Criteria: Internal controls should be in place to ensure that investment accounts and transactions are reconciled to prevent or detect unauthorized or inaccurate recording or presentation. In addition, a review of the reconciliation should be performed by an individual other than the individual performing the reconciliation. Condition and Context: Throughout the performance of audit procedures, the auditor identified the following instances where appropriate reconciliations were either not performed or were not reviewed by an individual other than the individual performing the reconciliation: The investment account were not adjusted to supporting documentation. Certificates of deposits were matured but left in a balance sheet account. Stock sales were never recorded. Cause: The Organization has limited written procedures for the reconciliation process. The limited procedures lack requiring the timely performance of specific reconciliations and providing instruction for performing the reconciliation including review by an individual other than the individual performing the reconciliation. Effect: The lack of reconciliation and review may result in the occurrence of unauthorized or inaccurate activity recorded within the Organization’s records and reflected on the interim financial statements. Recommendation: We recommend the Organization develop written policies requiring timely reconciliations including a documented review by an individual other than the individual performing the reconciliation. Monthly and annual closing processes should be documented, performed, and reviewed. Management Response: Processes are being implemented to ensure appropriate reconciliations and review process, see corrective action plan. Repeat Finding: This finding is a repeat of prior year Finding 2024-001. Although management implemented improvements in certain areas, the deficiency was not fully corrected during the current year.
Criteria: Revenue was not recognized in accordance with generally accepted accounting principles, specifically related to grant funding. Grants may be either exchange or non-exchange transactions. Condition and Context: Throughout the performance of audit procedures, the auditor identified several grants that were mis-identified as to type of grant, affecting revenue, deferred revenue, accounts receivable and refundable advances. Cause: The Organization has limited resources to identify types of grants and the appropriate accounting principle applications. Effect: Revenue was not recognized appropriately based on the type of grant received throughout the year. The lack of appropriate recognition may result in the occurrence of unauthorized or inaccurate activity recorded within the Organization’s records and reflected on the interim financial statements. Recommendation: Revenue streams should be analyzed for type of grant transaction (exchange vs. nonexchange). Appropriate accounting principles should be applied based on the grant type. Management Response: Revenue streams will be analyzed, identifying type of grant transaction to determine the appropriate recording of revenue, see corrective action plan. Repeat Finding: This finding is a repeat of prior-year Finding 2024-002. The corrective action plan developed by management has an implementation date of the beginning of fiscal year ending June 30, 2026. As the corrective actions had not yet been implemented during the year ended June 30, 2025, audit procedures continued to identify grants that were incorrectly classified as exchange or nonexchange transactions, resulting in adjustments to revenue, deferred revenue, accounts receivable, and refundable advances. Accordingly, the finding is repeated in the current year.
Criteria: Internal controls should be in place to ensure the schedule of federal awards is complete and accurate. In addition, a review of the schedule should be performed by an individual other than the individual performing the reconciliation. Condition and Context: Throughout the performance of audit procedures, the auditor identified federal awards that were not included on the schedule of expenditures of federal awards. Grant documents were not received by the accounting department to be able to track and identify the federal awards throughout the year. Cause: The Organization has limited written procedures for the acceptance and tracking of federal awards. The limited procedures lack requiring the timely communication between departments to summarize the federal award information accurately. Effect: The lack of identification of federal awards may result in the occurrence of unauthorized or inaccurate activity recorded within the Organization’s records and reflected on the interim financial statements. Recommendation: We recommend the Organization develop written policies establishing a centralized process to maintain grant records and a process to review the documents for federal funding, and track the federal grants in the aggregate to monitor the applicability of whether a Single Audit under Uniform Guidance is necessary. Management Response: Policies are being implemented to ensure appropriate identification, review process, and tracking of federal awards, see corrective action plan. Repeat Finding: This finding is a repeat of prior-year Finding 2024-004. Management's corrective action plan was scheduled for implementation at the beginning of year ended June 30, 2026 and therefore was not in effect during the year ended June 30, 2025. As a result, audit procedures continued to identify federal awards that were omitted from the Schedule of Expenditures of Federal Awards (SEFA). In addition, grant documents were not consistently provided to the accounting department, limiting management's ability to identify and track federal awards throughout the year.
Finding 2025-004 Activities Allowed/Allowable Costs: Internal Control (Non-Payroll Costs) U.S. Department of Health and Human Services No. 93.558 – Temporary Assistance for Needy Families Grant Period Year Ended June 30, 2025 Criteria: The entity should maintain internal controls to ensure all grant expenditures are properly reviewed and approved by personnel with sufficient knowledge of program requirements prior to processing. Condition and Context: During testing of 58 non-payroll expenditures, we identified 41 exceptions. Thirty-seven expenditures were paid with credit cards that lack review and approval by the program manager. Two expenditures were approved by an individual who was not sufficiently familiar with grant requirements, and two journal entries lacked evidence of review and approval by the program manager. Cause: Management did not establish or consistently follow procedures requiring expenditure approvals by personnel knowledgeable of program requirements and supervisory review of journal entries. Effect: Inadequate review and approval controls increase the risk that unallowable or unsupported expenditures could be charged to the federal program and go undetected. Recommendation: We recommend the Organization develop written policies establishing a review process for the temporary assistance for needy families program for activities allowed/allowable costs and document each review process. Management Response: Policies are being implemented to ensure there is a review process and documentation of the process, see corrective action plan.
Finding 2025-005 Activities Allowed/Allowable Costs: Internal Control (Payroll Costs) U.S. Department of Health and Human Services No. 93.558 – Temporary Assistance for Needy Families No. 93.276 Drug Free Community Grant Period Year Ended June 30, 2025 Criteria: The entity should maintain controls to ensure employee timecards are reviewed and approved before payroll is processed and charged to federal awards. Condition and Context: Of six payroll runs tested, six employees were selected from each run. Seven instances of timecards not being approved prior to payroll processing was found. Cause: Supervisory review controls over payroll processing were not operating effectively, and payroll was processed before approval of employee time records. Effect: Employees may be paid based on inaccurate or unauthorized time records. Payroll costs could be calculated or allocated incorrectly and charged to the federal program without timely detection. Recommendation: We recommend the Organization develop written policies establishing a review process for hourly timecards prior to payroll processing. Management Response: Policies are being implemented to ensure there is a review process and documentation of the process, see corrective action plan.
Finding 2025-006 Eligibility: Internal Control U.S. Department of Health and Human Services No. 93.558 – Temporary Assistance for Needy Families Grant Period Year Ended June 30, 2025 Criteria: Applications and eligibility determinations should be reviewed and approved in accordance with program policies to ensure participants meet eligibility requirements before receiving assistance. Condition and Context: Twenty of ninety-six eligibility files tested contained only one staff signature to document participant eligibility. No grant manager or supervisory approval was documented as approval for eligibility prior to participants being admitted to the program. Cause: Established eligibility review procedures were not consistently followed due to inadequate monitoring of the approval process. Effect: Insufficient review increases the risk that assistance could be provided to ineligible participants or that eligibility errors may not be detected timely. Recommendation: We recommend the Organization develop written policies establishing a review process for the program for eligibility and document each review process. Management Response: Policies are being implemented to ensure there is a review process, see corrective action plan. Repeat Finding: This finding is a repeat of prior-year Finding 2024-005. Although management's corrective action plan is scheduled to be fully implemented in the year ended June 30, 2026, improvements were made during the year ended June 30, 2025 to strengthen the eligibility review process. Audit testing noted a reduction in exceptions; however, documentation of required management review was still not consistently maintained for all participant applications. As a result, the eligibility control was not operating effectively throughout the audit period.
Finding 2025-007 Reporting: Internal Control and Compliance U.S. Department of Health and Human Services No. 93.558 – Temporary Assistance for Needy Families Grant Period Year Ended June 30, 2025 Criteria: Required federal and program reports should be prepared completely and submitted by established deadlines. Condition and Context: The Quarter 3 Quarterly Summary Project Report was not submitted as required. Cause: Management lacked procedures to track reporting deadlines and ensure timely preparation and submission of required reports. Effect: Failure to submit required reports may result in noncompliance with grant requirements and may impair oversight by the pass-through entity or federal agency. Recommendation: We recommend the Organization establish procedures to ensure all the required reports are submitted timely. Management Response: Policies are being implemented to ensure all reports are filed timely, see corrective action plan.
Finding 2025-008 Cash Management: Internal Control and Compliance U.S. Department of Health and Human Services No. 93.276 Drug Free Community Grant Period Year Ended June 30, 2025 Criteria: The entity should maintain effective cash management procedures to minimize the time between receipt and disbursement of federal funds and ensure grant expenditures are supported and monitored. Condition and Context: The program did not have effective controls over cash management and was overdrawn by approximately $21,000, representing approximately 17% of the grant balance. Cause: Management had not implemented monitoring and reconciliation procedures to review grant expenditures and cash draw activity on a timely basis. Effect: Ineffective cash management may result in noncompliance with federal requirements, temporary use of non-federal funds to support grant activities, and inaccurate reimbursement requests. Recommendation: We recommend management implement formal cash management monitoring procedures, including periodic reconciliations of expenditures to reimbursement requests and supervisory review of those reconciliations, to ensure compliance with federal cash management requirements. Management Response: Policies are being implemented to ensure reconciliations of expenditures to reimbursement requests are being done and reviewed, see corrective action plan.
Finding 2025-009 Matching: Internal Control U.S. Department of Health and Human Services No. 93.276 Drug Free Community Grant Period Year Ended June 30, 2025 Criteria: The entity should maintain controls to ensure matching contributions are properly calculated, documented, monitored, and reconciled to supporting records. Condition and Context: During the audit, management revised the allocation between grantfunded payroll costs and matching payroll costs. In addition, reconciliations had not been performed before the audit, resulting in differing match calculations during the audit process. Cause: Management did not perform periodic reconciliations of match calculations and lacked formal review procedures over the match reporting process. Effect: The absence of timely reconciliations increases the risk that matching requirements could be calculated incorrectly or unsupported amounts could be reported. Recommendation: We recommend management establish formal procedures for tracking and reconciling matching contributions, including documented supervisory review of match calculations and supporting documentation, to ensure compliance with federal matching requirements. Management Response: Policies are being implemented to ensure proper tracking and reconciling of matching contributions are being done and reviewed, see corrective action plan.