Audit 403865

Late Reporting and Noncompliance with Reporting Requirements Federal Agency: U.S. Department of Agriculture / U.S. Department of Education Federal Program: Child and Adult Care Food Program / Alaska Native Educational Programs ALN: 10.558 / 84.356A Award Numbers: 53301 / S356A210037 Type of Finding: Material weakness in internal control over compliance and material noncompliance. Criteria: In accordance with 2 CFR part 200, subpart F, section 200.512, the reporting package must be submitted the earlier of nine (9) months after year end or 30 days after the report issuance. Condition and context: The Organization did not adhere to the Uniform Guidance requirement of submitting the reporting package within the earlier of 30 days after the receipt of the audit report, or the nine (9) months after the end of the audit period. Cause: Due to high employee turnover and lack of internal controls over this function. Effect: The Organization was not in compliance with reporting requirements. Questioned Costs: None noted. Repeat finding: No, however due to the number of issues identified we believe this to be a systemic issue. Recommendation: We recommend the Organization adhere to Uniform Guidance reporting requirements. Management’s Response: Management concurs with the finding. See Corrective Action Plan.

Lack of Internal Controls over Substantially All Compliance Requirements Federal Agency: U.S. Department of Agriculture / U.S. Department of Education Federal Program: Child and Adult Care Food Program / Alaska Native Educational Programs ALN: 10.558 / 84.356A Award Numbers: 53301 / S356A210037 Type of Finding: Material weakness in internal control over compliance and material noncompliance. Criteria: Management is responsible for designing, implementing and maintaining internal controls relevant to ensuring that transactions charged to programs follow proper internal control processes (2 CFR Part 200 Subpart E §200.400 (d)). This includes ensuring there is proper supporting documentation for transactions as well as methods to document approval of the cost/activity to determine whether it is allowable under the funding requirements. Additionally, requirements relevant to maintaining effective internal control over Federal awards found in 2 CFR Part 200 Subpart E §200.303-Internal Controls are required to be implemented by grant recipients to provide reasonable assurance they are managing the award in compliance with Federal statutes, regulations, and the terms and conditions of the award. Condition and context: We were unable to obtain sufficient audit evidence to support compliance with applicable compliance requirements for all major federal programs of the Organization including Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Cash Management, Eligibility, Period of Performance, Procurement and Suspension and Debarment, Reporting and Special Tests and Provisions. The Organization was unable to provide supporting documentation for auditor’s to verify compliance with the compliance requirements listed above. Cause: Insufficient monitoring by management and the board over the financial and other activities of the Club as well as employee turnover in several positions contributed to an ineffective control environment throughout the Organization. Effect: Because adequate supporting documentation was not available for expenditures charged to the program, we could not determine whether the costs charged to the programs were allowable and in compliance with the applicable requirements. Accordingly, we consider the entire amount of expenditures for these programs during the audit period to be likely questioned costs. Questioned Costs: Likely questioned costs: Alaska Native Educational Program (ALN 84.356A) $757,173 and Child and Adult Care Food Program (ALN 10.558) $274,693 are equal to total estimated program expenditures during the period, representing the auditor’s best estimate of total questioned costs (likely questioned costs) for these major programs due to lack of adequate supporting documentation. Repeat finding: No, however due to the number of issues identified we believe this to be a systemic issue. Recommendation: We recommend that management implement a stronger internal controls environment that includes adequate staffing to maintain a segregation of duties for an effective control environment as well as improving monitoring processes to ensure the Organization is in compliance with requirements applicable to Federal statutes, regulations, and the terms and conditions of the award Management’s Response: Management concurs with the finding. See Corrective Action Plan.