Audit 381718

2024-001 MATERIAL AUDIT ADJUSTMENTS WERE REQUIRED TO BE RECORDED Condition: Material adjusting journal entries proposed by the auditor were required to be recorded to prevent the financial statements from being materially misstated. Criteria: It is the responsibility of management to implement proper internal controls to provide reasonable assurance about the achievement of the entity’s objectives with regard to the reliability of financial reporting. Cause: Inadequate controls to ensure proper financial reporting in accordance with accounting principles generally accepted in the United States of America. Effect: Without the audit adjustments, the financial statements could have been materially misstated. Recommendation: We recommend management ensures that all transactions are recorded properly. Management Response: The Organization will continue to use our auditors for these additional services.

SIGNIFICANT DEFICIENCY 2024-002 PREPARATION OF ANNUAL FINANCIAL STATEMENTS Condition: The audited financial statements and the accompanying footnote disclosures were prepared by the auditors. Criteria: It is the responsibility of management to prepare the financials and related disclosures to be audited. This criteria is derived from the audit engagement letter and demonstrates the general proficiency over financial reporting. Cause: Employees at Hanan Refugees Relief Group do not have experience preparing financial statements and disclosures in accordance with generally accepted accounting principles in the United States. Effect: Without staff knowledgeable about the preparation of financial statements in accordance with generally acceptable accounting principles, there may be material misstatements in the financials or disclosures that would not be prevented or detected in a timely manner. Recommendation: It is not cost effective for the auditee to employ additional personnel solely for financial reporting purposes. Therefore, the Organization should continue to utilize the financial expertise of their contracted CPA firm that performs accounting services. Management Response: The Organization will continue to use a CPA accounting service.

SIGNIFICANT DEFICIENCY 2024-003 PREPARATION OF SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS Condition: The audited schedule of expenditures of federal awards was prepared by the auditors. Criteria: It is the responsibility of management to prepare the schedule of expenditures of federal awards to be audited. This criteria is derived from the audit engagement letter and demonstrates the general proficiency over supplemental information – schedule of expenditures of federal awards. Cause: Employees at Hanan Refugees Relief Group do not have experience preparing the schedule of expenditures of federal awards in accordance with Governmental Audit Quality Center Uniform Single Audit Guidance in the United States. Effect: Without staff knowledgeable about the preparation of financial statements in accordance with Governmental Audit Quality Center Uniform Single Audit Guidance, there may be material misstatements schedule of expenditures of federal awards that would not be prevented or detected in a timely manner. Recommendation: It is not cost effective for the auditee to employ additional personnel solely for financial reporting purposes. Therefore, the Organization should continue to utilize the expertise of their auditors to assist with preparation of the Schedule of Expenditures of Federal Awards. Management Response: The Organization will continue to use our auditors for these additional services.