Audit 404413

Federal Program Information Federal Agency: National Endowment for the Arts Award Name(s): Promotion of the Arts Partnership Agreements Assistance Listing Number(s): 45.025 Award Year: 2020 Compliance Requirement: Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Subrecipient Monitoring Type of Finding Compliance Internal Control over Compliance – Significant Deficiency Criteria or Specific Requirement OMB’s Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (UG) requirements stipulate that federal award recipients must document their policies and procedures over certain aspects of financial and program management. Specifically, written policies are required for the following: • Determination of allowable costs • Employee travel • Subrecipient monitoring and management Condition and Context The Organization does not have written policies and procedures in place related to federal awards, as required under the Uniform Guidance. Cause The Organization has not developed written formal documentation of internal controls to encompass all required areas per the Uniform Guidance. Effect or Potential Effect Due to the weaknesses in internal controls noted above, the Organization did not comply with the requirements of the Uniform Guidance over documented policies and procedures. No questioned costs are reported as this requirement is procedural in nature. Recommendation The Organization should develop policies and procedures related to federal awards in order to comply with the Uniform Guidance. Views of Responsible Official Management’s corrective action plan is included at the end of this report after the Schedule of Prior Year Findings.

Federal Program Information Federal Agency: National Endowment for the Arts Award Name(s): Promotion of the Arts Partnership Agreements Assistance Listing Number(s): 45.025 Award Year: 2020 Compliance Requirement: Subrecipient Monitoring Type of Finding Compliance Internal Control over Compliance – Material Weakness Criteria or Specific Requirement OMB’s Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (UG) requires that a pass-through entity must ensure that every subaward is clearly identified to the subrecipient as a subaward and includes information as required in 2 CFR 200.331(a). Additionally, a pass-through entity must evaluate each subrecipient’s risk of noncompliance for purposes of determining the appropriate subrecipient monitoring related to the subaward as required in 2 CFR 200.331(b). Condition and Context During our audit, we tested a sample of 16 of 105 subrecipients to determine if the subrecipient agreements contained all required elements per 2 CFR 200.331(a) and ensure sufficient evaluation of the subrecipient’s risk of noncompliance was performed. As a result of our testing, it was identified that the agreements tested did not contain the subrecipient’s unique entity identifier, federal award identification number, federal award date, and federal award project description. Additionally, the Organization did not perform an evaluation of the subrecipient’s risk of noncompliance for purposes of determining the appropriate subrecipient monitoring. Cause The Organization did not have adequate controls in place to ensure all required elements were included in subrecipient agreements or to evaluate risk of subrecipient’s noncompliance. Effect or Potential Effect Due to the weakness in internal controls and compliance finding noted above, the Organization did not comply with the requirements of the Uniform Guidance regarding communication to subrecipients all the specified elements in 2 CFR 200.331. This impacts the subrecipients’ ability to properly identify federal funding. No questioned costs are reported as this requirement is administrative in nature. Recommendation The Organization should update its subrecipient agreements, policies, and procedures to ensure inclusion of all required elements and implement risk assessment procedures to comply with the Uniform Guidance. Views of Responsible Official Management’s corrective action plan is included at the end of this report after the Schedule of Prior Year Findings.

Type of Finding Compliance Internal Control over Compliance – Significant Deficiency Criteria or Specific Requirement According to 2 CFR Section 200.512(a) of the Uniform Guidance, auditees are required to submit the audit report and Data Collection Form (DCF) to the Federal Audit Clearinghouse (FAC) within the earlier of 30 calendar days after the reports are received from the auditor or nine months after the end of the audit period. Condition and Context The DCF was not submitted by its due date of February 28, 2021 Cause High turnover of staff in the finance office for several years contributed to delays in completing the federal single audit. Effect or Potential Effect Delays in the federal single audit resulted in the FAC deadline being missed. Failure to submit the single audit report timely constitutes noncompliance with federal audit requirements. No questioned costs are reported as this requirement is administrative in nature. Recommendation Improve the timeliness of single audit information and submit the DCF by the due date. Views of Responsible Official Management’s corrective action plan is included at the end of this report after the Schedule of Prior Year Findings.