2023-001: Financial Reporting
Material Weakness
Criteria: Management is responsible for establishing and maintaining an effective system of internal control over financial statement reporting. One of the components of an effective system of internal control over financial reporting is the preparation of full disclosure financial statements that do not require adjustment as part of the audit process. A second component is that reconciliations and transactions are properly reviewed and approved by the appropriate personnel.
Condition: As auditors, we were requested to draft the financial statements and accompanying notes to the financial statements. Certain reconciliations and journal entries were not reviewed and approved.
Cause: Auditor assistance with preparation of financial statements and note disclosures is not unusual in an organization the size of iFoster, Inc. The internal control process did not include appropriate review and approval processes.
Effect: Errors or omissions could occur without being identified in the normal course of operations. The following errors were noted:
• Understatement of accounts receivable by $153,088
• Understatement of grant revenue by $153,088
Recommendation: We recommend iFoster, Inc. enhance internal controls to ensure month end and year end balances and journal entries are reviewed and approved by the appropriate personnel to facilitate the accurate preparation of financial statements.
Views of Responsible
Officials: iFoster, Inc. agrees with this finding; see corrective action plan.
2023-002: Grant Expense Reconciliation
Material Weakness
Criteria: Internal controls should be in place to provide reasonable assurance that protects iFoster, Inc. from errors or omissions. Condition: iFoster, Inc. internal control system did not require consistent approval of grant expenditures as well as properly allocating costs within the accounting program.
Cause: The internal control system for iFoster, Inc. did not include approvals that were consistent across all costs. In addition, they relied on excel reports for reporting total costs which were not reconciled back to the accounting system.
Effect: Errors or omissions could occur without being identified in the normal course of operations.
Recommendation: We recommend iFoster, Inc. account for all reimbursable expenses in the accounting program which can be specifically identified by grant. All allocated costs should follow uniform guidance standards and be applied consistently among all grants. All costs should be approved in a consistent manner.
Views of Responsible
Officials: iFoster, Inc. agrees with this finding; see corrective action plan.
2023-003: Payroll Accrual
Material Weakness
Criteria: Management is responsible for establishing and maintaining an effective system of internal control over financial reporting. Ensuring accruals and expenses are recorded in the appropriate time period and meet the criteria for recognition is a key component of effective internal control over financial reporting.
Condition: Certain expenses were not recorded in the correct financial reporting period.
Cause: The Organization did not have adequate internal controls to ensure accounts accruals and expenses were appropriately recorded.
Effect: The following errors were noted:
• Understatement of payroll related accruals by $233,877
• Understatement of payroll related expenses by $152,149
• Overstatement of Net Assets by $81,728
Recommendation: We recommend the Organization enhance internal controls to ensure accruals and expenses are appropriately recorded.
Views of Responsible
Officials: iFoster, Inc. agrees with this finding; see corrective action plan.
2023-004: U.S. Department of Labor, State of Washington – Service Washington, State of California –
California Volunteers, State of Kentucky – KY Cabinet of Health and & Family Services,
94.006 AmeriCorps State and National
Allowable Costs/Costs Principles
Significant Deficiency in Internal Control Over Compliance
Grant Award
Number: GCU8PW8ZDXN8, G6Y2ZAMJJRA9, LECJQDCLHVE5, and 22ND243641
Criteria: Title 2 U.S. Code of Federal Regulations (CFR) Part 200 Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) section 200.430 provides that records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated.
Condition: Amounts for certain personnel costs were not reimbursed at the correct pay rate for certain employees.
Cause: Monthly pay rates used to calculate personnel costs were not consistently applied in accordance with the Organizations methodology.
Effect: The Organization underbilled for allowable personnel costs.
Questioned Costs: None noted.
Context/sampling: A nonstatistical sample of 24 payroll transactions out of a population of 155 was selected for testing, which accounted for $54,313 of $540,524 of federal program expenditures. We noted an error in the payroll rates used for 6 individuals for a total of $1,064.
Report Finding from
Prior Year(s): No.
Recommendation: We recommend iFoster, Inc. enhance the internal controls over the calculation of personnel costs.
Views of Responsible
Officials: iFoster, Inc. agrees with this finding; see corrective action plan.
2023-001: Financial Reporting
Material Weakness
Criteria: Management is responsible for establishing and maintaining an effective system of internal control over financial statement reporting. One of the components of an effective system of internal control over financial reporting is the preparation of full disclosure financial statements that do not require adjustment as part of the audit process. A second component is that reconciliations and transactions are properly reviewed and approved by the appropriate personnel.
Condition: As auditors, we were requested to draft the financial statements and accompanying notes to the financial statements. Certain reconciliations and journal entries were not reviewed and approved.
Cause: Auditor assistance with preparation of financial statements and note disclosures is not unusual in an organization the size of iFoster, Inc. The internal control process did not include appropriate review and approval processes.
Effect: Errors or omissions could occur without being identified in the normal course of operations. The following errors were noted:
• Understatement of accounts receivable by $153,088
• Understatement of grant revenue by $153,088
Recommendation: We recommend iFoster, Inc. enhance internal controls to ensure month end and year end balances and journal entries are reviewed and approved by the appropriate personnel to facilitate the accurate preparation of financial statements.
Views of Responsible
Officials: iFoster, Inc. agrees with this finding; see corrective action plan.
2023-002: Grant Expense Reconciliation
Material Weakness
Criteria: Internal controls should be in place to provide reasonable assurance that protects iFoster, Inc. from errors or omissions. Condition: iFoster, Inc. internal control system did not require consistent approval of grant expenditures as well as properly allocating costs within the accounting program.
Cause: The internal control system for iFoster, Inc. did not include approvals that were consistent across all costs. In addition, they relied on excel reports for reporting total costs which were not reconciled back to the accounting system.
Effect: Errors or omissions could occur without being identified in the normal course of operations.
Recommendation: We recommend iFoster, Inc. account for all reimbursable expenses in the accounting program which can be specifically identified by grant. All allocated costs should follow uniform guidance standards and be applied consistently among all grants. All costs should be approved in a consistent manner.
Views of Responsible
Officials: iFoster, Inc. agrees with this finding; see corrective action plan.
2023-003: Payroll Accrual
Material Weakness
Criteria: Management is responsible for establishing and maintaining an effective system of internal control over financial reporting. Ensuring accruals and expenses are recorded in the appropriate time period and meet the criteria for recognition is a key component of effective internal control over financial reporting.
Condition: Certain expenses were not recorded in the correct financial reporting period.
Cause: The Organization did not have adequate internal controls to ensure accounts accruals and expenses were appropriately recorded.
Effect: The following errors were noted:
• Understatement of payroll related accruals by $233,877
• Understatement of payroll related expenses by $152,149
• Overstatement of Net Assets by $81,728
Recommendation: We recommend the Organization enhance internal controls to ensure accruals and expenses are appropriately recorded.
Views of Responsible
Officials: iFoster, Inc. agrees with this finding; see corrective action plan.
2023-004: U.S. Department of Labor, State of Washington – Service Washington, State of California –
California Volunteers, State of Kentucky – KY Cabinet of Health and & Family Services,
94.006 AmeriCorps State and National
Allowable Costs/Costs Principles
Significant Deficiency in Internal Control Over Compliance
Grant Award
Number: GCU8PW8ZDXN8, G6Y2ZAMJJRA9, LECJQDCLHVE5, and 22ND243641
Criteria: Title 2 U.S. Code of Federal Regulations (CFR) Part 200 Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) section 200.430 provides that records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated.
Condition: Amounts for certain personnel costs were not reimbursed at the correct pay rate for certain employees.
Cause: Monthly pay rates used to calculate personnel costs were not consistently applied in accordance with the Organizations methodology.
Effect: The Organization underbilled for allowable personnel costs.
Questioned Costs: None noted.
Context/sampling: A nonstatistical sample of 24 payroll transactions out of a population of 155 was selected for testing, which accounted for $54,313 of $540,524 of federal program expenditures. We noted an error in the payroll rates used for 6 individuals for a total of $1,064.
Report Finding from
Prior Year(s): No.
Recommendation: We recommend iFoster, Inc. enhance the internal controls over the calculation of personnel costs.
Views of Responsible
Officials: iFoster, Inc. agrees with this finding; see corrective action plan.