Audit 369638

Criteria: Uniform Guidance requires payments to be based on reimbursement requests in accordance with 2 CFR 200.305. Condition: The Organization did not comply with the Uniform Guidance requirement to manage cash and requested payments in advance from the United States Department of Agriculture. Questioned Costs: $0 Cause: Inadequate oversight controls in the grant billing process resulted in duplicate Department of Agriculture reimbursement requests and funds received prior to issuing the related payments. Effect: The Organization was not in compliance with Uniform Guidance 2 CFR 200.305. Recommendation: We recommend the Organization monitors its budget and cash flows regularly. Views of Responsible Officials and Planned Corrective Action: Management agrees with the finding and in the summer of 2024, the Organization contracted with a third party accounting company to provide services.

Criteria: Per 2 CFR 200.332, pass-through entities must evaluate each subrecipient's risk of noncompliance with Federal statutes, regulations, and the terms and conditions of the subaward, and monitor subrecipient activities to provide reasonable assurance that the subaward is used for authorized purposes and in compliance with applicable requirements. Condition: The Organization did not consistently document and retain required monitoring procedures and assessments performed. Cause: The Organization had not developed policies and procedures to ensure compliance with subrecipient risk assessment and monitoring requirements. Effect: The Organization did not comply with 2 CFR 200.332. The lack of effective processes and documentation increases the risk of noncompliance by subrecipients, potential misuse of Federal funds, and questioned costs that could adversely affect current and future Federal funding. Questioned Costs: $0 Recommendation: We recommend the Organization strengthen its internal control framework over subrecipients by developing and implementing written policies and procedures for consistently performing and documenting risk assessments prior to making subawards, establishing clear monitoring protocols such as periodic report reviews, site visits, and follow-up on identified issues, and maintaining evidence of all monitoring activities performed. These steps will help ensure compliance with 2 CFR 200.332, reduce the risk of subrecipient noncompliance, and provide assurance that Federal funds are used for their intended purposes. Views of Responsible Officials and Planned Corrective Action: Management agrees with the finding. The Organization hired a new Executive Director in the fall of 2024 and has discussed the matter with the Department of Agriculture and legal counsel to ensure compliance requirements are followed.

Criteria: Under 2 CFR 200.403, costs charged to federal awards must be necessary, reasonable, and allocable, and must conform to limitations or exclusions set forth in the Uniform Guidance. 2 CFR 200.431 further specifies that fringe benefits must be actually incurred and in accordance with established written policies. Condition: During testing of payroll and related benefits, we identified instances where the organization billed federal awards for employee benefits (e.g., health insurance and retirement contributions) that were not provided or paid on behalf of the employees. The amounts were charged based on estimated budget allocations rather than actual costs incurred, and no reconciliation was performed. Cause: The Organization lacked adequate internal controls to ensure only paid fringe benefit costs were charged to federal awards. There was no process in place to reconcile estimated benefits to paid benefits. Effect: Charging unexpended costs to federal awards resulted in questioned costs totaling $22,241. This practice may lead to misrepresentation of expenditures and noncompliance with federal cost principles. Questioned Costs: $22,241 Recommendation: We recommend the organization implement procedures to ensure benefits charged to federal awards reflect actual costs expended, perform regular reconciliations between estimated and actual benefit costs, and update written policies to align with Uniform Guidance requirements for allowable fringe benefit charges. Views of Responsible Officials and Planned Corrective Action: Management agrees with the finding and in the summer of 2024, the Organization has contracted with a third party accounting company to provide services.

Criteria: Uniform Guidance requires written procedures for cash management and determining the allowability of costs in accordance with Subpart E – Cost Principles. Condition: The Organization did not have written procedures for cash management (2 CFR 200.302(b)(6)) and allowable costs determination (2 CFR 200.302(b)(7)) in accordance with Uniform Guidance requirements. Questioned Costs: $0 Cause: The Organization’s written policies and procedures were not updated to include required Uniform Guidance policies. Effect: Employees of the Organization could enter into a transaction that is not in compliance with Uniform Guidance requirements. Recommendation: We recommend the Organization draft and adopt written procedures in accordance with Uniform Guidance requirements. Views of Responsible Officials and Planned Corrective Action: Management agrees with the finding and has developed and will implement the appropriate policies and procedures by December 31, 2025.