Responsible Official: See Corrective Action Plan."