Finding 20375 (2022-003)

Material Weakness

Requirement

Questioned Costs

Year

2022

Accepted

2023-03-30

Audit: 19100

Organization: The Be Kind People Project Foundation (AZ)

Auditor: Eide Bailly LLP

AI Summary

Core Issue: The Organization failed to keep necessary documentation for reviewing expenditures related to COVID-19 disaster assistance loans.
Impacted Requirements: This violates 2 CFR 200.303(a), which mandates effective internal controls over federal awards.
Recommended Follow-Up: Management should establish a process for proper approval of expenditures to ensure compliance with allowable costs and activities.

Finding Text

2022-003 Small Business Administration Financial Assistance Listing #59.008 COVID-19 Disaster Assistance Loans Activities Allowed or Unallowed and Allowable Costs/Cost Principles Material Weakness in Internal Control over Compliance Criteria: 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the Organization is managing the federal award in compliance with federal statutes, regulations, and conditions of the federal award. Condition: The Organization did not retain the required documentation to support the review of expenditures. Cause: The Organization had turnover and limited staffing available. Effect: Lack of approval can result in expenditures that are otherwise not an allowable cost or allowable activity. Questioned Costs: None reported Context/Sampling: A nonstatistical sample of 60 transactions out of 333 total transactions were selected for testing, which accounted for $215,552 of $500,300 of federal program expenditures. Repeat Finding from Prior Year(s): No Recommendation: We recommend the Organization?s management implement a process that allows for proper approval of expenditures to ensure that expenditures are for allowable activities and costs. Views of Responsible Officials: Management agrees with the finding.

Corrective Action Plan

2022-003 Material Weakness in Internal Control over Compliance with Activities Allowed or Unallowed and Allowable Costs/ Cost Principles Condition: The Organization did not retain the required documentation to support the review of expenditures. Cause: The Organization had turnover and limited staffing available. Management?s Response and Corrective Action Plan: Changing the personnel involved has solved much of the problem, also the full awareness of what needs to be retained has also been explained to management. If/ when funds from federal sources are used, those expenditures will be reviewed monthly. Specifically, this will mean: ? Maintain EIDL-sourced funds in separate bank/ account. ? Have single authorization for any movement/ usage of funds in EIDL account. ? If/when funds from EIDL are used, have a written statement for purpose and documentation produced for use at the time of request. Responsible Individuals: ? Maintain separate account ? Marcia Meyer, CEO, in conjunction with Board Finance Committee ? Authorization for use of funds ? Marcia Meyer ? Maintenance of records for use ? JC Thompson ? Confirmation with use of funds per allowable uses per national guidelines ? Jennie Myers ? Reporting on monthly finance report ? Jennie Myers Anticipated Completion Date: This process is underway and will be visible at the fiscal year-end audit in June 2023.

Other Findings in this Audit

20376 2022-004

Material Weakness
596817 2022-003

Material Weakness
596818 2022-004

Material Weakness

Programs in Audit

ALN	Program Name	Expenditures
59.008	Disaster Assistance Loans	$1.90M
59.075	Shuttered Venue Operators Grant Program	$153,008
94.006	Americorps	$60,023