Audit 403931

Condition The Foundation had advance draws of funds on a quarterly basis and as such had funds on hand when there was not an immediate cash requirement to meet disbursement need to carry out the various programs or project costs. Criteria The Foundation is responsible for establishing and maintaining effective internal controls that provide reasonable assurance the Foundations is managing federal awards in compliance with the terms and conditions of the federal awards. Federal regulations that advance payments to a recipient must be limited to the minimum amounts needed and be timed with actual, immediate cash requirements of the recipient carrying out the purpose of the approved programs or projects. The time and amount of advance payments must be close as is administratively feasible to the actual disbursements by the recipient for direct program or project costs and the proportionate share of any allowable indirect costs. Cause The Foundation incorrectly determined that it was appropriate to make requests for advances on a quarterly basis rather than making requests when there was an immediate cash requirement in order to carry out the purpose of the approved programs or projects. Effect Funds were held requested and received and held longer in the Foundation’s cash account than allowed by Federal regulations. Questioned costs $-0- Recommendation We recommend that the Foundation implement proper procedures and processes to ensure that requests for advance payments be limited to the minimum amounts needed and be timed with actual, immediate cash requirements to carry out the purpose of approved programs and projects.

Condition Proper reporting was not completed in accordance with the grant agreements. Criteria The Foundation is responsible for establishing and maintaining effective internal controls that provide reasonable assurance the Foundations is managing federal awards in compliance with the terms and conditions of the federal awards. In accordance with the Federal Funding Accountability Transparency Act (FFATA), the Foundation had an obligation to report first-tier subawards under Federal grants that are funded at $30,000 or more that meet the reporting conditions as set forth in the grant award term. Cause The Foundation had made the determination that the community colleges that they provided funding to were contractors and not subrecipients. This was an incorrect determination as the community colleges did not provide any goods or services to the Foundation in exchange for the funds distributed and as such should have been considered subrecipients and reported in accordance with the FFATA regulations. Effect The Foundation did not file three FFATA reports in accordance with the grant agreements. Questioned costs $-0- Recommendation The Foundation should consult with the federal funding agency to determine the requirements for proper reporting in accordance with the grant agreements.

Condition The Foundation did not perform subrecipient monitoring procedures in accordance with federal regulations. Criteria The Foundation is responsible for establishing and maintaining effective internal controls that provide reasonable assurance the Foundations is managing federal awards in compliance with the terms and conditions of the federal awards. Federal regulations require recipients of federal awards to ensure their subrecipients expending $750,000 or more during fiscal years prior to October 1, 2024, are audited in accordance with requirements in 2 CFR 200 Subpart F, and then to perform certain actions dependent upon audit results. To satisfy this requirement, the Foundation is required to: • Ensure the subrecipient received an audit or consider sanctions per 2 CFR 200.339. • Ensure the subrecipient takes corrective action on all findings negatively affecting subawards. • Issue a management decision within six months of the Federal Audit Clearinghouse’s acceptance of the subrecipient’s audit report if there were findings pertaining to the agency’s subawards. Cause The Foundation was not aware of the federal regulations regarding the requirements for proper subrecipient monitoring. Effect Subrecipients were not properly monitored by the Foundation in accordance with federal regulations. Questioned costs $-0- Recommendation We recommend that the Foundation implement proper procedures and processes to ensure that subrecipients are monitored in accordance with federal regulations.