Audit 412125

Segregation of Duties - Material Weakness Federal Program: Assistance Listing #14.228 Community Development Block Grants - CV - Small Business Assistance Program, Passed Through Pennsylvania Department of Community and Economic Development, Pass-Through Entity Identifying Number: C000082605 Prior Year Finding Number: N/A Criteria: Internal control is a process, which captures and properly records transactions, safeguards assets and assures compliance with laws and regulations. One critical element of internal control is adequate segregation of duties between accounting functions. Condition/Context: The responsibility for performance of certain accounting duties, principally as related to review and approval of the award application and eligibility criteria is vested in a limited number of employees wherein there is also a familial relationship amongst individuals overseeing the program, such that there is an overall lack of segregation of duties. Questioned Costs: N/A Cause: The Center has limited staff amongst whom duties can be segregated and certain of the staff members involved in the oversight of the program were related to each other. The Center made a risk-based decision that the cost of hiring additional personnel would outweigh the benefits to be derived. Effect: The Center cannot be assured that errors or irregularities that may occur will be prevented or detected and corrected on a timely basis by its internal control system. Recommendation: We recommend that the Center be aware of the lack of adequate segregation of duties and the familial ties amongst employees and involve other individuals and/or the Board in direct oversight of program operations. Views of Responsible Officials and Planned Corrective Actions: The Center understands and will seek to delineate responsibilities as best able with available staff. Furthermore, the Board of Directors will provide oversight of the ongoing activities; see corrective action plan.

Incomplete Documentation - Material Weakness Federal Program: Assistance Listing #14.228 Community Development Block Grants - CV - Small Business Assistance Program, Passed Through Pennsylvania Department of Community and Economic Development, Pass-Through Entity Identifying Number: C000082605 Prior Year Finding Number: N/A Criteria: The Uniform Guidance requires grantees to design and implement internal controls over compliance to ensure that costs charged to federal programs be reasonable and necessary to the performance of the program, consistently applied to federal and non-federal programs, conform to generally accepted accounting principles, not be included as a cost of any other federally financed program and be adequately documented. Condition/Context: During the testing of the Center's activities, one (1) of the nine (9) disbursements selected for testing did not have an application checklist that was reviewed and approved prior to awarding and disbursement of funds. While we were ultimately able to determine that the cost was allowable and met the program objectives, the lack of a timely completed internal review process constitutes a deficiency in internal control over compliance. Questioned Costs: N/A Cause: Lack of consistent oversight and formal review and approval policies. Effect: The Center does not have a formally documented internal review process, consistently applied, such that activities could occur without appropriate supporting documentation and/or for unallowable activities or costs. Recommendation: We recommend that Center revisit its internal control processes to add additional, formally documented, steps to ensure activities and costs are appropriately supported and that there is a documented internal review and documentation process for all activities. Views of Responsible Officials and Planned Corrective Actions: Management understands and is considering how to better document its processes; see corrective action plan.

(Noncompliance) Uniform Guidance Written Policies/Procedures Federal Program: Assistance Listing #14.228 Community Development Block Grants - CV - Small Business Assistance Program, Passed Through Pennsylvania Department of Community and Economic Development, Pass-Through Entity Identifying Number: C000082605 Prior Year Finding Number: N/A Criteria: The Uniform Guidance requires written policies and/or procedures in the areas of allowability of costs, cash management and procurement. Condition/Context: While the Center has informal policies and procedures surrounding the administration of its federal programs, these policies and procedures have not been formally documented in written form to ensure compliance with the areas of allowability of costs, cash management or procurement as required under the Uniform Guidance. Questioned Costs: N/A Cause: The Center does not typically receive/expend federal financial assistance and as such, was not initially aware of the requirements within Uniform Guidance to have formal, written policies and procedures in place. Effect: The Center is not in compliance with this requirement of the Uniform Guidance and as such, employees do not currently have the benefit of these written policies and/or procedures to assist in managing and directing its federal award programs. Recommendation: We recommend that Center management prepare the required written policies/procedures related to allowability of costs, cash management and subrecipient monitoring in accordance with the Uniform Guidance. Views of Responsible Officials and Planned Corrective Actions: Management understands and is working to formally document the required elements of its policies and procedures pursuant to the Uniform Guidance.