In accordance with federal audit protocols, our organization underwent a rigorous evaluation administered by Jessica Sayles, CPA, representing the prestigious firm Houldsworth, Russo, and Co. for fiscal year 2021-2022. Specifically, the audit was conducted with a focus on our utilization of funds allocated under the ARP grant. This comprehensive audit revealed two distinct facets deserving of meticulous attention.
Firstly, we are pleased to report that the examination of our direct expenditures under the ARP grant has yielded an impeccable record of financial stewardship. No anomalies, deficiencies, or discrepancies were identified in the management of these direct expenses. This outcome reaffirms our unwavering commitment to fiscal diligence in the administration of public funds.
However, the audit did unveil an issue of significance, pertaining to our handling of indirect expenses and fringe rates. Ms. Jessica Sayles, discerned that our organization had inadvertently transgressed established regulations governing allowable indirect cost rates, particularly in relation to payroll and other miscellaneous expenses. This misapplication resulted in the disbursement of funds beyond the thresholds specified under the Uniform Guidance framework, consequently necessitating reimbursement to federal agencies.
This disclosure is an acknowledgment of the audit findings and represents our steadfast commitment to forthrightness, transparency, and responsible financial management. We deeply respect the critical importance of precision and adherence to federal guidelines in matters of fiscal accountability, and we are dedicated to addressing these issues with utmost professionalism.
Issue 1: Material Adjustments to the Financial Statements
We acknowledge the discovery of material current and prior period adjustments necessary to ensure that our financial statements are fairly stated in accordance with generally accepted accounting principles (GAAP). We understand the importance of accurate financial reporting and have already taken steps to address this concern. Our response to this issue includes:
Comprehensive Review: We have initiated a thorough review of our accounting records to identify the root causes of these material adjustments. This process includes examining internal controls and financial reporting procedures.
Rectification Plan: A plan has been developed to rectify these adjustments promptly, with a focus on maintaining compliance with GAAP. This includes improved monitoring, internal auditing, and reporting protocols.
Training and Development: Our finance and accounting team have undergone additional training and development to strengthen their understanding of financial reporting standards, and GAAP compliance.
Issue 2: Uniform Guidance - Allowable Indirect Cost Rates
We acknowledge the findings related to the misapplication of allowable indirect cost rates for payroll and other expenses. We deeply regret the misunderstanding that led to this issue and take full responsibility for it. To address this matter, we have initiated the following actions:
Immediate Compliance: We have already taken steps to ensure that allowable indirect cost rates are correctly applied in accordance with Uniform Guidance. This includes a review of all grant expenditures and related indirect costs.
Training and Education: We are committed to improving our management's understanding of allowable indirect cost rates. Specialized training sessions will be conducted to clarify the proper application of these rates to prevent such errors in the future.
Reconciliation and Repayment: We have worked closely with federal agencies, who opted for a refundable advance, to reconcile the amounts overdrawn on federal requests for reimbursements and promptly addressed any amounts due as a result of the misapplication of indirect cost rates.
We recognize the gravity of these findings and are actively working to ensure that such misapplications will not recur in the future. In tandem with this, we commit to working diligently alongside Ms. Sayles and her esteemed team to expeditiously rectify these concerns and establish a robust framework for accurate financial reporting in our future endeavors.
This organization remains firmly committed to upholding the highest standards of integrity, accountability, and compliance in its financial operations. We extend our appreciation to your department for your dedication to ensuring responsible fiscal oversight and the judicious allocation of federal resources.
Should you require additional information or wish to engage in a more detailed discussion of these matters, we are readily available for dialogue.
Andrea L. Gregg
Chief Executive Officer
High Sierra AHEC
639 Isbell Road, Suite 290
Reno, NV 89509
(775) 507-4022
andrea@highsierraahec.org