CORRECTIVE ACTION PLAN
June 25, 2024
Appalachia Service Project, Inc. respectfully submits the following corrective action plan for the year ended
December 31, 2023.
Name and address of independent public accounting firm:
Brown, Edwards & Company, L.L.P. 636 Shelby Street, Suite 400
Bristol, TN 3...
CORRECTIVE ACTION PLAN
June 25, 2024
Appalachia Service Project, Inc. respectfully submits the following corrective action plan for the year ended
December 31, 2023.
Name and address of independent public accounting firm:
Brown, Edwards & Company, L.L.P. 636 Shelby Street, Suite 400
Bristol, TN 37620
Audit period: December 31, 2023
The findings from the December 31, 2023, Schedule of Findings and Questioned Costs (the "Schedule") are discussed below. The findings are numbered consistently with the number assigned in the Schedule.
FINDINGS AND QUESTIONED COSTS- MAJOR FEDERAL AWARD PROGRAM AUDIT
2023-001: Community Development Block Grant-AL# 14.218, Controls over Reporting
Condition: ASP included an amount for reimbursement to the City of Johnson City, TN that had not been paid and was not paid promptly, resulting in ASP receiving funds in advance from the City, which is in violation of the grant agreement ASP has with the City.
Criteria: The grant agreerr.e nt with the City states that in no event shall the City provide advance funding to their sub-recipient.
Cause: ASP failed to pay an invoice that was submitted for reimbursement prior to the receipt of the reimbursement from the City. ASP's controls over the process of reconciling reimbursement requests and payables from their general ledger to the request were not sufficient to prevent this issue from occurring, resulting in the error.
Effect: ASP violated their agreement with the City and received funds in advance.
Questioned Costs: NIA
Perspective Information: An invoice recorded in their purchasing tracking software was not subsequently recorded in their financial software allowing for request for reimbursement to happen for an invoice that was not promptly paid. Controls were not sufficient to prevent this from occurring.
Repeat Finding: No
Recommendation: ASP should pay all invoices submitted for reimbursement prior to receipt of the reimbursement from the City in order to stay in compliance with their agreement with the City. ASP should also reconcile between the purchase tracking software and the general ledger to ensure that all purchases are promptly recorded in accounts payable to be paid promptly. ASP should ensure that controls are implemented to help prevent reoccurrence of this issue in the future.
Corrective Action: ASP has policies and procedures in place to ensure all reimbursable expenditures are allowable, paid and clear the bank before submitting for reimbursement. However, on one occasion, ASP inadvertently submitted an allowable and paid expenditure of
$32.78 that had not cleared the bank. ASP has since repaid this amount and the replacement check has been cashed by the vendor. In the future, ASP will ensure that all expenditures are allowable, paid, and clear the bank before submitting the reimbursement. ASP has re-emphasized the importance of following established procedures when submitting for grant reimbursements and believes proper controls and corrective actions are currently in place to prevent future issues.
2023-002: Community Development Block Grant - AL# 14.218, Reporting
Condition: ASP, a sub-recipient, did not submit their Quarter 3 report in a timely manner, which is in violation of the grant agreement ASP has with the pass-through entity, City of Johnson City, TN.
Criteria: The grant agreement with the City requires an annual report, a projected expenditures report, and four quarterly reports be submitted by ASP in a timely manner.
Cause: ASP failed to submit their Quarter 3 report before it was due.
Effect: ASP violated their agreement with the City and submitted their report late.
Questioned Costs: NIA
Perspective Information: The Quarter 3 report required by the grant agreement between ASP and the City of Johnson City was not submitted timely.
Repeat Finding: No
Recommendation: ASP should submit all required reports in a timely manner per the grant agreement. Additionally, ASP should review controls and procedures in place to ensure that there are policies to help aid with timely report completion.
Corrective Action: ASP is currently engaged in home rehabilitation projects under an agreement with Johnson City CDBG. This agreement stipulates that quarterly reports must be submitted by the 15th of the month following the quarter. Despite completing the required work and accurately tracking expenses, the report due on
I 0/16/2023 was submitted a little over 2 weeks late on I 1/2/2023 due to an omission by staff. However, ASP has
maintained communication with the grant administrator at Johnson City and has remained compliant with all other aspects of the contract. The delayed submission of the quarterly report has not impacted ASP's favorable standing with the city, and we have promptly rectified the situation, ensuring full compliance with the agreement. ASP believes the proper corrective action has taken place to ensure future reports are submitted in a timely manner.
If the Federal Audit Clearinghouse has questions regarding this plan, please call Greg DeGennaro, CFO at 423- 854-8800.
Sincerely yours,
Greg DeGennaro
Chief Financial Officer