Documentation of Costs Claimed for Reimbursement and Cash Management Significant Deficiency in Internal Control Over Compliance; Noncompliance; Known Questioned Costs - Federal Program: Assistance Listing No. 10.719 - Infrastructure Investment and Jobs Act Firewood Bank Program Federal Agency: U.S. Department of Agriculture, Forest Service (direct award; no pass-through entity) Federal Award Identification: 22-DG-11132544-049 (federal award year 2022) and 25-DG-11132544- 082 (federal award year 2025); USDA Forest Service Firewood Bank Program grant agreements identified by the Organization as contract 049 and contract 082 Compliance Requirements: Activities Allowed or Unallowed and Allowable Costs/Cost Principles; Cash Management; Reporting Type of Finding: Significant deficiency in internal control over compliance; noncompliance; known questioned costs Known Questioned Costs: $64,969 (contract 049 and contract 082 combined; the Organization’s records do not allocate administrative cost claims between the two agreements) Criteria: 2 CFR 200.303 requires a non-federal entity to establish and maintain effective internal control over the federal award providing reasonable assurance that the entity is managing the award in compliance with federal statutes, regulations and the terms and conditions of the award. 2 CFR 200.403 requires that costs charged to a federal award be necessary and reasonable, allocable to the award, adequately documented, and otherwise allowable under the cost principles in 2 CFR 200 Subpart E. 2 CFR 200.305(b) requires that payments made in advance of expenditures be limited to the minimum amounts needed and be timed in accordance with the actual, immediate cash requirements of the entity in carrying out the purpose of the approved program. 2 CFR 200.510(b) requires the auditee to prepare a schedule of expenditures of federal awards for the period covered by the audit. Condition: We identified the following related conditions, each arising from the concentration of the program’s administrative, accounting and monitoring functions in a single individual without documented independent review: (a) Costs claimed without supporting documentation. The Organization submitted requests to the two awards under Assistance Listing No. 10.719 totaling $170,700 for administrative costs for the year ended December 31, 2025. The Organization’s accounting records and supporting documentation substantiate administrative costs of $105,731 applicable to those awards. The remaining $64,969 was claimed, and reimbursed by the grantor, without supporting documentation. The personnel component of the administrative costs claimed was based on estimated allocations rather than records of work performed, as described in Finding 2025-004. (b) Federal funds drawn and unspent at year end. At December 31, 2025 the Organization held $15,735 of federal funds that had been drawn but not disbursed for program purposes. A subrecipient returned its award on December 22, 2025 and the funds were not re-granted until January 30, 2026. (c) Advance payments. The Organization received advance payments under the awards totaling $1,155,000 during the year ($300,000 received September 24, 2025; $500,000 received October 30, 2025; and $355,000 received December 10, 2025). No documented determination of the program’s immediate cash requirements supports the amount or the timing of these advances, and the Organization does not monitor the elapsed time between receipt of advanced funds and their disbursement for program purposes. (d) Preparation and review of program records. The log of amounts requested for reimbursement and amounts received, the monthly reconciliation of that log, and the schedule of expenditures of federal awards are prepared by the same individual who prepares the requests and records the related receipts in the general ledger. Neither the reconciliation nor the schedule is subject to a documented review by an individual independent of its preparation. Cause: The Organization administers the award with limited administrative staff and has not adopted written policies and procedures governing federal grant administration, including the documentation required to support costs claimed for reimbursement, the determination of immediate cash needs before requesting or accepting advance payments, and independent review of the reimbursement log, the monthly reconciliation and the schedule of expenditures of federal awards. Effect or Potential Effect: Costs of $64,969 were claimed and reimbursed without documentation supporting their allowability, and $15,735 of drawn funds remained unspent at year end. Amounts totaling $127,373, of which $64,969 relates to this program, were recorded as due to the grantor through an audit adjustment, and $15,735 was recorded as a refundable advance. A deficiency in internal control over compliance exists that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. Context: All administrative cost reimbursement requests submitted under the awards for the year ended December 31, 2025 ($170,700), all three advance payments received ($1,155,000), and the year-end balance of drawn but undisbursed funds were examined in their entirety and compared to the Organization’s accounting records; no sampling was used. Known questioned costs of $64,969 represent 38 percent of the administrative costs claimed and 5.2 percent of total program expenditures of $1,244,996, and exceed the $25,000 threshold in 2 CFR 200.516(a)(3). Our tests of compliance did not disclose instances of noncompliance that are material to the program, and our opinion on compliance for the major federal program is unmodified. Recommendation: We recommend that the Organization: (1) submit requests only for costs incurred and documented at the date of the request, and retain the request, the expenditure listing and the underlying support together in a single referenced file with the allowability review evidenced by preparer and reviewer sign-off; (2) prepare and retain, for each advance requested or received, an analysis of the program’s immediate cash requirements supporting the amount and timing of the advance, and monitor the period between receipt and disbursement of advanced funds; (3) require documented review of the monthly reimbursement log reconciliation and of the schedule of expenditures of federal awards by an individual not involved in preparing requests or recording receipts; and (4) coordinate with the USDA Forest Service program contact regarding repayment or offset of the amount recorded as due to the grantor. Repeat Finding: No Views of Responsible Officials: Management agrees that reimbursement requests should be subject to a more structured review and that an individual who did not prepare the request should independently review the supporting documentation and costs claimed. Cash needs are currently discussed and assessed based on factors including the number and status of applications, anticipated award amounts, and the timing of expected payments. Going forward, management will document its cash requirement determination when preparing each federal cash draw request, including the factors considered and the amount determined to be needed.