Finding 2025-001: Material Weaknesses in Internal Control Criteria: As a best practice, Partnership for the Umpqua Rivers, Inc. (PUR) should design, implement, and monitor internal control over financial transactions and reporting. Such controls should be based on guidance issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) Framework, as modified to suit the needs, size, and structure of PUR. In addition, 2 CFR 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, requires non-federal entities receiving federal awards to maintain internal controls. Finally, Oregon Revised Statute 65.771 requires Oregon corporations to maintain appropriate accounting records, which has been interpreted by the Oregon Department of Justice to include implementation of meaningful financial controls. Condition and Context: During the audit, we noted several deficiencies in internal control, sufficiently pervasive to call it a material weakness in internal control over financial transactions and reporting. We specifically noted the following deficiencies across our audit procedures: Cash receipts: There was no supervision or other oversight over cash receipts, such as a review of cash receipts to the bank deposits or a review of the monthly bank reconciliation. Cash disbursements: We noted not all general or project disbursements were approved, such as initials indicating approval or a signed purchase order. We also noted some support for disbursements was missing. However, we did find evidence of approval of timesheets throughout the year, email or other communication from project managers indicating authorization for disbursement, and signature of the Executive Director on all checks, thereby indicating tacit authorization for disbursement. Controls over cutoff: We noted in our testing that reimbursements requested for projects were not issued at the end of a period, but were issued as large expenses were presented. Board oversight of financial activity, internal control, and fraud and general risk assessment: We noted the Board of Directors does not take an active role in the oversight of the Organization’s financial operations, including monitoring internal control and performing regular assessments of fraud and general risks to financial operations. Oversight of procurement process: We noted sufficient documentation was not retained to support compliance with the procurement, suspension, and debarment requirements of federal awards. Effective internal control over the procurement process were not designed or implemented sufficient to prevent, or detect and correct, material noncompliance with this federal and state award requirement. Financial statement close: The unadjusted trial balance provided by management at the beginning of the audit contained unreconciled accounts, primarily a result of unreconciled prior year audit adjustments, which created inaccurate amounts on the unadjusted statements of financial position and activities. Questioned Costs: None noted. Cause: Ineffective design and implementation of internal control over financial activities and compliance with federal and state requirements. Effect or Potential Effect: A weak internal control framework enables the potential for misstatements to remain undetected and uncorrected. Such misstatements may be the result of error or fraud, including misappropriation of assets and fraudulent financial reporting. Repeat Finding: Repeat of findings 2024-001 through 2024-004. Recommendations: The Organization should continue to design and implement internal control that is effective for the Organization and its structure. The Organization should document internal control, including controls that mitigate inherent weaknesses in typical internal control measures. Such controls should also include oversight by the Board of Directors. Views of Responsible Officials and Planned Corrective Actions: See Corrective Action Plan.
Finding 2025-002: Material Weaknesses in Internal Control Criteria: As a best practice, Partnership for the Umpqua Rivers, Inc. (PUR) should design, implement, and monitor internal control over financial transactions and reporting. Such controls should be based on guidance issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) Framework, as modified to suit the needs, size, and structure of PUR. In addition, 2 CFR 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, requires non-federal entities receiving federal awards to maintain internal controls. Finally, Oregon Revised Statute 65.771 requires Oregon corporations to maintain appropriate accounting records, which has been interpreted by the Oregon Department of Justice to include implementation of meaningful financial controls. Condition and Context: During the audit, we noted several deficiencies in internal control, sufficiently pervasive to call it a material weakness in internal control over financial transactions and reporting. We specifically noted the following deficiencies across our audit procedures: Cash receipts: There was no supervision or other oversight over cash receipts, such as a review of cash receipts to the bank deposits or a review of the monthly bank reconciliation. Cash disbursements: We noted not all general or project disbursements were approved, such as initials indicating approval or a signed purchase order. We also noted some support for disbursements was missing. We also noted a single signature on some sampled checks over $10,000, even though the Organization requires two signatures on checks over that threshold. However, we did find evidence of approval of timesheets and time allocated to projects throughout the year, some evidence of email or other communication from project managers indicating authorization for disbursement, and signature of the Executive Director on all checks, thereby indicating tacit authorization for disbursement. In our procedures, we noted that large invoices from contractors could be clearly associated with a specific project based on information on the invoices. Although the approval process needs improvement, we did not identify any questioned costs related to this portion of the finding. Controls over cutoff: We noted in our testing that reimbursements requested for projects were not issued at the end of a period, but were issued as large expenses were presented. As related to the major programs tested, we determined that the lack of internal control over cutoff resulted in reporting expenditure of federal awards in different fiscal years for the Organization. The related major programs spanned several years and none of the periods of performance of the related awards ended at June 30, 2025, so we did not identify a lack of compliance with the awards’ periods of performance or budget periods, and, accordingly, no questioned costs related to this portion of the finding. Oversight of procurement process: We noted sufficient documentation was not retained to support compliance with the procurement, suspension, and debarment requirements of federal awards. Effective internal control over the procurement process were not designed or implemented sufficient to prevent, or detect and correct, material noncompliance with this federal and state award requirement. Financial statement close: The unadjusted trial balance provided by management at the beginning of the audit contained unreconciled accounts, primarily a result of unreconciled prior year audit adjustments, which created inaccurate amounts on the statement of financial position and statement of activities. These audit adjustments were recorded against administrative expenses, not federal or state awards, and were corrected by management as part of the current audit. Accordingly, there were no questioned costs related to this portion of the finding. Questioned Costs: None noted. Cause: Ineffective design and implementation of internal control over financial activities and compliance with federal and state requirements. Effect or Potential Effect: A weak internal control framework enables the potential for misstatements to remain undetected and uncorrected. Such misstatements may be the result of error or fraud, including misappropriation of assets and fraudulent financial reporting. Repeat Finding: Repeat of findings 2024-001 through 2024-004. Recommendations: The Organization should continue to design and implement internal control that is effective for the Organization and its structure. The Organization should document internal control, including controls that mitigate inherent weaknesses in typical internal control. Views of Responsible Officials and Planned Corrective Actions: See Corrective Action Plan.
Finding 2025-003: Inadequate Procurement Documentation Criteria: 2 CFR 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, §§200.317-200.327, requires non-federal entities receiving federal awards to maintain and use documented procedures for procurement transactions under a federal award or subaward. In addition, Oregon Revised Statute 279A generally requires Oregon corporations to comply with the procurement guidance set forth in 2 CFR 200 §§200.317-200.327. Condition and Context: Management was unable to provide documentation in support of proper procurement procedures, to include a bid process and checks for vendor suspension or debarment. Questioned Costs: None noted. Cause: Ineffective design and implementation of an Organization procurement policy. Effect or Potential Effect: An effective procurement policy prevents or detects and corrects potential conflicts of interest and lack of competition in the bidding process. An ineffective procurement policy can potentially result in misuse or misappropriation of federal and state funds. Repeat Finding: Repeat of finding 2024-007. Recommendations: The Organization should continue to design and implement a procurement policy that is effective for the Organization and its structure. The Organization should document the policy, have it reviewed and approved by the Board of Directors, and disseminate the policy to employees with responsibility for finding and overseeing contractors. Views of Responsible Officials and Planned Corrective Actions: See Corrective Action Plan.