Expenditures reported on the Schedule are reported on the accrual basis of accounting. Such expenditures are recognized following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement.
The Organization has not elected to use the 10 percent de minimis indirect cost rate.
2024-004 Failure to Identify Single Audit Requirement Criteria: Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (“Uniform Guidance”), subpart F, section 200.501 requires a Single Audit when a non-Federal entity expends $750,000 or more in Federal awards during the non-Federal entity’s fiscal year must haver a single audit conducted in accordance with section 200.514. Condition: As a result of our testing of this requirement, we noted the Organization expended over $750,000 worth of Federal awards during the year. Management was unaware of requirement to undergo a Single Audit in accordance with the Uniform Guidance. Cause: The Organization did not have a sufficient system of internal control over Federal grant compliance monitoring related to the tracking of Federal expenditures incurred during the year. There was no formal review process conducted related to determining whether the Single Audit requirement was met during the year. Additionally, since the award originated from a state agency, the Organization did not think this was a federal award. Effect: Management did not identify a Single Audit requirement. Recommendation: Hope Village, Tiny Housing Alternatives, Inc. should implement a formal control process to monitor the Single Audit requirement. For all government grans (where a state or federal agency is an awarding agency), the Organization should review for compliance audit requirements, including those in accordance with the Uniform Guidance. Management response: The Organization was not explicitly made aware of the Uniform Guidance requirements and mistakenly assumed that since this originated from the state, it was state funding. The Organization is aware of this situation and will create and implement a formal process to review federal and state expenditures incurred and evaluate whether there are state or federal compliance audit implications for all government grants upon signing the agreement. We will then proactively communicate this with our auditor so that plans can be made to perform the applicable compliance audit. We do not view this as an ongoing deficiency, and we deem our corrective action plan to be one that fully addresses this control deficiency.