2025-001 Habitat Conservation – Assistance Lising #11.463 - Audited Financial Statements Late Filing – Material Weakness in Controls Over Compliance and Noncompliance Recommendation: The Organization should review the program requirements and implement contingency plans to ensure that year-end reporting requirements are met. The Organization should establish clear, documented processes and procedures that address compliance requirements under Uniform Grant Guidance and can be consistently followed during management transitions. Explanation of disagreement with audit findings: there is no disagreement with the audit findings. Action taken in response to finding: Johnson Creek Watershed Council has taken steps to strengthen its financial management and compliance systems following the audit. The Council has transitioned its bookkeeping and accounting functions to Jitasa, an external accounting firm, and has developed a new Fiscal Policy Manual establishing clear responsibilities and procedures for financial management, grant compliance, audits, recordkeeping, and corrective actions. The Fiscal Policy Manual assigns responsibility for grant compliance and reporting to the Executive Director, with support from the Finance & Grants Manager, program staff, and Jitasa. It also establishes procedures for maintaining financial and grant documentation in organized, accessible systems and requires audit reports, corrective action plans, and related correspondence to be retained for a minimum of seven years. For example, Section 11, Independent Financial Reviews and Audits, establishes management's responsibility for monitoring Federal expenditures and determining whether a Single Audit is required. The policy also establishes Board oversight of financial reviews and audits. Section 10, Recordkeeping & Documentation, establishes requirements for maintaining financial records and supporting documentation and requires financial records, invoices, receipts, and contracts to be retained for a minimum of seven years. Action Plan: JCWC will finalize and adopt the Fiscal Policy Manual and implement a documented year-end compliance and audit reporting process. This process will identify required federal, state, and other funder reporting deadlines, assign responsibility for each filing, and provide sufficient lead time for management, Jitasa, the external accounting firm, the Board Treasurer, and the Board to complete required reviews and approvals. The Executive Director and Finance & Grants Manager will maintain a centralized schedule of financial, grant, audit, and regulatory reporting deadlines and will review the schedule regularly to ensure upcoming requirements are identified and assigned. The Executive Director will coordinate with Jitasa and the independent auditor to ensure that required financial information and supporting documentation are available in advance of filing deadlines. To address the risk created by management turnover, JCWC will maintain documented financial and compliance procedures and centralized records so that reporting responsibilities and supporting documentation can be transferred without relying on the knowledge of a single individual. Name(s) of the contact people responsible for correction action: Jennifer Hamilton, Executive Director Sean Connolly, Finance & Grants Manager Mallette Faherty, Board Treasurer Plan completion date for corrective action plan: December 31, 2026 for implementation and monitoring ongoing.