Finding 2024-001, Expense Allocations - Financial Management (Assistance Listings 19.510, 93.566, 93.583 and 93.576) Criteria: Per 2 CFR § 200.302(a) (Financial Management), all recipient and subrecipient financial management systems must be sufficient to track expenditures and establish that funds have been used in accordance with federal statutes, regulations, and the terms and conditions of the federal award. Condition and Context: The Organization’s documentation related to the reconciliation of government grant revenue claimed and received to the actual revenue earned were not maintained. The lack of regular reconciliations increased the risk of misstatements in the financial records and delayed the financial reporting process. Cause: Internal controls over government grant revenue were not operating efficiently or designed properly. Effect: This resulted to significant amount of time required by both Management and the Auditors in order to analyze and adjust grant revenue, accounts receivables and deferred revenue balances accurately. Identification as a Repeat Finding: Yes. Questioned Costs: None. Recommendation: We recommend that the Organization strengthen its policies and procedures for reconciling the grant revenue earned to the related expenses. Financial reports and claims should be created from the reconciled general ledger. Additionally, management should establish clear documentation procedures to support the proper allocation of expenses in the general ledger and ensure compliance with federal regulations. View of responsible officials: Management has reviewed the finding and recommendations. We note that this item was identified as a repeat issue primarily due to the timing of the prior year's audit. Because the FY23 findings were delivered after FY24 had already concluded, the Organization did not have the opportunity to incorporate the auditors' feedback during the FY24 audited period. However, the Organization took immediate, proactive steps to deploy enhanced internal controls for FY25 to ensure continuous alignment with federal standards. To ensure strict adherence to 2 CFR § 200.302(a), we are actively implementing a more regular reconciliation process between government grant revenue claimed and actual revenue earned. As a key part of this initiative, the Organization has developed and deployed new internal financial tools designed to incorporate automation into our daily workflows. By utilizing these automated tools-such as standardized templates for recording cash receipts and systematically clearing Accounts Receivable-we have significantly enhanced the accuracy of our data entries and reduced the risk of manual misstatements. Our ongoing objective is to leverage these tools to establish clear, standardized documentation procedures, ensuring that all financial reports and claims are consistently generated from a reconciled general ledger. Management remains fully committed to dedicating the necessary time and resources to mature these financial controls and ensure robust compliance with federal regulations.
Finding 2024-002, Timesheet – Timekeeping (Assistance Listings 19.510, 93.566, 93.583 and 93.576) Criteria: 2 CFR § 200.430 requires that the distribution of salary and wages charged to federal awards be based on actual employee activity as reflected in personnel activity reports (timesheets), prepared after-the-fact, and includes the total activity for which employees were compensated. Condition and Context: The Organization does not maintain functional timesheets and/or other documentation of the allocation of hours worked by program. Cause: Internal controls over the accurate distribution of hours on the timesheets were not operating effectively or designed properly. Effect: This lack of documented time and allocation limits the Organization’s ability to demonstrate how personnel costs are distributed across its programs and funding sources. Identification as a repeat finding: Yes. Questioned costs: None. Recommendation: We recommend that the Organization strengthen its policies and procedures for the timekeeping and distribution of the employees’ hours in accordance with the requirements of the federal programs. View of responsible officials: Management has reviewed the finding, noting the inherent complexity of time allocation in our operational environment. Because our personnel routinely serve multiple clients simultaneously across various federal grants, tracking exact hours per case presents a significant administrative challenge. Furthermore, the delayed receipt of the FY23 audit-delivered post-FY24-precluded the implementation of procedural adjustments during the audited timeframe. To address our operational realities and ensure strict, ongoing adherence to 2 CFR § 200.430, the Organization immediately instituted systemic enhancements for FY25. The Organization has transitioned all time tracking to a streamlined, system-driven process within our UKG platform: • Integrated UKG Time Tracking and Approvals: All employees are now required to punch in and out directly through the UKG system, efficiently assigning their actual hours worked to specific program and grant codes to generate functional, after-the-fact timesheets. To further streamline this documentation, the Organization is gradually transitioning our existing supervisory reviews into UKG’s electronic sign-off workflow, which will centralize our approval records and ensure accurate distribution across federal awards. By standardizing time tracking in UKG and refining our approval process, the Organization has alleviated the manual tracking burden on our staff while maintaining an audit-ready system to resolve this finding.
Finding 2024-003, Eligibility (Assistance Listings 93.583 and 93.576) Criteria: 2 CFR § 200.300 requires that the Federal Organization or pass-through entity must manage and administer the Federal award in a manner so as to ensure that Federal programs are implemented in full accordance with the U.S. Constitution, applicable Federal statutes and regulations. Condition and Context: The Organization’s maintains files for the documentation of program eligibility however those documents do not include evidence of review or approval by the Organization’s staff. 26 out of 60 samples didn’t include the signature of the interpreter which also served as case manager. There was no indication of who was handling the case unless the enrollment form was signed by the interpreter. Cause: Internal controls over the documentation of program eligibility were not operating effectively or designed properly. Effect: The review and approval performed on program eligibility was not documented. Identification as a repeat finding: Yes. Questioned costs: None. Recommendation: We recommend that the Organization institute a policy that provides for the documentation of the review of eligibility documents. View of responsible officials: Management has reviewed the finding regarding the documentation of program eligibility. We recognize the importance of maintaining clear, audit-ready files that explicitly demonstrate case ownership and supervisory approval. To ensure full alignment with 2 CFR § 200.300, we have drafted and instituted the following corrective actions: • Updated Internal Signature Policy: We have drafted a strict internal policy requiring the primary case manager-and any other staff actively working on a case-to sign and date all required enrollment documents. This explicitly includes signing intake forms and completing the interpreter sections, where applicable. This policy ensures there is never any ambiguity regarding who is handling the case. • Mandatory Supervisory Review: To enforce this new standard, our internal policy now requires Program Managers and Directors to systematically review each individual case file. Leadership must verify that all required staff signatures, interpreter sign-offs, and eligibility approvals are fully documented before a client's enrollment is considered complete. • Standardized Case Coversheet: To immediately resolve the issue of identifying case handlers, we are implementing a standardized enrollment coversheet for all new files. This document clearly assigns the primary case manager on day one and requires a final supervisory signature to formally authorize the eligibility review. • Targeted Training and Spot-Checks: We are conducting immediate refresher training for all program staff to clarify exactly which signatures are required on each document. Furthermore, leadership will conduct routine, random spot-checks of active case files each month to verify that staff are consistently adhering to this policy in real-time. By formalizing our signature requirements and mandating director-level reviews, we are confident this updated workflow establishes clear accountability and fully resolves the finding.
Finding 2024-004 Lack of documented approval of Other Than Personal Services (OTPS) expenditures charged to federal awards (Assistance Listings 19.510, 93.566, 93.583 and 93.576) Criteria: Under 2 CFR 200.303, the nonfederal entity must establish, document, and maintain effective internal control over federal awards that provides reasonable assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award; those internal controls should align with the Green Book or COSO framework and include adequate authorization and review of disbursements. To be allowable under a federal award, costs must be necessary and reasonable, allocable, accorded consistent treatment, determined in accordance with GAAP, not used to meet cost-sharing of other federal programs, adequately documented, and incurred during the approved budget period per 2 CFR 200.403. Inadequate or missing documentation may result in costs being considered improper payments or disallowed costs. Condition and Context: During testing of OTPS expenditures charged to the programs, the Organization did not consistently document required management approval prior to payment. For 13 of 23 OTPS transactions tested, totaling $49,393, the supporting documentation did not contain evidence of review and approval by an individual with appropriate authority in accordance with the Organization’s written policies and procedures. In addition, for these items, there was no alternative documentation demonstrating that the costs had been reviewed for allowability, allocability, and reasonableness before being charged to the federal award. Cause: The Organization’s policies require documented approval for OTPS expenditures; however, management did not effectively enforce these procedures, and staff responsible for processing OTPS transactions were not consistently following the policy and procedures on the documentation and approval requirements. Effect: Because documented approval was not consistently obtained prior to payment, there is an increased risk that unallowable, unreasonable, or non-program-related OTPS costs could be charged to the federal award. The transactions identified without documented approval may be subject to disallowance by the federal awarding agency or pass-through entity. Identification as a repeat finding: No. Questioned costs: None. Recommendation: We recommend that management: Reinforce and, if necessary, update written policies and procedures to require documented review and approval of all OTPS expenditures charged to federal awards prior to payment, including documentation of the program, funding source, and allowability assessment. Provide training to staff responsible for initiating, reviewing, and approving OTPS transactions to ensure understanding of Uniform Guidance requirements for allowability, allocability, and documentation. Implement periodic monitoring (for example, supervisory review of a sample of OTPS transactions) to verify that approvals are documented and that OTPS costs charged to federal awards are properly supported and in compliance with 2 CFR 200.303 and 2 CFR 200.403. Views of Responsible Officials: The Organization proactively enacted rigorous internal controls and systemic enhancements for FY25 to ensure optimal oversight and adherence to federal guidelines. Management has addressed this recommendation by deploying a strict, comprehensive expense request process to ensure robust internal controls over all Other Than Personal Services (OTPS) expenditures. To ensure full compliance with 2 CFR 200.303 and 200.403, Finance has deployed the following enhancements to our accounts payable workflows: Strict Electronic Approval Workflow: Finance has established a stringent review and approval protocol that requires direct involvement from Program Directors and Department Heads. All OTPS expenditures are now routed through a formalized electronic workflow, which mandates documented review and secure electronic signatures from authorized leadership prior to any payment processing. System-Integrated Documentation: The new process strictly requires that all supporting documentation-including invoices, receipts, and evidence of allowability-be provided upfront. These documents are now uploaded and attached directly to the specific transaction within the accounting program, creating a permanent, easily accessible, and audit-ready trail for every federal charge. Targeted Training and Oversight: To support this modernized workflow, Finance is providing targeted training to all staff responsible for initiating and approving transactions, ensuring a clear understanding of Uniform Guidance requirements. Furthermore, Finance leadership conducts periodic supervisory reviews directly within the accounting system to verify that all electronic approvals are captured and source documents are properly attached.