Audit 359133

Criteria: The grant award requires the following reports for the Brownfields program: Federal Financial Reports (SF-425), EPA Form 5700-52A reports, and quarterly progress reports submitted via the Assessment, Cleanup and Redevelopment Exchange System (ACRES). Condition: The Organization provided the Brownfields RLF2 quarterly reports for testing. The amounts reported for the four quarters did not agree to the accounting records. At the end of the fiscal year, June 30, 2024, there was a difference of $32,707 with the accounting records having a higher amount as expended compared to what was reported. There was also no indication of review of the reports submitted during the 2024 year. The Organization also completed the SF-425 report, but there were errors in the report with amounts not reported on the correct lines in the report. Context: The quarterly reports were submitted via ACRES for two quarters, and spreadsheets were provided in lieu of ACRES reports for two quarters. All of the quarterly information submitted had discrepancies to the accounting records. Only one SF-425 was submitted covering the audit period. Effect: Inaccurate information was submitted for the quarterly reports, and mistakes were made in the SF-425 report submitted. Questioned Costs: None. Cause: The Organization completed the adjustments and corrections to the reports for the September 2024 reporting period, but not as of the fiscal year end. The errors in the SF-425 report were an oversight when filing. Auditor Recommendation: We recommend that the Organization complete reconciliations between the accounting records and the quarterly reports, have these reports reviewed before filing, and retain documentation of the review. Organization Response: Background: The finding indicates discrepancies in the amounts reported for the four quarters of the fiscal year ending June 30, 2024. Specifically, it notes a difference of $32,707 between the accounting records and the reported amounts, as well as errors in the SF-425 report. Clarification: 1. Timing of Reporting June Expenses: The June expenses were reported in the July-September quarter based on the direction and approval of our US EPA representative. SMDC provided the auditor with documentation of this direction and approval. This decision was made to ensure accurate and complete reporting, given the timing constraints and the need for thorough review. 2. ACRES System Downtime: For two quarters, US EPA’s ACRES system was down, and we were not able to submit reporting. The availability and status of US EPA’s ACRES system is beyond SMDC’s control. As a result, we submitted the required information using spreadsheets. This was a temporary measure to ensure compliance and continuity in reporting, despite the technical challenges. 3. Errors in SF-425 Report: The discrepancies noted in the audit were due to missing two lines on the SF-425 report related to cash receipts and disbursements, not program-related expenditures. We have since implemented additional review and reconciliation procedures to ensure that all future reports are complete and accurate. Conclusion: We do not agree with the finding based on the fact that there is no misstatement or reporting of program-related expenditures. Our actions were taken in good faith, based on the guidance of our EPA representative and the technical limitations we faced. We are committed to maintaining accurate and compliant reporting and have taken steps to address the issues identified. Significant Concern: We are deeply concerned that the auditor's proposed finding is presented in a manner that may disproportionately highlight a negative condition of our financial statements. This portrayal could be interpreted as indicative of professional bias, which we believe is unwarranted given the context and the corrective measures we have implemented.

Criteria: The grant award requires the following reports for the Brownfields program: Federal Financial Reports (SF-425), EPA Form 5700-52A reports, and quarterly progress reports submitted via the Assessment, Cleanup and Redevelopment Exchange System (ACRES). Condition: The Organization provided the Brownfields RLF2 quarterly reports for testing. The amounts reported for the four quarters did not agree to the accounting records. At the end of the fiscal year, June 30, 2024, there was a difference of $32,707 with the accounting records having a higher amount as expended compared to what was reported. There was also no indication of review of the reports submitted during the 2024 year. The Organization also completed the SF-425 report, but there were errors in the report with amounts not reported on the correct lines in the report. Context: The quarterly reports were submitted via ACRES for two quarters, and spreadsheets were provided in lieu of ACRES reports for two quarters. All of the quarterly information submitted had discrepancies to the accounting records. Only one SF-425 was submitted covering the audit period. Effect: Inaccurate information was submitted for the quarterly reports, and mistakes were made in the SF-425 report submitted. Questioned Costs: None. Cause: The Organization completed the adjustments and corrections to the reports for the September 2024 reporting period, but not as of the fiscal year end. The errors in the SF-425 report were an oversight when filing. Auditor Recommendation: We recommend that the Organization complete reconciliations between the accounting records and the quarterly reports, have these reports reviewed before filing, and retain documentation of the review. Organization Response: Background: The finding indicates discrepancies in the amounts reported for the four quarters of the fiscal year ending June 30, 2024. Specifically, it notes a difference of $32,707 between the accounting records and the reported amounts, as well as errors in the SF-425 report. Clarification: 1. Timing of Reporting June Expenses: The June expenses were reported in the July-September quarter based on the direction and approval of our US EPA representative. SMDC provided the auditor with documentation of this direction and approval. This decision was made to ensure accurate and complete reporting, given the timing constraints and the need for thorough review. 2. ACRES System Downtime: For two quarters, US EPA’s ACRES system was down, and we were not able to submit reporting. The availability and status of US EPA’s ACRES system is beyond SMDC’s control. As a result, we submitted the required information using spreadsheets. This was a temporary measure to ensure compliance and continuity in reporting, despite the technical challenges. 3. Errors in SF-425 Report: The discrepancies noted in the audit were due to missing two lines on the SF-425 report related to cash receipts and disbursements, not program-related expenditures. We have since implemented additional review and reconciliation procedures to ensure that all future reports are complete and accurate. Conclusion: We do not agree with the finding based on the fact that there is no misstatement or reporting of program-related expenditures. Our actions were taken in good faith, based on the guidance of our EPA representative and the technical limitations we faced. We are committed to maintaining accurate and compliant reporting and have taken steps to address the issues identified. Significant Concern: We are deeply concerned that the auditor's proposed finding is presented in a manner that may disproportionately highlight a negative condition of our financial statements. This portrayal could be interpreted as indicative of professional bias, which we believe is unwarranted given the context and the corrective measures we have implemented.