Finding 1163396 (2023-001)

Material Weakness Repeat Finding

Requirement

Questioned Costs

Year

2023

Accepted

2025-12-03

Audit: 372936

Organization: CUMAC/ECHO, Inc. (NJ)

Auditor: CULLARI CARRICO LLC

AI Summary

Core Issue: The Organization lacks adequate controls for preparing the Schedule of Expenditures of Federal Awards and State Financial Assistance, leading to potential allocation errors.
Impacted Requirements: Expenditures are not directly mapped from the accounting system, making it difficult to trace individual transactions and understand grant sources.
Recommended Follow-Up: Implement sub-classes in the accounting software or invest in specialized non-profit accounting software to improve program allocation tracking.

Finding Text

Finding --- Inadequate controls regarding preparation of the Schedule of Expenditures of Federal Awards and State Financial Assistance. Criteria --- There was no direct mapping of expenditures from the Organization’s accounting system to the Schedule of Expenditures of Federal Awards and State Financial Assistance by program. Condition --- The Organization did not understand the source of some of its grants and did not have a method to distinguish its programs other than through excel, where individual transactions were not detailed. Context --- During the audit, it was noted that individual expenses were not traceable to the Schedule of Expenditures of Federal Awards and State Financial Assistance and additional analysis needed to be performed to obtain comfort over the expenditure amounts presented. Effect --- Allocation errors may exist that may not be remediated timely enough for a budget modification if one is needed. There is a risk that non-allowable or other program expenditures could be charged to the contract. Cause --- Financial procedures and knowledge of the source and nature of government funding were not robust enough to address the rapid increase in federal awards and state financial assistance received by the organization. Recommendation --- The Organization should implement sub-classes within their current software or purchase an accounting software specific for non-profit use, which utilizes sub-classes and program allocations. Management response --- Management will continue to enhance the internal structure of the chart of accounts to maintain full transparency. Management will contact governmental agencies upon receipt of contracts to determine the source and requirements of each award.

Corrective Action Plan

Finding --- Inadequate controls regarding preparation of the Schedule of Expenditures of Federal Award and State Financial Assistance. Corrective action – Management will continue to enhance the internal control structure and improve the chart of accounts to maintain full transparency and implement sub classes within the current software. Status --- Corrective action in progress. Completion date --- Before December 31, 2025 Contact --- Laura Purdy, COO Contact phone --- (973) 742-5518 Contact address --- 223 Ellison St., Paterson, New Jersey 07505

Other Findings in this Audit

1163392 2023-001

Material Weakness Repeat
1163393 2023-002

Material Weakness Repeat
1163394 2023-003

Material Weakness Repeat
1163395 2023-004

Material Weakness Repeat
1163397 2023-002

Material Weakness Repeat
1163398 2023-003

Material Weakness Repeat
1163399 2023-004

Material Weakness Repeat

Programs in Audit

ALN	Program Name	Expenditures
93.391	ACTIVITIES TO SUPPORT STATE, TRIBAL, LOCAL AND TERRITORIAL (STLT) HEALTH DEPARTMENT RESPONSE TO PUBLIC HEALTH OR HEALTHCARE CRISES	$202,848
93.569	COMMUNITY SERVICES BLOCK GRANT	$91,612
14.267	CONTINUUM OF CARE PROGRAM	$45,726
97.024	EMERGENCY FOOD AND SHELTER NATIONAL BOARD PROGRAM	$19,412
93.658	FOSTER CARE TITLE IV-E	$18,750