2025-006 Habitat Conservation – Assistance Lising #11.463 - Material Weakness in Internal Control over Compliance – Financial Reporting Recommendation: We recommend the Organization implement formal internal controls over the Federal financial reporting process, including documented supervisory review and approval of all Federal Financial Reports prior to submission. Federal Financial Reports should be prepared using information maintained within the accounting system and reconciled to the general ledger before submission to ensure the reports are complete, accurate, and fully supported. Additionally, management should develop and implement a written Federal financial reporting policy that establishes procedures for preparing, reviewing, approving, reconciling, documenting, and retaining Federal Financial Reports in accordance with the Uniform Guidance. Explanation of disagreement with audit findings: there is no disagreement with the audit findings. Action taken in response to finding: JCWC is in the process of implementing updated financial policies and procedures to strengthen internal controls over Federal financial reporting. The revised Fiscal Policy Manual establishes a specific Federal Financial Reporting Process in Section 7.4.1 that defines responsibilities and required controls for preparing, verifying, reconciling, reviewing, approving, submitting, and retaining Federal Financial Reports. The new process requires: 1. Prepare and Verify The Finance & Grants Manager works with Jitasa to prepare Federal Financial Reports using information maintained in QuickBooks and supporting documentation and verifies that reported expenditures are allowable, properly allocated, within the approved budget, and adequately supported. 2. Reconcile and Review Jitasa reconciles reported expenditures to the applicable QuickBooks general ledger accounts and supporting documentation. Any discrepancies must be investigated, corrected, and documented before submission. 3. Review and Approve The Executive Director reviews the Federal Financial Report and supporting documentation for accuracy, completeness, and compliance with Federal award requirements and provides documented approval through an approved electronic signature platform prior to submission. 4. Submit and Retain Following approval, the Finance & Grants Manager submits the report by the applicable deadline and retains the submitted report, supporting documentation, reconciliation, and documented approval in accordance with Section 10 and applicable Federal requirements. Action Plan: JCWC will finalize and present the Fiscal Policy Manual to the Board for formal adoption and will continue implementing the Federal Financial Reporting Process in the interim. Management will use the procedures established in Section 7.4.1 for all applicable Federal Financial Reports and will monitor compliance with the required preparation, reconciliation, review, approval, submission, and record-retention procedures. Any discrepancies or gaps identified through the reporting process will be addressed and documented. Name(s) of the contact people responsible for correction action: Jennifer Hamilton, Executive Director Sean Connolly, Finance & Grants Manager Jitasa Plan completion date for corrective action plan: December 31, 2026 for implementation and monitoring ongoing.