Finding No: 2024-001 Type: Material Weakness in internal control over financial reporting - this finding is also reported as a financial statement finding in Section II, Finding 2024-001 Major Program Affected: Agency: U.S. Department of Agriculture Program Name: American Rescue Plan Technical Assistance Investment Program Assistance Listing No.: 10.234 Award No.: 2023-70417-39226 Compliance Requirement: Allowable Costs / Cost Principles B Condition: The audit has a reasonable possibility that material misstatements in the entity's financial statements may not be prevented, detected, or corrected in a timely manner. Criteria: The Internal Control—Integrated Framework (2013), issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) Amount: Undeterminable Cause: Lack of effective safeguards that could impact the reliability of the financial reporting process. Effect or Potential Effect: This deficiency raises concerns about the reliability of the financial reporting process, indicating that existing controls may be inadequate to safeguard against errors or fraudulent activities that could impact the financial statements. Repeat Audit Finding: Yes
Finding No: 2024-002 Type: Significant deficiency in internal control over financial reporting - this finding is also reported as a financial statement finding in Section II, Finding 2024-002 Major Program Affected: Agency: U.S. Department of Agriculture Program Name: American Rescue Plan Technical Assistance Investment Program Assistance Listing No.: 10.234 Award No.: 2023-70417-39226 Compliance Requirement: Allowable Costs / Cost Principles B Condition: The audit has identified a lack of documented procedures within the organization. Criteria: The Internal Control—Integrated Framework (2013), issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) Amount: Undeterminable Cause: The absence of formalized documentation for processes and controls. Effect or Potential Effect: This deficiency can lead to various operational challenges, resulting in inconsistent practices and heightened risks across critical areas of the organization. Repeat Audit Finding: Yes
Finding No: 2024-003 Type: Compliance: Risk of Unearned Revenue Due to Cash‑Basis Accounting and Lack of Reconciliation of Advance Drawdowns Major Program Affected: Agency: U.S. Department of Agriculture Program Name: American Rescue Plan Technical Assistance Investment Program Assistance Listing No.: 10.234 Award No.: 2023-70417-39226 Compliance Requirement: Cash Management C Condition: During our audit, we noted that the auditee records transactions on the cash basis of accounting for the federal program and does not record accruals or deferrals related to grant activity at period‑end. The program permits advance drawdowns of federal funds, but the auditee did not prepare or maintain reconciliations of cumulative advances received to cumulative allowable costs incurred, nor did it assess or record any potential unearned revenue at year‑end. The SF-425 reported a $126,386 difference between the cash receipts and cash expenditures. In addition, there is no documented indirect cost allocation methodology to support the portion of shared or indirect costs charged to the program, which further impairs the ability to demonstrate that advances have been fully earned by allowable expenditures. Board minutes reflect discussion of the potential need to address this issue; however, the cash basis of accounting and lack of reconciliation and allocation processes continued in the current year. Criteria: Federal awards that allow advance funding require that drawdowns be limited to the minimum amounts needed and timed to meet immediate cash requirements, and that funds be used only for allowable, allocable costs of the program. When advances are received, the recipient is expected to monitor and reconcile advances to actual costs incurred and record any unearned amounts to ensure that reported expenditures and balances are accurate and that federal funds are not retained in excess of allowable costs. Amount: $126,386 Cause: The auditee continued to use cash‑basis accounting for the federal program and did not design or implement procedures to (1) reconcile advances to allowable costs incurred, (2) identify and record unearned revenue at year‑end, or (3) establish a documented method for allocating indirect costs to the program, despite prior board discussions acknowledging these risks. Effect or Potential Effect: Because advances were not reconciled to allowable costs and no accruals or deferrals were recorded, there is an increased risk that a portion of the advances remains unearned at year‑end and that federal program expenditures and net position are misstated. This could result in unearned revenue or amounts due back to the grantor not being identified, questioned costs, and heightened scrutiny of the auditee’s grant accounting and cash‑management practices. Repeat Audit Finding: No
Finding No: 2024-004 Type: Compliance: Unallowable Rent Cost Major Program Affected: Agency: U.S. Department of Agriculture Program Name: American Rescue Plan Technical Assistance Investment Program Assistance Listing No.: 10.234 Award No.: 2023-70417-39226 Compliance Requirement: Allowable Costs / Cost Principles B Condition: During our testing of costs charged to ALN 10.234, we noted rent costs of $14,500 charged to the grant as indirect costs under a related‑party lease arrangement. The leased property was originally the personal residence of members of the management team and was subsequently converted to mixed use, including continued residential use, program activities, storage, and housing available for staff. The auditee did not have a documented indirect cost rate, cost allocation plan, or other formal process or control to determine and support the portion of rent allocable to the federal program. As a result, rent costs were charged to the grant without a reasonable, supportable basis for allocation between personal, 31 non‑program, and program uses. Criteria: Under 2 CFR Part 200, Subpart E – Cost Principles, rental costs are allowable only to the extent that they are reasonable, necessary, and allocable to the federal award and are supported by adequate documentation and an appropriate cost‑allocation methodology for shared or mixed‑use facilities. For related‑party arrangements and facilities used for both personal and business/program purposes, only the portion of rental costs that clearly benefits the federal program and is supported by a reasonable allocation basis may be charged to the award. In the absence of a documented indirect cost rate or cost allocation process, rent charged to the grant that includes personal or non‑program use does not meet the allocability and documentation requirements and is therefore unallowable to the extent it exceeds the portion benefiting the federal program. Questioned Cost: $14,500 Cause: The auditee did not establish a formal indirect cost rate or documented cost allocation methodology for mixed‑use space, and management did not design controls to identify, segregate, and allocate only the portion of related‑party rent that benefits the federal program. Effect or Potential Effect: Because rent was charged to the grant without a documented, supportable allocation between personal, non‑program, and program use, there is a risk that a portion of the rent costs recorded to ALN 10.234 is unallowable or overstated. This may result in misstated federal program expenditures, questioned costs that may need to be refunded to USDA, and increased scrutiny of the auditee’s cost allocation practices and related‑party arrangements in future periods. Repeat Audit Finding: No
Finding No: 2024-005 Type: Compliance: Procurement, Suspension, and Debarment Major Program Affected: Agency: U.S. Department of Agriculture Program Name: American Rescue Plan Technical Assistance Investment Program Assistance Listing No.: 10.234 Award No.: 2023-70417-39226 Compliance Requirement: Procurement and Suspension and Debarment I Condition: During our testing of procurement transactions charged to ALN 10.234, we noted that the auditee did not perform or document required suspension and debarment procedures for vendors selected under this program. For the items tested, there was no evidence that the auditee (1) checked the System for Award Management (SAM.gov), or (2) obtained certifications from vendors. As result, the auditee did not demonstrate compliance with federal requirements designed to prevent awards to suspended or debarred parties. Criteria: Federal procurement requirements for this program require the auditee to verify that contractors and certain other parties are not suspended or debarred from doing business with the federal government, generally by checking SAM.gov, obtaining a vendor certification, or including a suspension and debarment clause in the contract. These procedures are intended to ensure that federal funds are not expended with ineligible parties. Amount: Not applicable Cause: Management did not implement a formal process or control to perform and document suspension and debarment checks as part of the procurement process for federally funded purchases. Effect or Potential Effect: Because suspension and debarment procedures were not performed or documented, there is a risk that federal funds could be, or could have been, expended with vendors who are suspended or debarred, which could result in questioned costs and potential repayment obligations, as well as increased scrutiny of the auditee’s procurement practices. Repeat Audit Finding: No