Audit 294918

Finding 2021-001: Material Weakness - Untimely Audit Submission in Accordance with OMB Uniform Guidance Federal Grantor: All Federal Programs Compliance Requirement: Reporting Condition: The Chamber did not electronically submit their December 31, 2021 Single Audit reporting package (Single Audit Report, Data Collection Form, Status of Prior Year Findings, and a Corrective Action Plan) within the required time period. Criteria: The Chamber was required to submit its December 31, 2021 audited financial statements and single audit reporting package to the federal audit clearinghouse no later than September 30, 2022, 9 months after the fiscal year-end (2 Code of Federal Regulations 200.512(a)). Effect: Federal awarding agencies may deny the Chamber future federal awards or subject the Chamber to additional monitoring requirements. Cause: The Chamber was not able to complete its single audit by the reporting deadline due to staff shortages. Recommendation: We recommended that management strengthen the related internal controls over monitoring of its year-end reconciliation of its financial statements to ensure that the general ledger accounts reflect proper and complete activity consistent with their basis of accounting. We believe that reviews, evaluations of transactions, and reconciliations of accounts should be performed on a regular basis during the year. This would expedite the year-end closing process and ensure compliance with the audit report submission requirements of OMB Uniform Guidance. Management’s Response: Management’s response to the findings is discussed in the Corrective Action Plan.

Finding 2021-002: Material Weakness – Lack of Documentation on Sole Source Contracts and Verification of Vendors Federal grantor: Department of Commerce Condition: The Chamber contract with a vendor on a sole-source basis and did not document justification for the use of a sole source vendor. In addition, the Chamber did not verify that the vendor was not on the list of vendors suspended or debarred from federal contracting before contracting with the vendor. Criteria: Entities are required to follow the procurement standards in 2 CFR sections 200.318 through 200.327, including ensuring that the procurement method used for the contracts are appropriate based on the dollar amount and conditions specified in 2 CFR section 200.320 and noncompetitive procurements. Entities also must comply with 2 CFR Part 1326 that prohibits entities that have been debarred, suspended or voluntarily excluded from participating in Federal procurement. Cause: The Chamber’s Procurement Policy allows for a sole source vendor but requires staff to document sole source procurements prior to initial purchase. It appears staff did not follow its policy. The Policy also contains a requirement to verify or receive vendor certification that they are not debarred, suspended, ineligible or voluntarily excluded from Federal procurements, but this procedure was not followed. Effect: The Department of Commerce may impose additional conditions on the receipt of a subsequent tranche of future award funds, if any, or take other available remedies as set forth in 2 C.F.C. section 200.339. Recommendation: We recommend the Chamber review policies with staff to ensure procurement requirements are followed, and that staff are familiar with federal procurement requirements. Management’s Response: Management’s response to the finding is discussed in the Corrective Action Plan.

Finding 2021-003: Material Weakness and Questioned Cost – Grant Claim Support Federal grantor: Department of Commerce Condition: The Chamber’s expenditure detail for the grant funded projects do not support the amounts billed to the Department of Commerce. The amounts billed were more than the general ledger detail supported. Criteria: A reconciliation of grant project expenses to the grant revenue billed should be performed. The supporting documentation of any reconciling items should be maintained with the grant bills. Also, 2 CFR 200.400 states that accounting practices of the entity be consistent with cost principals required under the CFR and support the accumulation of costs and provide adequate documentation to support costs charged to the Federal award. Cause: The Chamber billed costs to the grant that were not allocated in the accounting system to that grant and a reconciliation was not performed comparing the grant billings to the expense detail. Effect: The expenses billed to the grant may not be correct. Our reconciliation of these expenses disclosed an overbilling to the grant of approximately $2,500. Recommendation: The Chamber needs to ensure that expenses to be reimbursed by federal grant funds are recorded in the class code in the accounting system for that grant so that federal grant revenue in the accounting system match the expenses allocated to that grant. The Chamber needs to include in their year-end reconciliations a comparison of grant revenue and expense and ensure they match or can be reconciled. Management’s Response: Management’s response to the finding is discussed in the Corrective Action Plan.

Finding 2021-004: Significant Deficiency – Grant Claim Support Federal grantor: Department of Commerce Condition: The allocation of payroll costs to programs are done manually using spreadsheets instead of done based on entity-wide timesheets. Criteria: Under 2 CFR 200.400, direct cost allocation principles state that if a cost benefits two or more projects or activities in proportions that can be determined without undue effort or cost, the cost must be allocated to the projects based on the proportional benefit. If a cost benefits two or more projects or activities in proportions that cannot be determined because of the interrelationship of the work involved, then the costs may be allocated or transferred to benefitted projects on any reasonable documented basis. Further, a cost may not be assigned to a Federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the Federal award as an indirect cost. Costs are required to be adequately documented. Cause: The Chamber is not able to readily determine the amount of payroll costs billable to the grants. Effect: The approach of manually allocating payroll costs to grant projects leaves room for error, and makes it difficult to determine that costs are not being reimbursed by more than one source. Recommendation: The Chamber needs to prepare time studies or require employees to prepare timesheets on an automated system to support the payroll costs allocated to programs. Management’s Response: Management’s response to the finding is discussed in the Corrective Action Plan.

Finding 2021-001: Material Weakness - Untimely Audit Submission in Accordance with OMB Uniform Guidance Federal Grantor: All Federal Programs Compliance Requirement: Reporting Condition: The Chamber did not electronically submit their December 31, 2021 Single Audit reporting package (Single Audit Report, Data Collection Form, Status of Prior Year Findings, and a Corrective Action Plan) within the required time period. Criteria: The Chamber was required to submit its December 31, 2021 audited financial statements and single audit reporting package to the federal audit clearinghouse no later than September 30, 2022, 9 months after the fiscal year-end (2 Code of Federal Regulations 200.512(a)). Effect: Federal awarding agencies may deny the Chamber future federal awards or subject the Chamber to additional monitoring requirements. Cause: The Chamber was not able to complete its single audit by the reporting deadline due to staff shortages. Recommendation: We recommended that management strengthen the related internal controls over monitoring of its year-end reconciliation of its financial statements to ensure that the general ledger accounts reflect proper and complete activity consistent with their basis of accounting. We believe that reviews, evaluations of transactions, and reconciliations of accounts should be performed on a regular basis during the year. This would expedite the year-end closing process and ensure compliance with the audit report submission requirements of OMB Uniform Guidance. Management’s Response: Management’s response to the findings is discussed in the Corrective Action Plan.

Finding 2021-002: Material Weakness – Lack of Documentation on Sole Source Contracts and Verification of Vendors Federal grantor: Department of Commerce Condition: The Chamber contract with a vendor on a sole-source basis and did not document justification for the use of a sole source vendor. In addition, the Chamber did not verify that the vendor was not on the list of vendors suspended or debarred from federal contracting before contracting with the vendor. Criteria: Entities are required to follow the procurement standards in 2 CFR sections 200.318 through 200.327, including ensuring that the procurement method used for the contracts are appropriate based on the dollar amount and conditions specified in 2 CFR section 200.320 and noncompetitive procurements. Entities also must comply with 2 CFR Part 1326 that prohibits entities that have been debarred, suspended or voluntarily excluded from participating in Federal procurement. Cause: The Chamber’s Procurement Policy allows for a sole source vendor but requires staff to document sole source procurements prior to initial purchase. It appears staff did not follow its policy. The Policy also contains a requirement to verify or receive vendor certification that they are not debarred, suspended, ineligible or voluntarily excluded from Federal procurements, but this procedure was not followed. Effect: The Department of Commerce may impose additional conditions on the receipt of a subsequent tranche of future award funds, if any, or take other available remedies as set forth in 2 C.F.C. section 200.339. Recommendation: We recommend the Chamber review policies with staff to ensure procurement requirements are followed, and that staff are familiar with federal procurement requirements. Management’s Response: Management’s response to the finding is discussed in the Corrective Action Plan.

Finding 2021-003: Material Weakness and Questioned Cost – Grant Claim Support Federal grantor: Department of Commerce Condition: The Chamber’s expenditure detail for the grant funded projects do not support the amounts billed to the Department of Commerce. The amounts billed were more than the general ledger detail supported. Criteria: A reconciliation of grant project expenses to the grant revenue billed should be performed. The supporting documentation of any reconciling items should be maintained with the grant bills. Also, 2 CFR 200.400 states that accounting practices of the entity be consistent with cost principals required under the CFR and support the accumulation of costs and provide adequate documentation to support costs charged to the Federal award. Cause: The Chamber billed costs to the grant that were not allocated in the accounting system to that grant and a reconciliation was not performed comparing the grant billings to the expense detail. Effect: The expenses billed to the grant may not be correct. Our reconciliation of these expenses disclosed an overbilling to the grant of approximately $2,500. Recommendation: The Chamber needs to ensure that expenses to be reimbursed by federal grant funds are recorded in the class code in the accounting system for that grant so that federal grant revenue in the accounting system match the expenses allocated to that grant. The Chamber needs to include in their year-end reconciliations a comparison of grant revenue and expense and ensure they match or can be reconciled. Management’s Response: Management’s response to the finding is discussed in the Corrective Action Plan.

Finding 2021-004: Significant Deficiency – Grant Claim Support Federal grantor: Department of Commerce Condition: The allocation of payroll costs to programs are done manually using spreadsheets instead of done based on entity-wide timesheets. Criteria: Under 2 CFR 200.400, direct cost allocation principles state that if a cost benefits two or more projects or activities in proportions that can be determined without undue effort or cost, the cost must be allocated to the projects based on the proportional benefit. If a cost benefits two or more projects or activities in proportions that cannot be determined because of the interrelationship of the work involved, then the costs may be allocated or transferred to benefitted projects on any reasonable documented basis. Further, a cost may not be assigned to a Federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the Federal award as an indirect cost. Costs are required to be adequately documented. Cause: The Chamber is not able to readily determine the amount of payroll costs billable to the grants. Effect: The approach of manually allocating payroll costs to grant projects leaves room for error, and makes it difficult to determine that costs are not being reimbursed by more than one source. Recommendation: The Chamber needs to prepare time studies or require employees to prepare timesheets on an automated system to support the payroll costs allocated to programs. Management’s Response: Management’s response to the finding is discussed in the Corrective Action Plan.