Audit 405625

2024-004 Significant Deficiency – Missing Support Criteria and Condition: In order to stay in compliance with federal requirements for allowable activities/allowable costs, the Organization must maintain documentation to support allowable federal expenditures. During compliance testing for allowable cost/allowable activities, invoice support could not be provided for 2 sample items totaling $4,500. Context: Allowability of the expenditures under the federal awards could not be evaluated. Cause: Management did not have controls in place to download invoices and support from the vendor and was not able to go back that far when searching for the support when requested for the audit. Effect: The inability to evaluate allowability of expenditures under federal awards resulted in known questioned costs of $4,500, and likely questioned costs of $6,753 based on the projection of the error across the population. Recommendation: Establish a system of controls to maintain support for expenditures. Views of Responsible Officials and Planned Corrective Action: A process has been put in place to keep all backup documentation for expenditures in bill.com. The backup documentation is entered with the invoice for payment.

2024-005 Significant Deficiency –Approval of Invoices Criteria and Condition: In order to stay in compliance with federal requirements for allowable activities/allowable costs, the Organization must maintain a system of controls over federal expenditures. During compliance and control testing for allowable cost/allowable activities, no support could be provided regarding approval of the invoice and related disbursement. Context: Controls over invoice approval and related disbursement could not be reviewed on any of the 14 invoice sample selections. Cause: Management did not have controls in place to maintain an audit trail for the approval process of cash disbursements of federal awards to vendors and suppliers. Effect: Internal controls over cash disbursements to vendors and suppliers could not be evaluated. Recommendation: Establish a system of controls to approve disbursements and maintain an audit trail. Views of Responsible Officials and Planned Corrective Action: Bill.com is the system now being used to approve disbursements and maintain an audit trail.

2024-006 Significant Deficiency – Invoice and Receipt Support Differences Criteria and Condition: In order to stay in compliance with federal requirements for allowable activities/allowable costs, the Organization must maintain documentation to support allowable federal expenditures. During compliance and control testing for allowable cost/allowable activities, 8 instances were noted in which support provided totaled amounts different than what was submitted to the grantor on the FSRs (Financial Status Reports). Context: 8 of the 14 invoice sample selections the support did not match the FSR amounts. However, only 3 of the 8 sample items resulted in invoice amounts being lower than what was reported to grantor, resulting in questioned costs. Cause: Management did not have controls in place to track and match expenditures of federal awards to amounts submitted on FSRs. Effect: 3 instances in which invoice support was less than amounts submitted on FSRs, resulting in known questioned costs of $872, and likely questioned costs of $1,309 based on the projection of the error across the population. Recommendation: Establish a system of controls to reconcile invoices to amounts billed under federal awards. Views of Responsible Officials and Planned Corrective Action: The assistant finance officer will reconcile invoices to the amount of the federal award. The chief finance officer will review and submit the FSR for approval.

2024-007 Significant Deficiency – Fringe Benefit and Indirect Cost Rate Calculations Criteria and Condition: In order to stay in compliance with federal requirements for allowable activities/allowable costs, the Organization must submit reimbursement requests for fringe and indirect costs based on the budget of the grant. During compliance and control testing for allowable cost/allowable activities, 6 of the 12 monthly FSRs submitted during the year ended December 31, 2024 included overbillings on fringe benefits and indirect costs based on the terms outlined in the grant agreements. Context: As outlined in the awards, fringe benefits should be billed monthly at 10% of eligible wages through October 2024, and at 25% of eligible wages in November and December. Indirect costs should be billed monthly at 5% of total eligible costs through October, and at 10% of eligible costs in November and December. It was also noted that in 3 months, fringe benefits were underbilled. In 3 different months, wages were underbilled and reported net of employee withholding. Cause: In 3 of the 6 months with overbillings, management reported net wages on line 1 of the FSRs for salaries and wages, and reported the employee withholding as fringe benefits on line 2 of the FSRs instead of correctly reporting gross wages plus the applicable fringe rate. Remaining errors are due to reporting errors. Effect: The 6 months of overbilling of fringe and indirect costs resulted in known questioned costs of $61,113. Recommendation: Establish a system of controls to review FSR submissions for grant compliance prior to submission. Views of Responsible Officials and Planned Corrective Action: The chief financial officer will compare the FSR to the grant before submission to ensure the correct rates are used.

2024-008 Significant Deficiency – Allowable Wages Criteria and Condition: In order to stay in compliance with federal requirements for allowable activities/allowable costs, the Organization must have complete accounting records, follow approved budgets, and file required reporting forms in a timely and accurate manner. The Organization has not complied with this requirement. Context: As outlined in the award #48113, only 33.33% of Executive Director’s wages can be charged to the grant. In 1 of the payroll selections to test for allowable activity and costs, it was noted that 100% of the Executive Director’s compensation for the pay period tested was being charged to the grant. Cause: Management did not have controls in place to monitor grant requirements for allowable payroll expenditures under the federal award. Effect: The overbilling of executive director compensation resulted in known questioned costs of $2,028. Recommendation: Establish a system of controls to review FSR submissions for grant compliance prior to submission. Views of Responsible Officials and Planned Corrective Action: The chief financial officer will compare the FSR to the grant before submission to ensure allowable payroll is submitted.

2024-009 Material Weakness – Grant Expenses Criteria and Condition: In order to stay in compliance with federal requirements for allowable activities/allowable costs, the Organization must have complete accounting records, follow approved budgets, and file required reporting forms in a timely and accurate manner. The Organization has not complied with this requirement, as grant expenses reported in general ledger did not agree to grant expenses reported on monthly FSRs. Context: General ledger expense accounts for the federal grant did not agree with, or were not reconciled to, amounts reported on the FSRs, resulting in differences of balances and classifications from what was reported. Cause: Changes in personnel and accounting software, along with not having a system of controls in place to track and reconcile federal expenditures per the general ledger and support to amounts reported on the FSRs to ensure accurate reporting of amounts and classification of expenses. Effect: Accounting records could not be reconciled to amounts and classifications reported on FSRs. The largest variance in total expenses reported was from payroll ($171,199), and of which $74,814 can be attributed to audit finding 2024-008 in which 3 months were billed using net pay versus gross pay. The remaining difference of $96,385 in payroll could not be identified, however the general ledger balances were higher than what was reported on the FSRs. The remaining FSR categories of supplies and materials, travel, staff development, and media/communications/public affairs could not be reconciled to the general ledger individually, but in total reconciled within $3,531. Recommendation: Establish a system of controls to review and reconcile FSR submissions to support and the general ledger prior to submission. Views of Responsible Officials and Planned Corrective Action: The chief finance officer will reconcile FSR submission to document support and the general ledger before submission.