Audit 371817

Lack of Segregation of Duties and Organizational Monitoring - Internal Control - Material Weakness U.S. Department of State - Federal Assistance Listing Number 19.800 Weapons Removal and Abatement Program Criteria Standard accounting practice for the design of good internal controls requires that no one contracted staff member should have access to both physical assets and the related accounting records or to all phases of a transaction. Condition The condition reported as item 2024-001 above also applies to the Organization's internal control over compliance with the requirements of federal programs. The Organization's small size and limited contracted staff does not allow for it to have the checks and balances over the reporting and cash management functions that would be present in an ideal set of internal controls. Repeat Finding from Prior Year This is a repeat finding of a prior year. Cause Due to the limited contracted staff within the Organization, certain internal controls and other critical systems could lack the necessary safeguards and appropriate compensating controls. Effect This condition could result in errors being made in the accounting records and federal grant reporting and going undetected due to the lack of "cross-checking." Further one individual could have the opportunity to perpetrate fraud (by either intentional misstatements of the grant reports, or misappropriation of the Organization's assets) and conceal it without the proper oversight. Recommendation We recommend that all accounting areas be evaluated to ensure adequate controls are in place and operating as expected. We believe certain oversight or monitoring procedures should be put in place to enhance the systems of internal control. Our recommendation is for the Board to review all accounting and program duties and consider realigning certain incompatible duties to improve internal controls. Views of Responsible Officials Management agrees with the recommendation and has added an additional board member with a financial background who is working towards developing policies and procedures to implement another layer of oversight and improve documentation of reports submitted for the federal award programs. Management will continue to work to implement the other necessary components of the recommendation. -

Subrecipient Transfers - Internal Control and Compliance - Material Weakness - Noncompliance with Cash Management and Subrecipient Monitoring U.S. Department of State - Federal Assistance Listing Number 19.800 Weapons Removal and Abatement Program Criteria The Uniform Guidance requires that non-federal entities mIrnmIze the time between drawdowns of Federal funds and its expenditure for Federal program purposes. Condition Since there is no reconciliation process in place regarding the amounts sent to and expended by subrecipients, we were unable to determine whether federal funds were being passed through faster than necessary. Repeat Finding from Prior Year This is a repeat finding of a prior year. Cause The Organization does not have policies and a process in place to reconcile amounts drawn down on various grants with the amounts being spent on the various grants. Effect The Organization is not in compliance with cash management and subrecipient monitoring requirements. Recommendation We recommend that the Organization develop and implement a system whereby they can reconcile their grant drawdowns with the amounts being expended and amounts passed through to subrecipients. We would further recommend that the monthly reports that foreign country managers submit be signed by the party submitting the report and then signed by the International Director once the report is reviewed. Views of Responsible Officials Management agrees with the recommendation and will work to implement the necessary components of the recommendation. Accounting policies and procedures have been developed and will continue to be implemented.

Missing Support - Internal Control and Compliance - Material Weakness - Noncompliance with Activities Allowed and Unallowed U.S. Department of State - Federal Assistance Listing Number 19.800 Weapons Removal and Abatement Program Criteria Standard auditing practice is to review invoices and other support for numbers recorded in the general ledger. During our testing, four invoices and five contracts for the contracted staff could not be provided. Condition Since the above items could not be provided, we were unable to determine whether federal funds were spent in conjunction with the grant agreement. Cause The Organization does not have a central physical location. The contracted staff are in multiple countries. Effect The Organization is not in compliance with activities allowed and unallowed requirements. Recommendations We recommend that the Organization maintain all pertinent documents in a central location so they can be easily accessed. In addition, all general ledger transactions should be accompanied by support. Views of Responsible Officials Management agrees with the recommendation. Currently working on establishing a better setup with Administration on Google Drive to have every Sub-recipient and Contracted employee upload everything into each individual country folder.