Finding Text
Criteria: As noted in finding 2024-002, an effective internal control system should be designed and clearly documented. A key part of the documentation is the use of documented policies and procedures. The policies and procedures should cover general accounting and operational processes as well as compliance with State and Federal regulations as applicable. Federal regulations impacting the Organization include Title 2 CFR 200.318, Title 2 CFR 200.302(b), Title 2 CFR 200.313(d) and Title 2 CFR 200.403(d) (Factors Affecting Allowability of Costs). Condition: As noted in finding 2024-002, Every Woman's Place, Inc. did not have effective policies in place over payroll cost allocations, non-payroll cost allocations, procurement, gift cards, equipment inventory and other indirect program cost allocations. Cause: The Organization did not develop, design or implement adequate internal control policies over key required processes. Effect: As part of the audit, it was determined that indirect costs listed in the Financial Status Reports (FSR) for various programs passed through from the State of Michigan Department of Health and Human Services may have been erroneously calculated leading to questioned costs. The lack of internal controls could also lead to misstatements of financial activity and related program reports. The lack of such policies and procedures increases the risk of error, omission, fraud and abuse in financial statements and related activities. Context: A program audit was performed by the State of Michigan’s Department of Health and Human Services for the fiscal year ending September 30, 2023 (dated November 21, 2025). Based on additional items noted by the State of Michigan, it was determined that indirect costs appear to have been incorrectly calculated. These items were directly related to the lack of clarity and/or policy of the direct / indirect cost methodology being utilized Questioned Costs: Indirect costs presented on FSRs for the fiscal year ended September 30, 2024, that represent questioned costs is $83,141 Recommendation: The Organization should review accounting policies to ensure that the policies are up-to-date and, if applicable, in compliance with the State and Federal Regulations. The Organization should also adopt a proper allocation methodology for direct and indirect costs and require board-approval and annual certification. View of Responsible Officials and Planned Corrective Actions: