Audit 370152

Finding Reference 2024-002: Inaccurate SEFA Reporting Federal Agency: U.S. Department of Commerce Compliance Requirement: Reporting Federal Program: 11.034 - MBDA Business Center- Capital Readiness Program Grant Award: MB23OBD8020301 Type of Finding: Significant Deficiency in Internal Control over Compliance, Other Matters Condition/Context: SEFA provided for audit did not accurately reflect federal expenditures for the Capital Readiness Program as of year-end. Specifically, the SEFA was not reconciled to the underlying financial statements, and differences were noted between reported federal expenditures, receivables, and deferred revenue balances. Criteria: Per 2 CFR 200.510(b), auditees must prepare a SEFA for the period being audited that accurately reflects federal award expenditures and is supported by the accounting records. The SEFA should reconcile to the financial statements. Cause: The SEFA was prepared using incomplete or inaccurate information and was not reconciled to the financial records prior to submission for audit. Effect: Failure to prepare an accurate SEFA increases the risk of audit adjustments, delays in completing the audit, and potential noncompliance with Uniform Guidance reporting requirements. Questioned Costs: None Recommendation: We recommend that CRMSDC implement stronger year-end closing and review procedures to ensure that grant revenue, deferred revenue, and receivables are accurately recorded. SEFA preparation should include a reconciliation process to the general ledger and supporting schedules to ensure completeness and accuracy. Views of Responsible Officials and Planned Corrective Actions: See Corrective Action Plans section.

Finding Reference 2024-003: Insufficient Non-Federal Share Federal Agency: U.S. Department of Commerce Compliance Requirement: Matching, Level of Efforts, Earmarking Federal Program: 11.034 - MBDA Business Center- Capital Readiness Program Grant Award: MB23OBD8020301 Type of Finding: Significant Deficiency in Internal Control over Compliance Condition/Context: CRMSDC reported $191,585 in matching expenditures for Grant Year 1. However, the supporting documentation provided totaled only $114,473, which did not align with the categories in the approved matching budget of $189,250. Reported costs included expenditures outside of approved categories and did not reconcile to the grant agreement requirements. As a result, there was a shortfall of $74,777 in the required non-federal share. Criteria: In accordance with 2 CFR §200.306, cost sharing or matching contributions must be verifiable from the recipient’s records, necessary and reasonable for the program, and must meet the amounts and categories established in the approved award budget. Cause: CRMSDC did not establish adequate procedures to ensure that matching expenditures were tracked and reported in accordance with approved budget categories and amounts. Further, management did not seek or obtain prior approval from the awarding agency for any modification or waiver of the matching requirement. Effect: As a result, CRMSDC did not fully meet the required non-federal share. This noncompliance exposes the organization to potential disallowance of costs, repayment of federal funds, or other administrative actions by the awarding agency. Questioned Costs: $74,777 32 CAPITAL REGION MINORITY SUPPLIER DEVELOPMENT COUNCIL, INC. SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR THE YEAR ENDED DECEMBER 31, 2024 – (CONTINUTED) Recommendation: We recommend that CRMSDC strengthen its monitoring controls and procedures to ensure compliance with matching requirements. Specifically, management should: • Implement periodic reviews (e.g., quarterly) to compare actual contributions against the required match amounts and approved budget categories. • Maintain detailed and verifiable documentation for all matching costs. • Provide training to staff responsible for grant compliance on Uniform Guidance and award-specific requirements. • Seek timely approval from the awarding agency for any modifications to budget categories or matching requirements. • Develop and implement a corrective action plan to address the identified shortfall and to prevent recurrence in future grant periods. Views of Responsible Officials and Planned