Audit 407683

Criteria: Organizations spending more than the minimum threshold in Federal awards must submit an audit reporting package to the Federal Audit Clearinghouse within nine months of the end of the fiscal year per the requirements of the Uniform Guidance. Condition: The Organization failed to submit their audit reporting package to the Federal Audit Clearinghouse for the years ended June 30, 2023 and 2024. Context: There was turnover in management during fiscal years 2023 or 2024. Cause: Management did not have the appropriate knowledge of the federal audit requirements. Effect: Failure to submit the required audit reporting package could jeopardize the Organization’s ability to secure federal funds in the future. Recommendation: We recommend the Organization improve internal controls over reporting to ensure compliance with the Uniform Guidance. Views of responsible officials: Now that we are aware of the federal audit requirements, we will ensure that our audit package is submitted to the clearinghouse in a timely manner. We will ensure that this happens by including it in our internal reporting calendar, and specific staff will be responsible for specific reports. Repeat finding: Repeat of finding 2023-001. Questioned costs: None.

Criteria: Organizations must have written procurement policies and procedures that include the elements required by the Uniform Guidance and the organizations must follow those policies and procedures for purchases under Federal awards. Condition: The Organization’s written procurement policies do not include the elements required by the Uniform Guidance and the Organization did not follow the federal procurement requirements in spending federal funds. Context: The Organization’s management was not adequately familiar with the federal procurement requirements. Cause: The Organization did not have appropriate written policies and procedures. Effect: Lack of appropriate written policies and procedures and failure to follow the federal regulations could result in unallowable costs charged to Federal awards. Repeat finding: Repeat of finding 2023-003. Questioned costs: None.

Criteria: All costs must be adequately documented and approved prior to payment. Condition: Certain purchases were not supported by adequate documentation and certain other expenses were not approved prior to payment. Context: In a sample of 22 disbursements selected at random, there was a lack of documentation for 5 items and lack of documentation of approval for nearly all of the items. Cause: Management did not have appropriate financial policies and procedures. Effect: Lack of appropriate internal controls could jeopardize the Organization’s ability to secure federal funds in the future. Recommendation: We recommend the Organization improve internal controls over purchases and other costs to ensure there is adequate documentation and approval prior to payment. Views of responsible officials: We started working with an accountant in fiscal year 2024 who required that all invoices be approved prior to payment. The process aligned with our board-approved purchase amounts, which required one approval for purchases under $10,000 and two approvals for purchases equal to $10,000 or more. Approvals were recorded by changing the document’s file name when gathering the documentation for the audit, file names were changed in order to streamline the auditor’s ability to locate the supporting documentation. We now recognize that the auditors must see the approvals, and we will no longer update the file names during the preparation for the audit. Although we have a consistent approval process, we will explore other ways to document the approvals to satisfy the auditor’s requirements. Repeat finding: Repeat of finding 2023-004. Questioned costs: None.

Criteria: All costs must be adequately documented and approved prior to payment. Condition: Certain payroll costs were not supported by adequate documentation and there was a lack of supervisor approval on employee time reports. Context: Per our tests of a random sample of 29 payroll transactions, there was a lack of approval on 15 employee time records and lack of wage rate documentation for a majority of the items. Cause: Management did not have appropriate financial policies and procedures. Effect: Lack of appropriate internal controls could jeopardize the Organization’s ability to secure federal funds in the future. Recommendation: We recommend the Organization improve internal controls over payroll and other costs to ensure there is adequate documentation and approval prior to payment. Views of responsible officials: Under VAMHAR’s current management and financial oversight, we now have clear documentation on all payroll transactions and employee timesheets. Supervisor approval is now recorded on each timesheet prior to the payroll processing. Repeat finding: Repeat of finding 2023-003. Questioned costs: None.