Audit 301052

(3) Findings and Questioned Costs – Major Federal Programs Item # 2023-001 Financial Policies and Procedures Update (Significant Deficiency in Internal Control over Federal Major Program) Criteria: 2 CFR Section 200.303 requires federal award recipients to establish and maintain effective internal controls over those awards. 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). Condition: During our audit, we noted that the Organization does not have a comprehensive accounting policies and procedures manual that provides guidelines for internal control, cost allocation, financial reporting, and compliance with Uniform Guidance documentation requirements under 2 CFR Section 200.303. Cause: The Organization did not comply with the requirement for adequate internal control documentation set forth by the Uniform Guidance. Effect: Failure to have a comprehensive accounting policies and procedures manual that provides guidelines for internal control, cost allocation, financial reporting, and compliance with Uniform Guidance documentation requirements under 2 CFR Section 200.303 could result in ineffective monitoring of costs allocated to the federal program. Auditor’s Recommendation: The Organization should strengthen its internal control practices by updating its policies and procedures to comply with the Uniform Guidance. Views of Responsible Officials and Planned Corrective Actions: Management has been making updates to its policies and procedures throughout 2024 to be in full compliance with the Uniform Guidance. This exercise is anticipated to be complete by the end of the fiscal year.

Item # 2023-002 Allowable Costs Charged to Federal Award (Compliance Finding and Material Weakness in Internal Control over Federal Major Program) Criteria: Under Uniform Guidance regulations, all costs charged to the federal grant are those costs that can be identified specifically with a particular final cost objective, such as a federal award, or other internally or externally funded activity, or that can be directly assigned to such activities relatively easily with a high degree of accuracy. Condition: Based on the results of our audit testing we noted thirty-two direct costs were allocated to the federal award improperly and indirect costs were allocated incorrectly during the grant period. The total known questioned costs was $69,542 and the total likely questioned costs was $2,489. Cause: Management failed to charge allowable costs correctly on the federal subaward during the year ended June 30, 2023. Effect: The effect of the condition is that there was $72,031 in known or likely questioned costs charged to the federal subaward during the year ended June 30, 2023. Information on Sampling Results: Transactions Tested - 51 Exceptions based on Accuracy/Classification of Expense - 34 Dollar Amount Selected in Sample - $553,959 Aggregate Error-Overstatement of allowable costs by $72,031 (known and likely questioned costs) The sample size selected and tested was a statistically valid sample. Auditor’s Recommendation: Management should perform a thorough analysis of all expenses charged and allocated to the federal award to ensure they are approved and recorded correctly in accordance with the Uniform Guidance Regulation. Views of Responsible Officials and Planned Corrective Actions: Given the Organization’s lack of experience with federal awards, Management was not familiar with the accounting requirements for expenses charged and allocated to the federal grant programs. Management now understands that through the Single Audit process, such expenses must be reviewed and allocated appropriately. Management will ensure that it properly allocate expenses in accordance with Uniform Guidance Regulations.

(3) Findings and Questioned Costs – Major Federal Programs Item # 2023-001 Financial Policies and Procedures Update (Significant Deficiency in Internal Control over Federal Major Program) Criteria: 2 CFR Section 200.303 requires federal award recipients to establish and maintain effective internal controls over those awards. 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). Condition: During our audit, we noted that the Organization does not have a comprehensive accounting policies and procedures manual that provides guidelines for internal control, cost allocation, financial reporting, and compliance with Uniform Guidance documentation requirements under 2 CFR Section 200.303. Cause: The Organization did not comply with the requirement for adequate internal control documentation set forth by the Uniform Guidance. Effect: Failure to have a comprehensive accounting policies and procedures manual that provides guidelines for internal control, cost allocation, financial reporting, and compliance with Uniform Guidance documentation requirements under 2 CFR Section 200.303 could result in ineffective monitoring of costs allocated to the federal program. Auditor’s Recommendation: The Organization should strengthen its internal control practices by updating its policies and procedures to comply with the Uniform Guidance. Views of Responsible Officials and Planned Corrective Actions: Management has been making updates to its policies and procedures throughout 2024 to be in full compliance with the Uniform Guidance. This exercise is anticipated to be complete by the end of the fiscal year.

Item # 2023-002 Allowable Costs Charged to Federal Award (Compliance Finding and Material Weakness in Internal Control over Federal Major Program) Criteria: Under Uniform Guidance regulations, all costs charged to the federal grant are those costs that can be identified specifically with a particular final cost objective, such as a federal award, or other internally or externally funded activity, or that can be directly assigned to such activities relatively easily with a high degree of accuracy. Condition: Based on the results of our audit testing we noted thirty-two direct costs were allocated to the federal award improperly and indirect costs were allocated incorrectly during the grant period. The total known questioned costs was $69,542 and the total likely questioned costs was $2,489. Cause: Management failed to charge allowable costs correctly on the federal subaward during the year ended June 30, 2023. Effect: The effect of the condition is that there was $72,031 in known or likely questioned costs charged to the federal subaward during the year ended June 30, 2023. Information on Sampling Results: Transactions Tested - 51 Exceptions based on Accuracy/Classification of Expense - 34 Dollar Amount Selected in Sample - $553,959 Aggregate Error-Overstatement of allowable costs by $72,031 (known and likely questioned costs) The sample size selected and tested was a statistically valid sample. Auditor’s Recommendation: Management should perform a thorough analysis of all expenses charged and allocated to the federal award to ensure they are approved and recorded correctly in accordance with the Uniform Guidance Regulation. Views of Responsible Officials and Planned Corrective Actions: Given the Organization’s lack of experience with federal awards, Management was not familiar with the accounting requirements for expenses charged and allocated to the federal grant programs. Management now understands that through the Single Audit process, such expenses must be reviewed and allocated appropriately. Management will ensure that it properly allocate expenses in accordance with Uniform Guidance Regulations.