Finding 1182218 (2023-001)

Material Weakness Repeat Finding

Requirement

Questioned Costs

Year

2023

Accepted

2026-03-24

Audit: 393606

Organization: Independent Resources, Inc. (DE)

Auditor: BARBACANE THORNTON & COMPANY LLP

AI Summary

Core Issue: Bonuses were given without necessary approval from the Board of Directors.
Impacted Requirements: The Board must oversee and approve all employee bonuses to ensure compliance.
Recommended Follow-Up: Create a clear policy outlining the approval process and criteria for bonus amounts.

Finding Text

Condition During our current year audit, we noted that bonuses were awarded to employees that did not have documented approval from the Organization’s Board of Directors. Management is responsible for establishing and maintaining an effective system of internal control over financial reporting. The system should include Board oversight of bonuses issued as final approval. Questioned Costs We identified $239,998 in questioned costs for the Centers for Independent Living grant. Criteria The Board of Directors should have oversight and approve all proposed bonuses paid to employees. Cause The Organization did not have effective controls relating to the issuance and approval of bonuses. Effect of Condition Bonuses were paid without the Board of Directors’ approval. Recommendation We recommend that the Organization implement a policy specific for approval of bonuses and how bonus amounts are determined. The policy should specify who has the authority to initiate and approve bonuses and what determines the amount awarded as a bonus.

Corrective Action Plan

Name of Contact Person Lillian Harrison, Executive Director Management’s Response/Corrective Action The Organization has created a policy surrounding the issuance of bonuses. Bonuses may include performance-based, project-specific, and discretionary categories. The Executive Director initiates bonuses, while the Board of Directors provides final approval, maintaining transparency throughout. Regular reviews and audits ensure fairness and compliance. Non-compliance consequences are outlined. This policy emphasizes open communication, promoting a culture of fairness, accountability, and recognition of employee contributions. Proposed Completion Date September 30, 2026

Other Findings in this Audit

1182219 2023-002

Material Weakness Repeat
1182220 2023-003

Material Weakness Repeat
1182221 2023-004

Material Weakness Repeat
1182222 2023-005

Material Weakness Repeat
1182223 2023-006

Material Weakness Repeat

Programs in Audit

ALN	Program Name	Expenditures
93.432	ACL CENTERS FOR INDEPENDENT LIVING	$1.16M
93.048	SPECIAL PROGRAMS FOR THE AGING, TITLE IV, AND TITLE II, DISCRETIONARY PROJECTS	$49,000