Finding 2025-002 Lack of Internal Control Over Activities Allowed or Unallowed and Allowable Costs/Cost Principles Material Weakness Name of Contact Person: President, Nora Tom; Tribal Coordinator, Jacinta Martin Corrective Action Plan: The Stebbins Community Association will strengthen its internal controls over program expenditures by establishing and implementing written procedures to ensure that all costs charged to federally funded and other restricted programs are properly reviewed, supported, approved, and allowable. Management will implement the following corrective actions: 1. Written Policies and Procedures The Association will establish written procedures for reviewing expenditures to determine whether costs are allowable under applicable federal requirements, grant agreements, funding restrictions, and Association policies. 2. Pre-Approval of Expenditures Program expenditures will be reviewed and approved by authorized personnel before payment whenever practical. The reviewer will verify that the expenditure is related to an approved program activity and is necessary to accomplish the program's objectives. 3. Allowability and Cost Principles Review Before costs are charged to a federal award, designated accounting or management personnel will review the expenditure for: • Reasonableness; • Allowability; • Allocability to the applicable program or award; • Proper accounting treatment; • Consistency with applicable cost principles; • Compliance with grant or award restrictions; and • Adequate supporting documentation. 4. Supporting Documentation All expenditures will be supported by appropriate documentation, including invoices, receipts, purchase orders, contracts, timesheets, travel documentation, approval records, or other documentation demonstrating the purpose and allowability of the expenditure. 5. Program/Grant Coding Accounting personnel will ensure that expenditures are charged to the correct program, grant, funding source, and account code. Costs will not be charged to a federal award merely because funds are available. 6. Review of Unallowable Costs Management will establish procedures for identifying costs that are specifically prohibited or otherwise unallowable under applicable laws, regulations, grant agreements, or cost principles. Unallowable costs will not be charged to federal awards and, if identified after recording, will be promptly reclassified or otherwise corrected. 7. Periodic Expenditure Review Management will conduct periodic reviews of expenditures charged to federal and restricted programs. The review will include testing supporting documentation and determining whether expenditures were incurred for authorized program purposes. 8. Correcting Improper Charges If an expenditure is determined to be unallowable or improperly charged to a program, the Association will make the necessary accounting correction and, when applicable, reimburse or return funds to the appropriate funding source. 9. Employee and Management Training Employees and management personnel responsible for purchasing, accounts payable, grant administration, and financial reporting will receive training regarding allowable and unallowable costs, applicable cost principles, grant requirements, documentation requirements, and expenditure approval procedures. 10. Management Oversight The Executive Director and designated financial personnel will be responsible for monitoring compliance with these procedures and ensuring that appropriate corrective action is taken when deficiencies are identified. Proposed Completion Date: The corrective action will be implemented immediately and incorporated into the Association's ongoing purchasing, accounts payable, grant administration, and financial reporting procedures.