Audit 398747

Finding number: 2025-002 Significant Deficiency – Subrecipient Expenditures Recorded in Incorrect Period (Cut off and Completeness error) Assistance Listing Number 21.027 (Contract # 902060-23133) Condition: During our audit, we noted that, subrecipient invoices totaling approximately $163,000 received for the year ended September 30, 2024 were recorded as expenditures in the current fiscal year and approximately $57,000 federal expenditures related to year ended September 30, 2025 were incorrectly excluded from the Schedule of Expenditure of Federal Awards (SEFA). Criteria: Management and those charged with governance are responsible for the design, implementation, and maintenance of internal control relevant to the preparation of the financial statements, including the SEFA, in accordance with auditing standards generally accepted in the United States of America and the requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). In addition, Uniform Guidance requires that the auditee comply with the terms and conditions of the federal award and applicable regulations, including accurate reporting of expenditures in the proper period for each major program. Cause: Turnover of key personnel during 2025 did not allow for consistent and effective implementation of existing internal controls over financial reporting. Effect: Recording expenditures in the incorrect period results in misstated program expenditures reported on the SEFA and underlying accounting records for the affected years. Because the errors were identified and corrected by management prior to issuance of the financial statements and SEFA, there was no remaining misstatement of program expenditures reported for the year ended September 30, 2025 and no impact on the final determination of major programs. However, the existence of these errors indicates that the design and/or operation of controls over period-end cutoff were not sufficient to prevent or detect such misstatements on a timely basis. Accordingly, this represents a significant deficiency in internal control over compliance for this program under 2 CFR 200.516(a). Recommendation: We recommend the Organization add personnel to the accounting/finance team and continue improving and training the team for the purpose of effective design and implementation of internal controls over financial reporting. We also recommend the Organization create a robust year-end reporting checklist that provides for proper recording of transactions in accordance with U.S. GAAP and includes cut-off procedures to ensure transactions are captured in the correct period. The implementation of these checklists will minimize the number of misstatements. Views of Responsible Officials and Planned Corrective Actions: Management is in agreement with the finding, however the finding relates to subrecipient expenses for contract ended in February 2025 and was not renewed. The Organization has no other subrecipients expenses.

Finding number: 2025-003 Significant Deficiency – Lack of Internal Control Over Compliance with Subrecipient Monitoring Policy Assistance Listing Number 21.027 (Contract # 902060-23133) Criteria: Pursuant to CFR section 200.332(b), pass-through entities must evaluate each subrecipient's risk of noncompliance with Federal statutes, regulations, and the terms and conditions of the subaward for purposes of determining the appropriate subrecipient monitoring. Condition: The Unity Council did not perform a risk assessment of subrecipients. This is a repeat finding. Cause: The Organization does not have a formally documented policy for performing a risk assessment over subrecipients. Effect or potential effect: A risk assessment for purposes of determining the appropriate subrecipient monitoring was not performed. Recommendation: Management should develop a risk assessment policy to evaluate the risk profile of each subrecipient. Factors included during the evaluation can include the subrecipient's prior experience with the same or similar subawards, results of previous audits, whether the subrecipient has new personnel or new or substantially changed systems, and the extent and results of federal awarding agency monitoring. View of responsible officials: Management is in agreement with the finding, however the contract ended during 2025 and was not renewed. The Organization has no other subrecipients.