Audit 412412

2025-003 – Hearts for the Invisible Charlotte Coalition did not have a process to determine if vendors were suspended or debarred from receiving Federal funds. Federal Agency: Department of the Treasury Assistance Listing Number: 21.027 Award Period: 05/01/2023 to 04/30/2026 Type of Finding: Significant Deficiency in Internal Controls Over Compliance for Each Major Program Criteria or Specific Requirement: According to 2 CFR 200.213, non-Federal entities must ensure that they do not enter into any contracts or subcontracts with parties that are suspended or debarred. This requires the establishment of procedures to review the eligibility of vendors, including sub-awardees, before engaging in any contractual agreements. Condition: Hearts for the Invisible Charlotte Coalition does not have a formal suspension and debarment procedure in place to review vendors. This lack of procedure increases the risk of engaging in contractual relationships with entities that are suspended or debarred, which is a violation of Federal regulations. Questioned Costs: Indeterminable Context: During the audit period, Hearts for the Invisible Charlotte Coalition entered into agreements with vendors without performing suspension and debarment reviews. During the engagement we did not note any transactions involving vendors who were suspended or debarred.Cause: The primary cause of this finding is the lack of awareness of Federal requirements concerning suspension and debarment procedures. Effect: Failing to implement a suspension and debarment procedure exposes Hearts for the Invisible Charlotte Coalition to risks, including potential financial losses, reputational damage, and non-compliance with Federal regulations. This non-compliance could result in penalties and a loss of Federal funding.Repeat Finding: NoAuditor’s Recommendation: It is recommended that Hearts for the Invisible Charlotte Coalition develop and implement a suspension and debarment procedure to review the eligibility of vendors before entering into contracts.Training should be provided to all relevant staff to ensure awareness and compliance with Federal requirements. Additionally, periodic monitoring and internal audits should be conducted to ensure adherence to the established procedures. Views of Responsible Officials and Planned Corrective Actions:Management acknowledges the finding and agrees with the recommendation. Hearts for the Invisible Charlotte Coalition is in the process of developing and implementing a formal suspension and debarment procedure, which is intended to be implemented in October 2026. Furthermore, periodic reviews will be instituted to monitor adherence to these requirements and to prevent the recurrence of this issue.

2025-004 – Hearts for the Invisible Charlotte Coalition did not follow established Federal procurement procedures and maintain required procurement documentation. Federal Agency: Department of the Treasury Assistance Listing Number: 21.027 Award Period: 05/01/2023 to 04/30/2026 Type of Finding: Significant Deficiency in Internal Controls Over Compliance for Each Major Program Criteria or Specific Requirement: Under 2 CFR § 200.318(a), recipients and subrecipients must “maintain and use documented procedures for procurement transactions under a Federal award or subaward.” Additionally, 2 CFR § 200.318(i) requires that “the recipient or subrecipient must maintain records sufficient to detail the history of each procurement transaction,” including: Rationale for the method of procurement, Selection of contract type, Contractor selection or rejection, and Basis for the contract price. Condition: During our audit of procurement activities under Federal award 21.027, we noted that the Organization did not follow its documented procurement procedures. Specifically:The procurement plan lacked evidence of adherence to competitive procurement methods as required under 2 CFR § 200.320. No documentation was maintained to support when or how procurement decisions were made, including missing records of contractor selection, price justification, and procurement method rationale. Context: The finding pertains to two purchases tested under Assistance Listing 21.027 for which sufficient documentation was not maintained to demonstrate compliance with the Organization’s procurement procedures and applicable Federal requirements. Cause: The Organization did not implement adequate internal controls to ensure compliance with Federal procurement standards. Procurement activities were conducted informally without sufficient oversight or documentation, and staff were not adequately trained on Uniform Guidance requirements. Effect: Failure to follow documented procurement procedures and maintain required records increases the risk of: Noncompliance with Federal regulations, Unfair or noncompetitive procurement practices, Inability to justify expenditures to Federal agencies or auditors, and Disallowed costs or questioned costs during Federal review. Repeat Finding: Yes Auditor’s Recommendation: We recommend that the Organization: Implement and enforce the updated procurement policy. Train staff on Federal procurement requirements. Implement a checklist or control mechanism to ensure all required documentation is retained for each procurement transaction. Views of Responsible Officials and Planned Corrective Actions: Management acknowledges the finding and agrees with the recommendation. The Organization updated its procurement policy in February 2026 to align with applicable Federal procurement requirements. Management will implement and enforce the procurement methods established in the updated policy, provide training to relevant staff on Federal procurement requirements, and maintain the required supporting documentation for applicable procurement transactions going forward.

2025-005 – Hearts for the Invisible Charlotte Coalition did not consistently maintain documentation of review and approval in accordance with established policies. Federal Agency: Department of the Treasury Assistance Listing Number: 21.027 Award Period: 05/01/2023 to 04/30/2026 Type of Finding: Significant Deficiency in Internal Controls Over Compliance for Each Major Program Criteria or Specific Requirement: In accordance with 2 CFR § 200.303, non-Federal entities are required to establish and maintain effective internal controls over Federal awards and ensure that established policies and procedures are consistently followed. Controls should provide appropriate review, approval, oversight, and documentation over transactions charged to Federal awards. Condition: During our audit, we noted that the Organization did not consistently maintain documentation demonstrating that review and approval controls established by its policies were performed. Specifically, independent Board/Treasurer oversight over expenditure was not in place until the middle of 2025. Formal timesheets supporting employee time were not implemented until end of October 2025. Questioned Costs: None Context: The deficiency relates primarily to the documentation and evidence of review and approval controls during portions of 2025. Board/Treasurer oversight was implemented during the middle of the year, and formal timesheets were implemented on October 27, 2025, to strengthen payroll documentation. Cause: The Organization did not consistently implement and document the review and approval controls established by its policies during the audit period. Effect: The lack of documented review and approval increases the risk that errors or noncompliance may not be timely prevented or detected. Repeat Finding: Yes Auditor’s Recommendation: We recommend that the Organization consistently implement and document the review and approval controls established by its policies, including continued Board/Treasurer oversight over expenditures. We also recommend continued use of formal timesheets to document and support employee time. Views of Responsible Officials and Planned Corrective Actions: Management acknowledges the finding and agrees with the recommendation. The Organization implemented Board/Treasurer oversight during the middle of 2025 and formal timesheets effective October 27, 2025. Management will continue to maintain documented review and approval controls and utilize formal timesheets to support payroll activity.