Audit 369419

Finding 2024-001: Material Weakness - Employee Fraud ALN: 16.027, 16.526 Condition and Context: During the prior year audit, we became aware that a key and trusted employee devised a scheme to defraud the Association using their company issued corporate credit card for personal charges. The employee hid the scheme from the Association by submitting altered credit card statements. The altered credit card statements included deleting what appeared to be personal charges, altering dates, reference numbers, and vendor descriptions. In addition, the employee added fictitious charges to the statements submitted. The cost related to 2024 is approximately $6,000, of which approximately $500 related to federal grants. Criteria: Management is responsible for the preparation of the financial statements and is responsible for the design, implementation, and maintenance of a system of controls that can prevent and detect a material misstatement whether due to fraud or error in timely manner. Cause: The deliberate manipulation of systems and documents by the employee perpetrating the fraud, as well as the lack of comprehensive reconciliation of credit card data meant that the fraud went undetected. Effect: This resulted in an overstatement of 2024 expenses for approximately $6,000, of which an adjustment was required to properly reflect expenses for the year ended December 31, 2024. Questioned Costs: $6,000, of which $500 relates to federal grants. Recommendation: We recommend the Association carefully review their internal control procedures as it relates to credit card processing by having management review the original credit card statement and compare it to the statement submitted prior to approving payment. Management Response: Upon the discovery of fraud in 2024, Management took immediate action to address the issue and prevent future occurrences. Actions taken in 2024 include: • Improved the segregation of duties between the approval and recording of all expense transactions. • Automated the uploads of credit card transactions directly into the accounting system to prevent any manual manipulation and reconciled the transactions to the statements. • Updated the Association policies around vendor management and allowable/non allowable operating expenses. • The employee was terminated prior to discovering the fraud.

Finding 2024-003: Material Weakness - Reporting - Late or No Submission of the Single Audit Reporting Package to the Federal Audit Clearinghouse Agency: Department of Justice ALN: 16.027, 16.053, 16.526, 16.560, 16.582 Condition and Context: The Association submitted their Single Audit Reporting Package late for the year ended December 31, 2023, to the Federal Audit Clearinghouse. In addition, the Single Audit submission for the year ended December 31, 2022, was not filed. Criteria: The Association is required to adhere to reporting deadlines. The single audit submission to the Federal Audit Clearinghouse is due the earlier of nine months after fiscal year end or 30 days after the audit report is finalized. Cause: Due to employee fraud and lack of communication, coordination, and follow-up between the Association and their previous auditors, the single audit submission to the Federal Audit Clearinghouse was not filed on time for 2023 and not filed at all for 2022. Effect: This resulted in the single audit submission to the Federal Audit Clearinghouse being filed late or not at all. Questioned Costs: None noted. Recommendation: Appropriate written policies and procedures should be established to ensure timely filing of reports and the assignment of responsible personnel. Management Response: Management has implemented the following measures to address the issues and prevent future occurrences: The Association has implemented the steps outlined in the 2023 audit relative to this finding. In 2025, the Association hired a full-time Senior Finance Director, whose responsibilities regarding the timely filing of the annual audit are clearly outlined in the job description. Further, the third-party accounting firm has been eliminated, thereby eliminating some of the communication and coordination challenges previously experienced. Finally, steps have been taken to improve communication with our current auditors to ensure timely filing.