Audit 361183

Criteria All costs charged to federal awards must be reviewed and approved to ensure they are allowable, allocable, and reasonable. Additionally, non-federal entities are required to prepare a schedule of expenditures of federal awards (SEFA) that accurately reflects the total federal awards expended during the fiscal year. Context All nine transactions of our sample of nine out of 218 salaries and fringe benefit transactions allocated to federal awards were not reviewed and approved prior to reimbursement request. Management noted that documented review and approval over salaries and fringe benefit allocations to federal awards did not occur during 2024. Indirect costs allocated to the Technical Assistance for Specialty Crops Program were improperly calculated resulting in an overstatement on the SEFA. Cause Lack of documented review processes over costs allocated to federal awards and improper calculations of indirect costs. Effect Failure to review costs allocated to federal awards and failure to accurately report federal expenditures on the SEFA resulted in non-compliance with the Uniform Guidance, which led to questioned costs, and may lead to potential withholding of future funds, or other administrative actions by the federal awarding agency. Questioned Cost: $84,474 for indirect costs not properly calculated. Recommendation We recommend that management document its review of all costs allocated to federal awards. We recommend that management review and enhance its internal controls, policies and procedures as needed to ensure indirect costs allocated to the grants are properly calculated and the SEFA is accurately prepared and reported. Views of Responsible Officials and Planned Corrective Actions See Corrective Action Plan.

Criteria Uniform Guidance requires non-federal entities to follow the procurement standards set out at 2 CFR sections 200.318 through 200.326. The Organization is required to adopt and maintain a written procurement policy in accordance with Uniform Guidance procurement standards and perform and document suspended and debarment searches for potential vendors prior to procuring services from the contractor. If bids are not obtained in accordance with the Organization’s procurement procedures due to using the noncompetitive procurement method, documentation must be prepared and retained including justification for sole-source procurement. Condition and Context The Organization does not have a documented procurement policy in accordance with 2 CFR Part 200. We noted four contractors that had total 2024 purchases over $10,000 and selected two for testing. We noted the following deficiencies in our testing: - For the two contractors tested, the Organization had no documentation to support that its suspension and debarment verification procedures were performed prior to procuring services from contractors. Therefore, we have concluded that such verifications were not timely performed. - The two contractors tested were selected using the noncompetitive procurement method. When the Organization relied on sole-source justification to procure services, the Organization did not document its sole-source justification prior to procuring services from the contractor. Cause The Organization assumed that following the procurement standards in 2 CFR Part 200 was a sufficient procurement policy and the Organization was not aware that a documented procurement policy in accordance with 2 CFR Part 200 was required. Further, the Organization was not aware of the necessity to document its suspension and debarment search procedures and justification for sole-source procurements prior to procuring services from contractors. Effect Without a formal procurement policy, or abidance of the documentation requirements of 2 CFR Part 200, there is an increased risk that procurement activities may not be conducted in compliance with federal requirements, potentially leading to unallowable costs or questioned costs. Questioned Cost: None due to auditor agreeing with verbal justification of sole-source procurements. Recommendation We recommend that management develop and implement a formal procurement policy that aligns with the requirements of the Uniform Guidance. We recommend that management ensure all procurement policy requirements are performed and documented prior to entering into procurement transactions. Views of Responsible Officials and Planned Corrective Actions See Correction Action Plan.

Criteria Uniform Guidance requires non-federal entities to submit performance and financial reports to the federal awarding agency, ensuring these reports are accurate, complete, and submitted in a timely manner. Context The Organization did not submit required reports in accordance with the Uniform Guidance. Specifically, we noted the following deficiencies in our testing: - One financial report was not submitted timely. - Two financial reports lacked complete and accurate information. Information was corrected in the subsequent quarterly financial reports. Cause Lack of understanding and awareness of specific reporting deadlines and requirements. Effect Failure to comply with reporting requirements can result in non-compliance with federal award terms, which may lead to questioned costs, potential withholding of future funds, or other administrative actions by the federal awarding agency. Questioned Cost: None Recommendation We recommend that management review its reporting procedures to ensure compliance with the reporting requirements of the Uniform Guidance. Management should establish a calendar of all reporting deadlines to ensure timely submission of required reports. Management should review internal controls surrounding the preparation and review of financial and performance reports to ensure reports are complete and accurate. Management should regularly review the terms and conditions of federal awards to ensure all reporting requirements are met. Views of Responsible Officials and Planned Corrective Actions See Correction Action Plan.

Criteria A pass-through entity must identify the award and applicable requirements to the subrecipient, evaluate each subrecipient’s risk of noncompliance, and monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with federal statutes, regulations, and the terms and conditions of the subaward. Context The Organization has not implemented adequate procedures to monitor the activities of its subrecipients. We noted nine 2024 subrecipients and selected four for testing. We noted the following deficiencies in our testing: Specifically, we noted the following deficiencies in our testing: - For the four subrecipients tested, there was no documented evidence that the Organization confirmed if subrecipients expected to be audited as required by 2 CFR Part 200, Subpart F, and if so, met this requirement. - For the four subrecipients tested, there was no documented evidence that the Organization verified subrecipients were not suspended, debarred or otherwise excluded from participating. Cause The Organization was not aware of these documented requirements surrounding subrecipient monitoring. Additionally, government funding and reporting is searchable in USAspending.gov. Effect Failure to adequately monitor subrecipients increases the risk that subawards may not be used for their intended purposes and that noncompliance with federal requirements may go undetected. This could result in questioned costs or unallowable expenses. Questioned Cost: None Recommendation We recommend that management review its subrecipient monitoring procedures and ensure that all Uniform Guidance requirements are included and documented adherence to the Uniform Guidance requirements is retained in each subrecipient’s folder. Views of Responsible Officials and Planned Corrective Actions See Correction Action Plan.

Criteria All costs charged to federal awards must be reviewed and approved to ensure they are allowable, allocable, and reasonable. Additionally, non-federal entities are required to prepare a schedule of expenditures of federal awards (SEFA) that accurately reflects the total federal awards expended during the fiscal year. Context All nine transactions of our sample of nine out of 218 salaries and fringe benefit transactions allocated to federal awards were not reviewed and approved prior to reimbursement request. Management noted that documented review and approval over salaries and fringe benefit allocations to federal awards did not occur during 2024. Indirect costs allocated to the Technical Assistance for Specialty Crops Program were improperly calculated resulting in an overstatement on the SEFA. Cause Lack of documented review processes over costs allocated to federal awards and improper calculations of indirect costs. Effect Failure to review costs allocated to federal awards and failure to accurately report federal expenditures on the SEFA resulted in non-compliance with the Uniform Guidance, which led to questioned costs, and may lead to potential withholding of future funds, or other administrative actions by the federal awarding agency. Questioned Cost: $84,474 for indirect costs not properly calculated. Recommendation We recommend that management document its review of all costs allocated to federal awards. We recommend that management review and enhance its internal controls, policies and procedures as needed to ensure indirect costs allocated to the grants are properly calculated and the SEFA is accurately prepared and reported. Views of Responsible Officials and Planned Corrective Actions See Corrective Action Plan.

Criteria Uniform Guidance specifies that recipients of federal awards should use the reimbursement method for funding unless specifically allowed otherwise. The reimbursement method requires the Organization to pay for program costs with its own funds and then request reimbursement from the federal awarding agency. Context The Organization did not remit complete and accurate reimbursement requests. Specifically, we noted the following deficiencies in our testing: - One reimbursement request was remitted for the wrong grant agreement. The reimbursement request was returned and a corrected request was resubmitted to the federal awarding agency. - One reimbursement request contained an error in the amount requested. The reimbursement request was returned and a corrected request resubmitted to the federal awarding agency. - Indirect cost amounts were improperly calculated, and therefore, were improperly reported and requested on one reimbursement request (as included in Finding 2024-002). Cause Lack of understanding and oversight over the cash management Uniform Guidance requirements. Effect Non-compliance with reimbursement requirements can result in the federal awarding agency questioning costs, delaying reimbursements, and potentially imposing penalties or other administrative actions. It can also strain the Organization’s cash flow and financial management processes. Questioned Cost: None Recommendation We recommend that management review its internal controls surrounding cash management reimbursement requests to ensure reimbursement requests are complete, accurate, and in accordance with cash management requirements. Views of Responsible Officials and Planned Corrective Actions See Corrective Action Plan.

Criteria Uniform Guidance requires non-federal entities to follow the procurement standards set out at 2 CFR sections 200.318 through 200.326. The Organization is required to adopt and maintain a written procurement policy in accordance with Uniform Guidance procurement standards and perform and document suspended and debarment searches for potential vendors prior to procuring services from the contractor. If bids are not obtained in accordance with the Organization’s procurement procedures due to using the noncompetitive procurement method, documentation must be prepared and retained including justification for sole-source procurement. Condition and Context The Organization does not have a documented procurement policy in accordance with 2 CFR Part 200. We noted four contractors that had total 2024 purchases over $10,000 and selected two for testing. We noted the following deficiencies in our testing: - For the two contractors tested, the Organization had no documentation to support that its suspension and debarment verification procedures were performed prior to procuring services from contractors. Therefore, we have concluded that such verifications were not timely performed. - The two contractors tested were selected using the noncompetitive procurement method. When the Organization relied on sole-source justification to procure services, the Organization did not document its sole-source justification prior to procuring services from the contractor. Cause The Organization assumed that following the procurement standards in 2 CFR Part 200 was a sufficient procurement policy and the Organization was not aware that a documented procurement policy in accordance with 2 CFR Part 200 was required. Further, the Organization was not aware of the necessity to document its suspension and debarment search procedures and justification for sole-source procurements prior to procuring services from contractors. Effect Without a formal procurement policy, or abidance of the documentation requirements of 2 CFR Part 200, there is an increased risk that procurement activities may not be conducted in compliance with federal requirements, potentially leading to unallowable costs or questioned costs. Questioned Cost: None due to auditor agreeing with verbal justification of sole-source procurements. Recommendation We recommend that management develop and implement a formal procurement policy that aligns with the requirements of the Uniform Guidance. We recommend that management ensure all procurement policy requirements are performed and documented prior to entering into procurement transactions. Views of Responsible Officials and Planned Corrective Actions See Correction Action Plan.

Criteria A pass-through entity must identify the award and applicable requirements to the subrecipient, evaluate each subrecipient’s risk of noncompliance, and monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with federal statutes, regulations, and the terms and conditions of the subaward. Context The Organization has not implemented adequate procedures to monitor the activities of its subrecipients. We noted nine 2024 subrecipients and selected four for testing. We noted the following deficiencies in our testing: Specifically, we noted the following deficiencies in our testing: - For the four subrecipients tested, there was no documented evidence that the Organization confirmed if subrecipients expected to be audited as required by 2 CFR Part 200, Subpart F, and if so, met this requirement. - For the four subrecipients tested, there was no documented evidence that the Organization verified subrecipients were not suspended, debarred or otherwise excluded from participating. Cause The Organization was not aware of these documented requirements surrounding subrecipient monitoring. Additionally, government funding and reporting is searchable in USAspending.gov. Effect Failure to adequately monitor subrecipients increases the risk that subawards may not be used for their intended purposes and that noncompliance with federal requirements may go undetected. This could result in questioned costs or unallowable expenses. Questioned Cost: None Recommendation We recommend that management review its subrecipient monitoring procedures and ensure that all Uniform Guidance requirements are included and documented adherence to the Uniform Guidance requirements is retained in each subrecipient’s folder. Views of Responsible Officials and Planned Corrective Actions See Correction Action Plan.

Criteria All costs charged to federal awards must be reviewed and approved to ensure they are allowable, allocable, and reasonable. Additionally, non-federal entities are required to prepare a schedule of expenditures of federal awards (SEFA) that accurately reflects the total federal awards expended during the fiscal year. Context All nine transactions of our sample of nine out of 218 salaries and fringe benefit transactions allocated to federal awards were not reviewed and approved prior to reimbursement request. Management noted that documented review and approval over salaries and fringe benefit allocations to federal awards did not occur during 2024. Indirect costs allocated to the Technical Assistance for Specialty Crops Program were improperly calculated resulting in an overstatement on the SEFA. Cause Lack of documented review processes over costs allocated to federal awards and improper calculations of indirect costs. Effect Failure to review costs allocated to federal awards and failure to accurately report federal expenditures on the SEFA resulted in non-compliance with the Uniform Guidance, which led to questioned costs, and may lead to potential withholding of future funds, or other administrative actions by the federal awarding agency. Questioned Cost: $84,474 for indirect costs not properly calculated. Recommendation We recommend that management document its review of all costs allocated to federal awards. We recommend that management review and enhance its internal controls, policies and procedures as needed to ensure indirect costs allocated to the grants are properly calculated and the SEFA is accurately prepared and reported. Views of Responsible Officials and Planned Corrective Actions See Corrective Action Plan.

Criteria Uniform Guidance requires non-federal entities to follow the procurement standards set out at 2 CFR sections 200.318 through 200.326. The Organization is required to adopt and maintain a written procurement policy in accordance with Uniform Guidance procurement standards and perform and document suspended and debarment searches for potential vendors prior to procuring services from the contractor. If bids are not obtained in accordance with the Organization’s procurement procedures due to using the noncompetitive procurement method, documentation must be prepared and retained including justification for sole-source procurement. Condition and Context The Organization does not have a documented procurement policy in accordance with 2 CFR Part 200. We noted four contractors that had total 2024 purchases over $10,000 and selected two for testing. We noted the following deficiencies in our testing: - For the two contractors tested, the Organization had no documentation to support that its suspension and debarment verification procedures were performed prior to procuring services from contractors. Therefore, we have concluded that such verifications were not timely performed. - The two contractors tested were selected using the noncompetitive procurement method. When the Organization relied on sole-source justification to procure services, the Organization did not document its sole-source justification prior to procuring services from the contractor. Cause The Organization assumed that following the procurement standards in 2 CFR Part 200 was a sufficient procurement policy and the Organization was not aware that a documented procurement policy in accordance with 2 CFR Part 200 was required. Further, the Organization was not aware of the necessity to document its suspension and debarment search procedures and justification for sole-source procurements prior to procuring services from contractors. Effect Without a formal procurement policy, or abidance of the documentation requirements of 2 CFR Part 200, there is an increased risk that procurement activities may not be conducted in compliance with federal requirements, potentially leading to unallowable costs or questioned costs. Questioned Cost: None due to auditor agreeing with verbal justification of sole-source procurements. Recommendation We recommend that management develop and implement a formal procurement policy that aligns with the requirements of the Uniform Guidance. We recommend that management ensure all procurement policy requirements are performed and documented prior to entering into procurement transactions. Views of Responsible Officials and Planned Corrective Actions See Correction Action Plan.

Criteria Uniform Guidance requires non-federal entities to submit performance and financial reports to the federal awarding agency, ensuring these reports are accurate, complete, and submitted in a timely manner. Context The Organization did not submit required reports in accordance with the Uniform Guidance. Specifically, we noted the following deficiencies in our testing: - One financial report was not submitted timely. - Two financial reports lacked complete and accurate information. Information was corrected in the subsequent quarterly financial reports. Cause Lack of understanding and awareness of specific reporting deadlines and requirements. Effect Failure to comply with reporting requirements can result in non-compliance with federal award terms, which may lead to questioned costs, potential withholding of future funds, or other administrative actions by the federal awarding agency. Questioned Cost: None Recommendation We recommend that management review its reporting procedures to ensure compliance with the reporting requirements of the Uniform Guidance. Management should establish a calendar of all reporting deadlines to ensure timely submission of required reports. Management should review internal controls surrounding the preparation and review of financial and performance reports to ensure reports are complete and accurate. Management should regularly review the terms and conditions of federal awards to ensure all reporting requirements are met. Views of Responsible Officials and Planned Corrective Actions See Correction Action Plan.

Criteria A pass-through entity must identify the award and applicable requirements to the subrecipient, evaluate each subrecipient’s risk of noncompliance, and monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with federal statutes, regulations, and the terms and conditions of the subaward. Context The Organization has not implemented adequate procedures to monitor the activities of its subrecipients. We noted nine 2024 subrecipients and selected four for testing. We noted the following deficiencies in our testing: Specifically, we noted the following deficiencies in our testing: - For the four subrecipients tested, there was no documented evidence that the Organization confirmed if subrecipients expected to be audited as required by 2 CFR Part 200, Subpart F, and if so, met this requirement. - For the four subrecipients tested, there was no documented evidence that the Organization verified subrecipients were not suspended, debarred or otherwise excluded from participating. Cause The Organization was not aware of these documented requirements surrounding subrecipient monitoring. Additionally, government funding and reporting is searchable in USAspending.gov. Effect Failure to adequately monitor subrecipients increases the risk that subawards may not be used for their intended purposes and that noncompliance with federal requirements may go undetected. This could result in questioned costs or unallowable expenses. Questioned Cost: None Recommendation We recommend that management review its subrecipient monitoring procedures and ensure that all Uniform Guidance requirements are included and documented adherence to the Uniform Guidance requirements is retained in each subrecipient’s folder. Views of Responsible Officials and Planned Corrective Actions See Correction Action Plan.

Criteria All costs charged to federal awards must be reviewed and approved to ensure they are allowable, allocable, and reasonable. Additionally, non-federal entities are required to prepare a schedule of expenditures of federal awards (SEFA) that accurately reflects the total federal awards expended during the fiscal year. Context All nine transactions of our sample of nine out of 218 salaries and fringe benefit transactions allocated to federal awards were not reviewed and approved prior to reimbursement request. Management noted that documented review and approval over salaries and fringe benefit allocations to federal awards did not occur during 2024. Indirect costs allocated to the Technical Assistance for Specialty Crops Program were improperly calculated resulting in an overstatement on the SEFA. Cause Lack of documented review processes over costs allocated to federal awards and improper calculations of indirect costs. Effect Failure to review costs allocated to federal awards and failure to accurately report federal expenditures on the SEFA resulted in non-compliance with the Uniform Guidance, which led to questioned costs, and may lead to potential withholding of future funds, or other administrative actions by the federal awarding agency. Questioned Cost: $84,474 for indirect costs not properly calculated. Recommendation We recommend that management document its review of all costs allocated to federal awards. We recommend that management review and enhance its internal controls, policies and procedures as needed to ensure indirect costs allocated to the grants are properly calculated and the SEFA is accurately prepared and reported. Views of Responsible Officials and Planned Corrective Actions See Corrective Action Plan.

Criteria Uniform Guidance specifies that recipients of federal awards should use the reimbursement method for funding unless specifically allowed otherwise. The reimbursement method requires the Organization to pay for program costs with its own funds and then request reimbursement from the federal awarding agency. Context The Organization did not remit complete and accurate reimbursement requests. Specifically, we noted the following deficiencies in our testing: - One reimbursement request was remitted for the wrong grant agreement. The reimbursement request was returned and a corrected request was resubmitted to the federal awarding agency. - One reimbursement request contained an error in the amount requested. The reimbursement request was returned and a corrected request resubmitted to the federal awarding agency. - Indirect cost amounts were improperly calculated, and therefore, were improperly reported and requested on one reimbursement request (as included in Finding 2024-002). Cause Lack of understanding and oversight over the cash management Uniform Guidance requirements. Effect Non-compliance with reimbursement requirements can result in the federal awarding agency questioning costs, delaying reimbursements, and potentially imposing penalties or other administrative actions. It can also strain the Organization’s cash flow and financial management processes. Questioned Cost: None Recommendation We recommend that management review its internal controls surrounding cash management reimbursement requests to ensure reimbursement requests are complete, accurate, and in accordance with cash management requirements. Views of Responsible Officials and Planned Corrective Actions See Corrective Action Plan.

Criteria Uniform Guidance requires non-federal entities to follow the procurement standards set out at 2 CFR sections 200.318 through 200.326. The Organization is required to adopt and maintain a written procurement policy in accordance with Uniform Guidance procurement standards and perform and document suspended and debarment searches for potential vendors prior to procuring services from the contractor. If bids are not obtained in accordance with the Organization’s procurement procedures due to using the noncompetitive procurement method, documentation must be prepared and retained including justification for sole-source procurement. Condition and Context The Organization does not have a documented procurement policy in accordance with 2 CFR Part 200. We noted four contractors that had total 2024 purchases over $10,000 and selected two for testing. We noted the following deficiencies in our testing: - For the two contractors tested, the Organization had no documentation to support that its suspension and debarment verification procedures were performed prior to procuring services from contractors. Therefore, we have concluded that such verifications were not timely performed. - The two contractors tested were selected using the noncompetitive procurement method. When the Organization relied on sole-source justification to procure services, the Organization did not document its sole-source justification prior to procuring services from the contractor. Cause The Organization assumed that following the procurement standards in 2 CFR Part 200 was a sufficient procurement policy and the Organization was not aware that a documented procurement policy in accordance with 2 CFR Part 200 was required. Further, the Organization was not aware of the necessity to document its suspension and debarment search procedures and justification for sole-source procurements prior to procuring services from contractors. Effect Without a formal procurement policy, or abidance of the documentation requirements of 2 CFR Part 200, there is an increased risk that procurement activities may not be conducted in compliance with federal requirements, potentially leading to unallowable costs or questioned costs. Questioned Cost: None due to auditor agreeing with verbal justification of sole-source procurements. Recommendation We recommend that management develop and implement a formal procurement policy that aligns with the requirements of the Uniform Guidance. We recommend that management ensure all procurement policy requirements are performed and documented prior to entering into procurement transactions. Views of Responsible Officials and Planned Corrective Actions See Correction Action Plan.

Criteria A pass-through entity must identify the award and applicable requirements to the subrecipient, evaluate each subrecipient’s risk of noncompliance, and monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with federal statutes, regulations, and the terms and conditions of the subaward. Context The Organization has not implemented adequate procedures to monitor the activities of its subrecipients. We noted nine 2024 subrecipients and selected four for testing. We noted the following deficiencies in our testing: Specifically, we noted the following deficiencies in our testing: - For the four subrecipients tested, there was no documented evidence that the Organization confirmed if subrecipients expected to be audited as required by 2 CFR Part 200, Subpart F, and if so, met this requirement. - For the four subrecipients tested, there was no documented evidence that the Organization verified subrecipients were not suspended, debarred or otherwise excluded from participating. Cause The Organization was not aware of these documented requirements surrounding subrecipient monitoring. Additionally, government funding and reporting is searchable in USAspending.gov. Effect Failure to adequately monitor subrecipients increases the risk that subawards may not be used for their intended purposes and that noncompliance with federal requirements may go undetected. This could result in questioned costs or unallowable expenses. Questioned Cost: None Recommendation We recommend that management review its subrecipient monitoring procedures and ensure that all Uniform Guidance requirements are included and documented adherence to the Uniform Guidance requirements is retained in each subrecipient’s folder. Views of Responsible Officials and Planned Corrective Actions See Correction Action Plan.