Audit 414435

Reference Number: 2025-001 (Material Weakness – Grant Revenue Accounting) Finding: Criteria: Financial Accounting Standards Board (FASB) Accounting Standards Codification Topic 958 (ASC 958) requires conditional contribution revenue for non-profit organizations to be recognized upon satisfaction of the underlying condition. Condition: Jewish Family Services was not accounting for direct client assistance amounts received from their grantor as revenue to the organization and thus had a mismatching of revenue and expenses as well as an understatement of accounts receivable Cause: There was a misinterpretation of language in the grant agreement about whether these were agency contributions that should not have revenue recorded or direct contributions that would require recording at the gross amount received by the organization. The associated expenses were recognized by the organization as incurred. Effect: Not recognizing conditional governmental contributions upon the incurrence of qualified expenditures resulted in an understatement of revenue and accounts receivable, prior to adjustment, of $388,916. Recommendation: We recommend that management continue to evaluate current processes and practices. This can include building out and utilizing certain flowcharts/checklists to identify the appropriate timing and amount of revenue recognition as well as whether the Organization is considered an agent in grantor transactions. Views of Responsible Official and Planned Corrective Action: Refer to accompanying corrective action plan.

Reference Number: 2025-002 (Material Weakness - Internal Control over Financial Reporting and Noncompliance – Preparation of the Schedule of Expenditure of Federal Awards) Background: The Organization is required to prepare a Schedule of Expenditures of Federal Awards (SEFA) in accordance with 2 CFR 200.510(b), which serves as the basis for determining major programs and calculating the percentage of coverage under 2 CFR 200.518. During our audit, we identified omitted federal expenditures totaling $157,189 that primarily related to ALN 93.566. Criteria: • 2 CFR 200.510(b): The auditee must prepare a SEFA that includes total federal awards expended for each federal program. • 2 CFR 200.518(f): The auditor must obtain sufficient coverage of total federal awards expended (generally at least 40% for low-risk auditees and 20% for high-risk auditees). • 2 CFR 200.303(a): The auditee must establish and maintain effective internal control over federal awards to provide reasonable assurance of compliance, including accurate financial reporting. Condition: The Organization’s SEFA did not include $157,189 of federal expenditures. As a result, total federal expenditures were understated, and the auditor’s initial major program determination and testing did not achieve the required percentage of coverage under Uniform Guidance. Cause: Management’s controls over SEFA preparation and review were not adequately designed or implemented to ensure completeness of federal award identification and reporting. Specifically: • There was no formal reconciliation of federal expenditures to the general ledger and grant activity. • The review control did not include procedures to validate completeness of all ALNs, particularly for pass-through or less prominent programs. Effect: • The SEFA was materially misstated due to federal expenditures that were not included. • The initial major program determination resulted in insufficient audit coverage relative to total federal expenditures. • Additional audit procedures were required to achieve compliance with 2 CFR 200.518. • There is an increased risk that other federal programs or compliance requirements could be improperly reported or tested. Questioned Costs: None. Recommendation: We recommend that management strengthen internal controls over SEFA preparation and review by: • Implementing a formal SEFA preparation checklist that includes reconciliation of total federal expenditures to the general ledger and grant records. • Establishing a control to identify all federal awards by ALN, including pass-through funding, prior to SEFA finalization. • Enhancing management review procedures to include verification of completeness and accuracy, with documented evidence of review. • Coordinating with program personnel to ensure all sources of federal funding are captured. Views of Responsible Officials: Management acknowledges the omission of federal expenditures from the SEFA and agrees with the finding. Corrective actions will include implementing enhanced reconciliation and review controls to ensure completeness of the SEFA in future reporting periods.

Reference Number: 2025-003 Finding: Finding Type: Noncompliance with major program requirements Title and Federal Assistance Listing Number of Federal Program: 19.510 – U.S. Refugee Admissions Program - Department of State. 93.566 – Refugee and Entrant Assistance Finding Resolution Status: Ongoing Criteria: The Organization is required to submit certain financial reports within prescribed timelines to the Hebrew Immigrant Aid Society (HIAS). Condition: The Organization failed to submit certain monthly reimbursement requests to HIAS within the prescribed timeline of 15 days following the end of each month and to ESCCO within the monthly timelines prescribed in the underlying grant agreements. Context: During our test work of the reporting requirements for the HIAS grant, of the 3 monthly reports selected for test work, each of these reports were submitted after the established 15-day deadline. However, each report was submitted within 50 days and accepted by the grantor upon submission. Cause: Resource constraints due to the large number of reports that have to be filed and also employee turnover and this being the first full fiscal year expending funds for the HIAS programming. Effect: Failure to submit reports timely makes the Organization out of compliance with grant requirements. Questioned Costs: None Identification as a Repeat Finding: Yes – included as finding 2024-001 in the June 30, 2024 financial statements. Recommendation: All requested reports should be submitted in accordance with the mutually agreed upon Reporting Schedule. Views of Responsible Official and Planned Corrective Action: Management agrees with finding. The Organization has maintained and will continue to maintain an appropriate staffing level to ensure all reporting deadlines are met.