Audit 372589

2024-001 – ALN – 23.002 - Appalachian Area Development – Activities allowed/Unallowed and Allowable costs/Cost principles: Lack of control for approval of timesheets (New Finding) Criteria : Payroll disbursements should be approved and reviewed as per the internal controls in place in the organization. Condition : Payroll disbursements made from November 2024 to December 2024 did not have approval on timesheets and the disbursements were made without proper approval. Cause : Executive director parted ways with the Organization in November 2024 and there was no formal control policy for the alternate approval process. Effect : No proper approval may result in the expenditures of federal program not being properly monitored, thus resulting in potential noncompliance with program requirements. Recommendation : We recommend management implement an additional/alternate level of review by someone with proper knowledge to oversee the disbursements made under the program. Management’s Response : AOMC will retrain all staff and supervisors on the required payroll approval process. All timesheets must be reviewed and approved by the employee’s supervisor before being submitted for payroll processing. AOMC has also worked with the board to ensure that if no Executive Director is in place, a board member will approve timesheets or designate an AOMC employee with the authority to approve time.

2024-002 – ALN – 23.002 - Appalachian Area Development – Equipment and Real Property Management: Lack of control for filing Notice of Federal Interest (New Finding) Criteria : Per the grant agreement, any purchase of equipment or real property greater than $100,000 requires the organization to file a Notice of Federal Interest. Condition : All the equipment purchases greater than $100,000 (3 purchases) did not have Notice of Federal Interest filed. Cause : The Organization was unaware of the compliance requirement. Effect : Failure to file Notice of Federal Interest may result in the federal program not being properly monitored, thus resulting in potential noncompliance with program requirements. Recommendation : We recommend management implement a level of review by someone with knowledge of the grant requirements of the program. Management’s Response : AOMC acknowledges that notices of federal interest were not filed for equipment purchases over $100,000 as required by the grant agreement. AOMC is currently working with the grantors to file the appropriate notices of federal interest for all applicable equipment. In addition, AOMC is updating its internal policies to clearly include this requirement so that all future purchases meeting this threshold are properly documented and compliant with grant guidelines.

2024-003 – ALN – 23.002 - Appalachian Area Development – Procurement and Suspension and Debarment: Lack of documentation for vendors as not suspended or debarred (New Finding) Criteria : Per the compliance requirements, transactions should be made only with the vendors who are not suspended or debarred. Condition : Out of 3 vendors tested, we noted that there was no proper documentation maintained for one vendor showing that the vendor was not suspended or debarred. Cause : The Organization was unaware of the compliance requirement. Effect : Failure to verify the suspension or debarment of vendors may result in disbursements being made to a suspended/debarred vendor, thus resulting in potential noncompliance with program requirements. Recommendation : We recommend management implement a level of review by someone with knowledge of the grant requirements of the program. Management’s Response : AOMC acknowledges that one vendor was not confirmed to have not been suspended or debarred. AOMC is updating its internal policies to clearly include this requirement so that all future purchases meeting this requirement are properly documented and compliant with grant guidelines. AOMC staff directly responsible for grant management will also continue to attend training sessions to strengthen their knowledge of grant reporting, grant requirements, and compliance responsibilities.

2024-004 – ALN – 23.002 - Appalachian Area Development – Matching : Lack of approval for utilizing federal funds from different programs (New Finding) Criteria : Per the grant agreement and ARC website, any use of funds from other federal sources should be approved by ARC to consider the expenditure incurred to meet the match requirement. Condition :As the total amount of match is met from the different sources of federal funding, we noted that there is no documented proof of approval for the match related expenditure. Cause : The Organization was unaware of the compliance requirement. Effect : Failure to document proof of approval resulted in noncompliance with match requirements and the amount expended could not be considered as match for the program. Recommendation : We recommend management obtain proper approvals on time to be compliant with the requirements as mentioned in the grant agreement. Management’s Response : AOMC acknowledges that there is no documented proof of approval for the match related expenditure. AOMC staff directly responsible for grant management will continue to attend training sessions to strengthen their knowledge of grant reporting, grant requirements, and compliance responsibilities. Additionally, AOMC has increased board oversight during the grant process by creating a Finance and Grant Subcommittee, where grant compliance, proper reporting, and related requirements are regularly reviewed. This ensures stronger oversight of compliance and accurate reporting moving forward.