Finding 39608 (2022-003)

Material Weakness Repeat Finding

Requirement

Questioned Costs

Year

2022

Accepted

2023-03-26

Audit: 37105

Organization: Friendly House, Inc. (AZ)

Auditor: Eide Bailly LLP

AI Summary

Core Issue: There is a material weakness in cash management controls, specifically regarding the approval and support of draw requests.
Impacted Requirements: Payment methods must minimize delays between fund transfers and disbursements, and all invoices must have proper authorization and documentation.
Recommended Follow-Up: Management should regularly review and enhance policies to improve internal controls over invoice approval and submission.

Finding Text

2022-003 Cash Management Material Noncompliance Cash Management Material Weakness in Internal Control over Compliance U.S. Department of Health and Human Services Passed-through the Arizona Department of Economic Security Refugee and Entrant Assistance State Administered Federal Financial Assistance Listing/CFDA #93.566; ADES18-191650; October 1, 2020 to September 30, 2021 and October 1, 2021 to September 30, 2022 Criteria: For non-Federal entities other than states, payment methods must minimize the time elapsing between the transfer of funds from the pass-through entity and the disbursement by the non-Federal entity whether the payment is made by electronic funds transfer, or issuance of redemption of checks, warrants, or payment by other means. Per review of the invoices for the programs and the Organization?s internal control processes, all invoices require approval by someone authorized and that the draw requests should be adequately supported. Condition: Eide Bailly LLP (EB) noted that four out of four draw requests did not have adequate support for the class hours included. Cause: Based on discussions with personnel, lack of supporting documentation occurred due to administrative oversight. Effect: Invoices could be incorrect. Questioned Costs: None reported. Context/Sampling: A nonstatistical sample of 4 draw requests out of 12 total draw requests were selected for testing. Repeat Finding from Prior Year: Yes, 2021-003 Recommendation: We recommend the Organization?s management routinely review and consider modifications to or implementation of policies and procedures that would strengthen internal controls surrounding the approval and submission process of invoices. Views of Responsible Officials: Management agrees with the finding.

Corrective Action Plan

2022-003 Cash Management Material Noncompliance Cash Management Material Weakness in Internal Control over Compliance U.S. Department of Health and Human Services Passed-through the Arizona Department of Economic Security Refugee and Entrant Assistance State Administered Federal Financial Assistance Listing/CFDA #93.566; ADES18-191650; October 1, 2020 to September 30, 2021 and October 1, 2021 to September 30, 2022 Condition: Eide Bailly LLP (EB) noted that four out of four draw requests did not have adequate support for the class hours included. Management?s Response and Corrective Action Plan: ? Monthly Attendance Report are completed by data specialist using individual teachers? daily rosters. ? The Monthly Attendance Reports are verified by the program manager and corrected if any mistakes are identified. ? Monthly invoices are reviewed, prior to submission, with the Department Manager for additional verification and approval. ? After the student attendance has been reviewed by Program Manager and verified by the Department Manager, a review log is signed off by both the Program Manager and the Department Manager. ? Any changes to either the attendance logs or monthly student attendance will only be made with the authorization of the department manager after data has been verified, with an explanation of why that was needed. ? After the appropriate verifications have taken place, the Program Manager creates the monthly invoice, they will maintain and verify documentation for the student attendance hours reflected on the invoice. ? Management will continue to discuss and explore ways to strengthen our current internal controls, including, purchasing tracking software and/or the creation of a google form/document. ? Management will routinely review and consider any needed modifications to or implementation of new policies and procedures that would strengthen internal controls surrounding the invoicing process, record-keeping, and the management thereof. Contact Person: Jose J. Vaquera, VP of Client Services Anticipated Completion Date: May 15, 2023

Other Findings in this Audit

39607 2022-002

Significant Deficiency Repeat
616049 2022-002

Significant Deficiency Repeat
616050 2022-003

Material Weakness Repeat

Programs in Audit

ALN	Program Name	Expenditures
84.425	Education Stabilization Fund	$727,404
93.566	Refugee and Entrant Assistance_state Administered Programs	$391,870
84.044	Trio_talent Search	$294,593
10.559	Summer Food Service Program for Children	$235,088
16.575	Crime Victim Assistance	$225,954
93.235	Affordable Care Act (aca) Abstinence Education Program	$155,033
84.010	Title I Grants to Local Educational Agencies	$154,151
17.270	Reintegration of Ex-Offenders	$117,182
84.287	Twenty-First Century Community Learning Centers	$105,016
10.553	School Breakfast Program	$102,670
14.870	Resident Opportunity and Supportive Services - Service Coordinators	$71,560
10.569	Emergency Food Assistance Program (food Commodities)	$27,567
10.555	National School Lunch Program	$26,600
84.424	Student Support and Academic Enrichment Program	$19,645
84.002	Adult Education - Basic Grants to States	$18,735
84.367	Improving Teacher Quality State Grants	$18,509
84.027	Special Education_grants to States	$15,262
84.365	English Language Acquisition State Grants	$10,731
84.173	Special Education_preschool Grants	$1,138