Audit 393606

Condition During our current year audit, we noted that bonuses were awarded to employees that did not have documented approval from the Organization’s Board of Directors. Management is responsible for establishing and maintaining an effective system of internal control over financial reporting. The system should include Board oversight of bonuses issued as final approval. Questioned Costs We identified $239,998 in questioned costs for the Centers for Independent Living grant. Criteria The Board of Directors should have oversight and approve all proposed bonuses paid to employees. Cause The Organization did not have effective controls relating to the issuance and approval of bonuses. Effect of Condition Bonuses were paid without the Board of Directors’ approval. Recommendation We recommend that the Organization implement a policy specific for approval of bonuses and how bonus amounts are determined. The policy should specify who has the authority to initiate and approve bonuses and what determines the amount awarded as a bonus.

Condition During our current year audit, we noted that the Organization is not in compliance with its by-laws regarding the governance structure. Specifically: • Only two Directors are currently serving on the Board, whereas the by-laws require seven. • The Board is required to meet quarterly, yet meetings have been held irregularly throughout the year. Questioned Costs N/A Criteria According to the Organization’s by-laws, the Board of Directors shall consist of seven members, and the Board must convene at least once each quarter. Compliance with governing documents is essential for effective oversight and accountability. Cause The Organization has experienced challenges in recruiting and retaining qualified Board members and has not prioritized regular scheduling of Board meetings. Effect of Condition Failure to maintain the required number of Directors and meet regularly may impair the Organization’s ability to provide effective oversight, approve key decisions, and fulfill its fiduciary responsibilities. It also exposes the Organization to governance and compliance risks. Recommendation We recommend that the Organization review and assess the current composition and practices of the Board of Directors. The Organization should either: • Take immediate steps to recruit additional Board members and schedule meetings in accordance with the by-laws; • Amend the by-laws to reflect the Organization’s current operational capacity while still ensuring adequate governance. Doing so will help ensure that the Organization operates with proper oversight, transparency, and alignment with its governing documents.

Condition During our current year audit, we noted that the Organization did not submit its fiscal year 2023 single audit report to the Federal Audit Clearinghouse within 9 months of its fiscal year-end. Questioned Costs N/A Criteria The Organization is required to undergo and complete the Data Collection Form in connection with its single audit within 30 days after receipt of the auditor’s report or 9 months of its fiscal year-end, whichever comes first. Cause The Organization did not have procedures in place to have their financial records ready for audit within 9 months. Effect of Condition The filing deadline for the September 30, 2023 single audit was not met. Recommendation The Organization should develop procedures to ensure the timely filing of its single audit report to the Federal Audit Clearinghouse.

Condition During our current year testing of expenditures related to the Centers for Independent Living Program, we noted 3 instances from a sample of 40 expenditures that lacked evidence of management approval. Questioned Costs N/A Criteria Management is responsible for establishing and maintaining an effective system of internal control over financial reporting. Proper approval of expenditures is a key aspect of an effective system of internal control over financial reporting. Cause The absence of approval documentation appears to be due to management oversight and lack of enforcement of established control procedures. Effect of Condition Failure to consistently obtain and document management approval increases the risk of unauthorized, inappropriate, or fraudulent expenditures, and weakens the Organization’s overall internal control framework. Recommendation We recommend that the Board and management strengthen internal controls over expenditures by ensuring that all disbursements are properly reviewed and approved by authorized personnel prior to payment. Procedures should include clear documentation of such approvals (e.g., initials, signatures, or electronic authorization) and regular monitoring to ensure compliance.

Condition During our current year reporting testing, we noted four instances where the Organization submitted annual reports related to grants for the Centers for Independent Living Program after the required 90-day deadline following the fiscal year-end. Questioned Costs N/A Criteria Per program requirements, management is responsible for filing annual reports within 90 days after the close of the fiscal year to maintain compliance with federal reporting guidelines.Cause The delays were primarily due to management oversight and a lack of formalized procedures to track and ensure timely submission. Effect of Condition Late submission of annual reports resulted in noncompliance with program requirements, which could impact the Organization’s standing with the funding agency and potentially affect future funding or grant renewals. Recommendation We recommend that the Board and management implement formal procedures and internal controls to ensure timely tracking and submission of required reports. This may include the use of a compliance calendar, assignment of responsibility to specific personnel, and regular monitoring to avoid future delays.

Condition During our current year compliance testing, we identified expenditures totaling $96,250 that were charged to a federal award after the approved period of performance had ended. These costs were not incurred within the authorized period specified in the grant agreement and no formal extension had been approved by the granting agency. Questioned Costs $96,250 – Known questioned costs representing expenditures incurred outside the approved period of availability. Criteria A non-federal entity may charge to a federal award only allowable costs incurred during the approved period of performance. Costs incurred outside the established period of availability are unallowable unless a formal extension has been granted by the awarding agency. Cause The Organization did not maintain adequate internal controls to monitor grant period of performance end dates and ensure that expenditures were incurred within the allowable timeframe or that an extension was requested prior to expiration.Effect of Condition $96,250 of costs were charged to the federal award that may be deemed unallowable. Recommendation We recommend that management strengthen internal controls over grant compliance by: • Maintaining a centralized tracking system for grant performance periods • Performing periodic reviews of grant expenditures relative to award end dates • Implementing formal closeout procedures prior to grant expiration • Requesting extensions in advance when necessary