Audit 369651

Finding number 2024-002, material weakness in internal controls over compliance – cash management Federal Agency: U.S. Department of Justice Federal Program: Justice Reinvestment Initiative, ALN 16.827 Criteria: 2 CFR 200.303 states that the non-Federal entity is responsible for maintaining effective internal controls over cash management to comply with the terms and conditions of the Federal award. Under CFR 200.305(b), the timing of cash draws for cost reimbursement awards should be as close as administratively feasible to the actual disbursements of the expenditures. Condition: During the year ended December 31, 2024, the Organization’s federal draw down requests were not properly reconciled to actual cash needs. This also resulted in an instance where $121,533 was required to be returned to the awarding agency in June 2024. Cause: Inadequate procedures to monitor cash needs based on actual expenditures. Effect: The Organization temporarily held federal funds without immediate need and is not requesting funds based on actual expenditures incurred. Questioned Costs: None Recommendation: Management should improve the monitoring of actual expenditures to better align cash needs and draw down requests with actual expenditures incurred. Views of Responsible Officials: Management concurs with this finding. See Corrective Action Plan.

Finding number 2024-003, significant deficiency in internal controls over compliance - procurement Federal Agency: U.S. Department of Justice Federal Program: Justice Reinvestment Initiative, ALN 16.827 Criteria: In accordance with 2 CFR section 180.300 and 2 CFR section 200.214, nonfederal entities are required to verify that contractors and subrecipients are not suspended or debarred or otherwise excluded from participation in federal programs. This verification can be accomplished by checking the System for Award Management (SAM) Exclusions, collecting a certification from the entity or adding a clause or condition to the covered transaction with that entity. Condition: We noted the Organization did not maintain documentation evidencing that suspension and debarment checks were performed prior to entering into covered transactions with vendors. Cause: Inadequate procedures to ensure suspension and debarment checks were documented prior to entering into covered transactions with vendors. Effect: There is an increased risk that federal funds could be disbursed to vendors who are suspended or debarred from participation in federal programs which could result in the disallowance of costs and require funds to be returned. Questioned Costs: None Recommendation: We recommend that the Organization implement one of the following procedures to verify and document that vendors are not on the suspended or debarred list: 1) checking the System for Award Management (SAM) Exclusions and maintaining a printout of that as documentation of the check; 2) collecting a separately executed certification from the entity or 3) adding a clause to the consulting agreement with the vendor. Views of Responsible Officials: Management concurs with this finding. See Corrective Action Plan

Finding number 2024-004, significant deficiency in internal controls over compliance - reporting Federal Agency: U.S. Department of Justice Federal Program: Justice Reinvestment Initiative, ALN 16.827 Criteria: Per 2 CFR Section 200.328(b)(1), recipients are required to submit performance and financial reports as required by the terms and conditions of their federal award, and such reports must be submitted no later than 30 calendar days after the end of each reporting period, unless otherwise specified by the federal awarding agency. The Department of Justice’s grants financial guide specifies that the Federal Financial Reports (FFRs) must be submitted no later than 30 days after the last day of each quarter. Condition: During our review of federal financial reporting, we noted that two of the four required quarterly Federal Financial Reports (FFRs, SF-425) for the year ended December 31, 2024, were not submitted to the federal awarding agency within the required 30 days after the end of the reporting period. Cause: Inadequate procedures to ensure reports were timely filed. Effect: Failure to submit required federal financial reports on time may result in noncompliance with federal award requirements, could delay reimbursement of expenditures and may impact the grantee’s eligibility for future federal funding. Questioned Costs: None Recommendation: We recommend that the Organization implement and document procedures to ensure that all required federal financial reports are prepared, reviewed and submitted within the required timeframe. Views of Responsible Officials: Management concurs with this finding. See Corrective Action Plan.

Finding number 2024-005, material weakness in internal controls over compliance – subrecipient monitoring Federal Agency: U.S. Department of Justice Federal Program: Justice Reinvestment Initiative, ALN 16.827 Criteria: 2 CFR 200.332(a)(1) requires pass-through entities to clearly identify the federal award to the subrecipient, including the FAIN and ALN, in the subaward documents. 2 CFR 200.332(b)-(d) requires pass-through entities to evaluate each subrecipient’s risk of noncompliance to determine appropriate monitoring and to verify that subrecipients expending $750,000 or more are audited as required by the Uniform Guidance. Condition: During our review of subrecipient agreements, we noted that the agreements did not include the Federal Award Identification Number (FAIN) and the Assistance Listing Number (ALN) as required. Additionally, the pass-through entity did not adequately document its risk assessment of subrecipients or verify whether subrecipients were subject to the Single Audit and, if so, whether the required audit was completed and reviewed. Cause: Inadequate procedures to ensure that all required information was included in subrecipient agreements. Inadequate procedures were not followed to perform and/or document subrecipient risk assessments and audit verifications. Effect: Failure to include all required information in subrecipient agreements increases the risk that subrecipients may not be aware of or comply with federal requirements, which could result in noncompliance with federal statutes, regulations and the terms and conditions of the award. This deficiency may also impair the pass-through entity’s ability to properly monitor subrecipient activities and fulfill its responsibilities under the Uniform Guidance. Such omissions may result in audit findings, questioned costs and potential enforcement actions by federal agencies. Questioned Costs: None Recommendation: We recommend that management implement procedures to ensure that all subrecipient agreements include the information required by 2 CFR 200.332. This should include a standardized checklist or template for subaward agreements and periodic reviews to verify compliance. We further recommend the entity implement and document procedures to (1) perform and retain evidence of subrecipient risk assessments and (2) verify and document whether subrecipients are subject to the Single Audit and, if so, obtain and review the audit reports for findings related to the federal program Views of Responsible Officials: Management concurs with this finding. See Corrective Action Plan.