Audit 4363

Finding Number: 2022‐001 Repeat Finding: No Program Name/Assistance Listing Title: COVID‐19 Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027 Federal Agency: U.S. Department of Treasury Federal Award Number: ISA‐ARPA‐AZABGC‐042022‐47, GR‐GEER‐AZABGC‐040122‐01 Pass‐Through Agency: Arizona Alliance of Boys and Girls Clubs Questioned Costs: N/A Type of Finding: Noncompliance, Material Weakness Compliance Requirement: Procurement and Suspension and Debarment Criteria Non‐federal entities other than states, including those operating federal programs as subrecipients of states, must follow the procurement standards set out at 2 CFR §§200.318 through 200.326. They must use their own documented procurement procedures, which reflect applicable State and local laws and regulations, provided that the procurements conform to applicable federal statutes and the procurement requirements identified in 2 CFR part 200. Additionally, non‐federal entities are prohibited from contracting with or making subawards under covered transactions to parties that are suspended or debarred. When a non‐federal entity enters into a covered transaction with an entity at a lower tier, the non‐federal entity must verify that the entity, as defined in 2 CFR §180.995 and agency adopting regulations, is not suspended or debarred or otherwise excluded from participating in the transaction. This verification may be accomplished by (1) checking the System of Award Management (SAM) maintained by the General Services Administration (GSA) or (2) collecting a certification from the entity, or adding a clause or condition to the covered transaction with that entity (2 CFR §180.300). Condition The Club did not have proper internal controls over procurement to ensure compliance with federal regulations and guidelines. Adequate supporting documentation was not maintained to demonstrate compliance with procurement standards. In addition, the Club’s written procurement standards did not align with federal regulations and guidelines. Cause The Club’s internal controls over procurement of goods and services were not adequate. Effect The Club was not in compliance with Federal regulations and guidelines related to procurement. Context During our review of procurement, we noted the following: - The Club does not have a policy or procedure in place that requires a verification check of suspension and debarment for covered transactions. One purchase charged to the program exceeded $25,000; however, the Club did not perform a verification check. Audit procedures determined the vendor was not suspended or debarred. - The Club’s procurement policies did not address §200.321 Contracting with small and minority businesses, women's business enterprises, and labor surplus area firms or §200.322 Domestic preferences for procurements. - For purchases with two vendors exceeding the micro‐purchase threshold but less than the Simplified Acquisition Threshold, the Club did not maintain records sufficient to detail the procurement performed for these vendors. The sample was not intended to be, and was not, a statistically valid sample Recommendation The Club should develop and implement policies and procedures to ensure compliance with federal procurement requirements. Additionally, procurement records should be retained, and should include, but are not necessarily limited to, the following: rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Views of Responsible Officials See Corrective Action Plan.

Finding Number: 2022‐002 Repeat Finding: No Program Name/Assistance Listing Title: COVID‐19 Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027 Federal Agency: U.S. Department of Treasury Federal Award Number: ISA‐ARPA‐AZABGC‐042022‐47, GR‐GEER‐AZABGC‐040122‐01 Pass‐Through Agency: Arizona Alliance of Boys and Girls Clubs Questioned Costs: $5,076 Type of Finding: Noncompliance, Significant Deficiency Compliance Requirement: Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Period of Performance Criteria Under 2 CFR §200.303, the Club is required to establish and maintain effective internal controls over Federal awards that provide reasonable assurance that the Club is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition The Club did not have adequate internal controls in place to ensure eligible costs were charged to the program. Cause The Club lacked proper internal controls over payroll and accounts payable processing. Effect The Club may have charged unallowable costs to the program. Context The Club did not maintain an approved wage agreement for two employees paid from the grant. Therefore, it could not be determined if the wage rates charged to the grant were approved. The questioned cost of $3,970 represents amounts paid to these employees, less what would have been paid using the local minimum wage rate in effect for a similar number of hours worked. In addition, the Club did not maintain supporting documentation for five of 40 non‐payroll expenditures sampled that were charged to the grant, totaling $1,106. As a result, it could not be determined if the purchases were allowable or expended within the period of performance. The aggregated projected questioned cost for both items noted could be in excess of $25,000. The sample was not intended to be, and was not, a statistically valid sample. Recommendation The Club should implement procedures over payroll and non‐payroll expenditures to ensure the adequate maintenance of documents. These procedures should include maintaining approved wage agreements for all employees and purchase approvals and third party invoices for non‐payroll expenditures. Views Of Responsible Officials See Corrective Action Plan.

Finding Number: 2022‐001 Repeat Finding: No Program Name/Assistance Listing Title: COVID‐19 Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027 Federal Agency: U.S. Department of Treasury Federal Award Number: ISA‐ARPA‐AZABGC‐042022‐47, GR‐GEER‐AZABGC‐040122‐01 Pass‐Through Agency: Arizona Alliance of Boys and Girls Clubs Questioned Costs: N/A Type of Finding: Noncompliance, Material Weakness Compliance Requirement: Procurement and Suspension and Debarment Criteria Non‐federal entities other than states, including those operating federal programs as subrecipients of states, must follow the procurement standards set out at 2 CFR §§200.318 through 200.326. They must use their own documented procurement procedures, which reflect applicable State and local laws and regulations, provided that the procurements conform to applicable federal statutes and the procurement requirements identified in 2 CFR part 200. Additionally, non‐federal entities are prohibited from contracting with or making subawards under covered transactions to parties that are suspended or debarred. When a non‐federal entity enters into a covered transaction with an entity at a lower tier, the non‐federal entity must verify that the entity, as defined in 2 CFR §180.995 and agency adopting regulations, is not suspended or debarred or otherwise excluded from participating in the transaction. This verification may be accomplished by (1) checking the System of Award Management (SAM) maintained by the General Services Administration (GSA) or (2) collecting a certification from the entity, or adding a clause or condition to the covered transaction with that entity (2 CFR §180.300). Condition The Club did not have proper internal controls over procurement to ensure compliance with federal regulations and guidelines. Adequate supporting documentation was not maintained to demonstrate compliance with procurement standards. In addition, the Club’s written procurement standards did not align with federal regulations and guidelines. Cause The Club’s internal controls over procurement of goods and services were not adequate. Effect The Club was not in compliance with Federal regulations and guidelines related to procurement. Context During our review of procurement, we noted the following: - The Club does not have a policy or procedure in place that requires a verification check of suspension and debarment for covered transactions. One purchase charged to the program exceeded $25,000; however, the Club did not perform a verification check. Audit procedures determined the vendor was not suspended or debarred. - The Club’s procurement policies did not address §200.321 Contracting with small and minority businesses, women's business enterprises, and labor surplus area firms or §200.322 Domestic preferences for procurements. - For purchases with two vendors exceeding the micro‐purchase threshold but less than the Simplified Acquisition Threshold, the Club did not maintain records sufficient to detail the procurement performed for these vendors. The sample was not intended to be, and was not, a statistically valid sample Recommendation The Club should develop and implement policies and procedures to ensure compliance with federal procurement requirements. Additionally, procurement records should be retained, and should include, but are not necessarily limited to, the following: rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Views of Responsible Officials See Corrective Action Plan.

Finding Number: 2022‐002 Repeat Finding: No Program Name/Assistance Listing Title: COVID‐19 Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027 Federal Agency: U.S. Department of Treasury Federal Award Number: ISA‐ARPA‐AZABGC‐042022‐47, GR‐GEER‐AZABGC‐040122‐01 Pass‐Through Agency: Arizona Alliance of Boys and Girls Clubs Questioned Costs: $5,076 Type of Finding: Noncompliance, Significant Deficiency Compliance Requirement: Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Period of Performance Criteria Under 2 CFR §200.303, the Club is required to establish and maintain effective internal controls over Federal awards that provide reasonable assurance that the Club is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition The Club did not have adequate internal controls in place to ensure eligible costs were charged to the program. Cause The Club lacked proper internal controls over payroll and accounts payable processing. Effect The Club may have charged unallowable costs to the program. Context The Club did not maintain an approved wage agreement for two employees paid from the grant. Therefore, it could not be determined if the wage rates charged to the grant were approved. The questioned cost of $3,970 represents amounts paid to these employees, less what would have been paid using the local minimum wage rate in effect for a similar number of hours worked. In addition, the Club did not maintain supporting documentation for five of 40 non‐payroll expenditures sampled that were charged to the grant, totaling $1,106. As a result, it could not be determined if the purchases were allowable or expended within the period of performance. The aggregated projected questioned cost for both items noted could be in excess of $25,000. The sample was not intended to be, and was not, a statistically valid sample. Recommendation The Club should implement procedures over payroll and non‐payroll expenditures to ensure the adequate maintenance of documents. These procedures should include maintaining approved wage agreements for all employees and purchase approvals and third party invoices for non‐payroll expenditures. Views Of Responsible Officials See Corrective Action Plan.

Finding Number: 2022‐001 Repeat Finding: No Program Name/Assistance Listing Title: COVID‐19 Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027 Federal Agency: U.S. Department of Treasury Federal Award Number: ISA‐ARPA‐AZABGC‐042022‐47, GR‐GEER‐AZABGC‐040122‐01 Pass‐Through Agency: Arizona Alliance of Boys and Girls Clubs Questioned Costs: N/A Type of Finding: Noncompliance, Material Weakness Compliance Requirement: Procurement and Suspension and Debarment Criteria Non‐federal entities other than states, including those operating federal programs as subrecipients of states, must follow the procurement standards set out at 2 CFR §§200.318 through 200.326. They must use their own documented procurement procedures, which reflect applicable State and local laws and regulations, provided that the procurements conform to applicable federal statutes and the procurement requirements identified in 2 CFR part 200. Additionally, non‐federal entities are prohibited from contracting with or making subawards under covered transactions to parties that are suspended or debarred. When a non‐federal entity enters into a covered transaction with an entity at a lower tier, the non‐federal entity must verify that the entity, as defined in 2 CFR §180.995 and agency adopting regulations, is not suspended or debarred or otherwise excluded from participating in the transaction. This verification may be accomplished by (1) checking the System of Award Management (SAM) maintained by the General Services Administration (GSA) or (2) collecting a certification from the entity, or adding a clause or condition to the covered transaction with that entity (2 CFR §180.300). Condition The Club did not have proper internal controls over procurement to ensure compliance with federal regulations and guidelines. Adequate supporting documentation was not maintained to demonstrate compliance with procurement standards. In addition, the Club’s written procurement standards did not align with federal regulations and guidelines. Cause The Club’s internal controls over procurement of goods and services were not adequate. Effect The Club was not in compliance with Federal regulations and guidelines related to procurement. Context During our review of procurement, we noted the following: - The Club does not have a policy or procedure in place that requires a verification check of suspension and debarment for covered transactions. One purchase charged to the program exceeded $25,000; however, the Club did not perform a verification check. Audit procedures determined the vendor was not suspended or debarred. - The Club’s procurement policies did not address §200.321 Contracting with small and minority businesses, women's business enterprises, and labor surplus area firms or §200.322 Domestic preferences for procurements. - For purchases with two vendors exceeding the micro‐purchase threshold but less than the Simplified Acquisition Threshold, the Club did not maintain records sufficient to detail the procurement performed for these vendors. The sample was not intended to be, and was not, a statistically valid sample Recommendation The Club should develop and implement policies and procedures to ensure compliance with federal procurement requirements. Additionally, procurement records should be retained, and should include, but are not necessarily limited to, the following: rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Views of Responsible Officials See Corrective Action Plan.

Finding Number: 2022‐002 Repeat Finding: No Program Name/Assistance Listing Title: COVID‐19 Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027 Federal Agency: U.S. Department of Treasury Federal Award Number: ISA‐ARPA‐AZABGC‐042022‐47, GR‐GEER‐AZABGC‐040122‐01 Pass‐Through Agency: Arizona Alliance of Boys and Girls Clubs Questioned Costs: $5,076 Type of Finding: Noncompliance, Significant Deficiency Compliance Requirement: Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Period of Performance Criteria Under 2 CFR §200.303, the Club is required to establish and maintain effective internal controls over Federal awards that provide reasonable assurance that the Club is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition The Club did not have adequate internal controls in place to ensure eligible costs were charged to the program. Cause The Club lacked proper internal controls over payroll and accounts payable processing. Effect The Club may have charged unallowable costs to the program. Context The Club did not maintain an approved wage agreement for two employees paid from the grant. Therefore, it could not be determined if the wage rates charged to the grant were approved. The questioned cost of $3,970 represents amounts paid to these employees, less what would have been paid using the local minimum wage rate in effect for a similar number of hours worked. In addition, the Club did not maintain supporting documentation for five of 40 non‐payroll expenditures sampled that were charged to the grant, totaling $1,106. As a result, it could not be determined if the purchases were allowable or expended within the period of performance. The aggregated projected questioned cost for both items noted could be in excess of $25,000. The sample was not intended to be, and was not, a statistically valid sample. Recommendation The Club should implement procedures over payroll and non‐payroll expenditures to ensure the adequate maintenance of documents. These procedures should include maintaining approved wage agreements for all employees and purchase approvals and third party invoices for non‐payroll expenditures. Views Of Responsible Officials See Corrective Action Plan.

Finding Number: 2022‐001 Repeat Finding: No Program Name/Assistance Listing Title: COVID‐19 Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027 Federal Agency: U.S. Department of Treasury Federal Award Number: ISA‐ARPA‐AZABGC‐042022‐47, GR‐GEER‐AZABGC‐040122‐01 Pass‐Through Agency: Arizona Alliance of Boys and Girls Clubs Questioned Costs: N/A Type of Finding: Noncompliance, Material Weakness Compliance Requirement: Procurement and Suspension and Debarment Criteria Non‐federal entities other than states, including those operating federal programs as subrecipients of states, must follow the procurement standards set out at 2 CFR §§200.318 through 200.326. They must use their own documented procurement procedures, which reflect applicable State and local laws and regulations, provided that the procurements conform to applicable federal statutes and the procurement requirements identified in 2 CFR part 200. Additionally, non‐federal entities are prohibited from contracting with or making subawards under covered transactions to parties that are suspended or debarred. When a non‐federal entity enters into a covered transaction with an entity at a lower tier, the non‐federal entity must verify that the entity, as defined in 2 CFR §180.995 and agency adopting regulations, is not suspended or debarred or otherwise excluded from participating in the transaction. This verification may be accomplished by (1) checking the System of Award Management (SAM) maintained by the General Services Administration (GSA) or (2) collecting a certification from the entity, or adding a clause or condition to the covered transaction with that entity (2 CFR §180.300). Condition The Club did not have proper internal controls over procurement to ensure compliance with federal regulations and guidelines. Adequate supporting documentation was not maintained to demonstrate compliance with procurement standards. In addition, the Club’s written procurement standards did not align with federal regulations and guidelines. Cause The Club’s internal controls over procurement of goods and services were not adequate. Effect The Club was not in compliance with Federal regulations and guidelines related to procurement. Context During our review of procurement, we noted the following: - The Club does not have a policy or procedure in place that requires a verification check of suspension and debarment for covered transactions. One purchase charged to the program exceeded $25,000; however, the Club did not perform a verification check. Audit procedures determined the vendor was not suspended or debarred. - The Club’s procurement policies did not address §200.321 Contracting with small and minority businesses, women's business enterprises, and labor surplus area firms or §200.322 Domestic preferences for procurements. - For purchases with two vendors exceeding the micro‐purchase threshold but less than the Simplified Acquisition Threshold, the Club did not maintain records sufficient to detail the procurement performed for these vendors. The sample was not intended to be, and was not, a statistically valid sample Recommendation The Club should develop and implement policies and procedures to ensure compliance with federal procurement requirements. Additionally, procurement records should be retained, and should include, but are not necessarily limited to, the following: rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Views of Responsible Officials See Corrective Action Plan.

Finding Number: 2022‐002 Repeat Finding: No Program Name/Assistance Listing Title: COVID‐19 Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027 Federal Agency: U.S. Department of Treasury Federal Award Number: ISA‐ARPA‐AZABGC‐042022‐47, GR‐GEER‐AZABGC‐040122‐01 Pass‐Through Agency: Arizona Alliance of Boys and Girls Clubs Questioned Costs: $5,076 Type of Finding: Noncompliance, Significant Deficiency Compliance Requirement: Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Period of Performance Criteria Under 2 CFR §200.303, the Club is required to establish and maintain effective internal controls over Federal awards that provide reasonable assurance that the Club is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition The Club did not have adequate internal controls in place to ensure eligible costs were charged to the program. Cause The Club lacked proper internal controls over payroll and accounts payable processing. Effect The Club may have charged unallowable costs to the program. Context The Club did not maintain an approved wage agreement for two employees paid from the grant. Therefore, it could not be determined if the wage rates charged to the grant were approved. The questioned cost of $3,970 represents amounts paid to these employees, less what would have been paid using the local minimum wage rate in effect for a similar number of hours worked. In addition, the Club did not maintain supporting documentation for five of 40 non‐payroll expenditures sampled that were charged to the grant, totaling $1,106. As a result, it could not be determined if the purchases were allowable or expended within the period of performance. The aggregated projected questioned cost for both items noted could be in excess of $25,000. The sample was not intended to be, and was not, a statistically valid sample. Recommendation The Club should implement procedures over payroll and non‐payroll expenditures to ensure the adequate maintenance of documents. These procedures should include maintaining approved wage agreements for all employees and purchase approvals and third party invoices for non‐payroll expenditures. Views Of Responsible Officials See Corrective Action Plan.