Documentation of Costs Claimed for Reimbursement and Cash Management Significant Deficiency in Internal Control Over Compliance; Noncompliance; Known Questioned Costs - Federal Program: Assistance Listing No. 10.719 - Infrastructure Investment and Jobs Act Firewood Bank Program Federal Agency: U.S. Department of Agriculture, Forest Service (direct award; no pass-through entity) Federal Award Identification: 22-DG-11132544-049 (federal award year 2022) and 25-DG-11132544- 082 (federal award year 2025); USDA Forest Service Firewood Bank Program grant agreements identified by the Organization as contract 049 and contract 082 Compliance Requirements: Activities Allowed or Unallowed and Allowable Costs/Cost Principles; Cash Management; Reporting Type of Finding: Significant deficiency in internal control over compliance; noncompliance; known questioned costs Known Questioned Costs: $64,969 (contract 049 and contract 082 combined; the Organization’s records do not allocate administrative cost claims between the two agreements) Criteria: 2 CFR 200.303 requires a non-federal entity to establish and maintain effective internal control over the federal award providing reasonable assurance that the entity is managing the award in compliance with federal statutes, regulations and the terms and conditions of the award. 2 CFR 200.403 requires that costs charged to a federal award be necessary and reasonable, allocable to the award, adequately documented, and otherwise allowable under the cost principles in 2 CFR 200 Subpart E. 2 CFR 200.305(b) requires that payments made in advance of expenditures be limited to the minimum amounts needed and be timed in accordance with the actual, immediate cash requirements of the entity in carrying out the purpose of the approved program. 2 CFR 200.510(b) requires the auditee to prepare a schedule of expenditures of federal awards for the period covered by the audit. Condition: We identified the following related conditions, each arising from the concentration of the program’s administrative, accounting and monitoring functions in a single individual without documented independent review: (a) Costs claimed without supporting documentation. The Organization submitted requests to the two awards under Assistance Listing No. 10.719 totaling $170,700 for administrative costs for the year ended December 31, 2025. The Organization’s accounting records and supporting documentation substantiate administrative costs of $105,731 applicable to those awards. The remaining $64,969 was claimed, and reimbursed by the grantor, without supporting documentation. The personnel component of the administrative costs claimed was based on estimated allocations rather than records of work performed, as described in Finding 2025-004. (b) Federal funds drawn and unspent at year end. At December 31, 2025 the Organization held $15,735 of federal funds that had been drawn but not disbursed for program purposes. A subrecipient returned its award on December 22, 2025 and the funds were not re-granted until January 30, 2026. (c) Advance payments. The Organization received advance payments under the awards totaling $1,155,000 during the year ($300,000 received September 24, 2025; $500,000 received October 30, 2025; and $355,000 received December 10, 2025). No documented determination of the program’s immediate cash requirements supports the amount or the timing of these advances, and the Organization does not monitor the elapsed time between receipt of advanced funds and their disbursement for program purposes. (d) Preparation and review of program records. The log of amounts requested for reimbursement and amounts received, the monthly reconciliation of that log, and the schedule of expenditures of federal awards are prepared by the same individual who prepares the requests and records the related receipts in the general ledger. Neither the reconciliation nor the schedule is subject to a documented review by an individual independent of its preparation. Cause: The Organization administers the award with limited administrative staff and has not adopted written policies and procedures governing federal grant administration, including the documentation required to support costs claimed for reimbursement, the determination of immediate cash needs before requesting or accepting advance payments, and independent review of the reimbursement log, the monthly reconciliation and the schedule of expenditures of federal awards. Effect or Potential Effect: Costs of $64,969 were claimed and reimbursed without documentation supporting their allowability, and $15,735 of drawn funds remained unspent at year end. Amounts totaling $127,373, of which $64,969 relates to this program, were recorded as due to the grantor through an audit adjustment, and $15,735 was recorded as a refundable advance. A deficiency in internal control over compliance exists that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. Context: All administrative cost reimbursement requests submitted under the awards for the year ended December 31, 2025 ($170,700), all three advance payments received ($1,155,000), and the year-end balance of drawn but undisbursed funds were examined in their entirety and compared to the Organization’s accounting records; no sampling was used. Known questioned costs of $64,969 represent 38 percent of the administrative costs claimed and 5.2 percent of total program expenditures of $1,244,996, and exceed the $25,000 threshold in 2 CFR 200.516(a)(3). Our tests of compliance did not disclose instances of noncompliance that are material to the program, and our opinion on compliance for the major federal program is unmodified. Recommendation: We recommend that the Organization: (1) submit requests only for costs incurred and documented at the date of the request, and retain the request, the expenditure listing and the underlying support together in a single referenced file with the allowability review evidenced by preparer and reviewer sign-off; (2) prepare and retain, for each advance requested or received, an analysis of the program’s immediate cash requirements supporting the amount and timing of the advance, and monitor the period between receipt and disbursement of advanced funds; (3) require documented review of the monthly reimbursement log reconciliation and of the schedule of expenditures of federal awards by an individual not involved in preparing requests or recording receipts; and (4) coordinate with the USDA Forest Service program contact regarding repayment or offset of the amount recorded as due to the grantor. Repeat Finding: No Views of Responsible Officials: Management agrees that reimbursement requests should be subject to a more structured review and that an individual who did not prepare the request should independently review the supporting documentation and costs claimed. Cash needs are currently discussed and assessed based on factors including the number and status of applications, anticipated award amounts, and the timing of expected payments. Going forward, management will document its cash requirement determination when preparing each federal cash draw request, including the factors considered and the amount determined to be needed.
Standards for Documentation of Personnel Expenses Charged to Federal Awards Significant Deficiency in Internal Control Over Compliance - Federal Program: Assistance Listing No. 10.719 - Infrastructure Investment and Jobs Act Firewood Bank Program Federal Agency: U.S. Department of Agriculture, Forest Service (direct award; no pass-through entity) Federal Award Identification: 22-DG-11132544-049 (federal award year 2022) and 25-DG-11132544- 082 (federal award year 2025); USDA Forest Service Firewood Bank Program grant agreements identified by the Organization as contract 049 and contract 082 Compliance Requirements: Activities Allowed or Unallowed and Allowable Costs/Cost Principles Type of Finding: Significant deficiency in internal control over compliance Known Questioned Costs: None in addition to the $64,969 reported in Finding 2025-003. The personnel costs claimed without supporting records are included in that amount and are not questioned a second time here. Criteria: 2 CFR 200.430(g) (2 CFR 200.430(i) for awards subject to the guidance in effect before October 1, 2024) requires that charges to federal awards for salaries and wages be based on records that accurately reflect the work performed, be supported by a system of internal control that provides reasonable assurance that the charges are accurate, allowable and properly allocated, be incorporated into the official records of the entity, and reasonably reflect the total activity for which the employee is compensated, encompassing both federally assisted and all other activities. Budget estimates alone do not qualify as support for charges to federal awards. 2 CFR 200.303 requires the entity to establish and maintain effective internal control over the federal award. Condition: The Organization does not maintain records reflecting the work performed by employees whose salaries and related benefits are charged to the federal award. Personnel costs are assigned to programs, and between federal and non-federal activities, on the basis of management’s estimates rather than records of actual activity. For the year ended December 31, 2025, salaries, payroll taxes and related benefits of $177,331 were allocated on that basis, of which $158,372 was assigned to program services. No after-the-fact activity records, certifications or equivalent documentation covering the total compensated time of those employees are prepared, reviewed or retained, and no reconciliation of amounts charged to the award against records of actual effort is performed. Cause: The Organization has not adopted a time and effort reporting process or written policies addressing the documentation required to support personnel costs charged to federal awards. Effect or Potential Effect: Personnel costs charged to the award are not supported by records that meet the standards in 2 CFR 200.430, and unallowable or misallocated personnel charges could occur and not be prevented, or detected and corrected, on a timely basis. The same condition affects the allocation of expenses among functions presented in the financial statements, as described in Note 11 to the financial statements. Should the award impose a cost-sharing or matching requirement satisfied in whole or in part by personnel effort, the amounts claimed toward that requirement would likewise not be verifiable from the Organization’s records as required by 2 CFR 200.306(b)(1). Context: The condition is systemic and applies to all personnel costs charged to the award for the year ended December 31, 2025. Salaries, payroll taxes and related benefits totaling $177,331 were recorded for the year, against total expenditures of the major federal program of $1,244,996. The absence of activity records was established by inquiry and by examination of the Organization’s payroll and allocation records in their entirety; no sampling was used. Recommendation: We recommend that the Organization implement a personnel activity reporting process under which each employee whose compensation is charged to a federal award prepares, not less frequently than monthly, an after-the-fact record accounting for the employee’s total compensated time across federal and non-federal activities. Each record should be reviewed and approved by a supervisor, reconciled to payroll at least quarterly, used as the basis for amounts charged to the award, and retained in accordance with 2 CFR 200.334. Other documentation methods that satisfy the standards in 2 CFR 200.430 are acceptable provided they are applied consistently and are supported by a system of internal control. Repeat Finding: No Views of Responsible Officials: Management agrees that the Organization should maintain specific records of time and activity worked on federal awards. The Organization will implement a monthly process for documenting and reviewing employee activity to support personnel costs charged to federal awards.
Known Questioned Costs, Program Not Audited as a Major Program Noncompliance; Known Questioned Costs Reported Pursuant to 2 CFR 200.516(a)(4) - Federal Program: Assistance Listing No. 10.681 - Wood Education and Resource Center (WERC) Federal Agency: U.S. Department of Agriculture, Forest Service (direct award; no pass-through entity) Federal Award Identification: 23-DG-11094200-451 (federal award year 2023), as modified July 15, 2024; USDA Forest Service Wood Education and Resource Center grant agreement Compliance Requirements: Activities Allowed or Unallowed and Allowable Costs/Cost Principles Type of Finding: Noncompliance; known questioned costs for a federal program not audited as a major program Known Questioned Costs: $62,404 Criteria: 2 CFR 200.403 requires that costs charged to a federal award be adequately documented and otherwise allowable under the cost principles in 2 CFR 200 Subpart E, and 2 CFR 200.430 requires that charges for salaries and wages be supported by records that accurately reflect the work performed. 2 CFR 200.516(a)(4) requires the auditor to report known questioned costs greater than $25,000 for a federal program that is not audited as a major program. Condition: The Organization submitted requests to the Wood Education and Resource Center award totaling $163,960 for administrative costs for the year ended December 31, 2025. The Organization’s accounting records and supporting documentation substantiate administrative costs of $101,556 applicable to the award. The remaining $62,404 was claimed, and reimbursed by the grantor, without supporting documentation. The condition arises from the same practices described in Findings 2025-003 and 2025-004. Cause: See Findings 2025-003 and 2025-004. Effect or Potential Effect: Costs of $62,404 were claimed and reimbursed without documentation supporting their allowability. The amount was recorded as due to the grantor through an audit adjustment. This program was not audited as a major program, and we express no opinion on compliance with respect to it; the questioned costs are reported because they became known during the audit of the financial statements. Context: The condition was identified through examination of all administrative cost reimbursement requests submitted under the award for the year ($163,960) and comparison of those requests to the Organization’s accounting records in their entirety; no sampling was used. Total expenditures of the program for the year ended December 31, 2025 were $101,556. The program was classified as a Type B program and was not selected for audit as a major program. Recommendation: We recommend that the corrective action described in Findings 2025-003 and 2025- 004 be applied to all federal awards, and that the Organization coordinate with the awarding agency regarding repayment or offset of the amount recorded as due to the grantor. Repeat Finding: No Views of Responsible Officials: Management agrees that more specific and thorough review of reimbursement requests and the time allocated to individual projects should be implemented. The Organization will apply these strengthened review procedures to all federal awards and coordinate with the USDA Forest Service regarding the questioned costs.