FAC Explorer

Audit 361217

FY End
2023-12-31
Total Expended
$2.22M
Findings
6
Programs
7
Organization: East Side Neighborhood Services, Inc. (MN)
Year: 2023 Accepted: 2025-07-01
Auditor: Olsen Thielen & CO LTD

Organization Exclusion Status:

Findings

ID Ref Severity Repeat Requirement
569959 2023-001 Material Weakness Yes P
569960 2023-002 Material Weakness Yes P
569961 2023-003 Material Weakness Yes P
1146401 2023-001 Material Weakness Yes P
1146402 2023-002 Material Weakness Yes P
1146403 2023-003 Material Weakness Yes P

Programs

ALN Program Spent Major Findings
17.235 Senior Community Service Employment Program $1.38M Yes 3
84.287 Twenty-First Century Community Learning Centers $500,561 - 0
93.044 Special Programs for the Aging, Title Iii, Part B, Grants for Supportive Services and Senior Centers $148,575 - 0
93.052 National Family Caregiver Support, Title Iii, Part E $83,839 - 0
97.114 Emergency Food and Shelter National Board Program (arra) $45,198 - 0
17.259 Wia Youth Activities $20,508 - 0
14.218 Community Development Block Grants/entitlement Grants $20,000 - 0

Contacts

Name Title Type
GAFJHKJRAE36 John Pepper Auditee
6124029932 Daniel Owens Auditor
No contacts on file

Notes to SEFA

Title: Basis of Presentation Accounting Policies: Expenditures reported on the schedule of expenditures of federal awards are reported on the accrual basis of accounting. Such expenditures are recognized following the cost principles De Minimis Rate Used: N Rate Explanation: The Organization has elected not to use the 10 percent de minimis indirect cost rate as allowed under the Uniform Guidance. East Side Neighborhood Services, Inc. presents its schedule of federal expenditures of federal awards (the Schedule) in accordance with 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 selected portion of the operations of the Organization, it is not intended to and does not present the financial position, change in assets or cash flows of East Side Neighborhood Services, Inc.
Title: Summary of Significant Accounting Policies Accounting Policies: Expenditures reported on the schedule of expenditures of federal awards are reported on the accrual basis of accounting. Such expenditures are recognized following the cost principles De Minimis Rate Used: N Rate Explanation: The Organization has elected not to use the 10 percent de minimis indirect cost rate as allowed under the Uniform Guidance. Expenditures reported on the schedule of expenditures of federal awards 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. The Organization has elected not to use the 10 percent de minimis indirect cost rate as allowed under the Uniform Guidance
Title: Senior Community Service Employment Program Accounting Policies: Expenditures reported on the schedule of expenditures of federal awards are reported on the accrual basis of accounting. Such expenditures are recognized following the cost principles De Minimis Rate Used: N Rate Explanation: The Organization has elected not to use the 10 percent de minimis indirect cost rate as allowed under the Uniform Guidance. The major program is the Senior Community Service Employment program, which offers low-income elderly persons paid community service and training as an entry into productive work.

Finding Details

Finding 2023-001
Financial Statement Finding-Lack of Segregation of Duties- Criteria: A fundamental concept in a good system of internal controls is the segregation of duties. Duties should be separated so that no one person performs incompatible duties or has complete control of any type of transaction. Condition: The Organization does not currently have an internal control system to allow for proper segregation of duties in certain areas of the accounting duties. Cause: Due to the relatively small size of the Organization’s staff, the Organization is not able to attain segregation of duties to the extent required for ideal internal control. This is not unusual in a company of this size, and generally it is not economically feasible to provide for complete adherence to the segregation of duties concept. Effect: Proper segregation of duties helps minimize the chance of undetected errors and if not mitigated there is potential of misappropriation of assets. Recommendation: Due to the small size of the Organization, there is limited options available to them. Under this situation, the most effective control is management and the board’s oversight and knowledge of the matters relating to the operations of the Organization. Views of Responsible Officials and Planned Corrective Actions The Organization’s management is aware of this condition and believes that it is not economically feasible to attain the ideal segregation of duties. Management attempts to mitigate the associated risks by doing the following: (1) Identifies areas where the lack of segregation of duties exists and where there are higher risks of errors or fraud occurring. (2) Implements limited segregation to the extent possible to reduce risks without impairing efficiency. (3) Uses the knowledge that management and the Board of Directors has of operations by having them review certain accounting records and reports. (4) Monitors the effectiveness of the above actions and makes changes as considered appropriate.
Finding 2023-002
Financial Statement Finding-Preparation of GAAP Based Financial Statements-Criteria: Internal controls over financial reporting include those related to the actual preparation and review of the audited financial statements in conformity with generally accepted accounting principles (GAAP). Condition: The Organization has limited internal resources to prepare full-disclosure financial statements required by GAAP. Cause: Management has elected to have the financial statements and the related notes to the financial statements prepared by the independent auditor as part of the audit. Effect: Inadequate controls over financial reporting of the Organization could result in the likelihood that the Organization would not be able to prepare the financial statements and the related notes to the financial statements without the assistance of the auditors. Recommendation: For entities of the Organization's size, it generally is not practical to obtain the internal expertise to handle all aspects of the external financial reporting. Management should continually be aware of the financial reporting requirements and should review and approve the completed financial statements. Views of Responsible Officials and Planned Corrective Actions The Organization’s management is aware of this significant deficiency and addresses it by obtaining our assistance in the preparation of the Organization’s annual financial statements. Management reviews and approves the completed statements and distributes them to the users.
Finding 2023-003
Financial Statement Finding- Reconciliation of Key Accounts-Criteria: Internal controls over financial reporting includes timely reconciliation of key general ledger accounts and preparation of interim financial statements that are free from material misstatements. Condition: The Organization has limited personnel and resources to prepare timely monthly account reconciliations and other financial information for internal use of management and the Board of Directors. Cause: In 2022 and 2023, due to personnel turnover and need to spend more time managing cash flow and liquidity, the Organization was not reconciling key statement of financial position and revenue/expense accounts on a timely basis. Effect In order to prepare accurate monthly interim financial statements, timely account reconciliations should be done monthly. Recommendation Management should constantly strive to stay up to date on monthly reconciliations and consult with external resources when necessary. The Organization may need to consider adding additional personnel to obtain the internal expertise needed to handle all aspects of timely account reconciliations and interim financial reporting. Views of Responsible Officials and Planned Corrective Actions The Organization’s management is aware of this material weakness and has considered adding additional personnel to assist in the monthly reconciliations and financial statement preparation. Management reviews and approves the monthly interim financial statements.
Finding 2023-001
Financial Statement Finding-Lack of Segregation of Duties- Criteria: A fundamental concept in a good system of internal controls is the segregation of duties. Duties should be separated so that no one person performs incompatible duties or has complete control of any type of transaction. Condition: The Organization does not currently have an internal control system to allow for proper segregation of duties in certain areas of the accounting duties. Cause: Due to the relatively small size of the Organization’s staff, the Organization is not able to attain segregation of duties to the extent required for ideal internal control. This is not unusual in a company of this size, and generally it is not economically feasible to provide for complete adherence to the segregation of duties concept. Effect: Proper segregation of duties helps minimize the chance of undetected errors and if not mitigated there is potential of misappropriation of assets. Recommendation: Due to the small size of the Organization, there is limited options available to them. Under this situation, the most effective control is management and the board’s oversight and knowledge of the matters relating to the operations of the Organization. Views of Responsible Officials and Planned Corrective Actions The Organization’s management is aware of this condition and believes that it is not economically feasible to attain the ideal segregation of duties. Management attempts to mitigate the associated risks by doing the following: (1) Identifies areas where the lack of segregation of duties exists and where there are higher risks of errors or fraud occurring. (2) Implements limited segregation to the extent possible to reduce risks without impairing efficiency. (3) Uses the knowledge that management and the Board of Directors has of operations by having them review certain accounting records and reports. (4) Monitors the effectiveness of the above actions and makes changes as considered appropriate.
Finding 2023-002
Financial Statement Finding-Preparation of GAAP Based Financial Statements-Criteria: Internal controls over financial reporting include those related to the actual preparation and review of the audited financial statements in conformity with generally accepted accounting principles (GAAP). Condition: The Organization has limited internal resources to prepare full-disclosure financial statements required by GAAP. Cause: Management has elected to have the financial statements and the related notes to the financial statements prepared by the independent auditor as part of the audit. Effect: Inadequate controls over financial reporting of the Organization could result in the likelihood that the Organization would not be able to prepare the financial statements and the related notes to the financial statements without the assistance of the auditors. Recommendation: For entities of the Organization's size, it generally is not practical to obtain the internal expertise to handle all aspects of the external financial reporting. Management should continually be aware of the financial reporting requirements and should review and approve the completed financial statements. Views of Responsible Officials and Planned Corrective Actions The Organization’s management is aware of this significant deficiency and addresses it by obtaining our assistance in the preparation of the Organization’s annual financial statements. Management reviews and approves the completed statements and distributes them to the users.
Finding 2023-003
Financial Statement Finding- Reconciliation of Key Accounts-Criteria: Internal controls over financial reporting includes timely reconciliation of key general ledger accounts and preparation of interim financial statements that are free from material misstatements. Condition: The Organization has limited personnel and resources to prepare timely monthly account reconciliations and other financial information for internal use of management and the Board of Directors. Cause: In 2022 and 2023, due to personnel turnover and need to spend more time managing cash flow and liquidity, the Organization was not reconciling key statement of financial position and revenue/expense accounts on a timely basis. Effect In order to prepare accurate monthly interim financial statements, timely account reconciliations should be done monthly. Recommendation Management should constantly strive to stay up to date on monthly reconciliations and consult with external resources when necessary. The Organization may need to consider adding additional personnel to obtain the internal expertise needed to handle all aspects of timely account reconciliations and interim financial reporting. Views of Responsible Officials and Planned Corrective Actions The Organization’s management is aware of this material weakness and has considered adding additional personnel to assist in the monthly reconciliations and financial statement preparation. Management reviews and approves the monthly interim financial statements.