Audit 371378

Criteria: The Home should have in place written procurement standards found in 2 CFR 200.317 through 200.326 of the Uniform Guidance. Condition: The Home does not have written procurement standards that are in accordance with the standards found in 2 CFR 200.317 through 200.326 of the Uniform Guidance. Cause: The Home’s written purchasing policy has not been updated to incorporate the standards found in 2 CFR 200.317 through 200.326 of the Uniform Guidance. Effect: The Home is not in compliance with the procurement standards found in 2 CFR 200.317 through 200.326 of the Uniform Guidance. Recommendation: We recommend the Home update its written purchasing policy to ensure the procurement standards found in 2 CFR 200.317 through 200.326 of the Uniform Guidance are incorporated. Management’s Response: Although this is the same recommendation as from 2023, the agency did make a change to the purchasing policy; however, it was not as detailed as necessary. The agency’s purchasing policy will be revised to ensure that the standards outlined in 2 CFR 200.317 – 200.326 are incorporated and followed.

Criteria: The Organization is required to have internal controls that ensure it is following the policies and procedures it has put into place to safeguard its financial position. Condition: During our audit, we noted that the Organization has not been following its written policy related to accrued vacation. This policy states that on the anniversary of an employee’s hire date, the employee will lose any accrued vacation time in excess of 240 hours. However, the Organization has started paying employees at the end of each calendar year for vacation time lost during that calendar year. Cause: The change in the way the Organization handles accrued vacation came about partially due to the Organization being understaffed, which resulted in employees being required to work and forfeit vacation time, and partially due to the COVID-19 pandemic, which restricted travel, and the resulting sentiment that it was unfair for employees to lose vacation time that they were unable to take under these circumstances. Although the decision to begin paying employees for lost vacation time was verbally approved by the Organization’s President/CEO, the approval was not documented in writing, and the Organization’s written policy was not updated to reflect this change. Effect: The Organization is not adhering to its written policy on accrued vacation and is incurring an expense that has not been formally approved in writing by the Organization’s management or board. Recommendation: We recommend that either the Organization no longer pay employees for lost vacation time, in accordance with its current policy, or that the Organization update its written policy, with appropriate, documented approval from management and the board, to accurately reflect the manner in which it wishes to address accrued vacation. Management’s Response: Management’s Response: Under the current policy, vacation hours over 240 are typically lost on an employee’s anniversary date. During Covid, due to periods of low staffing, management chose to pay out excess vacation hours instead of forfeiting them, prioritizing client safety and agency culture. The agency has continued this approach. By the end of 2025, The HR Director and Senior Management will review the policy and submit recommendations to the Personnel Committee and Board on whether to allow future payouts or return to a "no payout" rule. Any updates will be reflected in the Employee Handbook.

Criteria: The Organization is required to have internal controls over the period-end financial reporting process that enable the Organization to record and process year-end journal entries to produce financial records that are in accordance with generally accepted accounting principles. Condition: During our audit, we identified material misstatements related to accounts receivable and fixed assets that were not identified by the Organization’s internal controls over financial reporting. Cause: The Organization failed to provide proper oversight over period-end financial reporting, which resulted in misstated accounting records prior to performance of the audit. Effect: The Organization relied on auditor-prepared accounting adjustments to ensure the financial records were properly stated in accordance with generally accepted accounting principles. The Organization reviewed, approved, and accepted responsibility for the accounting adjustments, as the auditor cannot be a component of the Organization’s internal controls. Recommendation: We recommend management review the period-end financial reporting process and implement an additional analysis of year-end balances prior to the start of the audit. We also recommend additional year-end analysis of accounts receivable and fixed assets to ensure balances are accurately stated. This additional oversight of the year-end financial records should ensure that balances are accurately stated prior to the audit. Management’s Response: Management recognizes the importance of a robust review process. Although the finding recurred from 2023, the surrounding circumstances differ, and previous issues have been addressed. For the current year, additional steps will be taken at year-end to review and confirm status of all pending estates. If the estate has closed the estimated income will be classified as receivable.

Criteria: The Organization is required to have internal controls in place that enable it to prepare complete financial statements, including note disclosures, in compliance with generally accepted accounting principles. Condition: Management was unable to prepare draft financial statements, including the related notes to the financial statements. Cause: The Organization lacks personnel with the expertise to apply generally accepted accounting principles in preparing its financial statements, including note disclosures, and thus, does not have the internal control procedures required to draft the financial statements and related notes in conformity with generally accepted accounting principles. Effect: Management engaged the auditor to prepare draft financial statements, including the related notes to the financial statements. Management reviewed, approved, and accepted responsibility for the financial statements prior to their issuance. Recommendation: We recommend management review the costs and benefits involved to retain a consultant with the required expertise to prepare the financial statements or review the financial statements as prepared by the auditor for compliance with generally accepted accounting principles. Management’s Response: Management has determined that, as in prior years, it is more cost effective to continue engaging the auditor to draft the financial statements and accompanying notes.