Audit 29586

Finding Number: 2022-001 Federal Agency: U.S. Department of Health and Human Services Pass-through Agency: State of Vermont, Department of Health Program: Immunization - COVID-19 CARES Assistance Listing Number: 93.268 Award Number: 43382 Award Year: 2022 Finding: Internal controls over financial reporting Prior Year Finding: N/A Type of Finding: Material Weakness Criteria In accordance with 2 CFR ?200.303, the non-federal entity must: (1) Establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework?, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). (2) Comply with the U.S. Constitution, federal statutes, regulations, and the terms and conditions of the federal awards. (3) Evaluate and monitor the non-federal entity?s compliance with statutes, regulations, and the terms and conditions of the federal awards. (4) Take prompt action when instances of noncompliance are identified including noncompliance identified in audit findings. (5) Take reasonable measures to safeguard protected personally identifiable information and other information the federal awarding agency or pass-through entity designates as sensitive or the non-federal entity considers sensitive consistent with applicable federal, state, local, and tribal laws regarding privacy and responsibility over confidentiality. Condition Management did not have effective internal controls over financial reporting. A large number of material audit adjustments were required, beginning balances were not correct and prior audit entries were not made. The creates a higher risk of material misstatement of federal award expenditures. Cause It appears that this was caused by this the COVID-19 pandemic using up a lot of the Organization?s staff in order to fulfill the services they were required to perform under federal award contracts. Also, this fiscal year being a first-year single audit most likely also contributed to the cause. Effect Poor internal controls over financial reporting create the opportunity for fraud or abuse and can cause the financial statements or the schedule of federal expenditures to be materially misstated. Whether Sampling was Statistically Valid The sample was not intended to be, and was not, a statistically valid sample. Questioned Costs: None Recommendation: We recommend that the Organization hire an outside consultant to help implement stronger internal controls over financial reporting and to help with the fiscal year end accounting close process. We also recommend that the Organization adopts a formal policy for month and year end accounting. View of Responsible Officials from the Auditee: Management agrees with finding and recommendation. The Organization is going to hire an outside bookkeeper to help with the month end close process. This person will reconcile all bank accounts in a timely manner and help with any accruals that need to be made. The Organization will formulate a comprehensive checklist of all month and year end accounting procedures to ensure that none are missed or overlooked. Also, a depreciation schedule will be kept and updated regularly to help with depreciation journal entries. Management will establish and perform a review process of all of these procedures to ensure they are being done in accordance with company policy.

Finding Number: 2022-001 Federal Agency: U.S. Department of Health and Human Services Pass-through Agency: State of Vermont, Department of Health Program: Immunization - COVID-19 CARES Assistance Listing Number: 93.268 Award Number: 43382 Award Year: 2022 Finding: Internal controls over financial reporting Prior Year Finding: N/A Type of Finding: Material Weakness Criteria In accordance with 2 CFR ?200.303, the non-federal entity must: (1) Establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework?, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). (2) Comply with the U.S. Constitution, federal statutes, regulations, and the terms and conditions of the federal awards. (3) Evaluate and monitor the non-federal entity?s compliance with statutes, regulations, and the terms and conditions of the federal awards. (4) Take prompt action when instances of noncompliance are identified including noncompliance identified in audit findings. (5) Take reasonable measures to safeguard protected personally identifiable information and other information the federal awarding agency or pass-through entity designates as sensitive or the non-federal entity considers sensitive consistent with applicable federal, state, local, and tribal laws regarding privacy and responsibility over confidentiality. Condition Management did not have effective internal controls over financial reporting. A large number of material audit adjustments were required, beginning balances were not correct and prior audit entries were not made. The creates a higher risk of material misstatement of federal award expenditures. Cause It appears that this was caused by this the COVID-19 pandemic using up a lot of the Organization?s staff in order to fulfill the services they were required to perform under federal award contracts. Also, this fiscal year being a first-year single audit most likely also contributed to the cause. Effect Poor internal controls over financial reporting create the opportunity for fraud or abuse and can cause the financial statements or the schedule of federal expenditures to be materially misstated. Whether Sampling was Statistically Valid The sample was not intended to be, and was not, a statistically valid sample. Questioned Costs: None Recommendation: We recommend that the Organization hire an outside consultant to help implement stronger internal controls over financial reporting and to help with the fiscal year end accounting close process. We also recommend that the Organization adopts a formal policy for month and year end accounting. View of Responsible Officials from the Auditee: Management agrees with finding and recommendation. The Organization is going to hire an outside bookkeeper to help with the month end close process. This person will reconcile all bank accounts in a timely manner and help with any accruals that need to be made. The Organization will formulate a comprehensive checklist of all month and year end accounting procedures to ensure that none are missed or overlooked. Also, a depreciation schedule will be kept and updated regularly to help with depreciation journal entries. Management will establish and perform a review process of all of these procedures to ensure they are being done in accordance with company policy.