Federal Agency: Various Assistance Listing Number: Multiple Compliance Requirement: Reporting Finding 2024-001: Submission of the Audit Reporting Package and Data Collection Form (Repeat of Finding 2023-001) Criteria: Per 2 CFR §200.510(b), the auditee must prepare a Schedule of Federal Awards (SEFA) for the period covered by the auditee’s financial statements. Per §200.512(a), the SEFA must be submitted to the Federal Audit Clearinghouse (FAC) within the required deadline. Condition: The audit reporting package and data collection form for the year ended September 30, 2024, was not submitted to the FAC within the timeframe as required by the Uniform Guidance. Cause: The delay was due to a lack of capacity in the finance department and not following the year-end closing schedule. Effect: To qualify as a low-risk auditee, 2 CFR section 200.520 requires the audit reporting package and data collection form to be submitted to the FAC by the due date for each of the previous two years. Late filing will result in noncompliance with timely submission of financial information to the grantor agencies. Recommendation: Management should address the lack of capacity in the finance department and monitor the year-end closing schedule for a timely audit reporting package and data collection form to ensure compliance with federal deadlines. Questioned costs: None Responsible Official's Response: We agree with the auditors’ comments, and the following action will be taken to improve the situation. At the beginning of fiscal year 2025 we have added capacity to the finance department by one full-time employee. Semcac has also contracted with an outsourcing accounting firm to enhance and improve our internal controls, processes, and procedures to ensure we both follow our year-end closing schedule and provide a timely audit reporting package.
Federal Agency: Various Assistance Listing Number: Multiple Compliance Requirement: Reporting Finding 2024-001: Submission of the Audit Reporting Package and Data Collection Form (Repeat of Finding 2023-001) Criteria: Per 2 CFR §200.510(b), the auditee must prepare a Schedule of Federal Awards (SEFA) for the period covered by the auditee’s financial statements. Per §200.512(a), the SEFA must be submitted to the Federal Audit Clearinghouse (FAC) within the required deadline. Condition: The audit reporting package and data collection form for the year ended September 30, 2024, was not submitted to the FAC within the timeframe as required by the Uniform Guidance. Cause: The delay was due to a lack of capacity in the finance department and not following the year-end closing schedule. Effect: To qualify as a low-risk auditee, 2 CFR section 200.520 requires the audit reporting package and data collection form to be submitted to the FAC by the due date for each of the previous two years. Late filing will result in noncompliance with timely submission of financial information to the grantor agencies. Recommendation: Management should address the lack of capacity in the finance department and monitor the year-end closing schedule for a timely audit reporting package and data collection form to ensure compliance with federal deadlines. Questioned costs: None Responsible Official's Response: We agree with the auditors’ comments, and the following action will be taken to improve the situation. At the beginning of fiscal year 2025 we have added capacity to the finance department by one full-time employee. Semcac has also contracted with an outsourcing accounting firm to enhance and improve our internal controls, processes, and procedures to ensure we both follow our year-end closing schedule and provide a timely audit reporting package.
Federal Agency: Various Assistance Listing Number: Multiple Compliance Requirement: Reporting Finding 2024-001: Submission of the Audit Reporting Package and Data Collection Form (Repeat of Finding 2023-001) Criteria: Per 2 CFR §200.510(b), the auditee must prepare a Schedule of Federal Awards (SEFA) for the period covered by the auditee’s financial statements. Per §200.512(a), the SEFA must be submitted to the Federal Audit Clearinghouse (FAC) within the required deadline. Condition: The audit reporting package and data collection form for the year ended September 30, 2024, was not submitted to the FAC within the timeframe as required by the Uniform Guidance. Cause: The delay was due to a lack of capacity in the finance department and not following the year-end closing schedule. Effect: To qualify as a low-risk auditee, 2 CFR section 200.520 requires the audit reporting package and data collection form to be submitted to the FAC by the due date for each of the previous two years. Late filing will result in noncompliance with timely submission of financial information to the grantor agencies. Recommendation: Management should address the lack of capacity in the finance department and monitor the year-end closing schedule for a timely audit reporting package and data collection form to ensure compliance with federal deadlines. Questioned costs: None Responsible Official's Response: We agree with the auditors’ comments, and the following action will be taken to improve the situation. At the beginning of fiscal year 2025 we have added capacity to the finance department by one full-time employee. Semcac has also contracted with an outsourcing accounting firm to enhance and improve our internal controls, processes, and procedures to ensure we both follow our year-end closing schedule and provide a timely audit reporting package.
SCHEDULE OF FINDINGS AND QUESTIONED COSTS AND CORRECTIVE ACTION PLAN Federal Award Finding September 30, 2024 Comment #2024-002 Repeat Comment #2023-001 AND #2022-001 INTERNAL CONTROLS OVER FINANCIAL STATEMENT PREPARATION AND COMPLIANCE WITH RELATED PROVISIONS OF GRANTS AND CONTRACTS SHOULD BE IMPROVED LIHEAP FALN 93.568 (Questioned Costs - Undetermined) Condition: As part of our auditing procedures, we assisted in the preparation of the financial statements, related disclosures, and the schedule of expenditures of federal awards of the Agency. The preparation of these financial statements in accordance with generally accepted accounting principles (GAAP) and Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, is the responsibility of the grantee. The authoritative and regulatory standards states in summary, that management should authorize, process, reconcile and close-out each grant and contract in a timely manner to ensure proper accounting and reporting of such activity in accordance with the specific professional standards and regulatory requirements. The close-out process is designed to reduce the risk of errors, fraud, material misstatement of financial and compliance reporting and recognition of expenditures (or revenue) in the proper period. We noted that the current system of internal controls over financial statements and compliance is not designed to ensure that the objectives are achieved. Further, the capacity and experience of the current staff does not allow for adequate analysis of grants and contracts, proper allocations of shared costs and support services provided, grantor receivables, deferred revenue, and the reconciliation of bank accounts accurately and in a timely manner. This resulted in adjustments necessary to properly present the financial statements and disclosures of the Council as of September 30, 2024. We also noted significant weaknesses in internal controls over personnel payroll and the processing, maintaining and reconciling payroll activity to the general ledger and external regulatory reporting (IRS Form 941's, state filings, reports to various funding sources, etc.) Therefore, the risk exists that grant receivables and/or cash from the various programs are not recorded properly during the reporting period (interim and annually). This condition also makes it difficult to prepare accurate external reports required by the various funding sources in a timely manner. The systemic cause appears to be the untimely termination of key personnel and a lack of personnel with the skills, knowledge, and experience with grant accounting and a weakness in the overall system of internal accounting controls and monitoring. Context: Review of internal control structure of the organization in accordance with Government Auditing Standards. Criteria: Controls should be in place to ensure that financial statements are prepared in accordance with GAAP. The auditee shall prepare financial statements that reflect its financial position, results of operations or changes in net assets, and, where appropriate, cash flows for the fiscal year audited. The auditee shall also prepare a schedule of expenditures of Federal awards for the period covered by the auditee's financial statements. [2 CFR §200.510(a) and (b)] Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in §200.328 Financial reporting and 200.329 Monitoring and reporting program performance [2 CFR §200.302(b)(2)]. SCHEDULE OF FINDINGS AND QUESTIONED COSTS AND CORRECTIVE ACTION PLAN Federal Award Finding September 30, 2024 Comment #2024-002 Repeat Comment #2023-001 AND #2022-001 INTERNAL CONTROLS OVER FINANCIAL STATEMENT PREPARATION AND COMPLIANCE WITH RELATED PROVISIONS OF GRANTS AND CONTRACTS SHOULD BE IMPROVED LIHEAP FALN 93.568 (Questioned Costs - Undetermined) (Continued) Effect: Management may not be able to obtain complete and accurate financial statements on an interim or fiscal year basis to be used for internal or external reporting purposes. Cause: Turnover of key staff and limited personnel with knowledge and/or the ability to assist and provide needed information to aid in financial statement preparation. Recommendation: The degree to which the preparation of the financial statements and related disclosures are prepared by the independent auditor is a control deficiency is determined by the knowledge, skills and experience of those in the organization who are charged with the responsibility of its financial reporting. The Council has hired a new fiscal officer and should hire additional staff (grant accountant and a general ledger accountant) to assist the new fiscal officer. New staff should have the adequate skills, knowledge and experience to oversee and/or perform the necessary accounting functions each month. Policies and procedures should be updated to adequately address the challenges and dynamics of the community action agency. The Board of Directors should be adequately trained in the areas of understanding risk assessment and financial awareness in the community action industry. A finance and audit committee should be established and trained in understanding and oversight of financial reporting responsibilities of community action associations. We believe that the CFO with the supporting staff and general ledger accountant should have the overall responsibility of properly reconciling and closing out the accounting system and grant activity each month in an efficient and timely manner so as to eliminate the risk of significant errors occurring. Budget-to-actual schedules should be an integral part of the grant accountant’s basic responsibilities. Program directors should be involved in the closing process. We further recommend that training be provided to all staff engaged in the financial reporting, allocations and reconciliation functions to ensure that a complete and accurate financial statements close-out process is achieved each month and annually. Views of Responsible Officials and Planned Corrective Actions: Management is in the process of assessing the organizational structure and capacity to provide adequate financial reporting. With Board review and approval of the Council’s financial funding sources, the Council will provide additional training to support the new fiscal officer. The fiscal officer will have the overall responsibility of properly reconciling and closing out the accounting system and grant activity each month in an efficient and timely manner to eliminate the risk of significant errors occurring. Budget-to-actual schedules will be an integral part of the grant accountant analyst’s basic responsibilities. All enhancements will be implemented by July 31, 2025.
Finding 2024-002: Submission of the Audit Reporting Package and Data Collection Form Federal Agency: Various Assistance Listing Number: Multiple Compliance Requirement: Reporting Criteria: Per 2 CFR § 200.510(b), the auditee must prepare a Schedule of Expenditures of Federal Awards (SEFA) for the period covered by the auditee’s financial statements. Per §200.512(a), the SEFA must be submitted to the Federal Audit Clearing House (FAC) within the required deadline. Cause: The delay was due to a lack of capacity in the finance department and not following the year-end closing schedule. Effect: To qualify as a low-risk auditee, 2 CFR section 200.520 requires the audit reporting package and data collection form to be submitted to the FAC by the due date for each of the previous two years. Late filing will result in noncompliance with timely submission of financial information to the grantor agencies. Recommendation: Management should address the lack of capacity in the finance department and monitor the year-end closing schedule for a timely audit reporting package and data collection form to ensure compliance with federal deadlines. Questioned costs: None Responsible Official's Response Management concurs with the finding. The Council recognizes the importance of timely submission of the SEFA and related audit documentation to maintain compliance with federal requirements. To address this issue, the Council has engaged an outside provider to assist with process improvements that will streamline financial reporting and ensure timely preparation and submission of all required audit materials. These enhancements will strengthen internal controls and support continued compliance in future reporting periods.
Finding 2024-003: Schedule of Expenditures of Federal Awards Presentation Program Title: Professional and Cultural Exchange Programs Assistance Listing Number: 19.402 Federal Agency: U.S. Department of State Pass-Through Entity Name, Pass-Through Identifying Numbers: Global Ties, CPG-ECA24-019 Global Ties, DBH-ECA24-14 Global Ties, IVRC-ECA23-04 Global Ties, CPG-ECA23-072-II Global Ties, N/A Federal Award Year: Year ended September 30, 2024 Program Title: Defense Nuclear Nonproliferation Research Assistance Listing Number: 81.113 Federal Agency: U.S. Department of Energy Direct Award Identifying Number: DE-NA004179 Federal Award Years: Years ended September 30, 2020, 2019 and 2018 Type of Finding: Material Weakness in Internal Control over Compliance and Material Noncompliance Criteria: Management is responsible for the complete and fair presentation of the financial statements, including any supplementary information that is presented in relation to the financial statements, such as the Schedule of Expenditures of Federal Awards (SEFA). Also, in accordance with 2 CFR Section 200.510 (b)(2), PFI is required to include only direct and pass-through Federal awards expended during the fiscal year in the SEFA. Condition: During our audit fieldwork, we noted that the SEFA omitted Federal expenditures of $38,047 that were passed through to PFI by a subrecipient under ALN 19.402. In addition, we noted that the SEFA omitted Federal expenditures of $74,111 under ALN 81.113 that occurred during prior years but were newly identified and reimbursed during the year under audit. Cause: The omission related to the reporting of the pass-through award appears to be due to a misunderstanding regarding the source of the funding. The omission related to the reporting of expenditures from a prior year appears to be due to a deficiency in controls over reconciling cash draws to activity in the general ledger. Effect or Potential Effect: The SEFA was understated. When the SEFA is not prepared properly, it could have an effect on the auditor's determination of major programs or the auditor's sample selections. Questioned Costs: None. Repeat Finding: Not applicable. Recommendation: We recommend that PFI ensure that their staff and outsourced accountants are properly trained to identify all funding sources that should be presented on the SEFA, particularly in connection with passthrough funding from other organizations, in accordance with 2 CFR §200. Furthermore, PFI should reconcile Federal grant expenditures per the general ledger to cumulative Federal financial reporting and cash draws to ensure consistency and completeness of their accounting records prior to preparing the SEFA.
Finding 2024-010 U.S. Department of Education Higher Education Emergency Relief Fund (HEERF) 84.425E/84.425F Requirements: Reporting Condition: During our audit of the Schedule of Expenditures of Federal Awards (“SEFA”) for the year ended August 31, 2024, we noted that the amount reported by the College for the HEERF grant on the SEFA did not agree with the cumulative expenditures reported in the Federal CARES Reporting Portal. Criteria: Per 2 CFR § 200.510(b), the SEFA must be complete and accurate, and per HEERF grant terms and conditions, institutions are required to accurately report grant expenditures in both the SEFA and the CARES Act Reporting Portal. Cause: The discrepancy appears to be the result of a lack of reconciliation procedures between the general ledger, the SEFA, and the Federal Reporting Portal submissions. Effect: The inconsistency may result in inaccurate financial reporting and a risk of noncompliance with federal reporting requirements, which could impact future funding or trigger additional oversight. Repeat Finding: Not a repeat finding Recommendation: We recommend that management implement formal reconciliation procedures to ensure that amounts reported in the SEFA align with those reported in the Federal CARES Portal. The reconciliation should be documented and reviewed by a responsible official prior to finalizing federal reporting submissions. Perspective: This issue only impacts reporting for the HEERF program. Management’s Response: See corrective action plan.
Finding 2024-003: Reportable finding considered a significant deficiency - Inaccurate and Incomplete Schedule of Expenditures of Federal Awards (SEFA) Program name: Child and Adult Care Food Program Assistance Listing: 10.558 Federal awarding agency: U.S. Department of Agriculture (USDA) Pass-through Entity: Maryland State Department of Education, District of Columbia Education Office Criteria: In accordance with 2 CFR 200.510(b), the auditee must prepare a complete and accurate Schedule of Expenditures of Federal Awards (SEFA) that includes the total federal awards expended for each federal program, the assistance listing number (ALN), the name of the federal agency, and the pass-through entity identifying number. Accurate SEFA reporting is essential to support the auditor’s responsibility under 2 CFR 200.518 major program determination and for federal oversight. Condition: The Organization failed to include two federal pass-through awards received from state and local governmental entities in prior years’ SEFAs. These awards were only identified as federal during the current audit year. Furthermore, when the awards were initially included in the current year’s SEFA, they were incorrectly classified under ALN 10.555 (National School Lunch Program). After additional inquiry and evaluation, they were determined to fall under ALN 10.558 (Child and Adult Care Food Program). The Organization was unable to locate specific subaward agreements; only a master service agreement from the state government was available. Cause: There were deficiencies in the Organization’s internal controls over SEFA preparation, specifically in identifying, classifying, and documenting pass-through federal awards. The absence of award documentation and misclassification of the assistance listing number further indicate inadequate review and verification procedures. Effect: Incomplete and inaccurate SEFA reporting may lead to noncompliance with Uniform Guidance requirements and increases the risk of omitted or misclassified programs subject to audit. Misreporting ALNs may also hinder proper audit coverage and oversight by federal and pass-through entities. Repeat finding: This is not a repeat finding. Questioned costs: There are no questioned costs associated with this finding. Perspective: This issue affected two federal awards and represents a systemic control issue over SEFA preparation. There is a reasonable possibility that similar issues could recur if not addressed. Recommendation: We recommend that the Organization: • Implement procedures to require written documentation (e.g., subaward agreements) for all federal pass-through funding received. • Enhance internal controls over the SEFA preparation process to ensure federal programs are accurately identified, classified, and reported, including verification of ALNs and funding sources. • Designate responsibility within the finance team for verifying the federal nature of all awards and ensure ongoing training on SEFA and Uniform Guidance requirements. Management’s response and corrective action plan (unaudited): See corrective action plan.
Finding 2024-003: Reportable finding considered a significant deficiency - Inaccurate and Incomplete Schedule of Expenditures of Federal Awards (SEFA) Program name: Child and Adult Care Food Program Assistance Listing: 10.558 Federal awarding agency: U.S. Department of Agriculture (USDA) Pass-through Entity: Maryland State Department of Education, District of Columbia Education Office Criteria: In accordance with 2 CFR 200.510(b), the auditee must prepare a complete and accurate Schedule of Expenditures of Federal Awards (SEFA) that includes the total federal awards expended for each federal program, the assistance listing number (ALN), the name of the federal agency, and the pass-through entity identifying number. Accurate SEFA reporting is essential to support the auditor’s responsibility under 2 CFR 200.518 major program determination and for federal oversight. Condition: The Organization failed to include two federal pass-through awards received from state and local governmental entities in prior years’ SEFAs. These awards were only identified as federal during the current audit year. Furthermore, when the awards were initially included in the current year’s SEFA, they were incorrectly classified under ALN 10.555 (National School Lunch Program). After additional inquiry and evaluation, they were determined to fall under ALN 10.558 (Child and Adult Care Food Program). The Organization was unable to locate specific subaward agreements; only a master service agreement from the state government was available. Cause: There were deficiencies in the Organization’s internal controls over SEFA preparation, specifically in identifying, classifying, and documenting pass-through federal awards. The absence of award documentation and misclassification of the assistance listing number further indicate inadequate review and verification procedures. Effect: Incomplete and inaccurate SEFA reporting may lead to noncompliance with Uniform Guidance requirements and increases the risk of omitted or misclassified programs subject to audit. Misreporting ALNs may also hinder proper audit coverage and oversight by federal and pass-through entities. Repeat finding: This is not a repeat finding. Questioned costs: There are no questioned costs associated with this finding. Perspective: This issue affected two federal awards and represents a systemic control issue over SEFA preparation. There is a reasonable possibility that similar issues could recur if not addressed. Recommendation: We recommend that the Organization: • Implement procedures to require written documentation (e.g., subaward agreements) for all federal pass-through funding received. • Enhance internal controls over the SEFA preparation process to ensure federal programs are accurately identified, classified, and reported, including verification of ALNs and funding sources. • Designate responsibility within the finance team for verifying the federal nature of all awards and ensure ongoing training on SEFA and Uniform Guidance requirements. Management’s response and corrective action plan (unaudited): See corrective action plan.
Finding 2024-010 U.S. Department of Education Higher Education Emergency Relief Fund (HEERF) 84.425E/84.425F Requirements: Reporting Condition: During our audit of the Schedule of Expenditures of Federal Awards (“SEFA”) for the year ended August 31, 2024, we noted that the amount reported by the College for the HEERF grant on the SEFA did not agree with the cumulative expenditures reported in the Federal CARES Reporting Portal. Criteria: Per 2 CFR § 200.510(b), the SEFA must be complete and accurate, and per HEERF grant terms and conditions, institutions are required to accurately report grant expenditures in both the SEFA and the CARES Act Reporting Portal. Cause: The discrepancy appears to be the result of a lack of reconciliation procedures between the general ledger, the SEFA, and the Federal Reporting Portal submissions. Effect: The inconsistency may result in inaccurate financial reporting and a risk of noncompliance with federal reporting requirements, which could impact future funding or trigger additional oversight. Repeat Finding: Not a repeat finding Recommendation: We recommend that management implement formal reconciliation procedures to ensure that amounts reported in the SEFA align with those reported in the Federal CARES Portal. The reconciliation should be documented and reviewed by a responsible official prior to finalizing federal reporting submissions. Perspective: This issue only impacts reporting for the HEERF program. Management’s Response: See corrective action plan.
Finding 2024-003: Reportable finding considered a significant deficiency - Inaccurate and Incomplete Schedule of Expenditures of Federal Awards (SEFA) Program name: Child and Adult Care Food Program Assistance Listing: 10.558 Federal awarding agency: U.S. Department of Agriculture (USDA) Pass-through Entity: Maryland State Department of Education, District of Columbia Education Office Criteria: In accordance with 2 CFR 200.510(b), the auditee must prepare a complete and accurate Schedule of Expenditures of Federal Awards (SEFA) that includes the total federal awards expended for each federal program, the assistance listing number (ALN), the name of the federal agency, and the pass-through entity identifying number. Accurate SEFA reporting is essential to support the auditor’s responsibility under 2 CFR 200.518 major program determination and for federal oversight. Condition: The Organization failed to include two federal pass-through awards received from state and local governmental entities in prior years’ SEFAs. These awards were only identified as federal during the current audit year. Furthermore, when the awards were initially included in the current year’s SEFA, they were incorrectly classified under ALN 10.555 (National School Lunch Program). After additional inquiry and evaluation, they were determined to fall under ALN 10.558 (Child and Adult Care Food Program). The Organization was unable to locate specific subaward agreements; only a master service agreement from the state government was available. Cause: There were deficiencies in the Organization’s internal controls over SEFA preparation, specifically in identifying, classifying, and documenting pass-through federal awards. The absence of award documentation and misclassification of the assistance listing number further indicate inadequate review and verification procedures. Effect: Incomplete and inaccurate SEFA reporting may lead to noncompliance with Uniform Guidance requirements and increases the risk of omitted or misclassified programs subject to audit. Misreporting ALNs may also hinder proper audit coverage and oversight by federal and pass-through entities. Repeat finding: This is not a repeat finding. Questioned costs: There are no questioned costs associated with this finding. Perspective: This issue affected two federal awards and represents a systemic control issue over SEFA preparation. There is a reasonable possibility that similar issues could recur if not addressed. Recommendation: We recommend that the Organization: • Implement procedures to require written documentation (e.g., subaward agreements) for all federal pass-through funding received. • Enhance internal controls over the SEFA preparation process to ensure federal programs are accurately identified, classified, and reported, including verification of ALNs and funding sources. • Designate responsibility within the finance team for verifying the federal nature of all awards and ensure ongoing training on SEFA and Uniform Guidance requirements. Management’s response and corrective action plan (unaudited): See corrective action plan.
Finding 2024-003: Reportable finding considered a significant deficiency - Inaccurate and Incomplete Schedule of Expenditures of Federal Awards (SEFA) Program name: Child and Adult Care Food Program Assistance Listing: 10.558 Federal awarding agency: U.S. Department of Agriculture (USDA) Pass-through Entity: Maryland State Department of Education, District of Columbia Education Office Criteria: In accordance with 2 CFR 200.510(b), the auditee must prepare a complete and accurate Schedule of Expenditures of Federal Awards (SEFA) that includes the total federal awards expended for each federal program, the assistance listing number (ALN), the name of the federal agency, and the pass-through entity identifying number. Accurate SEFA reporting is essential to support the auditor’s responsibility under 2 CFR 200.518 major program determination and for federal oversight. Condition: The Organization failed to include two federal pass-through awards received from state and local governmental entities in prior years’ SEFAs. These awards were only identified as federal during the current audit year. Furthermore, when the awards were initially included in the current year’s SEFA, they were incorrectly classified under ALN 10.555 (National School Lunch Program). After additional inquiry and evaluation, they were determined to fall under ALN 10.558 (Child and Adult Care Food Program). The Organization was unable to locate specific subaward agreements; only a master service agreement from the state government was available. Cause: There were deficiencies in the Organization’s internal controls over SEFA preparation, specifically in identifying, classifying, and documenting pass-through federal awards. The absence of award documentation and misclassification of the assistance listing number further indicate inadequate review and verification procedures. Effect: Incomplete and inaccurate SEFA reporting may lead to noncompliance with Uniform Guidance requirements and increases the risk of omitted or misclassified programs subject to audit. Misreporting ALNs may also hinder proper audit coverage and oversight by federal and pass-through entities. Repeat finding: This is not a repeat finding. Questioned costs: There are no questioned costs associated with this finding. Perspective: This issue affected two federal awards and represents a systemic control issue over SEFA preparation. There is a reasonable possibility that similar issues could recur if not addressed. Recommendation: We recommend that the Organization: • Implement procedures to require written documentation (e.g., subaward agreements) for all federal pass-through funding received. • Enhance internal controls over the SEFA preparation process to ensure federal programs are accurately identified, classified, and reported, including verification of ALNs and funding sources. • Designate responsibility within the finance team for verifying the federal nature of all awards and ensure ongoing training on SEFA and Uniform Guidance requirements. Management’s response and corrective action plan (unaudited): See corrective action plan.
SCHEDULE OF FINDINGS AND QUESTIONED COSTS Federal Award Findings and Questioned Costs July 31, 2024 Comment # 2024-002 INTERNAL CONTROLS OVER FINANCIAL STATEMENT PREPARATION, GRANT CLOSE OUT AND COMPLIANCE WITH RELATED PROVISIONS OF GRANTS AND CONTRACTS SHOULD BE IMPROVED HEAD START AND EARLY HEAD START, LIHEAP, LIHWAP, CSBG, ASTHO, CACFP and CSLFRF FAL # 93.600, 93.568, 93.499, 93.569, 93.185, 10.558, 21.027 (Questioned Costs - Undetermined) Condition: As part of our auditing procedures, we assisted in the preparation of the financial statements, related disclosures, and the schedule of expenditures of federal awards of the Agency. The preparation of these financial statements in accordance with generally accepted accounting principles (GAAP) and Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, is the responsibility of the grantee. The authoritative and regulatory standards states in summary that management should authorize, process, reconcile and close-out each grant and contract in a timely manner to ensure proper accounting and reporting of such activity in accordance with the specific professional standards and regulatory requirements. The closeout process is designed to reduce the risk of errors, fraud, material misstatement of financial and compliance reporting and recognition of expenditures (or revenue) in the proper period. We noted that the current system of internal controls over financial statements and compliance is not designed to ensure that the objectives are achieved. Further, the capacity and experience of the current staff does not allow for adequate analysis of grants and contracts, proper allocations of shared costs and support services provided, grantor receivables, deferred revenue, and the reconciliation of bank accounts accurately and in a timely manner. This resulted in adjustments necessary to present the financial statements and disclosures of the Agency as of July 31, 2024. We also noted significant weaknesses in internal controls over personnel payroll and the processing, maintaining and reconciling payroll activity to the general ledger and external regulatory reporting (IRS Form 941's, state filings, etc.). Therefore, the risk exists that grant receivables and/or cash from the various programs are not recorded properly during the reporting period (interim and annually). This condition also makes it difficult to prepare accurate external reports required by the various funding sources in a timely manner (i.e. SF-425, DHS’s reports for LIHEAP, etc.). Accordingly, the Agency is not in compliance with federal and state reporting as specified by grants and contracts and the Federal Audit Clearinghouse. The systemic cause appears to be the untimely resignation of key personnel, a change in the accounting system, a lack of personnel with the skills, knowledge, and experience with grant accounting and a weakness in the overall system of internal accounting controls and monitoring. Policies and procedures are not followed consistently throughout the year. Context: Review of internal control structure of the organization in accordance with Government Auditing Standards. Criteria: Controls should be in place to ensure that financial statements are prepared in accordance with GAAP. The auditee shall prepare financial statements that reflect its financial position, results of operations or changes in net assets, and, where appropriate, cash flows for the fiscal year audited. The auditee shall also prepare a schedule of expenditures of Federal awards for the period covered by the auditee's financial statements. [2 CFR §200.510(a) and (b)] Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in §200.328 Financial reporting and §200.329. (Continued) Effect: Monitoring and reporting program performance [2 CFR §200.302(b)(2)]. Management may not be able to obtain complete and accurate financial statements on an interim or fiscal year basis to be used for internal or external reporting purposes. Cause: Turnover of key staff, change in the accounting system, limited personnel with knowledge and/or the ability to assist and provide needed information to aid in financial statement preparation. Recommendation: The degree to which the preparation of the financial statements and related disclosures are prepared by the independent auditor is a control deficiency as determined by the knowledge, skills and experience of those in the organization who are charged with the responsibility of its financial reporting. The Agency has hired a new fiscal officer (CFO) and should hire additional staff (grant accountant and a general ledger accountant) to assist the new fiscal officer. New staff should have the adequate skills, knowledge and experience to oversee and/or perform the necessary accounting functions each month. Policies and procedures should be updated to adequately address the challenges and dynamics of the community action agency. We believe that the CFO with the supporting staff and general ledger accountant should have the overall responsibility of properly reconciling and closing out the accounting system and grant activity each month in an efficient and timely manner so as to eliminate the risk of significant errors occurring. Budget-to-actual schedules should be an integral part of the grant accountant’s basic responsibilities. Program directors should be involved in the closing process. We further recommend that training be provided to all staff engaged in the financial reporting, allocations and reconciliation functions to ensure that a complete and accurate financial statements close-out process is achieved each month and annually. Accounting policies and procedures must be updated and implemented. Views of Responsible Officials and Planned Corrective Actions: Management is in the process of assessing the organizational structure and capacity to provide adequate financial reporting. With Board review and approval of the Agency’s financial funding sources, the Agency will hire additional fiscal clerk to further support financial requirements and segregation of duties to ensure adequate internal controls are fully implemented. The CFO will have the overall responsibility of properly reconciling and closing out the accounting system and grant activity each month in an efficient and timely manner to eliminate the risk of significant errors occurring. Budget-to-actual schedules will be an integral part of the grant accountant analyst’s basic responsibilities. The fiscal policies and procedures will be updated with the enhancements implemented within the fiscal department. Staff will be trained on revised policies and procedures and Uniform Guidance regulations. The new automated financial systems, will support financial reporting to meet GAAP requirements and to provide informative reports for Board and Management. All enhancements will be implemented by December 31, 2025.
SCHEDULE OF FINDINGS AND QUESTIONED COSTS Federal Award Findings and Questioned Costs July 31, 2024 Comment # 2024-002 INTERNAL CONTROLS OVER FINANCIAL STATEMENT PREPARATION, GRANT CLOSE OUT AND COMPLIANCE WITH RELATED PROVISIONS OF GRANTS AND CONTRACTS SHOULD BE IMPROVED HEAD START AND EARLY HEAD START, LIHEAP, LIHWAP, CSBG, ASTHO, CACFP and CSLFRF FAL # 93.600, 93.568, 93.499, 93.569, 93.185, 10.558, 21.027 (Questioned Costs - Undetermined) Condition: As part of our auditing procedures, we assisted in the preparation of the financial statements, related disclosures, and the schedule of expenditures of federal awards of the Agency. The preparation of these financial statements in accordance with generally accepted accounting principles (GAAP) and Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, is the responsibility of the grantee. The authoritative and regulatory standards states in summary that management should authorize, process, reconcile and close-out each grant and contract in a timely manner to ensure proper accounting and reporting of such activity in accordance with the specific professional standards and regulatory requirements. The closeout process is designed to reduce the risk of errors, fraud, material misstatement of financial and compliance reporting and recognition of expenditures (or revenue) in the proper period. We noted that the current system of internal controls over financial statements and compliance is not designed to ensure that the objectives are achieved. Further, the capacity and experience of the current staff does not allow for adequate analysis of grants and contracts, proper allocations of shared costs and support services provided, grantor receivables, deferred revenue, and the reconciliation of bank accounts accurately and in a timely manner. This resulted in adjustments necessary to present the financial statements and disclosures of the Agency as of July 31, 2024. We also noted significant weaknesses in internal controls over personnel payroll and the processing, maintaining and reconciling payroll activity to the general ledger and external regulatory reporting (IRS Form 941's, state filings, etc.). Therefore, the risk exists that grant receivables and/or cash from the various programs are not recorded properly during the reporting period (interim and annually). This condition also makes it difficult to prepare accurate external reports required by the various funding sources in a timely manner (i.e. SF-425, DHS’s reports for LIHEAP, etc.). Accordingly, the Agency is not in compliance with federal and state reporting as specified by grants and contracts and the Federal Audit Clearinghouse. The systemic cause appears to be the untimely resignation of key personnel, a change in the accounting system, a lack of personnel with the skills, knowledge, and experience with grant accounting and a weakness in the overall system of internal accounting controls and monitoring. Policies and procedures are not followed consistently throughout the year. Context: Review of internal control structure of the organization in accordance with Government Auditing Standards. Criteria: Controls should be in place to ensure that financial statements are prepared in accordance with GAAP. The auditee shall prepare financial statements that reflect its financial position, results of operations or changes in net assets, and, where appropriate, cash flows for the fiscal year audited. The auditee shall also prepare a schedule of expenditures of Federal awards for the period covered by the auditee's financial statements. [2 CFR §200.510(a) and (b)] Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in §200.328 Financial reporting and §200.329. (Continued) Effect: Monitoring and reporting program performance [2 CFR §200.302(b)(2)]. Management may not be able to obtain complete and accurate financial statements on an interim or fiscal year basis to be used for internal or external reporting purposes. Cause: Turnover of key staff, change in the accounting system, limited personnel with knowledge and/or the ability to assist and provide needed information to aid in financial statement preparation. Recommendation: The degree to which the preparation of the financial statements and related disclosures are prepared by the independent auditor is a control deficiency as determined by the knowledge, skills and experience of those in the organization who are charged with the responsibility of its financial reporting. The Agency has hired a new fiscal officer (CFO) and should hire additional staff (grant accountant and a general ledger accountant) to assist the new fiscal officer. New staff should have the adequate skills, knowledge and experience to oversee and/or perform the necessary accounting functions each month. Policies and procedures should be updated to adequately address the challenges and dynamics of the community action agency. We believe that the CFO with the supporting staff and general ledger accountant should have the overall responsibility of properly reconciling and closing out the accounting system and grant activity each month in an efficient and timely manner so as to eliminate the risk of significant errors occurring. Budget-to-actual schedules should be an integral part of the grant accountant’s basic responsibilities. Program directors should be involved in the closing process. We further recommend that training be provided to all staff engaged in the financial reporting, allocations and reconciliation functions to ensure that a complete and accurate financial statements close-out process is achieved each month and annually. Accounting policies and procedures must be updated and implemented. Views of Responsible Officials and Planned Corrective Actions: Management is in the process of assessing the organizational structure and capacity to provide adequate financial reporting. With Board review and approval of the Agency’s financial funding sources, the Agency will hire additional fiscal clerk to further support financial requirements and segregation of duties to ensure adequate internal controls are fully implemented. The CFO will have the overall responsibility of properly reconciling and closing out the accounting system and grant activity each month in an efficient and timely manner to eliminate the risk of significant errors occurring. Budget-to-actual schedules will be an integral part of the grant accountant analyst’s basic responsibilities. The fiscal policies and procedures will be updated with the enhancements implemented within the fiscal department. Staff will be trained on revised policies and procedures and Uniform Guidance regulations. The new automated financial systems, will support financial reporting to meet GAAP requirements and to provide informative reports for Board and Management. All enhancements will be implemented by December 31, 2025.
SCHEDULE OF FINDINGS AND QUESTIONED COSTS Federal Award Findings and Questioned Costs July 31, 2024 Comment # 2024-002 INTERNAL CONTROLS OVER FINANCIAL STATEMENT PREPARATION, GRANT CLOSE OUT AND COMPLIANCE WITH RELATED PROVISIONS OF GRANTS AND CONTRACTS SHOULD BE IMPROVED HEAD START AND EARLY HEAD START, LIHEAP, LIHWAP, CSBG, ASTHO, CACFP and CSLFRF FAL # 93.600, 93.568, 93.499, 93.569, 93.185, 10.558, 21.027 (Questioned Costs - Undetermined) Condition: As part of our auditing procedures, we assisted in the preparation of the financial statements, related disclosures, and the schedule of expenditures of federal awards of the Agency. The preparation of these financial statements in accordance with generally accepted accounting principles (GAAP) and Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, is the responsibility of the grantee. The authoritative and regulatory standards states in summary that management should authorize, process, reconcile and close-out each grant and contract in a timely manner to ensure proper accounting and reporting of such activity in accordance with the specific professional standards and regulatory requirements. The closeout process is designed to reduce the risk of errors, fraud, material misstatement of financial and compliance reporting and recognition of expenditures (or revenue) in the proper period. We noted that the current system of internal controls over financial statements and compliance is not designed to ensure that the objectives are achieved. Further, the capacity and experience of the current staff does not allow for adequate analysis of grants and contracts, proper allocations of shared costs and support services provided, grantor receivables, deferred revenue, and the reconciliation of bank accounts accurately and in a timely manner. This resulted in adjustments necessary to present the financial statements and disclosures of the Agency as of July 31, 2024. We also noted significant weaknesses in internal controls over personnel payroll and the processing, maintaining and reconciling payroll activity to the general ledger and external regulatory reporting (IRS Form 941's, state filings, etc.). Therefore, the risk exists that grant receivables and/or cash from the various programs are not recorded properly during the reporting period (interim and annually). This condition also makes it difficult to prepare accurate external reports required by the various funding sources in a timely manner (i.e. SF-425, DHS’s reports for LIHEAP, etc.). Accordingly, the Agency is not in compliance with federal and state reporting as specified by grants and contracts and the Federal Audit Clearinghouse. The systemic cause appears to be the untimely resignation of key personnel, a change in the accounting system, a lack of personnel with the skills, knowledge, and experience with grant accounting and a weakness in the overall system of internal accounting controls and monitoring. Policies and procedures are not followed consistently throughout the year. Context: Review of internal control structure of the organization in accordance with Government Auditing Standards. Criteria: Controls should be in place to ensure that financial statements are prepared in accordance with GAAP. The auditee shall prepare financial statements that reflect its financial position, results of operations or changes in net assets, and, where appropriate, cash flows for the fiscal year audited. The auditee shall also prepare a schedule of expenditures of Federal awards for the period covered by the auditee's financial statements. [2 CFR §200.510(a) and (b)] Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in §200.328 Financial reporting and §200.329. (Continued) Effect: Monitoring and reporting program performance [2 CFR §200.302(b)(2)]. Management may not be able to obtain complete and accurate financial statements on an interim or fiscal year basis to be used for internal or external reporting purposes. Cause: Turnover of key staff, change in the accounting system, limited personnel with knowledge and/or the ability to assist and provide needed information to aid in financial statement preparation. Recommendation: The degree to which the preparation of the financial statements and related disclosures are prepared by the independent auditor is a control deficiency as determined by the knowledge, skills and experience of those in the organization who are charged with the responsibility of its financial reporting. The Agency has hired a new fiscal officer (CFO) and should hire additional staff (grant accountant and a general ledger accountant) to assist the new fiscal officer. New staff should have the adequate skills, knowledge and experience to oversee and/or perform the necessary accounting functions each month. Policies and procedures should be updated to adequately address the challenges and dynamics of the community action agency. We believe that the CFO with the supporting staff and general ledger accountant should have the overall responsibility of properly reconciling and closing out the accounting system and grant activity each month in an efficient and timely manner so as to eliminate the risk of significant errors occurring. Budget-to-actual schedules should be an integral part of the grant accountant’s basic responsibilities. Program directors should be involved in the closing process. We further recommend that training be provided to all staff engaged in the financial reporting, allocations and reconciliation functions to ensure that a complete and accurate financial statements close-out process is achieved each month and annually. Accounting policies and procedures must be updated and implemented. Views of Responsible Officials and Planned Corrective Actions: Management is in the process of assessing the organizational structure and capacity to provide adequate financial reporting. With Board review and approval of the Agency’s financial funding sources, the Agency will hire additional fiscal clerk to further support financial requirements and segregation of duties to ensure adequate internal controls are fully implemented. The CFO will have the overall responsibility of properly reconciling and closing out the accounting system and grant activity each month in an efficient and timely manner to eliminate the risk of significant errors occurring. Budget-to-actual schedules will be an integral part of the grant accountant analyst’s basic responsibilities. The fiscal policies and procedures will be updated with the enhancements implemented within the fiscal department. Staff will be trained on revised policies and procedures and Uniform Guidance regulations. The new automated financial systems, will support financial reporting to meet GAAP requirements and to provide informative reports for Board and Management. All enhancements will be implemented by December 31, 2025.
SCHEDULE OF FINDINGS AND QUESTIONED COSTS Federal Award Findings and Questioned Costs July 31, 2024 Comment # 2024-002 INTERNAL CONTROLS OVER FINANCIAL STATEMENT PREPARATION, GRANT CLOSE OUT AND COMPLIANCE WITH RELATED PROVISIONS OF GRANTS AND CONTRACTS SHOULD BE IMPROVED HEAD START AND EARLY HEAD START, LIHEAP, LIHWAP, CSBG, ASTHO, CACFP and CSLFRF FAL # 93.600, 93.568, 93.499, 93.569, 93.185, 10.558, 21.027 (Questioned Costs - Undetermined) Condition: As part of our auditing procedures, we assisted in the preparation of the financial statements, related disclosures, and the schedule of expenditures of federal awards of the Agency. The preparation of these financial statements in accordance with generally accepted accounting principles (GAAP) and Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, is the responsibility of the grantee. The authoritative and regulatory standards states in summary that management should authorize, process, reconcile and close-out each grant and contract in a timely manner to ensure proper accounting and reporting of such activity in accordance with the specific professional standards and regulatory requirements. The closeout process is designed to reduce the risk of errors, fraud, material misstatement of financial and compliance reporting and recognition of expenditures (or revenue) in the proper period. We noted that the current system of internal controls over financial statements and compliance is not designed to ensure that the objectives are achieved. Further, the capacity and experience of the current staff does not allow for adequate analysis of grants and contracts, proper allocations of shared costs and support services provided, grantor receivables, deferred revenue, and the reconciliation of bank accounts accurately and in a timely manner. This resulted in adjustments necessary to present the financial statements and disclosures of the Agency as of July 31, 2024. We also noted significant weaknesses in internal controls over personnel payroll and the processing, maintaining and reconciling payroll activity to the general ledger and external regulatory reporting (IRS Form 941's, state filings, etc.). Therefore, the risk exists that grant receivables and/or cash from the various programs are not recorded properly during the reporting period (interim and annually). This condition also makes it difficult to prepare accurate external reports required by the various funding sources in a timely manner (i.e. SF-425, DHS’s reports for LIHEAP, etc.). Accordingly, the Agency is not in compliance with federal and state reporting as specified by grants and contracts and the Federal Audit Clearinghouse. The systemic cause appears to be the untimely resignation of key personnel, a change in the accounting system, a lack of personnel with the skills, knowledge, and experience with grant accounting and a weakness in the overall system of internal accounting controls and monitoring. Policies and procedures are not followed consistently throughout the year. Context: Review of internal control structure of the organization in accordance with Government Auditing Standards. Criteria: Controls should be in place to ensure that financial statements are prepared in accordance with GAAP. The auditee shall prepare financial statements that reflect its financial position, results of operations or changes in net assets, and, where appropriate, cash flows for the fiscal year audited. The auditee shall also prepare a schedule of expenditures of Federal awards for the period covered by the auditee's financial statements. [2 CFR §200.510(a) and (b)] Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in §200.328 Financial reporting and §200.329. (Continued) Effect: Monitoring and reporting program performance [2 CFR §200.302(b)(2)]. Management may not be able to obtain complete and accurate financial statements on an interim or fiscal year basis to be used for internal or external reporting purposes. Cause: Turnover of key staff, change in the accounting system, limited personnel with knowledge and/or the ability to assist and provide needed information to aid in financial statement preparation. Recommendation: The degree to which the preparation of the financial statements and related disclosures are prepared by the independent auditor is a control deficiency as determined by the knowledge, skills and experience of those in the organization who are charged with the responsibility of its financial reporting. The Agency has hired a new fiscal officer (CFO) and should hire additional staff (grant accountant and a general ledger accountant) to assist the new fiscal officer. New staff should have the adequate skills, knowledge and experience to oversee and/or perform the necessary accounting functions each month. Policies and procedures should be updated to adequately address the challenges and dynamics of the community action agency. We believe that the CFO with the supporting staff and general ledger accountant should have the overall responsibility of properly reconciling and closing out the accounting system and grant activity each month in an efficient and timely manner so as to eliminate the risk of significant errors occurring. Budget-to-actual schedules should be an integral part of the grant accountant’s basic responsibilities. Program directors should be involved in the closing process. We further recommend that training be provided to all staff engaged in the financial reporting, allocations and reconciliation functions to ensure that a complete and accurate financial statements close-out process is achieved each month and annually. Accounting policies and procedures must be updated and implemented. Views of Responsible Officials and Planned Corrective Actions: Management is in the process of assessing the organizational structure and capacity to provide adequate financial reporting. With Board review and approval of the Agency’s financial funding sources, the Agency will hire additional fiscal clerk to further support financial requirements and segregation of duties to ensure adequate internal controls are fully implemented. The CFO will have the overall responsibility of properly reconciling and closing out the accounting system and grant activity each month in an efficient and timely manner to eliminate the risk of significant errors occurring. Budget-to-actual schedules will be an integral part of the grant accountant analyst’s basic responsibilities. The fiscal policies and procedures will be updated with the enhancements implemented within the fiscal department. Staff will be trained on revised policies and procedures and Uniform Guidance regulations. The new automated financial systems, will support financial reporting to meet GAAP requirements and to provide informative reports for Board and Management. All enhancements will be implemented by December 31, 2025.
SCHEDULE OF FINDINGS AND QUESTIONED COSTS Federal Award Findings and Questioned Costs July 31, 2024 Comment # 2024-002 INTERNAL CONTROLS OVER FINANCIAL STATEMENT PREPARATION, GRANT CLOSE OUT AND COMPLIANCE WITH RELATED PROVISIONS OF GRANTS AND CONTRACTS SHOULD BE IMPROVED HEAD START AND EARLY HEAD START, LIHEAP, LIHWAP, CSBG, ASTHO, CACFP and CSLFRF FAL # 93.600, 93.568, 93.499, 93.569, 93.185, 10.558, 21.027 (Questioned Costs - Undetermined) Condition: As part of our auditing procedures, we assisted in the preparation of the financial statements, related disclosures, and the schedule of expenditures of federal awards of the Agency. The preparation of these financial statements in accordance with generally accepted accounting principles (GAAP) and Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, is the responsibility of the grantee. The authoritative and regulatory standards states in summary that management should authorize, process, reconcile and close-out each grant and contract in a timely manner to ensure proper accounting and reporting of such activity in accordance with the specific professional standards and regulatory requirements. The closeout process is designed to reduce the risk of errors, fraud, material misstatement of financial and compliance reporting and recognition of expenditures (or revenue) in the proper period. We noted that the current system of internal controls over financial statements and compliance is not designed to ensure that the objectives are achieved. Further, the capacity and experience of the current staff does not allow for adequate analysis of grants and contracts, proper allocations of shared costs and support services provided, grantor receivables, deferred revenue, and the reconciliation of bank accounts accurately and in a timely manner. This resulted in adjustments necessary to present the financial statements and disclosures of the Agency as of July 31, 2024. We also noted significant weaknesses in internal controls over personnel payroll and the processing, maintaining and reconciling payroll activity to the general ledger and external regulatory reporting (IRS Form 941's, state filings, etc.). Therefore, the risk exists that grant receivables and/or cash from the various programs are not recorded properly during the reporting period (interim and annually). This condition also makes it difficult to prepare accurate external reports required by the various funding sources in a timely manner (i.e. SF-425, DHS’s reports for LIHEAP, etc.). Accordingly, the Agency is not in compliance with federal and state reporting as specified by grants and contracts and the Federal Audit Clearinghouse. The systemic cause appears to be the untimely resignation of key personnel, a change in the accounting system, a lack of personnel with the skills, knowledge, and experience with grant accounting and a weakness in the overall system of internal accounting controls and monitoring. Policies and procedures are not followed consistently throughout the year. Context: Review of internal control structure of the organization in accordance with Government Auditing Standards. Criteria: Controls should be in place to ensure that financial statements are prepared in accordance with GAAP. The auditee shall prepare financial statements that reflect its financial position, results of operations or changes in net assets, and, where appropriate, cash flows for the fiscal year audited. The auditee shall also prepare a schedule of expenditures of Federal awards for the period covered by the auditee's financial statements. [2 CFR §200.510(a) and (b)] Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in §200.328 Financial reporting and §200.329. (Continued) Effect: Monitoring and reporting program performance [2 CFR §200.302(b)(2)]. Management may not be able to obtain complete and accurate financial statements on an interim or fiscal year basis to be used for internal or external reporting purposes. Cause: Turnover of key staff, change in the accounting system, limited personnel with knowledge and/or the ability to assist and provide needed information to aid in financial statement preparation. Recommendation: The degree to which the preparation of the financial statements and related disclosures are prepared by the independent auditor is a control deficiency as determined by the knowledge, skills and experience of those in the organization who are charged with the responsibility of its financial reporting. The Agency has hired a new fiscal officer (CFO) and should hire additional staff (grant accountant and a general ledger accountant) to assist the new fiscal officer. New staff should have the adequate skills, knowledge and experience to oversee and/or perform the necessary accounting functions each month. Policies and procedures should be updated to adequately address the challenges and dynamics of the community action agency. We believe that the CFO with the supporting staff and general ledger accountant should have the overall responsibility of properly reconciling and closing out the accounting system and grant activity each month in an efficient and timely manner so as to eliminate the risk of significant errors occurring. Budget-to-actual schedules should be an integral part of the grant accountant’s basic responsibilities. Program directors should be involved in the closing process. We further recommend that training be provided to all staff engaged in the financial reporting, allocations and reconciliation functions to ensure that a complete and accurate financial statements close-out process is achieved each month and annually. Accounting policies and procedures must be updated and implemented. Views of Responsible Officials and Planned Corrective Actions: Management is in the process of assessing the organizational structure and capacity to provide adequate financial reporting. With Board review and approval of the Agency’s financial funding sources, the Agency will hire additional fiscal clerk to further support financial requirements and segregation of duties to ensure adequate internal controls are fully implemented. The CFO will have the overall responsibility of properly reconciling and closing out the accounting system and grant activity each month in an efficient and timely manner to eliminate the risk of significant errors occurring. Budget-to-actual schedules will be an integral part of the grant accountant analyst’s basic responsibilities. The fiscal policies and procedures will be updated with the enhancements implemented within the fiscal department. Staff will be trained on revised policies and procedures and Uniform Guidance regulations. The new automated financial systems, will support financial reporting to meet GAAP requirements and to provide informative reports for Board and Management. All enhancements will be implemented by December 31, 2025.
SCHEDULE OF FINDINGS AND QUESTIONED COSTS Federal Award Findings and Questioned Costs July 31, 2024 Comment # 2024-002 INTERNAL CONTROLS OVER FINANCIAL STATEMENT PREPARATION, GRANT CLOSE OUT AND COMPLIANCE WITH RELATED PROVISIONS OF GRANTS AND CONTRACTS SHOULD BE IMPROVED HEAD START AND EARLY HEAD START, LIHEAP, LIHWAP, CSBG, ASTHO, CACFP and CSLFRF FAL # 93.600, 93.568, 93.499, 93.569, 93.185, 10.558, 21.027 (Questioned Costs - Undetermined) Condition: As part of our auditing procedures, we assisted in the preparation of the financial statements, related disclosures, and the schedule of expenditures of federal awards of the Agency. The preparation of these financial statements in accordance with generally accepted accounting principles (GAAP) and Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, is the responsibility of the grantee. The authoritative and regulatory standards states in summary that management should authorize, process, reconcile and close-out each grant and contract in a timely manner to ensure proper accounting and reporting of such activity in accordance with the specific professional standards and regulatory requirements. The closeout process is designed to reduce the risk of errors, fraud, material misstatement of financial and compliance reporting and recognition of expenditures (or revenue) in the proper period. We noted that the current system of internal controls over financial statements and compliance is not designed to ensure that the objectives are achieved. Further, the capacity and experience of the current staff does not allow for adequate analysis of grants and contracts, proper allocations of shared costs and support services provided, grantor receivables, deferred revenue, and the reconciliation of bank accounts accurately and in a timely manner. This resulted in adjustments necessary to present the financial statements and disclosures of the Agency as of July 31, 2024. We also noted significant weaknesses in internal controls over personnel payroll and the processing, maintaining and reconciling payroll activity to the general ledger and external regulatory reporting (IRS Form 941's, state filings, etc.). Therefore, the risk exists that grant receivables and/or cash from the various programs are not recorded properly during the reporting period (interim and annually). This condition also makes it difficult to prepare accurate external reports required by the various funding sources in a timely manner (i.e. SF-425, DHS’s reports for LIHEAP, etc.). Accordingly, the Agency is not in compliance with federal and state reporting as specified by grants and contracts and the Federal Audit Clearinghouse. The systemic cause appears to be the untimely resignation of key personnel, a change in the accounting system, a lack of personnel with the skills, knowledge, and experience with grant accounting and a weakness in the overall system of internal accounting controls and monitoring. Policies and procedures are not followed consistently throughout the year. Context: Review of internal control structure of the organization in accordance with Government Auditing Standards. Criteria: Controls should be in place to ensure that financial statements are prepared in accordance with GAAP. The auditee shall prepare financial statements that reflect its financial position, results of operations or changes in net assets, and, where appropriate, cash flows for the fiscal year audited. The auditee shall also prepare a schedule of expenditures of Federal awards for the period covered by the auditee's financial statements. [2 CFR §200.510(a) and (b)] Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in §200.328 Financial reporting and §200.329. (Continued) Effect: Monitoring and reporting program performance [2 CFR §200.302(b)(2)]. Management may not be able to obtain complete and accurate financial statements on an interim or fiscal year basis to be used for internal or external reporting purposes. Cause: Turnover of key staff, change in the accounting system, limited personnel with knowledge and/or the ability to assist and provide needed information to aid in financial statement preparation. Recommendation: The degree to which the preparation of the financial statements and related disclosures are prepared by the independent auditor is a control deficiency as determined by the knowledge, skills and experience of those in the organization who are charged with the responsibility of its financial reporting. The Agency has hired a new fiscal officer (CFO) and should hire additional staff (grant accountant and a general ledger accountant) to assist the new fiscal officer. New staff should have the adequate skills, knowledge and experience to oversee and/or perform the necessary accounting functions each month. Policies and procedures should be updated to adequately address the challenges and dynamics of the community action agency. We believe that the CFO with the supporting staff and general ledger accountant should have the overall responsibility of properly reconciling and closing out the accounting system and grant activity each month in an efficient and timely manner so as to eliminate the risk of significant errors occurring. Budget-to-actual schedules should be an integral part of the grant accountant’s basic responsibilities. Program directors should be involved in the closing process. We further recommend that training be provided to all staff engaged in the financial reporting, allocations and reconciliation functions to ensure that a complete and accurate financial statements close-out process is achieved each month and annually. Accounting policies and procedures must be updated and implemented. Views of Responsible Officials and Planned Corrective Actions: Management is in the process of assessing the organizational structure and capacity to provide adequate financial reporting. With Board review and approval of the Agency’s financial funding sources, the Agency will hire additional fiscal clerk to further support financial requirements and segregation of duties to ensure adequate internal controls are fully implemented. The CFO will have the overall responsibility of properly reconciling and closing out the accounting system and grant activity each month in an efficient and timely manner to eliminate the risk of significant errors occurring. Budget-to-actual schedules will be an integral part of the grant accountant analyst’s basic responsibilities. The fiscal policies and procedures will be updated with the enhancements implemented within the fiscal department. Staff will be trained on revised policies and procedures and Uniform Guidance regulations. The new automated financial systems, will support financial reporting to meet GAAP requirements and to provide informative reports for Board and Management. All enhancements will be implemented by December 31, 2025.
SCHEDULE OF FINDINGS AND QUESTIONED COSTS Federal Award Findings and Questioned Costs July 31, 2024 Comment # 2024-002 INTERNAL CONTROLS OVER FINANCIAL STATEMENT PREPARATION, GRANT CLOSE OUT AND COMPLIANCE WITH RELATED PROVISIONS OF GRANTS AND CONTRACTS SHOULD BE IMPROVED HEAD START AND EARLY HEAD START, LIHEAP, LIHWAP, CSBG, ASTHO, CACFP and CSLFRF FAL # 93.600, 93.568, 93.499, 93.569, 93.185, 10.558, 21.027 (Questioned Costs - Undetermined) Condition: As part of our auditing procedures, we assisted in the preparation of the financial statements, related disclosures, and the schedule of expenditures of federal awards of the Agency. The preparation of these financial statements in accordance with generally accepted accounting principles (GAAP) and Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, is the responsibility of the grantee. The authoritative and regulatory standards states in summary that management should authorize, process, reconcile and close-out each grant and contract in a timely manner to ensure proper accounting and reporting of such activity in accordance with the specific professional standards and regulatory requirements. The closeout process is designed to reduce the risk of errors, fraud, material misstatement of financial and compliance reporting and recognition of expenditures (or revenue) in the proper period. We noted that the current system of internal controls over financial statements and compliance is not designed to ensure that the objectives are achieved. Further, the capacity and experience of the current staff does not allow for adequate analysis of grants and contracts, proper allocations of shared costs and support services provided, grantor receivables, deferred revenue, and the reconciliation of bank accounts accurately and in a timely manner. This resulted in adjustments necessary to present the financial statements and disclosures of the Agency as of July 31, 2024. We also noted significant weaknesses in internal controls over personnel payroll and the processing, maintaining and reconciling payroll activity to the general ledger and external regulatory reporting (IRS Form 941's, state filings, etc.). Therefore, the risk exists that grant receivables and/or cash from the various programs are not recorded properly during the reporting period (interim and annually). This condition also makes it difficult to prepare accurate external reports required by the various funding sources in a timely manner (i.e. SF-425, DHS’s reports for LIHEAP, etc.). Accordingly, the Agency is not in compliance with federal and state reporting as specified by grants and contracts and the Federal Audit Clearinghouse. The systemic cause appears to be the untimely resignation of key personnel, a change in the accounting system, a lack of personnel with the skills, knowledge, and experience with grant accounting and a weakness in the overall system of internal accounting controls and monitoring. Policies and procedures are not followed consistently throughout the year. Context: Review of internal control structure of the organization in accordance with Government Auditing Standards. Criteria: Controls should be in place to ensure that financial statements are prepared in accordance with GAAP. The auditee shall prepare financial statements that reflect its financial position, results of operations or changes in net assets, and, where appropriate, cash flows for the fiscal year audited. The auditee shall also prepare a schedule of expenditures of Federal awards for the period covered by the auditee's financial statements. [2 CFR §200.510(a) and (b)] Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in §200.328 Financial reporting and §200.329. (Continued) Effect: Monitoring and reporting program performance [2 CFR §200.302(b)(2)]. Management may not be able to obtain complete and accurate financial statements on an interim or fiscal year basis to be used for internal or external reporting purposes. Cause: Turnover of key staff, change in the accounting system, limited personnel with knowledge and/or the ability to assist and provide needed information to aid in financial statement preparation. Recommendation: The degree to which the preparation of the financial statements and related disclosures are prepared by the independent auditor is a control deficiency as determined by the knowledge, skills and experience of those in the organization who are charged with the responsibility of its financial reporting. The Agency has hired a new fiscal officer (CFO) and should hire additional staff (grant accountant and a general ledger accountant) to assist the new fiscal officer. New staff should have the adequate skills, knowledge and experience to oversee and/or perform the necessary accounting functions each month. Policies and procedures should be updated to adequately address the challenges and dynamics of the community action agency. We believe that the CFO with the supporting staff and general ledger accountant should have the overall responsibility of properly reconciling and closing out the accounting system and grant activity each month in an efficient and timely manner so as to eliminate the risk of significant errors occurring. Budget-to-actual schedules should be an integral part of the grant accountant’s basic responsibilities. Program directors should be involved in the closing process. We further recommend that training be provided to all staff engaged in the financial reporting, allocations and reconciliation functions to ensure that a complete and accurate financial statements close-out process is achieved each month and annually. Accounting policies and procedures must be updated and implemented. Views of Responsible Officials and Planned Corrective Actions: Management is in the process of assessing the organizational structure and capacity to provide adequate financial reporting. With Board review and approval of the Agency’s financial funding sources, the Agency will hire additional fiscal clerk to further support financial requirements and segregation of duties to ensure adequate internal controls are fully implemented. The CFO will have the overall responsibility of properly reconciling and closing out the accounting system and grant activity each month in an efficient and timely manner to eliminate the risk of significant errors occurring. Budget-to-actual schedules will be an integral part of the grant accountant analyst’s basic responsibilities. The fiscal policies and procedures will be updated with the enhancements implemented within the fiscal department. Staff will be trained on revised policies and procedures and Uniform Guidance regulations. The new automated financial systems, will support financial reporting to meet GAAP requirements and to provide informative reports for Board and Management. All enhancements will be implemented by December 31, 2025.
SCHEDULE OF FINDINGS AND QUESTIONED COSTS Federal Award Findings and Questioned Costs July 31, 2024 Comment # 2024-002 INTERNAL CONTROLS OVER FINANCIAL STATEMENT PREPARATION, GRANT CLOSE OUT AND COMPLIANCE WITH RELATED PROVISIONS OF GRANTS AND CONTRACTS SHOULD BE IMPROVED HEAD START AND EARLY HEAD START, LIHEAP, LIHWAP, CSBG, ASTHO, CACFP and CSLFRF FAL # 93.600, 93.568, 93.499, 93.569, 93.185, 10.558, 21.027 (Questioned Costs - Undetermined) Condition: As part of our auditing procedures, we assisted in the preparation of the financial statements, related disclosures, and the schedule of expenditures of federal awards of the Agency. The preparation of these financial statements in accordance with generally accepted accounting principles (GAAP) and Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, is the responsibility of the grantee. The authoritative and regulatory standards states in summary that management should authorize, process, reconcile and close-out each grant and contract in a timely manner to ensure proper accounting and reporting of such activity in accordance with the specific professional standards and regulatory requirements. The closeout process is designed to reduce the risk of errors, fraud, material misstatement of financial and compliance reporting and recognition of expenditures (or revenue) in the proper period. We noted that the current system of internal controls over financial statements and compliance is not designed to ensure that the objectives are achieved. Further, the capacity and experience of the current staff does not allow for adequate analysis of grants and contracts, proper allocations of shared costs and support services provided, grantor receivables, deferred revenue, and the reconciliation of bank accounts accurately and in a timely manner. This resulted in adjustments necessary to present the financial statements and disclosures of the Agency as of July 31, 2024. We also noted significant weaknesses in internal controls over personnel payroll and the processing, maintaining and reconciling payroll activity to the general ledger and external regulatory reporting (IRS Form 941's, state filings, etc.). Therefore, the risk exists that grant receivables and/or cash from the various programs are not recorded properly during the reporting period (interim and annually). This condition also makes it difficult to prepare accurate external reports required by the various funding sources in a timely manner (i.e. SF-425, DHS’s reports for LIHEAP, etc.). Accordingly, the Agency is not in compliance with federal and state reporting as specified by grants and contracts and the Federal Audit Clearinghouse. The systemic cause appears to be the untimely resignation of key personnel, a change in the accounting system, a lack of personnel with the skills, knowledge, and experience with grant accounting and a weakness in the overall system of internal accounting controls and monitoring. Policies and procedures are not followed consistently throughout the year. Context: Review of internal control structure of the organization in accordance with Government Auditing Standards. Criteria: Controls should be in place to ensure that financial statements are prepared in accordance with GAAP. The auditee shall prepare financial statements that reflect its financial position, results of operations or changes in net assets, and, where appropriate, cash flows for the fiscal year audited. The auditee shall also prepare a schedule of expenditures of Federal awards for the period covered by the auditee's financial statements. [2 CFR §200.510(a) and (b)] Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in §200.328 Financial reporting and §200.329. (Continued) Effect: Monitoring and reporting program performance [2 CFR §200.302(b)(2)]. Management may not be able to obtain complete and accurate financial statements on an interim or fiscal year basis to be used for internal or external reporting purposes. Cause: Turnover of key staff, change in the accounting system, limited personnel with knowledge and/or the ability to assist and provide needed information to aid in financial statement preparation. Recommendation: The degree to which the preparation of the financial statements and related disclosures are prepared by the independent auditor is a control deficiency as determined by the knowledge, skills and experience of those in the organization who are charged with the responsibility of its financial reporting. The Agency has hired a new fiscal officer (CFO) and should hire additional staff (grant accountant and a general ledger accountant) to assist the new fiscal officer. New staff should have the adequate skills, knowledge and experience to oversee and/or perform the necessary accounting functions each month. Policies and procedures should be updated to adequately address the challenges and dynamics of the community action agency. We believe that the CFO with the supporting staff and general ledger accountant should have the overall responsibility of properly reconciling and closing out the accounting system and grant activity each month in an efficient and timely manner so as to eliminate the risk of significant errors occurring. Budget-to-actual schedules should be an integral part of the grant accountant’s basic responsibilities. Program directors should be involved in the closing process. We further recommend that training be provided to all staff engaged in the financial reporting, allocations and reconciliation functions to ensure that a complete and accurate financial statements close-out process is achieved each month and annually. Accounting policies and procedures must be updated and implemented. Views of Responsible Officials and Planned Corrective Actions: Management is in the process of assessing the organizational structure and capacity to provide adequate financial reporting. With Board review and approval of the Agency’s financial funding sources, the Agency will hire additional fiscal clerk to further support financial requirements and segregation of duties to ensure adequate internal controls are fully implemented. The CFO will have the overall responsibility of properly reconciling and closing out the accounting system and grant activity each month in an efficient and timely manner to eliminate the risk of significant errors occurring. Budget-to-actual schedules will be an integral part of the grant accountant analyst’s basic responsibilities. The fiscal policies and procedures will be updated with the enhancements implemented within the fiscal department. Staff will be trained on revised policies and procedures and Uniform Guidance regulations. The new automated financial systems, will support financial reporting to meet GAAP requirements and to provide informative reports for Board and Management. All enhancements will be implemented by December 31, 2025.
SCHEDULE OF FINDINGS AND QUESTIONED COSTS Federal Award Findings and Questioned Costs July 31, 2024 Comment # 2024-002 INTERNAL CONTROLS OVER FINANCIAL STATEMENT PREPARATION, GRANT CLOSE OUT AND COMPLIANCE WITH RELATED PROVISIONS OF GRANTS AND CONTRACTS SHOULD BE IMPROVED HEAD START AND EARLY HEAD START, LIHEAP, LIHWAP, CSBG, ASTHO, CACFP and CSLFRF FAL # 93.600, 93.568, 93.499, 93.569, 93.185, 10.558, 21.027 (Questioned Costs - Undetermined) Condition: As part of our auditing procedures, we assisted in the preparation of the financial statements, related disclosures, and the schedule of expenditures of federal awards of the Agency. The preparation of these financial statements in accordance with generally accepted accounting principles (GAAP) and Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, is the responsibility of the grantee. The authoritative and regulatory standards states in summary that management should authorize, process, reconcile and close-out each grant and contract in a timely manner to ensure proper accounting and reporting of such activity in accordance with the specific professional standards and regulatory requirements. The closeout process is designed to reduce the risk of errors, fraud, material misstatement of financial and compliance reporting and recognition of expenditures (or revenue) in the proper period. We noted that the current system of internal controls over financial statements and compliance is not designed to ensure that the objectives are achieved. Further, the capacity and experience of the current staff does not allow for adequate analysis of grants and contracts, proper allocations of shared costs and support services provided, grantor receivables, deferred revenue, and the reconciliation of bank accounts accurately and in a timely manner. This resulted in adjustments necessary to present the financial statements and disclosures of the Agency as of July 31, 2024. We also noted significant weaknesses in internal controls over personnel payroll and the processing, maintaining and reconciling payroll activity to the general ledger and external regulatory reporting (IRS Form 941's, state filings, etc.). Therefore, the risk exists that grant receivables and/or cash from the various programs are not recorded properly during the reporting period (interim and annually). This condition also makes it difficult to prepare accurate external reports required by the various funding sources in a timely manner (i.e. SF-425, DHS’s reports for LIHEAP, etc.). Accordingly, the Agency is not in compliance with federal and state reporting as specified by grants and contracts and the Federal Audit Clearinghouse. The systemic cause appears to be the untimely resignation of key personnel, a change in the accounting system, a lack of personnel with the skills, knowledge, and experience with grant accounting and a weakness in the overall system of internal accounting controls and monitoring. Policies and procedures are not followed consistently throughout the year. Context: Review of internal control structure of the organization in accordance with Government Auditing Standards. Criteria: Controls should be in place to ensure that financial statements are prepared in accordance with GAAP. The auditee shall prepare financial statements that reflect its financial position, results of operations or changes in net assets, and, where appropriate, cash flows for the fiscal year audited. The auditee shall also prepare a schedule of expenditures of Federal awards for the period covered by the auditee's financial statements. [2 CFR §200.510(a) and (b)] Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in §200.328 Financial reporting and §200.329. (Continued) Effect: Monitoring and reporting program performance [2 CFR §200.302(b)(2)]. Management may not be able to obtain complete and accurate financial statements on an interim or fiscal year basis to be used for internal or external reporting purposes. Cause: Turnover of key staff, change in the accounting system, limited personnel with knowledge and/or the ability to assist and provide needed information to aid in financial statement preparation. Recommendation: The degree to which the preparation of the financial statements and related disclosures are prepared by the independent auditor is a control deficiency as determined by the knowledge, skills and experience of those in the organization who are charged with the responsibility of its financial reporting. The Agency has hired a new fiscal officer (CFO) and should hire additional staff (grant accountant and a general ledger accountant) to assist the new fiscal officer. New staff should have the adequate skills, knowledge and experience to oversee and/or perform the necessary accounting functions each month. Policies and procedures should be updated to adequately address the challenges and dynamics of the community action agency. We believe that the CFO with the supporting staff and general ledger accountant should have the overall responsibility of properly reconciling and closing out the accounting system and grant activity each month in an efficient and timely manner so as to eliminate the risk of significant errors occurring. Budget-to-actual schedules should be an integral part of the grant accountant’s basic responsibilities. Program directors should be involved in the closing process. We further recommend that training be provided to all staff engaged in the financial reporting, allocations and reconciliation functions to ensure that a complete and accurate financial statements close-out process is achieved each month and annually. Accounting policies and procedures must be updated and implemented. Views of Responsible Officials and Planned Corrective Actions: Management is in the process of assessing the organizational structure and capacity to provide adequate financial reporting. With Board review and approval of the Agency’s financial funding sources, the Agency will hire additional fiscal clerk to further support financial requirements and segregation of duties to ensure adequate internal controls are fully implemented. The CFO will have the overall responsibility of properly reconciling and closing out the accounting system and grant activity each month in an efficient and timely manner to eliminate the risk of significant errors occurring. Budget-to-actual schedules will be an integral part of the grant accountant analyst’s basic responsibilities. The fiscal policies and procedures will be updated with the enhancements implemented within the fiscal department. Staff will be trained on revised policies and procedures and Uniform Guidance regulations. The new automated financial systems, will support financial reporting to meet GAAP requirements and to provide informative reports for Board and Management. All enhancements will be implemented by December 31, 2025.
SCHEDULE OF FINDINGS AND QUESTIONED COSTS Federal Award Findings and Questioned Costs July 31, 2024 Comment # 2024-002 INTERNAL CONTROLS OVER FINANCIAL STATEMENT PREPARATION, GRANT CLOSE OUT AND COMPLIANCE WITH RELATED PROVISIONS OF GRANTS AND CONTRACTS SHOULD BE IMPROVED HEAD START AND EARLY HEAD START, LIHEAP, LIHWAP, CSBG, ASTHO, CACFP and CSLFRF FAL # 93.600, 93.568, 93.499, 93.569, 93.185, 10.558, 21.027 (Questioned Costs - Undetermined) Condition: As part of our auditing procedures, we assisted in the preparation of the financial statements, related disclosures, and the schedule of expenditures of federal awards of the Agency. The preparation of these financial statements in accordance with generally accepted accounting principles (GAAP) and Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, is the responsibility of the grantee. The authoritative and regulatory standards states in summary that management should authorize, process, reconcile and close-out each grant and contract in a timely manner to ensure proper accounting and reporting of such activity in accordance with the specific professional standards and regulatory requirements. The closeout process is designed to reduce the risk of errors, fraud, material misstatement of financial and compliance reporting and recognition of expenditures (or revenue) in the proper period. We noted that the current system of internal controls over financial statements and compliance is not designed to ensure that the objectives are achieved. Further, the capacity and experience of the current staff does not allow for adequate analysis of grants and contracts, proper allocations of shared costs and support services provided, grantor receivables, deferred revenue, and the reconciliation of bank accounts accurately and in a timely manner. This resulted in adjustments necessary to present the financial statements and disclosures of the Agency as of July 31, 2024. We also noted significant weaknesses in internal controls over personnel payroll and the processing, maintaining and reconciling payroll activity to the general ledger and external regulatory reporting (IRS Form 941's, state filings, etc.). Therefore, the risk exists that grant receivables and/or cash from the various programs are not recorded properly during the reporting period (interim and annually). This condition also makes it difficult to prepare accurate external reports required by the various funding sources in a timely manner (i.e. SF-425, DHS’s reports for LIHEAP, etc.). Accordingly, the Agency is not in compliance with federal and state reporting as specified by grants and contracts and the Federal Audit Clearinghouse. The systemic cause appears to be the untimely resignation of key personnel, a change in the accounting system, a lack of personnel with the skills, knowledge, and experience with grant accounting and a weakness in the overall system of internal accounting controls and monitoring. Policies and procedures are not followed consistently throughout the year. Context: Review of internal control structure of the organization in accordance with Government Auditing Standards. Criteria: Controls should be in place to ensure that financial statements are prepared in accordance with GAAP. The auditee shall prepare financial statements that reflect its financial position, results of operations or changes in net assets, and, where appropriate, cash flows for the fiscal year audited. The auditee shall also prepare a schedule of expenditures of Federal awards for the period covered by the auditee's financial statements. [2 CFR §200.510(a) and (b)] Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in §200.328 Financial reporting and §200.329. (Continued) Effect: Monitoring and reporting program performance [2 CFR §200.302(b)(2)]. Management may not be able to obtain complete and accurate financial statements on an interim or fiscal year basis to be used for internal or external reporting purposes. Cause: Turnover of key staff, change in the accounting system, limited personnel with knowledge and/or the ability to assist and provide needed information to aid in financial statement preparation. Recommendation: The degree to which the preparation of the financial statements and related disclosures are prepared by the independent auditor is a control deficiency as determined by the knowledge, skills and experience of those in the organization who are charged with the responsibility of its financial reporting. The Agency has hired a new fiscal officer (CFO) and should hire additional staff (grant accountant and a general ledger accountant) to assist the new fiscal officer. New staff should have the adequate skills, knowledge and experience to oversee and/or perform the necessary accounting functions each month. Policies and procedures should be updated to adequately address the challenges and dynamics of the community action agency. We believe that the CFO with the supporting staff and general ledger accountant should have the overall responsibility of properly reconciling and closing out the accounting system and grant activity each month in an efficient and timely manner so as to eliminate the risk of significant errors occurring. Budget-to-actual schedules should be an integral part of the grant accountant’s basic responsibilities. Program directors should be involved in the closing process. We further recommend that training be provided to all staff engaged in the financial reporting, allocations and reconciliation functions to ensure that a complete and accurate financial statements close-out process is achieved each month and annually. Accounting policies and procedures must be updated and implemented. Views of Responsible Officials and Planned Corrective Actions: Management is in the process of assessing the organizational structure and capacity to provide adequate financial reporting. With Board review and approval of the Agency’s financial funding sources, the Agency will hire additional fiscal clerk to further support financial requirements and segregation of duties to ensure adequate internal controls are fully implemented. The CFO will have the overall responsibility of properly reconciling and closing out the accounting system and grant activity each month in an efficient and timely manner to eliminate the risk of significant errors occurring. Budget-to-actual schedules will be an integral part of the grant accountant analyst’s basic responsibilities. The fiscal policies and procedures will be updated with the enhancements implemented within the fiscal department. Staff will be trained on revised policies and procedures and Uniform Guidance regulations. The new automated financial systems, will support financial reporting to meet GAAP requirements and to provide informative reports for Board and Management. All enhancements will be implemented by December 31, 2025.
SCHEDULE OF FINDINGS AND QUESTIONED COSTS Federal Award Findings and Questioned Costs July 31, 2024 Comment # 2024-002 INTERNAL CONTROLS OVER FINANCIAL STATEMENT PREPARATION, GRANT CLOSE OUT AND COMPLIANCE WITH RELATED PROVISIONS OF GRANTS AND CONTRACTS SHOULD BE IMPROVED HEAD START AND EARLY HEAD START, LIHEAP, LIHWAP, CSBG, ASTHO, CACFP and CSLFRF FAL # 93.600, 93.568, 93.499, 93.569, 93.185, 10.558, 21.027 (Questioned Costs - Undetermined) Condition: As part of our auditing procedures, we assisted in the preparation of the financial statements, related disclosures, and the schedule of expenditures of federal awards of the Agency. The preparation of these financial statements in accordance with generally accepted accounting principles (GAAP) and Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, is the responsibility of the grantee. The authoritative and regulatory standards states in summary that management should authorize, process, reconcile and close-out each grant and contract in a timely manner to ensure proper accounting and reporting of such activity in accordance with the specific professional standards and regulatory requirements. The closeout process is designed to reduce the risk of errors, fraud, material misstatement of financial and compliance reporting and recognition of expenditures (or revenue) in the proper period. We noted that the current system of internal controls over financial statements and compliance is not designed to ensure that the objectives are achieved. Further, the capacity and experience of the current staff does not allow for adequate analysis of grants and contracts, proper allocations of shared costs and support services provided, grantor receivables, deferred revenue, and the reconciliation of bank accounts accurately and in a timely manner. This resulted in adjustments necessary to present the financial statements and disclosures of the Agency as of July 31, 2024. We also noted significant weaknesses in internal controls over personnel payroll and the processing, maintaining and reconciling payroll activity to the general ledger and external regulatory reporting (IRS Form 941's, state filings, etc.). Therefore, the risk exists that grant receivables and/or cash from the various programs are not recorded properly during the reporting period (interim and annually). This condition also makes it difficult to prepare accurate external reports required by the various funding sources in a timely manner (i.e. SF-425, DHS’s reports for LIHEAP, etc.). Accordingly, the Agency is not in compliance with federal and state reporting as specified by grants and contracts and the Federal Audit Clearinghouse. The systemic cause appears to be the untimely resignation of key personnel, a change in the accounting system, a lack of personnel with the skills, knowledge, and experience with grant accounting and a weakness in the overall system of internal accounting controls and monitoring. Policies and procedures are not followed consistently throughout the year. Context: Review of internal control structure of the organization in accordance with Government Auditing Standards. Criteria: Controls should be in place to ensure that financial statements are prepared in accordance with GAAP. The auditee shall prepare financial statements that reflect its financial position, results of operations or changes in net assets, and, where appropriate, cash flows for the fiscal year audited. The auditee shall also prepare a schedule of expenditures of Federal awards for the period covered by the auditee's financial statements. [2 CFR §200.510(a) and (b)] Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in §200.328 Financial reporting and §200.329. (Continued) Effect: Monitoring and reporting program performance [2 CFR §200.302(b)(2)]. Management may not be able to obtain complete and accurate financial statements on an interim or fiscal year basis to be used for internal or external reporting purposes. Cause: Turnover of key staff, change in the accounting system, limited personnel with knowledge and/or the ability to assist and provide needed information to aid in financial statement preparation. Recommendation: The degree to which the preparation of the financial statements and related disclosures are prepared by the independent auditor is a control deficiency as determined by the knowledge, skills and experience of those in the organization who are charged with the responsibility of its financial reporting. The Agency has hired a new fiscal officer (CFO) and should hire additional staff (grant accountant and a general ledger accountant) to assist the new fiscal officer. New staff should have the adequate skills, knowledge and experience to oversee and/or perform the necessary accounting functions each month. Policies and procedures should be updated to adequately address the challenges and dynamics of the community action agency. We believe that the CFO with the supporting staff and general ledger accountant should have the overall responsibility of properly reconciling and closing out the accounting system and grant activity each month in an efficient and timely manner so as to eliminate the risk of significant errors occurring. Budget-to-actual schedules should be an integral part of the grant accountant’s basic responsibilities. Program directors should be involved in the closing process. We further recommend that training be provided to all staff engaged in the financial reporting, allocations and reconciliation functions to ensure that a complete and accurate financial statements close-out process is achieved each month and annually. Accounting policies and procedures must be updated and implemented. Views of Responsible Officials and Planned Corrective Actions: Management is in the process of assessing the organizational structure and capacity to provide adequate financial reporting. With Board review and approval of the Agency’s financial funding sources, the Agency will hire additional fiscal clerk to further support financial requirements and segregation of duties to ensure adequate internal controls are fully implemented. The CFO will have the overall responsibility of properly reconciling and closing out the accounting system and grant activity each month in an efficient and timely manner to eliminate the risk of significant errors occurring. Budget-to-actual schedules will be an integral part of the grant accountant analyst’s basic responsibilities. The fiscal policies and procedures will be updated with the enhancements implemented within the fiscal department. Staff will be trained on revised policies and procedures and Uniform Guidance regulations. The new automated financial systems, will support financial reporting to meet GAAP requirements and to provide informative reports for Board and Management. All enhancements will be implemented by December 31, 2025.
SCHEDULE OF FINDINGS AND QUESTIONED COSTS Federal Award Findings and Questioned Costs July 31, 2024 Comment # 2024-002 INTERNAL CONTROLS OVER FINANCIAL STATEMENT PREPARATION, GRANT CLOSE OUT AND COMPLIANCE WITH RELATED PROVISIONS OF GRANTS AND CONTRACTS SHOULD BE IMPROVED HEAD START AND EARLY HEAD START, LIHEAP, LIHWAP, CSBG, ASTHO, CACFP and CSLFRF FAL # 93.600, 93.568, 93.499, 93.569, 93.185, 10.558, 21.027 (Questioned Costs - Undetermined) Condition: As part of our auditing procedures, we assisted in the preparation of the financial statements, related disclosures, and the schedule of expenditures of federal awards of the Agency. The preparation of these financial statements in accordance with generally accepted accounting principles (GAAP) and Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, is the responsibility of the grantee. The authoritative and regulatory standards states in summary that management should authorize, process, reconcile and close-out each grant and contract in a timely manner to ensure proper accounting and reporting of such activity in accordance with the specific professional standards and regulatory requirements. The closeout process is designed to reduce the risk of errors, fraud, material misstatement of financial and compliance reporting and recognition of expenditures (or revenue) in the proper period. We noted that the current system of internal controls over financial statements and compliance is not designed to ensure that the objectives are achieved. Further, the capacity and experience of the current staff does not allow for adequate analysis of grants and contracts, proper allocations of shared costs and support services provided, grantor receivables, deferred revenue, and the reconciliation of bank accounts accurately and in a timely manner. This resulted in adjustments necessary to present the financial statements and disclosures of the Agency as of July 31, 2024. We also noted significant weaknesses in internal controls over personnel payroll and the processing, maintaining and reconciling payroll activity to the general ledger and external regulatory reporting (IRS Form 941's, state filings, etc.). Therefore, the risk exists that grant receivables and/or cash from the various programs are not recorded properly during the reporting period (interim and annually). This condition also makes it difficult to prepare accurate external reports required by the various funding sources in a timely manner (i.e. SF-425, DHS’s reports for LIHEAP, etc.). Accordingly, the Agency is not in compliance with federal and state reporting as specified by grants and contracts and the Federal Audit Clearinghouse. The systemic cause appears to be the untimely resignation of key personnel, a change in the accounting system, a lack of personnel with the skills, knowledge, and experience with grant accounting and a weakness in the overall system of internal accounting controls and monitoring. Policies and procedures are not followed consistently throughout the year. Context: Review of internal control structure of the organization in accordance with Government Auditing Standards. Criteria: Controls should be in place to ensure that financial statements are prepared in accordance with GAAP. The auditee shall prepare financial statements that reflect its financial position, results of operations or changes in net assets, and, where appropriate, cash flows for the fiscal year audited. The auditee shall also prepare a schedule of expenditures of Federal awards for the period covered by the auditee's financial statements. [2 CFR §200.510(a) and (b)] Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in §200.328 Financial reporting and §200.329. (Continued) Effect: Monitoring and reporting program performance [2 CFR §200.302(b)(2)]. Management may not be able to obtain complete and accurate financial statements on an interim or fiscal year basis to be used for internal or external reporting purposes. Cause: Turnover of key staff, change in the accounting system, limited personnel with knowledge and/or the ability to assist and provide needed information to aid in financial statement preparation. Recommendation: The degree to which the preparation of the financial statements and related disclosures are prepared by the independent auditor is a control deficiency as determined by the knowledge, skills and experience of those in the organization who are charged with the responsibility of its financial reporting. The Agency has hired a new fiscal officer (CFO) and should hire additional staff (grant accountant and a general ledger accountant) to assist the new fiscal officer. New staff should have the adequate skills, knowledge and experience to oversee and/or perform the necessary accounting functions each month. Policies and procedures should be updated to adequately address the challenges and dynamics of the community action agency. We believe that the CFO with the supporting staff and general ledger accountant should have the overall responsibility of properly reconciling and closing out the accounting system and grant activity each month in an efficient and timely manner so as to eliminate the risk of significant errors occurring. Budget-to-actual schedules should be an integral part of the grant accountant’s basic responsibilities. Program directors should be involved in the closing process. We further recommend that training be provided to all staff engaged in the financial reporting, allocations and reconciliation functions to ensure that a complete and accurate financial statements close-out process is achieved each month and annually. Accounting policies and procedures must be updated and implemented. Views of Responsible Officials and Planned Corrective Actions: Management is in the process of assessing the organizational structure and capacity to provide adequate financial reporting. With Board review and approval of the Agency’s financial funding sources, the Agency will hire additional fiscal clerk to further support financial requirements and segregation of duties to ensure adequate internal controls are fully implemented. The CFO will have the overall responsibility of properly reconciling and closing out the accounting system and grant activity each month in an efficient and timely manner to eliminate the risk of significant errors occurring. Budget-to-actual schedules will be an integral part of the grant accountant analyst’s basic responsibilities. The fiscal policies and procedures will be updated with the enhancements implemented within the fiscal department. Staff will be trained on revised policies and procedures and Uniform Guidance regulations. The new automated financial systems, will support financial reporting to meet GAAP requirements and to provide informative reports for Board and Management. All enhancements will be implemented by December 31, 2025.
SCHEDULE OF FINDINGS AND QUESTIONED COSTS Federal Award Findings and Questioned Costs July 31, 2024 Comment # 2024-002 INTERNAL CONTROLS OVER FINANCIAL STATEMENT PREPARATION, GRANT CLOSE OUT AND COMPLIANCE WITH RELATED PROVISIONS OF GRANTS AND CONTRACTS SHOULD BE IMPROVED HEAD START AND EARLY HEAD START, LIHEAP, LIHWAP, CSBG, ASTHO, CACFP and CSLFRF FAL # 93.600, 93.568, 93.499, 93.569, 93.185, 10.558, 21.027 (Questioned Costs - Undetermined) Condition: As part of our auditing procedures, we assisted in the preparation of the financial statements, related disclosures, and the schedule of expenditures of federal awards of the Agency. The preparation of these financial statements in accordance with generally accepted accounting principles (GAAP) and Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, is the responsibility of the grantee. The authoritative and regulatory standards states in summary that management should authorize, process, reconcile and close-out each grant and contract in a timely manner to ensure proper accounting and reporting of such activity in accordance with the specific professional standards and regulatory requirements. The closeout process is designed to reduce the risk of errors, fraud, material misstatement of financial and compliance reporting and recognition of expenditures (or revenue) in the proper period. We noted that the current system of internal controls over financial statements and compliance is not designed to ensure that the objectives are achieved. Further, the capacity and experience of the current staff does not allow for adequate analysis of grants and contracts, proper allocations of shared costs and support services provided, grantor receivables, deferred revenue, and the reconciliation of bank accounts accurately and in a timely manner. This resulted in adjustments necessary to present the financial statements and disclosures of the Agency as of July 31, 2024. We also noted significant weaknesses in internal controls over personnel payroll and the processing, maintaining and reconciling payroll activity to the general ledger and external regulatory reporting (IRS Form 941's, state filings, etc.). Therefore, the risk exists that grant receivables and/or cash from the various programs are not recorded properly during the reporting period (interim and annually). This condition also makes it difficult to prepare accurate external reports required by the various funding sources in a timely manner (i.e. SF-425, DHS’s reports for LIHEAP, etc.). Accordingly, the Agency is not in compliance with federal and state reporting as specified by grants and contracts and the Federal Audit Clearinghouse. The systemic cause appears to be the untimely resignation of key personnel, a change in the accounting system, a lack of personnel with the skills, knowledge, and experience with grant accounting and a weakness in the overall system of internal accounting controls and monitoring. Policies and procedures are not followed consistently throughout the year. Context: Review of internal control structure of the organization in accordance with Government Auditing Standards. Criteria: Controls should be in place to ensure that financial statements are prepared in accordance with GAAP. The auditee shall prepare financial statements that reflect its financial position, results of operations or changes in net assets, and, where appropriate, cash flows for the fiscal year audited. The auditee shall also prepare a schedule of expenditures of Federal awards for the period covered by the auditee's financial statements. [2 CFR §200.510(a) and (b)] Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in §200.328 Financial reporting and §200.329. (Continued) Effect: Monitoring and reporting program performance [2 CFR §200.302(b)(2)]. Management may not be able to obtain complete and accurate financial statements on an interim or fiscal year basis to be used for internal or external reporting purposes. Cause: Turnover of key staff, change in the accounting system, limited personnel with knowledge and/or the ability to assist and provide needed information to aid in financial statement preparation. Recommendation: The degree to which the preparation of the financial statements and related disclosures are prepared by the independent auditor is a control deficiency as determined by the knowledge, skills and experience of those in the organization who are charged with the responsibility of its financial reporting. The Agency has hired a new fiscal officer (CFO) and should hire additional staff (grant accountant and a general ledger accountant) to assist the new fiscal officer. New staff should have the adequate skills, knowledge and experience to oversee and/or perform the necessary accounting functions each month. Policies and procedures should be updated to adequately address the challenges and dynamics of the community action agency. We believe that the CFO with the supporting staff and general ledger accountant should have the overall responsibility of properly reconciling and closing out the accounting system and grant activity each month in an efficient and timely manner so as to eliminate the risk of significant errors occurring. Budget-to-actual schedules should be an integral part of the grant accountant’s basic responsibilities. Program directors should be involved in the closing process. We further recommend that training be provided to all staff engaged in the financial reporting, allocations and reconciliation functions to ensure that a complete and accurate financial statements close-out process is achieved each month and annually. Accounting policies and procedures must be updated and implemented. Views of Responsible Officials and Planned Corrective Actions: Management is in the process of assessing the organizational structure and capacity to provide adequate financial reporting. With Board review and approval of the Agency’s financial funding sources, the Agency will hire additional fiscal clerk to further support financial requirements and segregation of duties to ensure adequate internal controls are fully implemented. The CFO will have the overall responsibility of properly reconciling and closing out the accounting system and grant activity each month in an efficient and timely manner to eliminate the risk of significant errors occurring. Budget-to-actual schedules will be an integral part of the grant accountant analyst’s basic responsibilities. The fiscal policies and procedures will be updated with the enhancements implemented within the fiscal department. Staff will be trained on revised policies and procedures and Uniform Guidance regulations. The new automated financial systems, will support financial reporting to meet GAAP requirements and to provide informative reports for Board and Management. All enhancements will be implemented by December 31, 2025.
SCHEDULE OF FINDINGS AND QUESTIONED COSTS Federal Award Findings and Questioned Costs July 31, 2024 Comment # 2024-002 INTERNAL CONTROLS OVER FINANCIAL STATEMENT PREPARATION, GRANT CLOSE OUT AND COMPLIANCE WITH RELATED PROVISIONS OF GRANTS AND CONTRACTS SHOULD BE IMPROVED HEAD START AND EARLY HEAD START, LIHEAP, LIHWAP, CSBG, ASTHO, CACFP and CSLFRF FAL # 93.600, 93.568, 93.499, 93.569, 93.185, 10.558, 21.027 (Questioned Costs - Undetermined) Condition: As part of our auditing procedures, we assisted in the preparation of the financial statements, related disclosures, and the schedule of expenditures of federal awards of the Agency. The preparation of these financial statements in accordance with generally accepted accounting principles (GAAP) and Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, is the responsibility of the grantee. The authoritative and regulatory standards states in summary that management should authorize, process, reconcile and close-out each grant and contract in a timely manner to ensure proper accounting and reporting of such activity in accordance with the specific professional standards and regulatory requirements. The closeout process is designed to reduce the risk of errors, fraud, material misstatement of financial and compliance reporting and recognition of expenditures (or revenue) in the proper period. We noted that the current system of internal controls over financial statements and compliance is not designed to ensure that the objectives are achieved. Further, the capacity and experience of the current staff does not allow for adequate analysis of grants and contracts, proper allocations of shared costs and support services provided, grantor receivables, deferred revenue, and the reconciliation of bank accounts accurately and in a timely manner. This resulted in adjustments necessary to present the financial statements and disclosures of the Agency as of July 31, 2024. We also noted significant weaknesses in internal controls over personnel payroll and the processing, maintaining and reconciling payroll activity to the general ledger and external regulatory reporting (IRS Form 941's, state filings, etc.). Therefore, the risk exists that grant receivables and/or cash from the various programs are not recorded properly during the reporting period (interim and annually). This condition also makes it difficult to prepare accurate external reports required by the various funding sources in a timely manner (i.e. SF-425, DHS’s reports for LIHEAP, etc.). Accordingly, the Agency is not in compliance with federal and state reporting as specified by grants and contracts and the Federal Audit Clearinghouse. The systemic cause appears to be the untimely resignation of key personnel, a change in the accounting system, a lack of personnel with the skills, knowledge, and experience with grant accounting and a weakness in the overall system of internal accounting controls and monitoring. Policies and procedures are not followed consistently throughout the year. Context: Review of internal control structure of the organization in accordance with Government Auditing Standards. Criteria: Controls should be in place to ensure that financial statements are prepared in accordance with GAAP. The auditee shall prepare financial statements that reflect its financial position, results of operations or changes in net assets, and, where appropriate, cash flows for the fiscal year audited. The auditee shall also prepare a schedule of expenditures of Federal awards for the period covered by the auditee's financial statements. [2 CFR §200.510(a) and (b)] Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in §200.328 Financial reporting and §200.329. (Continued) Effect: Monitoring and reporting program performance [2 CFR §200.302(b)(2)]. Management may not be able to obtain complete and accurate financial statements on an interim or fiscal year basis to be used for internal or external reporting purposes. Cause: Turnover of key staff, change in the accounting system, limited personnel with knowledge and/or the ability to assist and provide needed information to aid in financial statement preparation. Recommendation: The degree to which the preparation of the financial statements and related disclosures are prepared by the independent auditor is a control deficiency as determined by the knowledge, skills and experience of those in the organization who are charged with the responsibility of its financial reporting. The Agency has hired a new fiscal officer (CFO) and should hire additional staff (grant accountant and a general ledger accountant) to assist the new fiscal officer. New staff should have the adequate skills, knowledge and experience to oversee and/or perform the necessary accounting functions each month. Policies and procedures should be updated to adequately address the challenges and dynamics of the community action agency. We believe that the CFO with the supporting staff and general ledger accountant should have the overall responsibility of properly reconciling and closing out the accounting system and grant activity each month in an efficient and timely manner so as to eliminate the risk of significant errors occurring. Budget-to-actual schedules should be an integral part of the grant accountant’s basic responsibilities. Program directors should be involved in the closing process. We further recommend that training be provided to all staff engaged in the financial reporting, allocations and reconciliation functions to ensure that a complete and accurate financial statements close-out process is achieved each month and annually. Accounting policies and procedures must be updated and implemented. Views of Responsible Officials and Planned Corrective Actions: Management is in the process of assessing the organizational structure and capacity to provide adequate financial reporting. With Board review and approval of the Agency’s financial funding sources, the Agency will hire additional fiscal clerk to further support financial requirements and segregation of duties to ensure adequate internal controls are fully implemented. The CFO will have the overall responsibility of properly reconciling and closing out the accounting system and grant activity each month in an efficient and timely manner to eliminate the risk of significant errors occurring. Budget-to-actual schedules will be an integral part of the grant accountant analyst’s basic responsibilities. The fiscal policies and procedures will be updated with the enhancements implemented within the fiscal department. Staff will be trained on revised policies and procedures and Uniform Guidance regulations. The new automated financial systems, will support financial reporting to meet GAAP requirements and to provide informative reports for Board and Management. All enhancements will be implemented by December 31, 2025.
SCHEDULE OF FINDINGS AND QUESTIONED COSTS Federal Award Findings and Questioned Costs July 31, 2024 Comment # 2024-002 INTERNAL CONTROLS OVER FINANCIAL STATEMENT PREPARATION, GRANT CLOSE OUT AND COMPLIANCE WITH RELATED PROVISIONS OF GRANTS AND CONTRACTS SHOULD BE IMPROVED HEAD START AND EARLY HEAD START, LIHEAP, LIHWAP, CSBG, ASTHO, CACFP and CSLFRF FAL # 93.600, 93.568, 93.499, 93.569, 93.185, 10.558, 21.027 (Questioned Costs - Undetermined) Condition: As part of our auditing procedures, we assisted in the preparation of the financial statements, related disclosures, and the schedule of expenditures of federal awards of the Agency. The preparation of these financial statements in accordance with generally accepted accounting principles (GAAP) and Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, is the responsibility of the grantee. The authoritative and regulatory standards states in summary that management should authorize, process, reconcile and close-out each grant and contract in a timely manner to ensure proper accounting and reporting of such activity in accordance with the specific professional standards and regulatory requirements. The closeout process is designed to reduce the risk of errors, fraud, material misstatement of financial and compliance reporting and recognition of expenditures (or revenue) in the proper period. We noted that the current system of internal controls over financial statements and compliance is not designed to ensure that the objectives are achieved. Further, the capacity and experience of the current staff does not allow for adequate analysis of grants and contracts, proper allocations of shared costs and support services provided, grantor receivables, deferred revenue, and the reconciliation of bank accounts accurately and in a timely manner. This resulted in adjustments necessary to present the financial statements and disclosures of the Agency as of July 31, 2024. We also noted significant weaknesses in internal controls over personnel payroll and the processing, maintaining and reconciling payroll activity to the general ledger and external regulatory reporting (IRS Form 941's, state filings, etc.). Therefore, the risk exists that grant receivables and/or cash from the various programs are not recorded properly during the reporting period (interim and annually). This condition also makes it difficult to prepare accurate external reports required by the various funding sources in a timely manner (i.e. SF-425, DHS’s reports for LIHEAP, etc.). Accordingly, the Agency is not in compliance with federal and state reporting as specified by grants and contracts and the Federal Audit Clearinghouse. The systemic cause appears to be the untimely resignation of key personnel, a change in the accounting system, a lack of personnel with the skills, knowledge, and experience with grant accounting and a weakness in the overall system of internal accounting controls and monitoring. Policies and procedures are not followed consistently throughout the year. Context: Review of internal control structure of the organization in accordance with Government Auditing Standards. Criteria: Controls should be in place to ensure that financial statements are prepared in accordance with GAAP. The auditee shall prepare financial statements that reflect its financial position, results of operations or changes in net assets, and, where appropriate, cash flows for the fiscal year audited. The auditee shall also prepare a schedule of expenditures of Federal awards for the period covered by the auditee's financial statements. [2 CFR §200.510(a) and (b)] Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in §200.328 Financial reporting and §200.329. (Continued) Effect: Monitoring and reporting program performance [2 CFR §200.302(b)(2)]. Management may not be able to obtain complete and accurate financial statements on an interim or fiscal year basis to be used for internal or external reporting purposes. Cause: Turnover of key staff, change in the accounting system, limited personnel with knowledge and/or the ability to assist and provide needed information to aid in financial statement preparation. Recommendation: The degree to which the preparation of the financial statements and related disclosures are prepared by the independent auditor is a control deficiency as determined by the knowledge, skills and experience of those in the organization who are charged with the responsibility of its financial reporting. The Agency has hired a new fiscal officer (CFO) and should hire additional staff (grant accountant and a general ledger accountant) to assist the new fiscal officer. New staff should have the adequate skills, knowledge and experience to oversee and/or perform the necessary accounting functions each month. Policies and procedures should be updated to adequately address the challenges and dynamics of the community action agency. We believe that the CFO with the supporting staff and general ledger accountant should have the overall responsibility of properly reconciling and closing out the accounting system and grant activity each month in an efficient and timely manner so as to eliminate the risk of significant errors occurring. Budget-to-actual schedules should be an integral part of the grant accountant’s basic responsibilities. Program directors should be involved in the closing process. We further recommend that training be provided to all staff engaged in the financial reporting, allocations and reconciliation functions to ensure that a complete and accurate financial statements close-out process is achieved each month and annually. Accounting policies and procedures must be updated and implemented. Views of Responsible Officials and Planned Corrective Actions: Management is in the process of assessing the organizational structure and capacity to provide adequate financial reporting. With Board review and approval of the Agency’s financial funding sources, the Agency will hire additional fiscal clerk to further support financial requirements and segregation of duties to ensure adequate internal controls are fully implemented. The CFO will have the overall responsibility of properly reconciling and closing out the accounting system and grant activity each month in an efficient and timely manner to eliminate the risk of significant errors occurring. Budget-to-actual schedules will be an integral part of the grant accountant analyst’s basic responsibilities. The fiscal policies and procedures will be updated with the enhancements implemented within the fiscal department. Staff will be trained on revised policies and procedures and Uniform Guidance regulations. The new automated financial systems, will support financial reporting to meet GAAP requirements and to provide informative reports for Board and Management. All enhancements will be implemented by December 31, 2025.
SCHEDULE OF FINDINGS AND QUESTIONED COSTS Federal Award Findings and Questioned Costs July 31, 2024 Comment # 2024-002 INTERNAL CONTROLS OVER FINANCIAL STATEMENT PREPARATION, GRANT CLOSE OUT AND COMPLIANCE WITH RELATED PROVISIONS OF GRANTS AND CONTRACTS SHOULD BE IMPROVED HEAD START AND EARLY HEAD START, LIHEAP, LIHWAP, CSBG, ASTHO, CACFP and CSLFRF FAL # 93.600, 93.568, 93.499, 93.569, 93.185, 10.558, 21.027 (Questioned Costs - Undetermined) Condition: As part of our auditing procedures, we assisted in the preparation of the financial statements, related disclosures, and the schedule of expenditures of federal awards of the Agency. The preparation of these financial statements in accordance with generally accepted accounting principles (GAAP) and Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, is the responsibility of the grantee. The authoritative and regulatory standards states in summary that management should authorize, process, reconcile and close-out each grant and contract in a timely manner to ensure proper accounting and reporting of such activity in accordance with the specific professional standards and regulatory requirements. The closeout process is designed to reduce the risk of errors, fraud, material misstatement of financial and compliance reporting and recognition of expenditures (or revenue) in the proper period. We noted that the current system of internal controls over financial statements and compliance is not designed to ensure that the objectives are achieved. Further, the capacity and experience of the current staff does not allow for adequate analysis of grants and contracts, proper allocations of shared costs and support services provided, grantor receivables, deferred revenue, and the reconciliation of bank accounts accurately and in a timely manner. This resulted in adjustments necessary to present the financial statements and disclosures of the Agency as of July 31, 2024. We also noted significant weaknesses in internal controls over personnel payroll and the processing, maintaining and reconciling payroll activity to the general ledger and external regulatory reporting (IRS Form 941's, state filings, etc.). Therefore, the risk exists that grant receivables and/or cash from the various programs are not recorded properly during the reporting period (interim and annually). This condition also makes it difficult to prepare accurate external reports required by the various funding sources in a timely manner (i.e. SF-425, DHS’s reports for LIHEAP, etc.). Accordingly, the Agency is not in compliance with federal and state reporting as specified by grants and contracts and the Federal Audit Clearinghouse. The systemic cause appears to be the untimely resignation of key personnel, a change in the accounting system, a lack of personnel with the skills, knowledge, and experience with grant accounting and a weakness in the overall system of internal accounting controls and monitoring. Policies and procedures are not followed consistently throughout the year. Context: Review of internal control structure of the organization in accordance with Government Auditing Standards. Criteria: Controls should be in place to ensure that financial statements are prepared in accordance with GAAP. The auditee shall prepare financial statements that reflect its financial position, results of operations or changes in net assets, and, where appropriate, cash flows for the fiscal year audited. The auditee shall also prepare a schedule of expenditures of Federal awards for the period covered by the auditee's financial statements. [2 CFR §200.510(a) and (b)] Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in §200.328 Financial reporting and §200.329. (Continued) Effect: Monitoring and reporting program performance [2 CFR §200.302(b)(2)]. Management may not be able to obtain complete and accurate financial statements on an interim or fiscal year basis to be used for internal or external reporting purposes. Cause: Turnover of key staff, change in the accounting system, limited personnel with knowledge and/or the ability to assist and provide needed information to aid in financial statement preparation. Recommendation: The degree to which the preparation of the financial statements and related disclosures are prepared by the independent auditor is a control deficiency as determined by the knowledge, skills and experience of those in the organization who are charged with the responsibility of its financial reporting. The Agency has hired a new fiscal officer (CFO) and should hire additional staff (grant accountant and a general ledger accountant) to assist the new fiscal officer. New staff should have the adequate skills, knowledge and experience to oversee and/or perform the necessary accounting functions each month. Policies and procedures should be updated to adequately address the challenges and dynamics of the community action agency. We believe that the CFO with the supporting staff and general ledger accountant should have the overall responsibility of properly reconciling and closing out the accounting system and grant activity each month in an efficient and timely manner so as to eliminate the risk of significant errors occurring. Budget-to-actual schedules should be an integral part of the grant accountant’s basic responsibilities. Program directors should be involved in the closing process. We further recommend that training be provided to all staff engaged in the financial reporting, allocations and reconciliation functions to ensure that a complete and accurate financial statements close-out process is achieved each month and annually. Accounting policies and procedures must be updated and implemented. Views of Responsible Officials and Planned Corrective Actions: Management is in the process of assessing the organizational structure and capacity to provide adequate financial reporting. With Board review and approval of the Agency’s financial funding sources, the Agency will hire additional fiscal clerk to further support financial requirements and segregation of duties to ensure adequate internal controls are fully implemented. The CFO will have the overall responsibility of properly reconciling and closing out the accounting system and grant activity each month in an efficient and timely manner to eliminate the risk of significant errors occurring. Budget-to-actual schedules will be an integral part of the grant accountant analyst’s basic responsibilities. The fiscal policies and procedures will be updated with the enhancements implemented within the fiscal department. Staff will be trained on revised policies and procedures and Uniform Guidance regulations. The new automated financial systems, will support financial reporting to meet GAAP requirements and to provide informative reports for Board and Management. All enhancements will be implemented by December 31, 2025.
SCHEDULE OF FINDINGS AND QUESTIONED COSTS Federal Award Findings and Questioned Costs July 31, 2024 Comment # 2024-002 INTERNAL CONTROLS OVER FINANCIAL STATEMENT PREPARATION, GRANT CLOSE OUT AND COMPLIANCE WITH RELATED PROVISIONS OF GRANTS AND CONTRACTS SHOULD BE IMPROVED HEAD START AND EARLY HEAD START, LIHEAP, LIHWAP, CSBG, ASTHO, CACFP and CSLFRF FAL # 93.600, 93.568, 93.499, 93.569, 93.185, 10.558, 21.027 (Questioned Costs - Undetermined) Condition: As part of our auditing procedures, we assisted in the preparation of the financial statements, related disclosures, and the schedule of expenditures of federal awards of the Agency. The preparation of these financial statements in accordance with generally accepted accounting principles (GAAP) and Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, is the responsibility of the grantee. The authoritative and regulatory standards states in summary that management should authorize, process, reconcile and close-out each grant and contract in a timely manner to ensure proper accounting and reporting of such activity in accordance with the specific professional standards and regulatory requirements. The closeout process is designed to reduce the risk of errors, fraud, material misstatement of financial and compliance reporting and recognition of expenditures (or revenue) in the proper period. We noted that the current system of internal controls over financial statements and compliance is not designed to ensure that the objectives are achieved. Further, the capacity and experience of the current staff does not allow for adequate analysis of grants and contracts, proper allocations of shared costs and support services provided, grantor receivables, deferred revenue, and the reconciliation of bank accounts accurately and in a timely manner. This resulted in adjustments necessary to present the financial statements and disclosures of the Agency as of July 31, 2024. We also noted significant weaknesses in internal controls over personnel payroll and the processing, maintaining and reconciling payroll activity to the general ledger and external regulatory reporting (IRS Form 941's, state filings, etc.). Therefore, the risk exists that grant receivables and/or cash from the various programs are not recorded properly during the reporting period (interim and annually). This condition also makes it difficult to prepare accurate external reports required by the various funding sources in a timely manner (i.e. SF-425, DHS’s reports for LIHEAP, etc.). Accordingly, the Agency is not in compliance with federal and state reporting as specified by grants and contracts and the Federal Audit Clearinghouse. The systemic cause appears to be the untimely resignation of key personnel, a change in the accounting system, a lack of personnel with the skills, knowledge, and experience with grant accounting and a weakness in the overall system of internal accounting controls and monitoring. Policies and procedures are not followed consistently throughout the year. Context: Review of internal control structure of the organization in accordance with Government Auditing Standards. Criteria: Controls should be in place to ensure that financial statements are prepared in accordance with GAAP. The auditee shall prepare financial statements that reflect its financial position, results of operations or changes in net assets, and, where appropriate, cash flows for the fiscal year audited. The auditee shall also prepare a schedule of expenditures of Federal awards for the period covered by the auditee's financial statements. [2 CFR §200.510(a) and (b)] Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in §200.328 Financial reporting and §200.329. (Continued) Effect: Monitoring and reporting program performance [2 CFR §200.302(b)(2)]. Management may not be able to obtain complete and accurate financial statements on an interim or fiscal year basis to be used for internal or external reporting purposes. Cause: Turnover of key staff, change in the accounting system, limited personnel with knowledge and/or the ability to assist and provide needed information to aid in financial statement preparation. Recommendation: The degree to which the preparation of the financial statements and related disclosures are prepared by the independent auditor is a control deficiency as determined by the knowledge, skills and experience of those in the organization who are charged with the responsibility of its financial reporting. The Agency has hired a new fiscal officer (CFO) and should hire additional staff (grant accountant and a general ledger accountant) to assist the new fiscal officer. New staff should have the adequate skills, knowledge and experience to oversee and/or perform the necessary accounting functions each month. Policies and procedures should be updated to adequately address the challenges and dynamics of the community action agency. We believe that the CFO with the supporting staff and general ledger accountant should have the overall responsibility of properly reconciling and closing out the accounting system and grant activity each month in an efficient and timely manner so as to eliminate the risk of significant errors occurring. Budget-to-actual schedules should be an integral part of the grant accountant’s basic responsibilities. Program directors should be involved in the closing process. We further recommend that training be provided to all staff engaged in the financial reporting, allocations and reconciliation functions to ensure that a complete and accurate financial statements close-out process is achieved each month and annually. Accounting policies and procedures must be updated and implemented. Views of Responsible Officials and Planned Corrective Actions: Management is in the process of assessing the organizational structure and capacity to provide adequate financial reporting. With Board review and approval of the Agency’s financial funding sources, the Agency will hire additional fiscal clerk to further support financial requirements and segregation of duties to ensure adequate internal controls are fully implemented. The CFO will have the overall responsibility of properly reconciling and closing out the accounting system and grant activity each month in an efficient and timely manner to eliminate the risk of significant errors occurring. Budget-to-actual schedules will be an integral part of the grant accountant analyst’s basic responsibilities. The fiscal policies and procedures will be updated with the enhancements implemented within the fiscal department. Staff will be trained on revised policies and procedures and Uniform Guidance regulations. The new automated financial systems, will support financial reporting to meet GAAP requirements and to provide informative reports for Board and Management. All enhancements will be implemented by December 31, 2025.
SCHEDULE OF FINDINGS AND QUESTIONED COSTS Federal Award Findings and Questioned Costs July 31, 2024 Comment # 2024-002 INTERNAL CONTROLS OVER FINANCIAL STATEMENT PREPARATION, GRANT CLOSE OUT AND COMPLIANCE WITH RELATED PROVISIONS OF GRANTS AND CONTRACTS SHOULD BE IMPROVED HEAD START AND EARLY HEAD START, LIHEAP, LIHWAP, CSBG, ASTHO, CACFP and CSLFRF FAL # 93.600, 93.568, 93.499, 93.569, 93.185, 10.558, 21.027 (Questioned Costs - Undetermined) Condition: As part of our auditing procedures, we assisted in the preparation of the financial statements, related disclosures, and the schedule of expenditures of federal awards of the Agency. The preparation of these financial statements in accordance with generally accepted accounting principles (GAAP) and Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, is the responsibility of the grantee. The authoritative and regulatory standards states in summary that management should authorize, process, reconcile and close-out each grant and contract in a timely manner to ensure proper accounting and reporting of such activity in accordance with the specific professional standards and regulatory requirements. The closeout process is designed to reduce the risk of errors, fraud, material misstatement of financial and compliance reporting and recognition of expenditures (or revenue) in the proper period. We noted that the current system of internal controls over financial statements and compliance is not designed to ensure that the objectives are achieved. Further, the capacity and experience of the current staff does not allow for adequate analysis of grants and contracts, proper allocations of shared costs and support services provided, grantor receivables, deferred revenue, and the reconciliation of bank accounts accurately and in a timely manner. This resulted in adjustments necessary to present the financial statements and disclosures of the Agency as of July 31, 2024. We also noted significant weaknesses in internal controls over personnel payroll and the processing, maintaining and reconciling payroll activity to the general ledger and external regulatory reporting (IRS Form 941's, state filings, etc.). Therefore, the risk exists that grant receivables and/or cash from the various programs are not recorded properly during the reporting period (interim and annually). This condition also makes it difficult to prepare accurate external reports required by the various funding sources in a timely manner (i.e. SF-425, DHS’s reports for LIHEAP, etc.). Accordingly, the Agency is not in compliance with federal and state reporting as specified by grants and contracts and the Federal Audit Clearinghouse. The systemic cause appears to be the untimely resignation of key personnel, a change in the accounting system, a lack of personnel with the skills, knowledge, and experience with grant accounting and a weakness in the overall system of internal accounting controls and monitoring. Policies and procedures are not followed consistently throughout the year. Context: Review of internal control structure of the organization in accordance with Government Auditing Standards. Criteria: Controls should be in place to ensure that financial statements are prepared in accordance with GAAP. The auditee shall prepare financial statements that reflect its financial position, results of operations or changes in net assets, and, where appropriate, cash flows for the fiscal year audited. The auditee shall also prepare a schedule of expenditures of Federal awards for the period covered by the auditee's financial statements. [2 CFR §200.510(a) and (b)] Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in §200.328 Financial reporting and §200.329. (Continued) Effect: Monitoring and reporting program performance [2 CFR §200.302(b)(2)]. Management may not be able to obtain complete and accurate financial statements on an interim or fiscal year basis to be used for internal or external reporting purposes. Cause: Turnover of key staff, change in the accounting system, limited personnel with knowledge and/or the ability to assist and provide needed information to aid in financial statement preparation. Recommendation: The degree to which the preparation of the financial statements and related disclosures are prepared by the independent auditor is a control deficiency as determined by the knowledge, skills and experience of those in the organization who are charged with the responsibility of its financial reporting. The Agency has hired a new fiscal officer (CFO) and should hire additional staff (grant accountant and a general ledger accountant) to assist the new fiscal officer. New staff should have the adequate skills, knowledge and experience to oversee and/or perform the necessary accounting functions each month. Policies and procedures should be updated to adequately address the challenges and dynamics of the community action agency. We believe that the CFO with the supporting staff and general ledger accountant should have the overall responsibility of properly reconciling and closing out the accounting system and grant activity each month in an efficient and timely manner so as to eliminate the risk of significant errors occurring. Budget-to-actual schedules should be an integral part of the grant accountant’s basic responsibilities. Program directors should be involved in the closing process. We further recommend that training be provided to all staff engaged in the financial reporting, allocations and reconciliation functions to ensure that a complete and accurate financial statements close-out process is achieved each month and annually. Accounting policies and procedures must be updated and implemented. Views of Responsible Officials and Planned Corrective Actions: Management is in the process of assessing the organizational structure and capacity to provide adequate financial reporting. With Board review and approval of the Agency’s financial funding sources, the Agency will hire additional fiscal clerk to further support financial requirements and segregation of duties to ensure adequate internal controls are fully implemented. The CFO will have the overall responsibility of properly reconciling and closing out the accounting system and grant activity each month in an efficient and timely manner to eliminate the risk of significant errors occurring. Budget-to-actual schedules will be an integral part of the grant accountant analyst’s basic responsibilities. The fiscal policies and procedures will be updated with the enhancements implemented within the fiscal department. Staff will be trained on revised policies and procedures and Uniform Guidance regulations. The new automated financial systems, will support financial reporting to meet GAAP requirements and to provide informative reports for Board and Management. All enhancements will be implemented by December 31, 2025.
SCHEDULE OF FINDINGS AND QUESTIONED COSTS Federal Award Findings and Questioned Costs July 31, 2024 Comment # 2024-002 INTERNAL CONTROLS OVER FINANCIAL STATEMENT PREPARATION, GRANT CLOSE OUT AND COMPLIANCE WITH RELATED PROVISIONS OF GRANTS AND CONTRACTS SHOULD BE IMPROVED HEAD START AND EARLY HEAD START, LIHEAP, LIHWAP, CSBG, ASTHO, CACFP and CSLFRF FAL # 93.600, 93.568, 93.499, 93.569, 93.185, 10.558, 21.027 (Questioned Costs - Undetermined) Condition: As part of our auditing procedures, we assisted in the preparation of the financial statements, related disclosures, and the schedule of expenditures of federal awards of the Agency. The preparation of these financial statements in accordance with generally accepted accounting principles (GAAP) and Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, is the responsibility of the grantee. The authoritative and regulatory standards states in summary that management should authorize, process, reconcile and close-out each grant and contract in a timely manner to ensure proper accounting and reporting of such activity in accordance with the specific professional standards and regulatory requirements. The closeout process is designed to reduce the risk of errors, fraud, material misstatement of financial and compliance reporting and recognition of expenditures (or revenue) in the proper period. We noted that the current system of internal controls over financial statements and compliance is not designed to ensure that the objectives are achieved. Further, the capacity and experience of the current staff does not allow for adequate analysis of grants and contracts, proper allocations of shared costs and support services provided, grantor receivables, deferred revenue, and the reconciliation of bank accounts accurately and in a timely manner. This resulted in adjustments necessary to present the financial statements and disclosures of the Agency as of July 31, 2024. We also noted significant weaknesses in internal controls over personnel payroll and the processing, maintaining and reconciling payroll activity to the general ledger and external regulatory reporting (IRS Form 941's, state filings, etc.). Therefore, the risk exists that grant receivables and/or cash from the various programs are not recorded properly during the reporting period (interim and annually). This condition also makes it difficult to prepare accurate external reports required by the various funding sources in a timely manner (i.e. SF-425, DHS’s reports for LIHEAP, etc.). Accordingly, the Agency is not in compliance with federal and state reporting as specified by grants and contracts and the Federal Audit Clearinghouse. The systemic cause appears to be the untimely resignation of key personnel, a change in the accounting system, a lack of personnel with the skills, knowledge, and experience with grant accounting and a weakness in the overall system of internal accounting controls and monitoring. Policies and procedures are not followed consistently throughout the year. Context: Review of internal control structure of the organization in accordance with Government Auditing Standards. Criteria: Controls should be in place to ensure that financial statements are prepared in accordance with GAAP. The auditee shall prepare financial statements that reflect its financial position, results of operations or changes in net assets, and, where appropriate, cash flows for the fiscal year audited. The auditee shall also prepare a schedule of expenditures of Federal awards for the period covered by the auditee's financial statements. [2 CFR §200.510(a) and (b)] Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in §200.328 Financial reporting and §200.329. (Continued) Effect: Monitoring and reporting program performance [2 CFR §200.302(b)(2)]. Management may not be able to obtain complete and accurate financial statements on an interim or fiscal year basis to be used for internal or external reporting purposes. Cause: Turnover of key staff, change in the accounting system, limited personnel with knowledge and/or the ability to assist and provide needed information to aid in financial statement preparation. Recommendation: The degree to which the preparation of the financial statements and related disclosures are prepared by the independent auditor is a control deficiency as determined by the knowledge, skills and experience of those in the organization who are charged with the responsibility of its financial reporting. The Agency has hired a new fiscal officer (CFO) and should hire additional staff (grant accountant and a general ledger accountant) to assist the new fiscal officer. New staff should have the adequate skills, knowledge and experience to oversee and/or perform the necessary accounting functions each month. Policies and procedures should be updated to adequately address the challenges and dynamics of the community action agency. We believe that the CFO with the supporting staff and general ledger accountant should have the overall responsibility of properly reconciling and closing out the accounting system and grant activity each month in an efficient and timely manner so as to eliminate the risk of significant errors occurring. Budget-to-actual schedules should be an integral part of the grant accountant’s basic responsibilities. Program directors should be involved in the closing process. We further recommend that training be provided to all staff engaged in the financial reporting, allocations and reconciliation functions to ensure that a complete and accurate financial statements close-out process is achieved each month and annually. Accounting policies and procedures must be updated and implemented. Views of Responsible Officials and Planned Corrective Actions: Management is in the process of assessing the organizational structure and capacity to provide adequate financial reporting. With Board review and approval of the Agency’s financial funding sources, the Agency will hire additional fiscal clerk to further support financial requirements and segregation of duties to ensure adequate internal controls are fully implemented. The CFO will have the overall responsibility of properly reconciling and closing out the accounting system and grant activity each month in an efficient and timely manner to eliminate the risk of significant errors occurring. Budget-to-actual schedules will be an integral part of the grant accountant analyst’s basic responsibilities. The fiscal policies and procedures will be updated with the enhancements implemented within the fiscal department. Staff will be trained on revised policies and procedures and Uniform Guidance regulations. The new automated financial systems, will support financial reporting to meet GAAP requirements and to provide informative reports for Board and Management. All enhancements will be implemented by December 31, 2025.
SCHEDULE OF FINDINGS AND QUESTIONED COSTS Federal Award Findings and Questioned Costs July 31, 2024 Comment # 2024-002 INTERNAL CONTROLS OVER FINANCIAL STATEMENT PREPARATION, GRANT CLOSE OUT AND COMPLIANCE WITH RELATED PROVISIONS OF GRANTS AND CONTRACTS SHOULD BE IMPROVED HEAD START AND EARLY HEAD START, LIHEAP, LIHWAP, CSBG, ASTHO, CACFP and CSLFRF FAL # 93.600, 93.568, 93.499, 93.569, 93.185, 10.558, 21.027 (Questioned Costs - Undetermined) Condition: As part of our auditing procedures, we assisted in the preparation of the financial statements, related disclosures, and the schedule of expenditures of federal awards of the Agency. The preparation of these financial statements in accordance with generally accepted accounting principles (GAAP) and Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, is the responsibility of the grantee. The authoritative and regulatory standards states in summary that management should authorize, process, reconcile and close-out each grant and contract in a timely manner to ensure proper accounting and reporting of such activity in accordance with the specific professional standards and regulatory requirements. The closeout process is designed to reduce the risk of errors, fraud, material misstatement of financial and compliance reporting and recognition of expenditures (or revenue) in the proper period. We noted that the current system of internal controls over financial statements and compliance is not designed to ensure that the objectives are achieved. Further, the capacity and experience of the current staff does not allow for adequate analysis of grants and contracts, proper allocations of shared costs and support services provided, grantor receivables, deferred revenue, and the reconciliation of bank accounts accurately and in a timely manner. This resulted in adjustments necessary to present the financial statements and disclosures of the Agency as of July 31, 2024. We also noted significant weaknesses in internal controls over personnel payroll and the processing, maintaining and reconciling payroll activity to the general ledger and external regulatory reporting (IRS Form 941's, state filings, etc.). Therefore, the risk exists that grant receivables and/or cash from the various programs are not recorded properly during the reporting period (interim and annually). This condition also makes it difficult to prepare accurate external reports required by the various funding sources in a timely manner (i.e. SF-425, DHS’s reports for LIHEAP, etc.). Accordingly, the Agency is not in compliance with federal and state reporting as specified by grants and contracts and the Federal Audit Clearinghouse. The systemic cause appears to be the untimely resignation of key personnel, a change in the accounting system, a lack of personnel with the skills, knowledge, and experience with grant accounting and a weakness in the overall system of internal accounting controls and monitoring. Policies and procedures are not followed consistently throughout the year. Context: Review of internal control structure of the organization in accordance with Government Auditing Standards. Criteria: Controls should be in place to ensure that financial statements are prepared in accordance with GAAP. The auditee shall prepare financial statements that reflect its financial position, results of operations or changes in net assets, and, where appropriate, cash flows for the fiscal year audited. The auditee shall also prepare a schedule of expenditures of Federal awards for the period covered by the auditee's financial statements. [2 CFR §200.510(a) and (b)] Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in §200.328 Financial reporting and §200.329. (Continued) Effect: Monitoring and reporting program performance [2 CFR §200.302(b)(2)]. Management may not be able to obtain complete and accurate financial statements on an interim or fiscal year basis to be used for internal or external reporting purposes. Cause: Turnover of key staff, change in the accounting system, limited personnel with knowledge and/or the ability to assist and provide needed information to aid in financial statement preparation. Recommendation: The degree to which the preparation of the financial statements and related disclosures are prepared by the independent auditor is a control deficiency as determined by the knowledge, skills and experience of those in the organization who are charged with the responsibility of its financial reporting. The Agency has hired a new fiscal officer (CFO) and should hire additional staff (grant accountant and a general ledger accountant) to assist the new fiscal officer. New staff should have the adequate skills, knowledge and experience to oversee and/or perform the necessary accounting functions each month. Policies and procedures should be updated to adequately address the challenges and dynamics of the community action agency. We believe that the CFO with the supporting staff and general ledger accountant should have the overall responsibility of properly reconciling and closing out the accounting system and grant activity each month in an efficient and timely manner so as to eliminate the risk of significant errors occurring. Budget-to-actual schedules should be an integral part of the grant accountant’s basic responsibilities. Program directors should be involved in the closing process. We further recommend that training be provided to all staff engaged in the financial reporting, allocations and reconciliation functions to ensure that a complete and accurate financial statements close-out process is achieved each month and annually. Accounting policies and procedures must be updated and implemented. Views of Responsible Officials and Planned Corrective Actions: Management is in the process of assessing the organizational structure and capacity to provide adequate financial reporting. With Board review and approval of the Agency’s financial funding sources, the Agency will hire additional fiscal clerk to further support financial requirements and segregation of duties to ensure adequate internal controls are fully implemented. The CFO will have the overall responsibility of properly reconciling and closing out the accounting system and grant activity each month in an efficient and timely manner to eliminate the risk of significant errors occurring. Budget-to-actual schedules will be an integral part of the grant accountant analyst’s basic responsibilities. The fiscal policies and procedures will be updated with the enhancements implemented within the fiscal department. Staff will be trained on revised policies and procedures and Uniform Guidance regulations. The new automated financial systems, will support financial reporting to meet GAAP requirements and to provide informative reports for Board and Management. All enhancements will be implemented by December 31, 2025.
SCHEDULE OF FINDINGS AND QUESTIONED COSTS Federal Award Findings and Questioned Costs July 31, 2024 Comment # 2024-002 INTERNAL CONTROLS OVER FINANCIAL STATEMENT PREPARATION, GRANT CLOSE OUT AND COMPLIANCE WITH RELATED PROVISIONS OF GRANTS AND CONTRACTS SHOULD BE IMPROVED HEAD START AND EARLY HEAD START, LIHEAP, LIHWAP, CSBG, ASTHO, CACFP and CSLFRF FAL # 93.600, 93.568, 93.499, 93.569, 93.185, 10.558, 21.027 (Questioned Costs - Undetermined) Condition: As part of our auditing procedures, we assisted in the preparation of the financial statements, related disclosures, and the schedule of expenditures of federal awards of the Agency. The preparation of these financial statements in accordance with generally accepted accounting principles (GAAP) and Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, is the responsibility of the grantee. The authoritative and regulatory standards states in summary that management should authorize, process, reconcile and close-out each grant and contract in a timely manner to ensure proper accounting and reporting of such activity in accordance with the specific professional standards and regulatory requirements. The closeout process is designed to reduce the risk of errors, fraud, material misstatement of financial and compliance reporting and recognition of expenditures (or revenue) in the proper period. We noted that the current system of internal controls over financial statements and compliance is not designed to ensure that the objectives are achieved. Further, the capacity and experience of the current staff does not allow for adequate analysis of grants and contracts, proper allocations of shared costs and support services provided, grantor receivables, deferred revenue, and the reconciliation of bank accounts accurately and in a timely manner. This resulted in adjustments necessary to present the financial statements and disclosures of the Agency as of July 31, 2024. We also noted significant weaknesses in internal controls over personnel payroll and the processing, maintaining and reconciling payroll activity to the general ledger and external regulatory reporting (IRS Form 941's, state filings, etc.). Therefore, the risk exists that grant receivables and/or cash from the various programs are not recorded properly during the reporting period (interim and annually). This condition also makes it difficult to prepare accurate external reports required by the various funding sources in a timely manner (i.e. SF-425, DHS’s reports for LIHEAP, etc.). Accordingly, the Agency is not in compliance with federal and state reporting as specified by grants and contracts and the Federal Audit Clearinghouse. The systemic cause appears to be the untimely resignation of key personnel, a change in the accounting system, a lack of personnel with the skills, knowledge, and experience with grant accounting and a weakness in the overall system of internal accounting controls and monitoring. Policies and procedures are not followed consistently throughout the year. Context: Review of internal control structure of the organization in accordance with Government Auditing Standards. Criteria: Controls should be in place to ensure that financial statements are prepared in accordance with GAAP. The auditee shall prepare financial statements that reflect its financial position, results of operations or changes in net assets, and, where appropriate, cash flows for the fiscal year audited. The auditee shall also prepare a schedule of expenditures of Federal awards for the period covered by the auditee's financial statements. [2 CFR §200.510(a) and (b)] Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in §200.328 Financial reporting and §200.329. (Continued) Effect: Monitoring and reporting program performance [2 CFR §200.302(b)(2)]. Management may not be able to obtain complete and accurate financial statements on an interim or fiscal year basis to be used for internal or external reporting purposes. Cause: Turnover of key staff, change in the accounting system, limited personnel with knowledge and/or the ability to assist and provide needed information to aid in financial statement preparation. Recommendation: The degree to which the preparation of the financial statements and related disclosures are prepared by the independent auditor is a control deficiency as determined by the knowledge, skills and experience of those in the organization who are charged with the responsibility of its financial reporting. The Agency has hired a new fiscal officer (CFO) and should hire additional staff (grant accountant and a general ledger accountant) to assist the new fiscal officer. New staff should have the adequate skills, knowledge and experience to oversee and/or perform the necessary accounting functions each month. Policies and procedures should be updated to adequately address the challenges and dynamics of the community action agency. We believe that the CFO with the supporting staff and general ledger accountant should have the overall responsibility of properly reconciling and closing out the accounting system and grant activity each month in an efficient and timely manner so as to eliminate the risk of significant errors occurring. Budget-to-actual schedules should be an integral part of the grant accountant’s basic responsibilities. Program directors should be involved in the closing process. We further recommend that training be provided to all staff engaged in the financial reporting, allocations and reconciliation functions to ensure that a complete and accurate financial statements close-out process is achieved each month and annually. Accounting policies and procedures must be updated and implemented. Views of Responsible Officials and Planned Corrective Actions: Management is in the process of assessing the organizational structure and capacity to provide adequate financial reporting. With Board review and approval of the Agency’s financial funding sources, the Agency will hire additional fiscal clerk to further support financial requirements and segregation of duties to ensure adequate internal controls are fully implemented. The CFO will have the overall responsibility of properly reconciling and closing out the accounting system and grant activity each month in an efficient and timely manner to eliminate the risk of significant errors occurring. Budget-to-actual schedules will be an integral part of the grant accountant analyst’s basic responsibilities. The fiscal policies and procedures will be updated with the enhancements implemented within the fiscal department. Staff will be trained on revised policies and procedures and Uniform Guidance regulations. The new automated financial systems, will support financial reporting to meet GAAP requirements and to provide informative reports for Board and Management. All enhancements will be implemented by December 31, 2025.
SCHEDULE OF FINDINGS AND QUESTIONED COSTS Federal Award Findings and Questioned Costs July 31, 2024 Comment # 2024-002 INTERNAL CONTROLS OVER FINANCIAL STATEMENT PREPARATION, GRANT CLOSE OUT AND COMPLIANCE WITH RELATED PROVISIONS OF GRANTS AND CONTRACTS SHOULD BE IMPROVED HEAD START AND EARLY HEAD START, LIHEAP, LIHWAP, CSBG, ASTHO, CACFP and CSLFRF FAL # 93.600, 93.568, 93.499, 93.569, 93.185, 10.558, 21.027 (Questioned Costs - Undetermined) Condition: As part of our auditing procedures, we assisted in the preparation of the financial statements, related disclosures, and the schedule of expenditures of federal awards of the Agency. The preparation of these financial statements in accordance with generally accepted accounting principles (GAAP) and Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, is the responsibility of the grantee. The authoritative and regulatory standards states in summary that management should authorize, process, reconcile and close-out each grant and contract in a timely manner to ensure proper accounting and reporting of such activity in accordance with the specific professional standards and regulatory requirements. The closeout process is designed to reduce the risk of errors, fraud, material misstatement of financial and compliance reporting and recognition of expenditures (or revenue) in the proper period. We noted that the current system of internal controls over financial statements and compliance is not designed to ensure that the objectives are achieved. Further, the capacity and experience of the current staff does not allow for adequate analysis of grants and contracts, proper allocations of shared costs and support services provided, grantor receivables, deferred revenue, and the reconciliation of bank accounts accurately and in a timely manner. This resulted in adjustments necessary to present the financial statements and disclosures of the Agency as of July 31, 2024. We also noted significant weaknesses in internal controls over personnel payroll and the processing, maintaining and reconciling payroll activity to the general ledger and external regulatory reporting (IRS Form 941's, state filings, etc.). Therefore, the risk exists that grant receivables and/or cash from the various programs are not recorded properly during the reporting period (interim and annually). This condition also makes it difficult to prepare accurate external reports required by the various funding sources in a timely manner (i.e. SF-425, DHS’s reports for LIHEAP, etc.). Accordingly, the Agency is not in compliance with federal and state reporting as specified by grants and contracts and the Federal Audit Clearinghouse. The systemic cause appears to be the untimely resignation of key personnel, a change in the accounting system, a lack of personnel with the skills, knowledge, and experience with grant accounting and a weakness in the overall system of internal accounting controls and monitoring. Policies and procedures are not followed consistently throughout the year. Context: Review of internal control structure of the organization in accordance with Government Auditing Standards. Criteria: Controls should be in place to ensure that financial statements are prepared in accordance with GAAP. The auditee shall prepare financial statements that reflect its financial position, results of operations or changes in net assets, and, where appropriate, cash flows for the fiscal year audited. The auditee shall also prepare a schedule of expenditures of Federal awards for the period covered by the auditee's financial statements. [2 CFR §200.510(a) and (b)] Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in §200.328 Financial reporting and §200.329. (Continued) Effect: Monitoring and reporting program performance [2 CFR §200.302(b)(2)]. Management may not be able to obtain complete and accurate financial statements on an interim or fiscal year basis to be used for internal or external reporting purposes. Cause: Turnover of key staff, change in the accounting system, limited personnel with knowledge and/or the ability to assist and provide needed information to aid in financial statement preparation. Recommendation: The degree to which the preparation of the financial statements and related disclosures are prepared by the independent auditor is a control deficiency as determined by the knowledge, skills and experience of those in the organization who are charged with the responsibility of its financial reporting. The Agency has hired a new fiscal officer (CFO) and should hire additional staff (grant accountant and a general ledger accountant) to assist the new fiscal officer. New staff should have the adequate skills, knowledge and experience to oversee and/or perform the necessary accounting functions each month. Policies and procedures should be updated to adequately address the challenges and dynamics of the community action agency. We believe that the CFO with the supporting staff and general ledger accountant should have the overall responsibility of properly reconciling and closing out the accounting system and grant activity each month in an efficient and timely manner so as to eliminate the risk of significant errors occurring. Budget-to-actual schedules should be an integral part of the grant accountant’s basic responsibilities. Program directors should be involved in the closing process. We further recommend that training be provided to all staff engaged in the financial reporting, allocations and reconciliation functions to ensure that a complete and accurate financial statements close-out process is achieved each month and annually. Accounting policies and procedures must be updated and implemented. Views of Responsible Officials and Planned Corrective Actions: Management is in the process of assessing the organizational structure and capacity to provide adequate financial reporting. With Board review and approval of the Agency’s financial funding sources, the Agency will hire additional fiscal clerk to further support financial requirements and segregation of duties to ensure adequate internal controls are fully implemented. The CFO will have the overall responsibility of properly reconciling and closing out the accounting system and grant activity each month in an efficient and timely manner to eliminate the risk of significant errors occurring. Budget-to-actual schedules will be an integral part of the grant accountant analyst’s basic responsibilities. The fiscal policies and procedures will be updated with the enhancements implemented within the fiscal department. Staff will be trained on revised policies and procedures and Uniform Guidance regulations. The new automated financial systems, will support financial reporting to meet GAAP requirements and to provide informative reports for Board and Management. All enhancements will be implemented by December 31, 2025.
U.S. Department of Housing and Urban Development #14.251 Economic Development Initiative, Community Project Funding, and Miscellaneous Grants 2024-003 Inaccurate Preparation of the Schedule of Expenditures of Federal Awards (SEFA) Criteria: Per 2 CFR §200.510(b), the auditee must prepare a SEFA that includes the total federal awards expended, the name of the federal agency, the Assistance Listing Number, the pass-through entity identifying number (if applicable), and other relevant details to ensure complete and accurate reporting. Condition: During our audit of the federal awards received by the Organization, we noted that the SEFA was not prepared. Cause: The failure to prepare the SEFA was due to a lack of formal procedures and oversight in Single Audit requirements. Effect: Errors in the preparation of the SEFA could lead funding agencies to misinterpret the level of spending for a particular program for the period under audit. Additionally, the identification of major federal award programs chosen for specific compliance testing could be erroneous, depending on the misstatement in the total amount of federal expenditures for the year. Questioned Costs: None noted. Recommendation: We recommend that staff responsible for federal grant reporting receive additional training on Single Audits and SEFA preparation. Views of Responsible Officials and Planned Corrective Actions: Management agrees and has adopted a SEFA tracking template. Corrective Action: Track federal expenditures monthly by funding source and Assistance Listing Number (ALN), reconcile SEFA totals to the general eldger, and train staff on Uniform Guidance.
Assistance Listing Number: 10.553, 10.555, 10.559 – Child Nutrition Cluster Pass-through Entity: Michigan Department of Education Finding Type: Material weakness in internal controls over compliance. Repeat Finding: No Criteria: 2CFR 200.510(b) requires organizations to prepare a Schedule of Expenditures of Federal Awards (SEFA) for the period covered by the auditee’s financial statements, which must include the total of federal awards as determined in accordance with 2 CFR 200.502. Condition: The original SEFA provided by the School District was not complete and accurate. The audit team identified numerous errors throughout the course of our procedures which were brought to management’s attention. Questioned Costs: None Cause: Controls and processes in place to prepare the SEFA did not ensure that the SEFA was complete and accurate. Effect: The School District accumulates the financial data and other required information to complete the SEFA. The original SEFA provided by the School District to the audit team included several inaccuracies, including missing or incomplete expenditure amounts. The SEFA most significantly included the following inaccuracies: - $18,063 spent under ALN 10.553 (National School Breakfast Program) was improperly excluded from the SEFA. - $41,653 spent under ALN 10.555 (National School Lunch Program) was improperly excluded from the SEFA. Recommendation: The School District’s process for preparing the SEFA should be adjusted to ensure that accounting records are closed timely, internal accounts are reconciled (the SEFA should reconcile to the federal revenues recorded), and appropriate workpapers are prepared to support the SEFA balances. View of Responsible Officials: Management agrees with the finding and will implement procedures to ensure the SEFA is prepared accurately in the future.
Assistance Listing Number: 10.553, 10.555, 10.559 – Child Nutrition Cluster Pass-through Entity: Michigan Department of Education Finding Type: Material weakness in internal controls over compliance. Repeat Finding: No Criteria: 2CFR 200.510(b) requires organizations to prepare a Schedule of Expenditures of Federal Awards (SEFA) for the period covered by the auditee’s financial statements, which must include the total of federal awards as determined in accordance with 2 CFR 200.502. Condition: The original SEFA provided by the School District was not complete and accurate. The audit team identified numerous errors throughout the course of our procedures which were brought to management’s attention. Questioned Costs: None Cause: Controls and processes in place to prepare the SEFA did not ensure that the SEFA was complete and accurate. Effect: The School District accumulates the financial data and other required information to complete the SEFA. The original SEFA provided by the School District to the audit team included several inaccuracies, including missing or incomplete expenditure amounts. The SEFA most significantly included the following inaccuracies: - $18,063 spent under ALN 10.553 (National School Breakfast Program) was improperly excluded from the SEFA. - $41,653 spent under ALN 10.555 (National School Lunch Program) was improperly excluded from the SEFA. Recommendation: The School District’s process for preparing the SEFA should be adjusted to ensure that accounting records are closed timely, internal accounts are reconciled (the SEFA should reconcile to the federal revenues recorded), and appropriate workpapers are prepared to support the SEFA balances. View of Responsible Officials: Management agrees with the finding and will implement procedures to ensure the SEFA is prepared accurately in the future.
Assistance Listing Number: 10.553, 10.555, 10.559 – Child Nutrition Cluster Pass-through Entity: Michigan Department of Education Finding Type: Material weakness in internal controls over compliance. Repeat Finding: No Criteria: 2CFR 200.510(b) requires organizations to prepare a Schedule of Expenditures of Federal Awards (SEFA) for the period covered by the auditee’s financial statements, which must include the total of federal awards as determined in accordance with 2 CFR 200.502. Condition: The original SEFA provided by the School District was not complete and accurate. The audit team identified numerous errors throughout the course of our procedures which were brought to management’s attention. Questioned Costs: None Cause: Controls and processes in place to prepare the SEFA did not ensure that the SEFA was complete and accurate. Effect: The School District accumulates the financial data and other required information to complete the SEFA. The original SEFA provided by the School District to the audit team included several inaccuracies, including missing or incomplete expenditure amounts. The SEFA most significantly included the following inaccuracies: - $18,063 spent under ALN 10.553 (National School Breakfast Program) was improperly excluded from the SEFA. - $41,653 spent under ALN 10.555 (National School Lunch Program) was improperly excluded from the SEFA. Recommendation: The School District’s process for preparing the SEFA should be adjusted to ensure that accounting records are closed timely, internal accounts are reconciled (the SEFA should reconcile to the federal revenues recorded), and appropriate workpapers are prepared to support the SEFA balances. View of Responsible Officials: Management agrees with the finding and will implement procedures to ensure the SEFA is prepared accurately in the future.
Assistance Listing Number: 10.553, 10.555, 10.559 – Child Nutrition Cluster Pass-through Entity: Michigan Department of Education Finding Type: Material weakness in internal controls over compliance. Repeat Finding: No Criteria: 2CFR 200.510(b) requires organizations to prepare a Schedule of Expenditures of Federal Awards (SEFA) for the period covered by the auditee’s financial statements, which must include the total of federal awards as determined in accordance with 2 CFR 200.502. Condition: The original SEFA provided by the School District was not complete and accurate. The audit team identified numerous errors throughout the course of our procedures which were brought to management’s attention. Questioned Costs: None Cause: Controls and processes in place to prepare the SEFA did not ensure that the SEFA was complete and accurate. Effect: The School District accumulates the financial data and other required information to complete the SEFA. The original SEFA provided by the School District to the audit team included several inaccuracies, including missing or incomplete expenditure amounts. The SEFA most significantly included the following inaccuracies: - $18,063 spent under ALN 10.553 (National School Breakfast Program) was improperly excluded from the SEFA. - $41,653 spent under ALN 10.555 (National School Lunch Program) was improperly excluded from the SEFA. Recommendation: The School District’s process for preparing the SEFA should be adjusted to ensure that accounting records are closed timely, internal accounts are reconciled (the SEFA should reconcile to the federal revenues recorded), and appropriate workpapers are prepared to support the SEFA balances. View of Responsible Officials: Management agrees with the finding and will implement procedures to ensure the SEFA is prepared accurately in the future.
Assistance Listing Number: 10.553, 10.555, 10.559 – Child Nutrition Cluster Pass-through Entity: Michigan Department of Education Finding Type: Material weakness in internal controls over compliance. Repeat Finding: No Criteria: 2CFR 200.510(b) requires organizations to prepare a Schedule of Expenditures of Federal Awards (SEFA) for the period covered by the auditee’s financial statements, which must include the total of federal awards as determined in accordance with 2 CFR 200.502. Condition: The original SEFA provided by the School District was not complete and accurate. The audit team identified numerous errors throughout the course of our procedures which were brought to management’s attention. Questioned Costs: None Cause: Controls and processes in place to prepare the SEFA did not ensure that the SEFA was complete and accurate. Effect: The School District accumulates the financial data and other required information to complete the SEFA. The original SEFA provided by the School District to the audit team included several inaccuracies, including missing or incomplete expenditure amounts. The SEFA most significantly included the following inaccuracies: - $18,063 spent under ALN 10.553 (National School Breakfast Program) was improperly excluded from the SEFA. - $41,653 spent under ALN 10.555 (National School Lunch Program) was improperly excluded from the SEFA. Recommendation: The School District’s process for preparing the SEFA should be adjusted to ensure that accounting records are closed timely, internal accounts are reconciled (the SEFA should reconcile to the federal revenues recorded), and appropriate workpapers are prepared to support the SEFA balances. View of Responsible Officials: Management agrees with the finding and will implement procedures to ensure the SEFA is prepared accurately in the future.
2024-001 – Reporting - Preparation of the Schedule of Expenditures of Federal Awards Identification of the Federal Program – Department of Housing and Urban Development - 14.128 Mortgage Insurance Hospitals - FHA Section 242 Mortgage Insurance Program Loan Criteria – CFR Section §200.510(b) states in part: “The auditee must also prepare a schedule of expenditures of Federal awards (Schedule) for the period covered by the auditee's financial statements which must include the total Federal awards expended as determined in accordance with §200.502”. Also, in accordance with CFR Section §200.302, a non-Federal entity's financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions; and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the Federal statutes, regulations, and the terms and conditions of the Federal award. Condition – We noted that there were adjustments needed to the Schedule to include initial debt issuance costs incurred and drawn during the period in connection with the new HUD mortgage secured during January 2024. Cause – Internal controls over review of the completeness of the Schedule were not properly implemented during the period of additional mortgages secured. Such internal controls were designed to require timely review of the completeness of the Schedule by appropriate personnel. Effect – The Schedule for the year ended June 30, 2024 inappropriately excluded $845,273 of related expenditures against the latest HUD mortgage established during January 2024. Questioned costs – none Context – Internal controls did not operate as intended to ensure the Schedule captured nonrecurring expenditures. In connection with securing the January 2024 HUD mortgage, certain debt issuance costs were charged against the mortgage upon closing. These expenditures were not part of the routine expenditure and draw processes and controls in place at the Authority due to their unique nature and infrequency. Therefore, management did not identify such initial closing costs for capture on the Schedule. Repeat finding – No Recommendation – We recommend the Schedule to be reviewed timely and with sufficient precision by the appropriate level of personnel and reconciliation of new HUD mortgage closing documents. View of Responsible Officials - Management agrees with the Federal Award Finding regarding the determination of when a Federal award is expended. As part of the Corrective Action Plan, management will validate mortgage activity against HUD mortgage provided information.
Criteria: 2 CFR section 200.510(b) requires the auditee to prepare a Schedule of Expenditures of Federal Awards (“SEFA”) that must contain all federal awards expended during the period. 2 CFR section 200.502 requires proper tracking and accounting of federal expenditures incurred under the same basis of accounting as the basic financial statements to ensure proper cutoff and reporting. Condition: The School failed to timely prepare a complete and accurate SEFA. Cause: The School did not have an adequate process to track expenditures of federal awards for which purchases were made on the School’s behalf by the pass-through grantor. This resulted in the School’s initial draft of their SEFA not including all federal expenditures made by the School. Effect: Failure to adequately track all expenditures of federal awards could result in the SEFA being prepared inaccurately or in an untimely manner. Recommendation: Marshall Jones recommends that the School establish a process to track the expenditures of federal awards during the year, including awards for which purchases are made on the School’s behalf by the pass-through grantor. This will better enable the School to timely prepare a complete and accurate SEFA. Views of Responsible Officials: Management of the School concurs with the finding. Please refer to the Corrective Action Plan.
Material Weakness in Internal Control Over Compliance Information on the Federal Programs: Assistance Listing Number 14.157 – Section 202 Supportive Housing for the Elderly, U.S. Department of Housing and Urban Development Assistance Listing Number 14.218 – Community Development Block Grants/Entitlement Grants, U.S. Department of Housing and Urban Development Assistance Listing Number 14.239 – HOME Investments Partnership Program, U.S. Department of Housing and Urban Development Criteria: The regulations in 2 CFR 200.510 requires the auditee to prepare a schedule of expenditures of Federal awards which includes the Federal awards expended for each individual Federal program and in total. Condition: For the year June 30, 2024, the unadjusted schedule of expenditures of Federal awards did not report the correct Federal awards expended for each individual Federal program or in total. Cause: Management does not have internal control over preparation of the schedule of expenditures of Federal awards or reconciliation of the reported expenditures to source documentation. Effect or Potential Effect: Material misstatements of the schedule of expenditures of Federal awards could be undetected and determination of major program(s) could be based on inaccurate information. Questioned Costs: None Context: This finding relates to all aspects of the schedule of expenditures of federal awards. Recommendation: We recommend that management develop and implement internal controls over the preparation of the schedule of expenditures of Federal awards. At a minimum, they should require identification of Federal award source documentation and documentation of how the expenditure amount reported for each was calculated. Views of Responsible Official: Management will develop internal controls and oversight over the schedule of expenditures of Federal awards.
Material Weakness in Internal Control Over Compliance Information on the Federal Programs: Assistance Listing Number 14.157 – Section 202 Supportive Housing for the Elderly, U.S. Department of Housing and Urban Development Assistance Listing Number 14.218 – Community Development Block Grants/Entitlement Grants, U.S. Department of Housing and Urban Development Assistance Listing Number 14.239 – HOME Investments Partnership Program, U.S. Department of Housing and Urban Development Criteria: The regulations in 2 CFR 200.510 requires the auditee to prepare a schedule of expenditures of Federal awards which includes the Federal awards expended for each individual Federal program and in total. Condition: For the year June 30, 2024, the unadjusted schedule of expenditures of Federal awards did not report the correct Federal awards expended for each individual Federal program or in total. Cause: Management does not have internal control over preparation of the schedule of expenditures of Federal awards or reconciliation of the reported expenditures to source documentation. Effect or Potential Effect: Material misstatements of the schedule of expenditures of Federal awards could be undetected and determination of major program(s) could be based on inaccurate information. Questioned Costs: None Context: This finding relates to all aspects of the schedule of expenditures of federal awards. Recommendation: We recommend that management develop and implement internal controls over the preparation of the schedule of expenditures of Federal awards. At a minimum, they should require identification of Federal award source documentation and documentation of how the expenditure amount reported for each was calculated. Views of Responsible Official: Management will develop internal controls and oversight over the schedule of expenditures of Federal awards.
Material Weakness in Internal Control Over Compliance Information on the Federal Programs: Assistance Listing Number 14.157 – Section 202 Supportive Housing for the Elderly, U.S. Department of Housing and Urban Development Assistance Listing Number 14.218 – Community Development Block Grants/Entitlement Grants, U.S. Department of Housing and Urban Development Assistance Listing Number 14.239 – HOME Investments Partnership Program, U.S. Department of Housing and Urban Development Criteria: The regulations in 2 CFR 200.510 requires the auditee to prepare a schedule of expenditures of Federal awards which includes the Federal awards expended for each individual Federal program and in total. Condition: For the year June 30, 2024, the unadjusted schedule of expenditures of Federal awards did not report the correct Federal awards expended for each individual Federal program or in total. Cause: Management does not have internal control over preparation of the schedule of expenditures of Federal awards or reconciliation of the reported expenditures to source documentation. Effect or Potential Effect: Material misstatements of the schedule of expenditures of Federal awards could be undetected and determination of major program(s) could be based on inaccurate information. Questioned Costs: None Context: This finding relates to all aspects of the schedule of expenditures of federal awards. Recommendation: We recommend that management develop and implement internal controls over the preparation of the schedule of expenditures of Federal awards. At a minimum, they should require identification of Federal award source documentation and documentation of how the expenditure amount reported for each was calculated. Views of Responsible Official: Management will develop internal controls and oversight over the schedule of expenditures of Federal awards.
Material Weakness in Internal Control Over Compliance Information on the Federal Programs: Assistance Listing Number 14.157 – Section 202 Supportive Housing for the Elderly, U.S. Department of Housing and Urban Development Assistance Listing Number 14.218 – Community Development Block Grants/Entitlement Grants, U.S. Department of Housing and Urban Development Assistance Listing Number 14.239 – HOME Investments Partnership Program, U.S. Department of Housing and Urban Development Criteria: The regulations in 2 CFR 200.510 requires the auditee to prepare a schedule of expenditures of Federal awards which includes the Federal awards expended for each individual Federal program and in total. Condition: For the year June 30, 2024, the unadjusted schedule of expenditures of Federal awards did not report the correct Federal awards expended for each individual Federal program or in total. Cause: Management does not have internal control over preparation of the schedule of expenditures of Federal awards or reconciliation of the reported expenditures to source documentation. Effect or Potential Effect: Material misstatements of the schedule of expenditures of Federal awards could be undetected and determination of major program(s) could be based on inaccurate information. Questioned Costs: None Context: This finding relates to all aspects of the schedule of expenditures of federal awards. Recommendation: We recommend that management develop and implement internal controls over the preparation of the schedule of expenditures of Federal awards. At a minimum, they should require identification of Federal award source documentation and documentation of how the expenditure amount reported for each was calculated. Views of Responsible Official: Management will develop internal controls and oversight over the schedule of expenditures of Federal awards.
2024-003 Internal Controls over Preparation of the Schedule of Expenditures of Federal Awards (Material Weakness in Internal Controls over Compliance)—All Awards) Criteria: 2 CFR 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, £200.508 (b) The auditee must prepare appropriate statements including an accurate Schedule of Expenditures of Federal Awards (SEFA) in accordance with £200.510, Financial Statements. Condition and Context: The following errors were noted and corrected as a result of auditing procedures on the SEFA: • CRA program federal expenditures (CFDA #14.228) were understated by $23,893. • ACL Independent Living State Grants federal expenditures (CFDA #93.369) were overstated by $21,856 due to errors in SEFA preparation. • Several presentational errors including incorrect identifying numbers listed, incorrect award terms listed, and incorrect CFDA #’s listed for multiple awards. Cause: Insufficient internal controls over the preparation, review, and documentation process for the SEFA and supporting documents. Effect: Errors on reporting can lead to issues in reconciling and tracking of awards earned and recognized in the financial statements. The above corrections, if not made, would have led to the SEFA being materially misstated. They could also lead to findings and corrective action with funders. Questioned Costs: None Recommendation: Management should continue to seek additional training for the fiscal department on preparation of the SEFA and reporting standards. In addition, review processes over the SEFA and supporting reports should be strengthened. Both the preparer and reviewer should have a clear understanding of the required minimum elements and instructions. As part of the review, all required minimum elements should be vouched to original source documents including copies of awards, grant reporting, and the trial balance profit and loss reports. Steps should be taken to prevent further adjustment of supporting profit and loss reports once reconciled without the express review and approval of the Fiscal Director. Review of the standards for supporting grant reports should be strengthened to prevent errors in reporting leading to errors on the SEFA. Any inconsistencies should be resolved before beginning the audit. Management has taken steps to identify and seek training in areas they have identified as needing improvement. Views of Responsible Officials and Planned Corrective Actions: Management acknowledges the audit findings and the material weakness related to the preparation of the Schedule of Expenditures of Federal Awards (SEFA). The errors identified stemmed from insufficient internal controls over the preparation and review process. Additionally, there were inconsistencies in how the SEFA was prepared in previous years, compounded by a quick turnover to a new controller at year-end, which disrupted continuity and contributed to the lack of clear guidance in the SEFA preparation process. To address these challenges, management has implemented immediate corrective actions, including enhanced training for all staff involved in the SEFA preparation to ensure a thorough understanding of federal reporting standards and the required minimum elements. Furthermore, all SEFA components will be reconciled with original source documents, such as grant awards and trial balances, prior to submission for audit. Management believes that, with the new internal control measures and training in place, these errors are not expected to occur in future years.
2024-003 Internal Controls over Preparation of the Schedule of Expenditures of Federal Awards (Material Weakness in Internal Controls over Compliance)—All Awards) Criteria: 2 CFR 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, £200.508 (b) The auditee must prepare appropriate statements including an accurate Schedule of Expenditures of Federal Awards (SEFA) in accordance with £200.510, Financial Statements. Condition and Context: The following errors were noted and corrected as a result of auditing procedures on the SEFA: • CRA program federal expenditures (CFDA #14.228) were understated by $23,893. • ACL Independent Living State Grants federal expenditures (CFDA #93.369) were overstated by $21,856 due to errors in SEFA preparation. • Several presentational errors including incorrect identifying numbers listed, incorrect award terms listed, and incorrect CFDA #’s listed for multiple awards. Cause: Insufficient internal controls over the preparation, review, and documentation process for the SEFA and supporting documents. Effect: Errors on reporting can lead to issues in reconciling and tracking of awards earned and recognized in the financial statements. The above corrections, if not made, would have led to the SEFA being materially misstated. They could also lead to findings and corrective action with funders. Questioned Costs: None Recommendation: Management should continue to seek additional training for the fiscal department on preparation of the SEFA and reporting standards. In addition, review processes over the SEFA and supporting reports should be strengthened. Both the preparer and reviewer should have a clear understanding of the required minimum elements and instructions. As part of the review, all required minimum elements should be vouched to original source documents including copies of awards, grant reporting, and the trial balance profit and loss reports. Steps should be taken to prevent further adjustment of supporting profit and loss reports once reconciled without the express review and approval of the Fiscal Director. Review of the standards for supporting grant reports should be strengthened to prevent errors in reporting leading to errors on the SEFA. Any inconsistencies should be resolved before beginning the audit. Management has taken steps to identify and seek training in areas they have identified as needing improvement. Views of Responsible Officials and Planned Corrective Actions: Management acknowledges the audit findings and the material weakness related to the preparation of the Schedule of Expenditures of Federal Awards (SEFA). The errors identified stemmed from insufficient internal controls over the preparation and review process. Additionally, there were inconsistencies in how the SEFA was prepared in previous years, compounded by a quick turnover to a new controller at year-end, which disrupted continuity and contributed to the lack of clear guidance in the SEFA preparation process. To address these challenges, management has implemented immediate corrective actions, including enhanced training for all staff involved in the SEFA preparation to ensure a thorough understanding of federal reporting standards and the required minimum elements. Furthermore, all SEFA components will be reconciled with original source documents, such as grant awards and trial balances, prior to submission for audit. Management believes that, with the new internal control measures and training in place, these errors are not expected to occur in future years.
2024-003 Internal Controls over Preparation of the Schedule of Expenditures of Federal Awards (Material Weakness in Internal Controls over Compliance)—All Awards) Criteria: 2 CFR 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, £200.508 (b) The auditee must prepare appropriate statements including an accurate Schedule of Expenditures of Federal Awards (SEFA) in accordance with £200.510, Financial Statements. Condition and Context: The following errors were noted and corrected as a result of auditing procedures on the SEFA: • CRA program federal expenditures (CFDA #14.228) were understated by $23,893. • ACL Independent Living State Grants federal expenditures (CFDA #93.369) were overstated by $21,856 due to errors in SEFA preparation. • Several presentational errors including incorrect identifying numbers listed, incorrect award terms listed, and incorrect CFDA #’s listed for multiple awards. Cause: Insufficient internal controls over the preparation, review, and documentation process for the SEFA and supporting documents. Effect: Errors on reporting can lead to issues in reconciling and tracking of awards earned and recognized in the financial statements. The above corrections, if not made, would have led to the SEFA being materially misstated. They could also lead to findings and corrective action with funders. Questioned Costs: None Recommendation: Management should continue to seek additional training for the fiscal department on preparation of the SEFA and reporting standards. In addition, review processes over the SEFA and supporting reports should be strengthened. Both the preparer and reviewer should have a clear understanding of the required minimum elements and instructions. As part of the review, all required minimum elements should be vouched to original source documents including copies of awards, grant reporting, and the trial balance profit and loss reports. Steps should be taken to prevent further adjustment of supporting profit and loss reports once reconciled without the express review and approval of the Fiscal Director. Review of the standards for supporting grant reports should be strengthened to prevent errors in reporting leading to errors on the SEFA. Any inconsistencies should be resolved before beginning the audit. Management has taken steps to identify and seek training in areas they have identified as needing improvement. Views of Responsible Officials and Planned Corrective Actions: Management acknowledges the audit findings and the material weakness related to the preparation of the Schedule of Expenditures of Federal Awards (SEFA). The errors identified stemmed from insufficient internal controls over the preparation and review process. Additionally, there were inconsistencies in how the SEFA was prepared in previous years, compounded by a quick turnover to a new controller at year-end, which disrupted continuity and contributed to the lack of clear guidance in the SEFA preparation process. To address these challenges, management has implemented immediate corrective actions, including enhanced training for all staff involved in the SEFA preparation to ensure a thorough understanding of federal reporting standards and the required minimum elements. Furthermore, all SEFA components will be reconciled with original source documents, such as grant awards and trial balances, prior to submission for audit. Management believes that, with the new internal control measures and training in place, these errors are not expected to occur in future years.
2024-003 Internal Controls over Preparation of the Schedule of Expenditures of Federal Awards (Material Weakness in Internal Controls over Compliance)—All Awards) Criteria: 2 CFR 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, £200.508 (b) The auditee must prepare appropriate statements including an accurate Schedule of Expenditures of Federal Awards (SEFA) in accordance with £200.510, Financial Statements. Condition and Context: The following errors were noted and corrected as a result of auditing procedures on the SEFA: • CRA program federal expenditures (CFDA #14.228) were understated by $23,893. • ACL Independent Living State Grants federal expenditures (CFDA #93.369) were overstated by $21,856 due to errors in SEFA preparation. • Several presentational errors including incorrect identifying numbers listed, incorrect award terms listed, and incorrect CFDA #’s listed for multiple awards. Cause: Insufficient internal controls over the preparation, review, and documentation process for the SEFA and supporting documents. Effect: Errors on reporting can lead to issues in reconciling and tracking of awards earned and recognized in the financial statements. The above corrections, if not made, would have led to the SEFA being materially misstated. They could also lead to findings and corrective action with funders. Questioned Costs: None Recommendation: Management should continue to seek additional training for the fiscal department on preparation of the SEFA and reporting standards. In addition, review processes over the SEFA and supporting reports should be strengthened. Both the preparer and reviewer should have a clear understanding of the required minimum elements and instructions. As part of the review, all required minimum elements should be vouched to original source documents including copies of awards, grant reporting, and the trial balance profit and loss reports. Steps should be taken to prevent further adjustment of supporting profit and loss reports once reconciled without the express review and approval of the Fiscal Director. Review of the standards for supporting grant reports should be strengthened to prevent errors in reporting leading to errors on the SEFA. Any inconsistencies should be resolved before beginning the audit. Management has taken steps to identify and seek training in areas they have identified as needing improvement. Views of Responsible Officials and Planned Corrective Actions: Management acknowledges the audit findings and the material weakness related to the preparation of the Schedule of Expenditures of Federal Awards (SEFA). The errors identified stemmed from insufficient internal controls over the preparation and review process. Additionally, there were inconsistencies in how the SEFA was prepared in previous years, compounded by a quick turnover to a new controller at year-end, which disrupted continuity and contributed to the lack of clear guidance in the SEFA preparation process. To address these challenges, management has implemented immediate corrective actions, including enhanced training for all staff involved in the SEFA preparation to ensure a thorough understanding of federal reporting standards and the required minimum elements. Furthermore, all SEFA components will be reconciled with original source documents, such as grant awards and trial balances, prior to submission for audit. Management believes that, with the new internal control measures and training in place, these errors are not expected to occur in future years.