FAC Explorer

Audit 360261

FY End
2023-12-31
Total Expended
$2.16M
Findings
6
Programs
1
Organization: Appalachian Headwaters INC (WV)
Year: 2023 Accepted: 2025-06-27
Auditor: Brown Edwards & Company LLP

Organization Exclusion Status:

Findings

ID Ref Severity Repeat Requirement
567926 2023-002 Significant Deficiency - B
567927 2023-003 Significant Deficiency - B
567928 2023-004 - Yes P
1144368 2023-002 Significant Deficiency - B
1144369 2023-003 Significant Deficiency - B
1144370 2023-004 - Yes P

Programs

ALN Program Spent Major Findings
10.001 Agricultural Research Basic and Applied Research $2.16M Yes 3

Contacts

Name Title Type
F164J1XK3FN4 Joseph Lovett Auditee
3046459008 Valerie Ellis Auditor
No contacts on file

Notes to SEFA

Title: Note 1. Basis of Presentation Accounting Policies: Note 1: The accompanying schedule of expenditures of federal awards (the Schedule) includes the federal award activity of Appalachian Headwaters, Inc. (the Organization), under programs of the federal government for the year ended December 31, 2023. The information in this Schedule is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Because the Schedule presents only a select portion of the operations of the Organization, it is not intended to and does not present the financial position, changes in net assets, or cash flows of the Organization. Note 2: Expenditures reported on the Schedule are reported on the accrual basis of accounting. Such expenditures are recognized following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement. Note 3: For the purposes of charging indirect costs to federal awards, the Organization has not elected to use the 10% de minimis cost rate as permitted by Section 200.414 of the Uniform Guidance. De Minimis Rate Used: N Rate Explanation: For the purposes of charging indirect costs to federal awards, the Organization has not elected to use the 10% de minimis cost rate as permitted by Section 200.414 of the Uniform Guidance. The accompanying schedule of expenditures of federal awards (the Schedule) includes the federal award activity of Appalachian Headwaters, Inc. (the Organization), under programs of the federal government for the year ended December 31, 2023. The information in this Schedule is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Because the Schedule presents only a select portion of the operations of the Organization, it is not intended to and does not present the financial position, changes in net assets, or cash flows of the Organization.
Title: Note 2. Summary of Significant Accounting Policies Accounting Policies: Note 1: The accompanying schedule of expenditures of federal awards (the Schedule) includes the federal award activity of Appalachian Headwaters, Inc. (the Organization), under programs of the federal government for the year ended December 31, 2023. The information in this Schedule is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Because the Schedule presents only a select portion of the operations of the Organization, it is not intended to and does not present the financial position, changes in net assets, or cash flows of the Organization. Note 2: Expenditures reported on the Schedule are reported on the accrual basis of accounting. Such expenditures are recognized following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement. Note 3: For the purposes of charging indirect costs to federal awards, the Organization has not elected to use the 10% de minimis cost rate as permitted by Section 200.414 of the Uniform Guidance. De Minimis Rate Used: N Rate Explanation: For the purposes of charging indirect costs to federal awards, the Organization has not elected to use the 10% de minimis cost rate as permitted by Section 200.414 of the Uniform Guidance. Expenditures reported on the Schedule are reported on the accrual basis of accounting. Such expenditures are recognized following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement.
Title: Note 3. Indirect Cost Rate Accounting Policies: Note 1: The accompanying schedule of expenditures of federal awards (the Schedule) includes the federal award activity of Appalachian Headwaters, Inc. (the Organization), under programs of the federal government for the year ended December 31, 2023. The information in this Schedule is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Because the Schedule presents only a select portion of the operations of the Organization, it is not intended to and does not present the financial position, changes in net assets, or cash flows of the Organization. Note 2: Expenditures reported on the Schedule are reported on the accrual basis of accounting. Such expenditures are recognized following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement. Note 3: For the purposes of charging indirect costs to federal awards, the Organization has not elected to use the 10% de minimis cost rate as permitted by Section 200.414 of the Uniform Guidance. De Minimis Rate Used: N Rate Explanation: For the purposes of charging indirect costs to federal awards, the Organization has not elected to use the 10% de minimis cost rate as permitted by Section 200.414 of the Uniform Guidance. For the purposes of charging indirect costs to federal awards, the Organization has not elected to use the 10% de minimis cost rate as permitted by Section 200.414 of the Uniform Guidance.

Finding Details

Finding 2023-002
Condition: The Organization does not maintain a mapping schedule or other means to efficiently determine that expenses charged to the federal grant represent expenses incurred and paid as reflected in the general ledger. Criteria: Controls are not in place to ensure all expenses charged to the grant have been incurred and paid as reflected in the general ledger. Cause: The details of federal expenses are maintained outside of the general ledger and there is no efficient means to reconcile to the general ledger. Effect: Amounts reported as eligible grant expenses may be incorrect. Questioned Costs: N/A Recommendation: We recommend that the Organization consider incorporating a chart of accounts specifically used for federal grant expenditures. Alternatively, additional detail could be included in its grant spreadsheet to clearly indicate which expense account was charged in order to agree these amounts to the general ledger. This will allow the entity to ensure the accuracy of its grant reporting in a more efficient manner. Views of Responsible Officials and Planned Corrective Action: Management stated that they disagree with the audit finding. Management notes that all expenses are documented in spreadsheets, invoice form, and available for review. However, management indicates that it will begin reclassifying federal grant expenditures in the accounting software. Auditor notes that this is consistent with the auditor’s finding that the entity lacks a means to efficiently determine that expenses charged to the grant are included in the general ledger, and the auditor’s recommendation to consider incorporating a chart of accounts specifically used for federal grant expenditures.
Finding 2023-003
Condition: The Organization does not maintain time and effort reports to support time allocations for salaried employees who are charged to the federal grant. Criteria: In accordance with 2 CFR section 200.430(g) charges to federal awards for salaries and wages must be based on records that accurately reflect the work performed. Cause: The Organization does not maintain time and effort reports to support allocations of salaried employees charged to the grant. Effect: With no time and effort reporting, the allocations for salaried employees for a particular pay period are not supported. Context: Of 25 payroll transactions tested from a population of approximately 300 transactions, we noted that payroll and related costs of $8,999 for four administrative employees were allocated to the grant, but those costs were not supported by time records or time studies. Upon further analysis of payroll costs, a total of $177,140 was determined to have been allocated to the grant for administrative employees but not supported by time records or time studies. Questioned Costs: Potential questioned costs of approximately $177,140. Recommendation: We recommend that management review controls over employee time reporting and determine an appropriate form to document time and effort for each pay period. This should include appropriate documentation of the employees time allocation between program and administrative duties based on work performed. These time and effort reports should be reviewed and approved by the employee’s direct supervisor or the Executive Director. Views of Responsible Officials and Planned Corrective Action: Management stated they will purchase a professional time tracking software program to help all employees track their work hours and activities.
Finding 2023-004
Condition: The Organization did not submit the Single Audit Reporting Package to the Federal Audit Clearinghouse prior to the September 30, 2024, deadline. Criteria: Based on requirements set forth by 2 CFR section 200.512(a), the Organization is required to submit the Single Audit Reporting Package to the Federal Audit Clearinghouse by the earlier of thirty calendar days after receipt of the auditor's reports or nine months after the end of the audit period. Cause: The Organization’s audit was not completed and submitted to the Federal Audit Clearinghouse prior to the deadline for the year ended December 31, 2023. Effect: The Organization was not in compliance with the requirements of 2 CFR section 200.512(a) regarding the timely submission of the Single Audit Reporting Package to the Federal Audit Clearinghouse. The effect will not allow the Organization to be considered a low risk auditee for their next two annual Single Audits. Questioned Costs: N/A Recommendation: We recommend the Organization complete and submit all future annual Single Audits to the Federal Audit Clearinghouse prior to the required deadline to ensure all compliance requirements are met. Views of Responsible Officials and Planned Corrective Action: Management stated they intend to complete and submit all future audits prior to the required deadline. Management stated the failure was due solely to delays by the auditor. The auditor disagrees with this assertion, based upon the audit timeline evidenced in the audit documentation.
Finding 2023-002
Condition: The Organization does not maintain a mapping schedule or other means to efficiently determine that expenses charged to the federal grant represent expenses incurred and paid as reflected in the general ledger. Criteria: Controls are not in place to ensure all expenses charged to the grant have been incurred and paid as reflected in the general ledger. Cause: The details of federal expenses are maintained outside of the general ledger and there is no efficient means to reconcile to the general ledger. Effect: Amounts reported as eligible grant expenses may be incorrect. Questioned Costs: N/A Recommendation: We recommend that the Organization consider incorporating a chart of accounts specifically used for federal grant expenditures. Alternatively, additional detail could be included in its grant spreadsheet to clearly indicate which expense account was charged in order to agree these amounts to the general ledger. This will allow the entity to ensure the accuracy of its grant reporting in a more efficient manner. Views of Responsible Officials and Planned Corrective Action: Management stated that they disagree with the audit finding. Management notes that all expenses are documented in spreadsheets, invoice form, and available for review. However, management indicates that it will begin reclassifying federal grant expenditures in the accounting software. Auditor notes that this is consistent with the auditor’s finding that the entity lacks a means to efficiently determine that expenses charged to the grant are included in the general ledger, and the auditor’s recommendation to consider incorporating a chart of accounts specifically used for federal grant expenditures.
Finding 2023-003
Condition: The Organization does not maintain time and effort reports to support time allocations for salaried employees who are charged to the federal grant. Criteria: In accordance with 2 CFR section 200.430(g) charges to federal awards for salaries and wages must be based on records that accurately reflect the work performed. Cause: The Organization does not maintain time and effort reports to support allocations of salaried employees charged to the grant. Effect: With no time and effort reporting, the allocations for salaried employees for a particular pay period are not supported. Context: Of 25 payroll transactions tested from a population of approximately 300 transactions, we noted that payroll and related costs of $8,999 for four administrative employees were allocated to the grant, but those costs were not supported by time records or time studies. Upon further analysis of payroll costs, a total of $177,140 was determined to have been allocated to the grant for administrative employees but not supported by time records or time studies. Questioned Costs: Potential questioned costs of approximately $177,140. Recommendation: We recommend that management review controls over employee time reporting and determine an appropriate form to document time and effort for each pay period. This should include appropriate documentation of the employees time allocation between program and administrative duties based on work performed. These time and effort reports should be reviewed and approved by the employee’s direct supervisor or the Executive Director. Views of Responsible Officials and Planned Corrective Action: Management stated they will purchase a professional time tracking software program to help all employees track their work hours and activities.
Finding 2023-004
Condition: The Organization did not submit the Single Audit Reporting Package to the Federal Audit Clearinghouse prior to the September 30, 2024, deadline. Criteria: Based on requirements set forth by 2 CFR section 200.512(a), the Organization is required to submit the Single Audit Reporting Package to the Federal Audit Clearinghouse by the earlier of thirty calendar days after receipt of the auditor's reports or nine months after the end of the audit period. Cause: The Organization’s audit was not completed and submitted to the Federal Audit Clearinghouse prior to the deadline for the year ended December 31, 2023. Effect: The Organization was not in compliance with the requirements of 2 CFR section 200.512(a) regarding the timely submission of the Single Audit Reporting Package to the Federal Audit Clearinghouse. The effect will not allow the Organization to be considered a low risk auditee for their next two annual Single Audits. Questioned Costs: N/A Recommendation: We recommend the Organization complete and submit all future annual Single Audits to the Federal Audit Clearinghouse prior to the required deadline to ensure all compliance requirements are met. Views of Responsible Officials and Planned Corrective Action: Management stated they intend to complete and submit all future audits prior to the required deadline. Management stated the failure was due solely to delays by the auditor. The auditor disagrees with this assertion, based upon the audit timeline evidenced in the audit documentation.