Audit 411568

Criteria: As stated in the ASC 958-605-25-5F, a transfer of assets is accounted for as a refundable advance until the conditions associated with the transfer have been substantially met or explicitly waived by the donor. Additionally, 2 U.S. Code of Federal Regulations Part 200 , Subpart F - Section 200.501 Audit Requirements , states that the determination of when a Federal award is expended must be based on when the activity related to the federal award occurs. Condition: During our audit, we noted matters that constituted a material weakness in internal control over financial reporting. The Organization failed to record advance payments on conditional grants as refundable advances in the prior year, resulting in a material entry to net assets and a corresponding adjustment to refundable advances. Specifically, the Organization incorrectly recognized revenue in the following three federal programs: 93.576 - Planting New Roots 93.243 - Substance Abuse and Mental Health Services of Regional and National Significance 94.013 - AmeriCorps VISTA Support Grant Context: The issue was identified during the reconciliation of the SEFA to the general ledger detail, prompting Jewish Family Services to recalculate the total using correct information and provide a revised SEFA. Cause: Management's documented controls were not consistently applied. Effect: Ineffective controls to properly prepare and review the financial statements and SEFA resulted in the following material misstatements to the 2025 financial statements: a$117,708 overstatement in beginning net assets, and a $117,708 understatement to federal revenue. Consequently, the 2025 SEFA was understated by $117,708. These errors were ultimately corrected by management. Questioned Costs: No Repeat Finding: N/A Recommendation: Management should strengthen its internal controls over the preparation of the SEFA, including a secondary review, to ensure all expenditures associated with federal programs are identified and accurately reported. Views of Responsible Officials: Management agrees with the finding and has provided the accompanying corrective action plan.

Criteria: According to 2 U.S. Code of Federal Regulations Part 200 , Subpart F - Audit Requirements, the Organization is required to prepare a SEFA that accurately reflects the total federal awards expended during the period covered by the financial statements. Specifically, section 200.510(b) mandates the preparation of a complete SEFA, Section 200.510(b)(3) requires the SEFA will include the total federal awards expended under each federal program and ALN, and finally, Section 200.508(b) emphasizes the importance of ensuring the SEFA is accurate, complete, and prepared in accordance with federal requirements. Condition: During the course of our audit, the Organization identified and corrected a discrepancy in the Schedule of Expenditures of Federal Awards (SEFA) related to three programs. Specifically, the following programs were calculated using incorrect information: 97.008 - Michigan State Police Nonprofit Security Grant 21.027 - Small Business Support HUB Program 94.013 - AmeriCorps VISTA Support Grant Context: The issue was identified during the reconciliation of the SEFA to the general ledger detail, prompting Jewish Family Services to recalculate the total using correct information and provide a revised SEFA. Management's documented controls were not sufficient. Effect: Ineffective controls to properly prepare and review the 2025 SEFA resulted in an overstatement of expenses for three programs; the total overstatement of $229,757 in the 2025 SEFA was ultimately corrected by management. Questioned Costs: No Repeat Finding: N/A Recommendation: Management should strengthen its internal controls over the preparation of the SEFA, including a secondary review, to ensure all expenditures associated with federal programs are identified and accurately reported. Views of Responsible Officials: Management agrees with the finding and has provided the accompanying corrective action plan.