Audit 410807

Finding 2025-003 – Material Weakness in Internal Controls over Federal Award Compliance Criteria – 2 CFR 200.303 requires the recipient to establish, document, and maintain effective internal control over federal awards. Condition – The Organization has a documented fiscal policy; however the policy does not include procedures that cover specific compliance attributes associated with federal award requirements. Context and Cause – The Organization’s current policies do not include a review of the fiscal policy for required changes on a scheduled basis. Effect of Condition – Incomplete documentation of policies regarding federal compliance could prevent management and the Board from providing adequate oversight over compliance activities of the Organization, and could result in non-compliance with federal awards. Questioned Cost – None. Recommendation – We recommend the Organization develop, document, and implement policies and procedures that address the recent guidance regarding applicable federal compliance requirements. Views of Responsible Officials and Planned Corrective Actions – Management concurs with the finding and has developed a corrective action plan. The material weakness is in internal controls over compliance, and not a compliance finding. We will work to increase the strength of our internal controls over compliance.

Finding 2025-002 – Material Weakness in Internal Controls Over Allowable Costs and Non- Compliance Identification of Federal Program: AL Number: 14.247 Self-Help Homeownership Opportunity Program (SHOP) Condition – A material amount of funding for the program was initially used for an unallowable activity. Funding for construction was used for down payment assistance. It was also noted that the program requires a separate bank account for the funds, yet the funds were not segregated. Criteria – Per Subpart E, Cost Principles, 2 CFR section 200, it is the grantee’s responsibility to understand the purpose of funding received, and other program requirements. Context and Cause – The Organization experienced turnover at the executive level. Management did not communicate with the funder in order to gain an understanding of allowable costs, and other program requirements. The organization subsequently met with the funder and re-submitted allowable invoices for the federal funding. Effect of Condition – The Organization was out of compliance until the costs were re-allocated. The Organization will need to open a separate account for the SHOP funds. Questioned Cost – None. Recommendation – The Organization should communicate with funders in order to understand the purpose of the funding and other program requirements, and develop an internal control system that ensures only allowable costs are charged to the grants. Views of Responsible Officials and Planned Corrective Actions – Management concurs with the finding and has developed a corrective action plan. We understand a material weakness is identified in the internal controls over allowable costs. Management will implement a procedure to ensure more frequent contact with funding sources regarding the purpose of funding and other program requirements.