Audit 322061

Internal Control Over Compliance Material Weakness in Internal Control Over Compliance Criteria – The Uniform Guidance states that 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). (§200.303). Condition – We identified insufficient internal controls, including lack of internal controls relating to (1) supervisory review and approval of invoices and payroll, (2) review and authorization of drawdowns prior to submission, (3) preparation and review of cash flow statements/forecasts to determine the immediate cash needs of the federal program, and (4) review and approval of reports for completeness and accuracy. Cause – Effective internal controls over federal awards have not been implemented due to limited individuals as a result of the small size of the entity. Effect – Deficiencies in internal control could result in noncompliance with the terms and conditions of the federal program. Recommendations – Civic Arts should develop and document review processes to ensure (1) supervisory review and approval of invoices and payroll, (2) review and authorization of drawdowns prior to submission, (3) preparation and review of cash flow statements/forecasts to determine the immediate cash needs of the federal program, and (4) review and approval of reports for completeness and accuracy.

Written Policies and Procedures Significant Deficiency in Internal Control Over Compliance Criteria – The Uniform Guidance requires a non-federal entity that has expended federal awards to have written procedures related to (1) federal payments, including methods to minimize the time elapsing between the transfer of federal funds and the disbursement by the non-federal entity (§200.302(b)(6)) and (2) allowability of costs in accordance with the Uniform Guidance and the terms and conditions of the federal award (§200.302(b)(7)). Condition – There are no written policies and procedures related to federal payments and allowability of costs as of December 31, 2023. Cause – Written policies and procedures related to federal payments and allowability of costs were not created and implemented by Civic Arts. Effect – Civic Arts is not in compliance with the Uniform Guidance. Recommendations – Civic Arts should prepare and implement written policies and procedures related to federal payments and allowability of costs.

Suspension and Debarment Significant Deficiency in Internal Control Over Compliance Criteria – The Uniform Guidance requires that when a non-federal entity enters into a covered transaction with an entity at a lower tier, the non-federal entity must verify that the entity is not suspended or debarred or otherwise excluded from participating in the transaction (§200.214). Generally, a covered transaction is a transaction expected to equal or exceed $25,000 and be funded with federal funds. Condition – Civic Arts does not have a procedure designed to identify vendors that are suspended or debarred. Cause – Civic Arts was not aware of the requirement to verify vendors are not suspended or debarred. Effect – A vendor who is suspended or debarred could be paid with federal funds inappropriately. Recommendations – Civic Arts should implement a process to compare all vendors meeting the covered transaction threshold to the System for Award Management (SAM) on a regular basis and when a new vendor is entered into the accounting system. This procedure should be documented when it is performed.

Internal Control Over Compliance Material Weakness in Internal Control Over Compliance Criteria – The Uniform Guidance states that 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). (§200.303). Condition – We identified insufficient internal controls, including lack of internal controls relating to (1) supervisory review and approval of invoices and payroll, (2) review and authorization of drawdowns prior to submission, (3) preparation and review of cash flow statements/forecasts to determine the immediate cash needs of the federal program, and (4) review and approval of reports for completeness and accuracy. Cause – Effective internal controls over federal awards have not been implemented due to limited individuals as a result of the small size of the entity. Effect – Deficiencies in internal control could result in noncompliance with the terms and conditions of the federal program. Recommendations – Civic Arts should develop and document review processes to ensure (1) supervisory review and approval of invoices and payroll, (2) review and authorization of drawdowns prior to submission, (3) preparation and review of cash flow statements/forecasts to determine the immediate cash needs of the federal program, and (4) review and approval of reports for completeness and accuracy.

Written Policies and Procedures Significant Deficiency in Internal Control Over Compliance Criteria – The Uniform Guidance requires a non-federal entity that has expended federal awards to have written procedures related to (1) federal payments, including methods to minimize the time elapsing between the transfer of federal funds and the disbursement by the non-federal entity (§200.302(b)(6)) and (2) allowability of costs in accordance with the Uniform Guidance and the terms and conditions of the federal award (§200.302(b)(7)). Condition – There are no written policies and procedures related to federal payments and allowability of costs as of December 31, 2023. Cause – Written policies and procedures related to federal payments and allowability of costs were not created and implemented by Civic Arts. Effect – Civic Arts is not in compliance with the Uniform Guidance. Recommendations – Civic Arts should prepare and implement written policies and procedures related to federal payments and allowability of costs.

Suspension and Debarment Significant Deficiency in Internal Control Over Compliance Criteria – The Uniform Guidance requires that when a non-federal entity enters into a covered transaction with an entity at a lower tier, the non-federal entity must verify that the entity is not suspended or debarred or otherwise excluded from participating in the transaction (§200.214). Generally, a covered transaction is a transaction expected to equal or exceed $25,000 and be funded with federal funds. Condition – Civic Arts does not have a procedure designed to identify vendors that are suspended or debarred. Cause – Civic Arts was not aware of the requirement to verify vendors are not suspended or debarred. Effect – A vendor who is suspended or debarred could be paid with federal funds inappropriately. Recommendations – Civic Arts should implement a process to compare all vendors meeting the covered transaction threshold to the System for Award Management (SAM) on a regular basis and when a new vendor is entered into the accounting system. This procedure should be documented when it is performed.