Audit 566

Noncompliance Material to the Financial Statements and Material Weakness in Internal Control - Community Services Block Grant Finding: 2022-003 U.S. Department of Health and Human Services Passed-through NC Department of Health and Human Services (NC DHHS) Program Name: Community Services Block Grant AL #: 93.569 Award Year: 2022 Criteria: According to Internal Revenue Code Sections 6601 and 6651(a)(2), interest and late payment penalties are assessed on employers when payroll tax withholdings are not paid in full or on time. Additionally, as defined by G.S. 105-243.1 the grantee should not have any overdue tax debts; these are defined on the statute as: "Any part of a tax debt that remains unpaid 60 days or more after it becomes collectible under G.S. 105-241.22. The term does not include a tax debt for which the taxpayer entered into an agreement for the tax debt under G.S. 105-237 within 60 days after the tax debt became collectible, if the taxpayer has not failed to make any payments due under the installment agreement." Tax debt defined as "The total amount of tax, penalty, and interest collectible under G.S. 105-241.22." The certification and test for no overdue tax debts is a required Special Test and Provision of the CSBG Program Compliance Supplement issued by NC DHHS Division of Social Services Office of Economic Opportunity. Condition and context: Central Piedmont Community Action, Inc. failed to make timely payroll tax withholding payments resulting in significant Internal Revenue Service (IRS) penalties and interest incurred by the Agency. Additionally, as a result the Agency is non-compliant with G.S. 105-243.1 regarding the non- overdue tax debt requirement. Effect: As a result of failure to make timely payroll tax withholding payments, Central Piedmont Community Action, Inc. incurred $6,750 in penalties and interest in current year and still owed $56,625 from previous years. Also, as a result of failure fo make the timely payroll tax withholding payments, Central Piedmont Community Action, Inc. is non-compliant with the non-overdue tax debt as defined under G.S. 105-243.1. Cause: Insufficient planning for delayed cash flow, due to grantor reimbursements not being made timely to Central Piedmont Community Action, Inc., prevented the Agency from being able to make timely payments. Identification of a Repeated Finding: This is a repeated finding 2021-002 from the immediate previous audit. Recommendation: We recommend that Central Piedmont Community Action, Inc. work closely with their grantors in order to communicate the importance of timely reimbursements from them as well as recommending that the Agency seek out additional funding sources in order to strengthen cash flow and assist with their administrative expenses. Additionally, we recommend the Agency work with vendors to explore other options in delayed reimbursement situations as to not incur significant penalties from the IRS. Views of Responsible Management: See management's corrective action plan.

Noncompliance Material to the Financial Statements and Material Weakness in Internal Control - Community Services Block Grant Finding: 2022-003 U.S. Department of Health and Human Services Passed-through NC Department of Health and Human Services (NC DHHS) Program Name: Community Services Block Grant AL #: 93.569 Award Year: 2022 Criteria: According to Internal Revenue Code Sections 6601 and 6651(a)(2), interest and late payment penalties are assessed on employers when payroll tax withholdings are not paid in full or on time. Additionally, as defined by G.S. 105-243.1 the grantee should not have any overdue tax debts; these are defined on the statute as: "Any part of a tax debt that remains unpaid 60 days or more after it becomes collectible under G.S. 105-241.22. The term does not include a tax debt for which the taxpayer entered into an agreement for the tax debt under G.S. 105-237 within 60 days after the tax debt became collectible, if the taxpayer has not failed to make any payments due under the installment agreement." Tax debt defined as "The total amount of tax, penalty, and interest collectible under G.S. 105-241.22." The certification and test for no overdue tax debts is a required Special Test and Provision of the CSBG Program Compliance Supplement issued by NC DHHS Division of Social Services Office of Economic Opportunity. Condition and context: Central Piedmont Community Action, Inc. failed to make timely payroll tax withholding payments resulting in significant Internal Revenue Service (IRS) penalties and interest incurred by the Agency. Additionally, as a result the Agency is non-compliant with G.S. 105-243.1 regarding the non- overdue tax debt requirement. Effect: As a result of failure to make timely payroll tax withholding payments, Central Piedmont Community Action, Inc. incurred $6,750 in penalties and interest in current year and still owed $56,625 from previous years. Also, as a result of failure fo make the timely payroll tax withholding payments, Central Piedmont Community Action, Inc. is non-compliant with the non-overdue tax debt as defined under G.S. 105-243.1. Cause: Insufficient planning for delayed cash flow, due to grantor reimbursements not being made timely to Central Piedmont Community Action, Inc., prevented the Agency from being able to make timely payments. Identification of a Repeated Finding: This is a repeated finding 2021-002 from the immediate previous audit. Recommendation: We recommend that Central Piedmont Community Action, Inc. work closely with their grantors in order to communicate the importance of timely reimbursements from them as well as recommending that the Agency seek out additional funding sources in order to strengthen cash flow and assist with their administrative expenses. Additionally, we recommend the Agency work with vendors to explore other options in delayed reimbursement situations as to not incur significant penalties from the IRS. Views of Responsible Management: See management's corrective action plan.