Finding No. 2025-001: Lack of Formal Financial Reporting Policies, Procedures, and Internal Controls Type of Finding Material Weakness in Internal Control over Financial Reporting Criteria Management is responsible for establishing and maintaining effective internal control over financial reporting, including policies and procedures designed to ensure the accurate, complete, and timely preparation of financial statements. Effective controls include documented review and approval procedures, timely account reconciliations, and oversight of financial reporting activities. Condition During our audit, we noted that IRIS continues to lack formalized accounting and financial reporting processes designed to ensure the accuracy, completeness, and timely preparation of its financial statements. Specifically, there is no formal documentation evidencing the review and approval of journal entries, account reconciliations, or independent oversight of financial reporting activities. Additionally, existing accounting and financial reporting policies have not been updated to reflect current operations and practices. Context Written finance department policies for all significant transaction classes are out of date and do not reflect either the current procedures or the current personnel who prepares, approves, or reviews. Effect The lack of formal financial reporting policies, procedures, and internal controls increases the risk that material misstatements may not be prevented, detected, or corrected on a timely basis. In addition, the absence of standardized financial reporting procedures contributed to delays in the completion of the audit for the year ended December 31, 2025. Cause IRIS has relied on informal processes and institutional knowledge to perform financial reporting activities and has not established formal policies, procedures, and documentation requirements over key financial reporting processes. Repeat Finding Yes. This finding was also reported in the prior year as Finding 2024-001. Recommendation We recommend that management establish and document formal policies and procedures for monthly and annual financial reporting. Such procedures should include a financial reporting timeline, standardized closing checklists, documented review and approval requirements, and clearly defined responsibilities for the preparation and review of financial information. Additionally, management should implement timely reviews and reconciliations of all balance sheet, revenue, and expense accounts to ensure amounts are properly recorded, supported, reviewed, and approved. Management’s Response/Views of Responsible Officials See Auditee’s Corrective Action Plan.
Finding No. 2025-002: Segregation of Duties Type of Finding Material Weakness in Internal Control over Financial Reporting Criteria An effective system of internal control should provide for an appropriate segregation of duties so that no one individual has control over all phases of a transaction. Where segregation of duties is limited due to staffing constraints, compensating monitoring controls should be implemented. Condition During our review of internal controls, we noted that the Controller performs multiple significant functions within the accounting and financial reporting processes, including responsibilities related to cash disbursements, banking activities, transaction processing, account reconciliations, and financial oversight. In addition, the Controller has the ability to initiate payments and receives the bank authorization code required to release certain disbursements. As a result, key accounting and treasury functions are concentrated with one individual. Context There is a lack of segregation of duties over internal controls for all significant transaction classes. Effect The concentration of incompatible duties increases the risk that errors, unauthorized transactions, or irregularities could occur and not be detected in a timely manner. The lack of segregation also increases the risk that an individual could initiate, process, approve, and conceal transactions without independent review. Cause Due to staffing constraints and organizational structure, certain incompatible accounting and treasury responsibilities have not been adequately segregated among multiple individuals. Repeat Finding No. Recommendation We recommend that management evaluate opportunities to strengthen segregation of duties by assigning certain authorization, review, banking, reconciliation, and reporting functions to other qualified personnel. Where staffing limitations make complete segregation impractical, compensating controls should be implemented, including independent review and approval of disbursements, dual authorization requirements for bank transactions, periodic review of bank activity by executive management or the Board, independent review of reconciliations and journal entries, and increased oversight of cash disbursement and financial reporting activities. Management’s Response/Views of Responsible Officials See Auditee’s Corrective Action Plan.
Finding No. 2025-004: Lack of a Formal Cost Allocation Plan Federal Program Name: Refugee and Entrant Assistance State/Replacement Designee Administered Programs; Refugee and Entrant Assistance Discretionary Grants Federal Assistance Listing Number: 93.566; 93.576 Type of Finding Material Weakness in Internal Control over Compliance Criteria In accordance with 2 CFR §200.403 and §200.405, costs charged to federal awards must be adequately documented, allowable, and allocated to programs based on relative benefits received. Organizations allocating shared or indirect costs among multiple funding sources are required to maintain a reasonable, consistently applied, and current cost allocation methodology. Condition IRIS does not have a cost allocation plan ("CAP") that has not been formally reviewed and approved and does not reflect the current structure of awards and programs. As a result, IRIS could not demonstrate that costs charged to federal awards were consistently allocated in accordance with a current, formally approved methodology. Questions Costs None Context IRIS’ cost allocation plan has not been formally reviewed and approved. Management utilized an informal practice during the audit period to allocate shared costs among multiple funding sources and programs. Effect Without an approved CAP, there is an increased risk that costs charged to federal awards may not be properly allocated, may not reflect relative benefits received, or may not be consistently applied in accordance with federal requirements. Cause Management has historically allocated shared costs based on established practices; however, the methodology has not been formalized in a written cost allocation plan. Repeat Finding: No. Recommendation We recommend that the Organization formally document its cost allocation methodology and establish procedures for periodic review and update of the CAP to ensure it reflects current operations and funding sources. The CAP should be formally approved by governance and retained as support for allocation of shared costs to state programs. Management’s Response/Views of Responsible Officials See Auditee’s Corrective Action Plan.
Finding No. 2025-005: Timely Submission of Grant Reports Federal Program Name: Refugee and Entrant Assistance State/Replacement Designee Administered Programs; Refugee and Entrant Assistance Discretionary Grants Federal Assistance Listing Number: 93.566; 93.576 Type of Finding Significant Deficiency in Internal Control over Compliance; Other Matters Criteria Grant reports are to be submitted in accordance with deadlines outlined in the grant agreement. Quarterly financial reports are due within 30 days, with the final quarter being due within 60 days. Condition Grant reports selected for testing of timely submission were filed several months late. Question Costs None Context All of the quarterly financial reports were filed late. Effect Due to the fact that grants may not reimburse expenses incurred until grant reports are filed, this could result in a delay in cash receipts. Cause Based on the large influx of refugees in a short time period and additional funds being provided to IRIS on a retrospective basis, IRIS was not able to file the grant report timely, as these factors required additional work be done on IRIS’s end to ensure the grant reports were filed accurately. Repeat Finding Yes. This finding was also reported in the prior year as Finding 2024-003. Recommendation We recommend that management ensure that grants are filed timely. Management’s Response/Views of Responsible Officials See Auditee’s Corrective Action Plan.
Finding No. 2025-006: Eligibility Documentation and Record Retention Controls Federal Program Name: Refugee and Entrant Assistance State/Replacement Designee Administered Programs; Refugee and Entrant Assistance Discretionary Grants Federal Assistance Listing Number: 93.566; 93.576 Type of Finding Significant Deficiency in Internal Control over Compliance; Other Matters Criteria Grant requirements require organizations to obtain, maintain, and retain documentation supporting participant eligibility and compliance with program requirements. Such documentation should be complete, properly executed, and readily available for review. Condition During our review of participant eligibility documentation, we noted exceptions related to the completion, retention, and availability of required participant documentation. Specifically, required service plans and self-sufficiency plans were not consistently completed, signed, retained, or available for review for certain participants. Management indicated that documentation requirements were not always clearly communicated during the implementation of certain programs and that requirements evolved over time as additional guidance was received from funding agencies. In addition, participant records were historically maintained in multiple formats and locations. IRIS also experienced operational challenges, including the transition from paper-based to electronic records, office transitions, program implementation changes, and flooding that damaged certain stored client files and rendered some records unrecoverable. Questions Costs None Context Of the 60 participants selected for testing, 23 of the selections were not in compliance due to lack of supporting documentation. Effect As a result, IRIS was unable to demonstrate compliance with certain participant eligibility documentation requirements for a limited number of participants selected for testing. Missing or incomplete documentation may result in audit exceptions, monitoring findings, and an inability to demonstrate participant eligibility. Cause IRIS did not maintain formalized procedures governing participant eligibility documentation, file review, record retention, and documentation monitoring across certain programs. Repeat Finding Yes. This finding was also reported in the prior year as Finding 2024-002. Recommendation We recommend that management establish and document formal procedures for obtaining, reviewing, retaining, and periodically monitoring participant eligibility documentation. Procedures should identify required documentation by program, assign responsibility for file review, establish record retention standards, and include safeguards to protect records from loss or damage. Management should also perform periodic reviews of participant files to verify that required documentation is complete, properly executed, and retained in accordance with program requirements. Management’s Response/Views of Responsible Officials See Auditee’s Corrective Action Plan.