Finding No.: 2025-002 Criteria In order for an Organization’s system of internal controls to function properly, it is essential that there be clear definitions of job responsibilities. Assignment of responsibilities should include the appropriate segregation of duties in order to ensure proper control. Also, personnel within the Organization should be cross-trained to ensure that in the event that an employee leaves the Organization, there would be another employee prepared to take on the responsibilities. Such responsibilities should be formally documented in a policies and procedures manual. Conditions Found During audit procedures, it was noted that the Organization had trouble producing internal control procedure documents for the period under audit. The Organization also relies heavily on a third party to produce quarterly and annual reporting. Cause The Organization lacks updated and proper documentation around policies and procedures and lacks formal review of third party information. Effect The SEFA and financial statements could be inaccurately presented. Context This issue was identified during our audit procedures and was noted across multiple areas. Repeat Finding Yes. Reported as Finding No. 2024-003. Questioned Costs None Recommendation We recommend an internal control procedure document be maintained and regularly updated to reflect the current procedures, policies, roles and responsibilities in place. In addition, there should be formal documented review and approval by someone in the Organization of the work produced by the third party to ensure any errors or omissions in financial information are caught. Views of Responsible Officials See attached corrective action plan.
Finding No.: 2025-005 Federal Agency: Aging Cluster (93.044, 93.045, 93.053) and Medicaid Cluster (93.778) Criteria In order for an Organization’s system of internal controls to function properly, it is essential that there be clear definitions of job responsibilities. Assignment of responsibilities should include the appropriate segregation of duties in order to ensure proper control. Also, personnel within the Organization should be cross-trained to ensure that in the event that an employee leaves the Organization, there would be another employee prepared to take on the responsibilities. Such responsibilities should be formally documented in a policies and procedures manual. Conditions Found During audit procedures, it was noted that the Organization had trouble producing internal control procedure documents that had been updated for the period under audit. The Organization also relies heavily on a third party to produce quarterly and annual reporting. Cause The Organization lacks updated and proper documentation around policies and procedures and lacks formal review of third party information. Effect The SEFA and financial statements could be inaccurately presented. Context This issue was identified during our audit procedures and was noted across multiple areas. Repeat Finding Yes. Reported as Finding No. 2024-003. Questioned Costs None. Recommendation We recommend a document be maintained and regularly updated to reflect the current procedures, policies, roles and responsibilities in place. In addition, there should be formal documented review and approval by someone in the Organization of the work produced by the third party to ensure any errors or omissions in financial information are caught. Views of Responsible Officials See attached corrective action plan
Finding No.: 2025-001 Criteria Pursuant to 2 CFR §200.302(b)(3), nonfederal entities must maintain financial management systems that provide for the identification of all federal awards received and expended, including accurate, current, and complete disclosure of expenditures by federal award. Further, 2 CFR §200.403 requires that costs charged to federal awards be allowable, allocable, and adequately documented. Costs must be directly associated with the benefiting program. Government Auditing Standards require that entities design and implement internal controls to provide reasonable assurance that transactions are properly recorded and compliance with applicable requirements is achieved. Conditions Found The Organization did not record expenditures directly to specific federal awards or grant programs at the time costs were incurred. Instead, expenditures were recorded in classes of accounts and subsequently allocated to funding sources in aggregate based on available revenue. This methodology does not ensure that expenditures are accurately identified with the benefiting federal award. Cause The condition appears to be the result of inadequate internal controls over grant accounting, including: • Lack of a formalized process for tracking expenditures by individual grant • Limitations in the accounting system and heavily reliance on supporting schedules outside of the accounting function • Insufficient training and oversight related to grant compliance requirements Effect As a result, the Organization is at risk of: • Noncompliance with Uniform Guidance cost principles and reporting requirements • Misstatement of expenditures by grant program • Inability to demonstrate that costs charged to federal awards are allowable, allocable, and properly supported • Potential questioned costs or repayment of federal funds • Inaccuracy of federal reporting Context This issue was identified through testing of expenditures across multiple federal programs and was determined to be pervasive in nature. The control deficiency impacts all major federal programs and financial reporting processes related to grant activity. Repeat Finding No Questioned Costs The Organization’s expenditures are similar amongst all programs and grants. At the onset of the audit, expenditures were not coded and reconciled to each grant individually; however, the Organization was able to identify, code and update the general ledger to properly identify the major program expenditures. We were able to determine there are no questioned costs. Recommendation We recommend that the Organization strengthen its internal controls over grant accounting by: • Implementing procedures to code expenditures directly to specific grants at the time of entry • Enhancing the chart of accounts to allow for tracking by funding source • Reducing the use of manual spreadsheets that allow for human error • Proper review and approval of grant allocations to ensure proper grant reporting • Providing training to accounting personnel on Uniform Guidance requirements for cost allowability and allocability Views of Responsible Officials See attached corrective action plan.
Finding No.: 2025-003 Federal Agency: Aging Cluster (93.044, 93.045, 93.053) and Medicaid Cluster (93.778) Criteria Pursuant to 2 CFR §200.302(b)(3), nonfederal entities must maintain financial management systems that provide for the identification of all federal awards received and expended, including accurate, current, and complete disclosure of expenditures by federal award. Further, 2 CFR §200.403 requires that costs charged to federal awards be allowable, allocable, and adequately documented. Costs must be directly associated with the benefiting program. Government Auditing Standards require that entities design and implement internal controls to provide reasonable assurance that transactions are properly recorded and compliance with applicable requirements is achieved. Conditions Found The Organization did not consistently record expenditures directly to specific federal awards or grant revenue at the time costs were incurred. Instead, expenditures were recorded in general accounts and subsequently allocated to funding sources in aggregate based on available grant revenue. This methodology does not ensure that expenditures are accurately identified with the benefiting federal award. Cause The condition appears to be the result of inadequate internal controls over grant accounting, including: • Lack of a formalized process for tracking expenditures by individual grant • Limitations in the accounting system and heavily reliance on supporting schedules outside of the accounting function • Insufficient training and oversight related to grant compliance requirements Effect As a result, the Organization is at risk of: • Noncompliance with Uniform Guidance cost principles and reporting requirements • Misstatement of expenditures by grant program • Inability to demonstrate that costs charged to federal awards are allowable, allocable, and properly supported • Potential questioned costs or repayment of federal funds • Inaccuracy of federal reporting Questioned Costs The lack of coding by invoice level to each grant raises concern that expenditures listed on the SEFA may not meet stated grant allowability and allocable requirements. The Organization’s expenditures are similar amongst all programs and grants. At the onset of the audit, expenditures were not coded and reconciled to each grant individually; however, the Organization was able to identify, code and update the general ledger to properly identify the major program expenditures. We were able to determine there are no questioned costs. Context This issue was identified through testing of expenditures across multiple federal programs and was determined to be pervasive in nature. The control deficiency impacts all major federal programs and financial reporting processes related to grant activity. Repeat Finding No Recommendation We recommend that the Organization strengthen its internal controls over grant accounting by: • Implementing procedures to code expenditures directly to specific grants at the time of entry • Enhancing the chart of accounts to allow for tracking by funding source • Reducing the use of manual spreadsheets that allow for human error • Proper review and approval of grant allocations to ensure proper grant reporting • Providing training to accounting personnel on Uniform Guidance requirements for cost allowability and allocability Views of Responsible Officials See attached corrective action plan.
Finding No.: 2025-004 Federal Agency: Medicaid Cluster (93.778) Criteria Under 2 CFR §200.510(b), nonfederal entities that expend federal awards are required to prepare a Schedule of Expenditures of Federal Awards (SEFA) for the period covered by the entity’s financial statements. The SEFA must: • Include total federal expenditures for each federal program • Identify each federal program by Assistance Listing Number (ALN) • Include the name of the federal agency and pass-through entity, where applicable • Include pass-through identifying numbers • Disclose significant accounting policies used in preparing the SEFA • Reconcile, or be traceable, to the underlying accounting records Additionally, Government Auditing Standards require that internal controls over financial reporting and compliance be designed and implemented to ensure accurate reporting. Conditions Found The Organization did not prepare a complete and accurate SEFA for the year ended September 30, 2025. Certain federal expenditures were initially omitted from the SEFA. As a result, the SEFA required adjustment which resulted in a second major program for testing once the Organization corrected its SEFA. Cause The condition appears to be the result of inadequate internal controls over the identification, tracking, and reporting of federal awards. Specifically: • Lack of a formal process to identify all federal funding sources • Insufficient review controls over SEFA preparation • Limited understanding of SEFA reporting requirements under Uniform Guidance Effect The incomplete SEFA increases the risk that: • Federal expenditures may be understated or misstated • Major program determination could be impacted • Required disclosures under Uniform Guidance may not be met • Users of the financial statements may rely on inaccurate information Questioned Costs The Organization’s expenditures are similar amongst all programs and grants. At the onset of the audit, expenditures were not coded and reconciled to each grant individually; however, the Organization was able to identify, code and update the general ledger to properly identify the major program expenditures. We were able to determine there are no questioned costs. Context The SEFA omitted approximately $347,000 in federal expenditures in their SEFA provided during audit planning procedures, representing approximately 18% of total federal expenditures. Repeat Finding No Recommendation We recommend that the Organization strengthen internal controls over SEFA preparation and completeness by: • Implementing a comprehensive process to identify all federal awards, including pass-through funding • Maintaining a centralized listing of federal grants with ALNs and award information • Ensuring expenditures are tracked by federal program throughout the year • Performing a detailed review and reconciliation of the SEFA to the general ledger prior to issuance • Providing training to personnel responsible for SEFA preparation on Uniform Guidance requirements Views of Responsible Officials See attached corrective action plan.