Audit 320871

Criteria: “A non-Federal entity that expends $750,000 or more in Federal awards during the non-Federal entity's fiscal year must have a single or program-specific audit conducted for that year in accordance with the provisions of the Uniform Guidance Part 2 CFR section 200.50 (a). In order to accomplish this, “The auditee must also prepare a Schedule of Expenditures of Federal Awards (SEFA) for the period covered by the auditee's financial statements which must include the total Federal awards expended as determined in accordance with § 200.502” per Part 2 CFR section 200.510 (b) of the Uniform Guidance. This guidance includes the requirement that the SEFA include the Assistance Listing Number (ALN) for each grant award included in the schedule . Condition: The amounts recorded as federal expenditures on the SEFA were not based on expenditures. The amounts recorded as expenditures and recognized as revenues were based on budget billings. Cause: Prior management lacked an understanding of what should be considered a grant (versus a contract) and how expenditures should be determined. Effect: The SEFA was not prepared correctly, which could have a direct and material effect on allowable costs, the financial statements, and annual audit. Questioned Costs: Expenditures on the SEFA are recorded on an incorrect basis and per finding 2023-003, were not properly supported. The major program, ALN 84.027 reported expenditures of $840,000. Although not tested as a major program, we determined for the same reason noted in this finding that the other federal reported expenditures on the SEFA are also considered questioned cost, totaling $508,600. Context: Federal programs and expenditures are not recognized consistent with the Uniform Guidance. Identification of Repeat Finding: 2020-001, 2021-001, 2022-001 Recommendation: We recommend that management develop policies and procedures to ensure all allowable grant expenditures are included on the SEFA and are accumulated, and recognized on the appropriate basis.

Criteria: The Uniform Guidance Part 200.512(a)(1) states: “The audit must be completed and the data collection form described in paragraph (b) of this section and reporting package described in paragraph (c) of this section shall be submitted within the earlier of 30 calendar days after receipt of the auditor’s report, or nine months after the end of the audit period.” Condition: Community Council failed to submit its data collection form and reporting package timely. Cause: Community Council experienced turnover at substantially every senior management position and new management was unable to locate certain accounting records needed to complete an audit. Effect: Noncompliance with Federal regulations. Questioned Costs: None noted. Identification of Repeat Finding: 2020-002, 2021-002, 2022-002 Recommendation: We recommend that management ensure documentation for the audit is readily available and properly reviewed for accuracy and completeness to enable timely audit submission to the Federal Data Clearinghouse and funding agencies.

“A non-Federal entity that expends $750,000 or more during the non-Federal entity's fiscal year in Federal awards must have a single or program-specific audit conducted for that year in accordance with the provisions of the Uniform Guidance Part 2 CFR section 200.50 (a). In order to accomplish this, “The auditee must also prepare a Schedule of Expenditures of Federal Awards (SEFA) for the period covered by the auditee's financial statements which must include the total Federal awards expended as determined in accordance with § 200.502” per Part 2 CFR section 200.510 (b) of the Uniform Guidance. As noted in 2 CFR 200.303 – Internal Control, the non-Federal entity must 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. The 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 of the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: Community Council was not able to provide detail of expenditures recorded on the SEFA to facilitate sampling and testing. For most awards there were no invoices or other required audit evidence and required reporting of costs was not maintained. Cause: No detail of expenditures or supporting grant documents were maintained. Effect: Noncompliance with Federal regulations. Questioned Costs: See questioned cost indicated in finding 2023-001. Context: As part of the single audit testing of allowable cost included on the SEFA, we were unable to determine compliance due to the lack of records. Identification of Repeat Finding: 2020-003, 2021-003, 2022-003 Recommendation: We recommend that management develop policies and procedures to ensure that grant expenditures are appropriately captured based on federal regulations and are properly supported.

Criteria: “A non-Federal entity that expends $750,000 or more in Federal awards during the non-Federal entity's fiscal year must have a single or program-specific audit conducted for that year in accordance with the provisions of the Uniform Guidance Part 2 CFR section 200.50 (a). In order to accomplish this, “The auditee must also prepare a Schedule of Expenditures of Federal Awards (SEFA) for the period covered by the auditee's financial statements which must include the total Federal awards expended as determined in accordance with § 200.502” per Part 2 CFR section 200.510 (b) of the Uniform Guidance. This guidance includes the requirement that the SEFA include the Assistance Listing Number (ALN) for each grant award included in the schedule . Condition: The amounts recorded as federal expenditures on the SEFA were not based on expenditures. The amounts recorded as expenditures and recognized as revenues were based on budget billings. Cause: Prior management lacked an understanding of what should be considered a grant (versus a contract) and how expenditures should be determined. Effect: The SEFA was not prepared correctly, which could have a direct and material effect on allowable costs, the financial statements, and annual audit. Questioned Costs: Expenditures on the SEFA are recorded on an incorrect basis and per finding 2023-003, were not properly supported. The major program, ALN 84.027 reported expenditures of $840,000. Although not tested as a major program, we determined for the same reason noted in this finding that the other federal reported expenditures on the SEFA are also considered questioned cost, totaling $508,600. Context: Federal programs and expenditures are not recognized consistent with the Uniform Guidance. Identification of Repeat Finding: 2020-001, 2021-001, 2022-001 Recommendation: We recommend that management develop policies and procedures to ensure all allowable grant expenditures are included on the SEFA and are accumulated, and recognized on the appropriate basis.

Criteria: The Uniform Guidance Part 200.512(a)(1) states: “The audit must be completed and the data collection form described in paragraph (b) of this section and reporting package described in paragraph (c) of this section shall be submitted within the earlier of 30 calendar days after receipt of the auditor’s report, or nine months after the end of the audit period.” Condition: Community Council failed to submit its data collection form and reporting package timely. Cause: Community Council experienced turnover at substantially every senior management position and new management was unable to locate certain accounting records needed to complete an audit. Effect: Noncompliance with Federal regulations. Questioned Costs: None noted. Identification of Repeat Finding: 2020-002, 2021-002, 2022-002 Recommendation: We recommend that management ensure documentation for the audit is readily available and properly reviewed for accuracy and completeness to enable timely audit submission to the Federal Data Clearinghouse and funding agencies.

“A non-Federal entity that expends $750,000 or more during the non-Federal entity's fiscal year in Federal awards must have a single or program-specific audit conducted for that year in accordance with the provisions of the Uniform Guidance Part 2 CFR section 200.50 (a). In order to accomplish this, “The auditee must also prepare a Schedule of Expenditures of Federal Awards (SEFA) for the period covered by the auditee's financial statements which must include the total Federal awards expended as determined in accordance with § 200.502” per Part 2 CFR section 200.510 (b) of the Uniform Guidance. As noted in 2 CFR 200.303 – Internal Control, the non-Federal entity must 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. The 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 of the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: Community Council was not able to provide detail of expenditures recorded on the SEFA to facilitate sampling and testing. For most awards there were no invoices or other required audit evidence and required reporting of costs was not maintained. Cause: No detail of expenditures or supporting grant documents were maintained. Effect: Noncompliance with Federal regulations. Questioned Costs: See questioned cost indicated in finding 2023-001. Context: As part of the single audit testing of allowable cost included on the SEFA, we were unable to determine compliance due to the lack of records. Identification of Repeat Finding: 2020-003, 2021-003, 2022-003 Recommendation: We recommend that management develop policies and procedures to ensure that grant expenditures are appropriately captured based on federal regulations and are properly supported.