Audit 407958

Criteria: It is management's responsibility to provide financial information for audit that properly recognizes the following accrued liability accounts, in accordance with accounting principles generally accepted in the United States of America: Compensated absences Accrued payroll and payroll taxes 401k accrued liability Accrued expense subcontractor Condition: The accounting records were maintained using a QuickBooks (QB) general ledger accounting system and transitioned to Blackbaud NXT during the fiscal year. However, the liability accounts noted above were not updated, analyzed and reconciled at year end as required by generally accepted accounting principles for nonprofits using the accrual basis of accounting. Context: The accounting records were maintained using a QuickBooks (QB) general ledger accounting system and transitioned to Blackbaud NXT during the fiscal year. These account balances were corrected during the audit process. Effect: The effect was that the organization did not have controls and procedures in place to permit the normal analysis of the accrued liability accounts in accordance with generally accepted governmental accounting practices. The impact was that some account balances were not accurate and reliable and hindered the timely preparation of both internal and external financial reports. Cause: The cause, in the auditor’s judgment, was turnover of the financial management staff with adequate skill, knowledge and experience to maintain the organization’s general ledger accounting system, that did not allow the appropriate staff to reconcile the balances on a regular basis and prepare its annual financial statements. Recommendation: We recommend Eviction Defense Collaborative reconcile all assets, liability, and net asset accounts to support schedules and documentation each month. The Eviction Defense Collaborative has hired the professional service firm, Scrubbed.net, to assist with this process. Views of Responsible Officials and Corrective Actions: Eviction Defense Collaborative has retained a professional service firm, Scrubbed.net, to review and revise our accounting system to better conform to current accounting practices.

Criteria: Internal control over financial reporting requires that personnel with adequate skill, knowledge and experience in nonprofit accounting and financial reporting oversee the maintenance of an entity's general ledger accounting system, subsidiary records, and external financial reporting processes to enable the entity to meet all its reporting requirements. Condition: The organization did not have internal controls, and policies and procedures, in place to require record keeping, including allocating, recording and reporting of costs charged to federal programs, as required by Office of Management and Budget (OMB) regulations for not-for-profit organizations using the accrual basis of accounting and receiving federal funds, including the Uniform Guidance. Context: The accounting records are maintained using originally QuickBooks (QB) and changed to Blackbaud NXT general ledger accounting system. The Eviction Defense Collaborative’s Controller and other accounting staff departed, and the organization replaced them with Scrubbed.net, a professional accounting services firm, to maintain its financial accounting and reporting system. General ledger accounts were not updated for costs charged to federal programs in accordance with OMB regulations. Effect: The Eviction Defense Collaborative did not provide sufficient supporting documentation to provide an audit opinion on compliance with requirements that could have a direct and material effect on the major federal program (Community Development Block Grant/Entitlement grants cluster). The 2024 Single audit received a disclaimer of opinion on the report on Compliance for Each Major Program. Cause: The cause, in our judgment, was turnover of the accounting staff with adequate skill, knowledge and experience in nonprofit accounting and financial reporting to maintain the organization’s general ledger accounting system, reconciling the account balances on a regular basis, preparing its annual financial statements and grant financial reports, in accordance with OMB regulations. Recommendation: We recommend the Eviction Defense Collaborative reconcile all assets, liability, and net asset accounts to support schedules and documentation each month and have internal controls in place that require the allocation, recording and reporting costs charged to federal programs in accordance with OMB regulations. The Eviction Defense Collaborative hired a new professional accounting firm and Controller to improve this process. Views of Responsible Officials and Corrective Actions: The Eviction Defense Collaborative has hired a new controller, Daniel Poore, and has replaced Scrubbed.net with a new professional services firm YPTC to implement this recommendation