SCHEDULE OF FINDINGS AND QUESTIONED COSTS
For the year ended May 31, 2024
SECTION II – FINANCIAL STATEMENTS FINDINGS
No matters were reported.
SECTION III – FEDERAL AWARD FINDINGS AND QUESTIONED COSTS
Finding Number: 2024-001
Federal Program:
14.267 Continuum of Care
Category:
Compliance/internal control
Criteria:
As established in CFR 200.318 of General procurement standards (c)- Conflict of interest - (1) “The recipient or
subrecipient must maintain written standards of conduct covering conflicts of interest and governing the actions of its
employees engaged in the selection, award, and administration of contracts. No employee, officer, agent, or board
member with a real or apparent conflict of interest may participate in the selection, award, or administration of a
contract supported by the Federal award. A conflict of interest includes when the employee, officer, agent, or board
member, any member of their immediate family, their partner, or an organization that employs or is about to employ
any of the parties indicated herein, has a financial or other interest in or a tangible personal benefit from an entity
considered for a contract. “
The Conflict-of-Interest policy of the Organization establishes the parameters that define an actual, potential or
apparent conflict of interest as follows:
• actual conflict of interest - includes any link or relationship between any employee, any Board member
and/or any volunteer facing a real and existing conflict
• potential conflict of interest - includes any link or relationship between any employee, any Board member
and/or any volunteer that could be in a situation that may result in a conflict of interest
• apparent conflict of interest - includes any link or relationship between any employee, any Board member
and/or any volunteer that could be in a situation that may be perceived having to do with conflict, although
in fact it is not
Employees, directors, Board members and/or volunteers of the Organization must recognize when they have, could
have, or could be thought to have a conflict of interest and must be reported immediately. The Organization can
employ relatives, partners and/or spouses of an employee, if the family romantic or marital relationship does not
cause a conflict of interest or negative and adversely impact the Organization.
In addition, on January 1, 2024, the Organization established a new protocol through an agreement regarding how
the working relationships between family members will be managed. The purpose is to reasonably accommodate
the supervision status of any immediate family member recruited by the Organization. Specific controls are
established for functions such as the performance evaluation process, the disciplinary or reprimand process,
evaluation and approval of legal documents, requisition of funds, and programmatic implementation process, among
others, to ascertain that any actual, potential or apparent conflict of interest is appropriately mitigated. The agreement
needs to be signed by the parties having the relationship and another independent party. Condition:
An immediate family member of the Executive Director was promoted to Director of Services and the safeguard
measures established in the Conflict-of-Interest policy and the new protocol of the Organization were not followed.
The following instances were noted:
• The Employment Agreement was signed exclusively by the Executive Director and the Director of Services.
• The Reasonable Accommodation of the Supervisory Role of the Director of Services Agreement was
signed exclusively by the Executive Director and the Director of Services.
In addition, another immediate family member of the Director of Services was hired as a professional contractor. At
the moment of the recruitment, the document establishing the relationship was not signed. Subsequently the referred
document was signed but it did not specify the existing conflicts with the Director of Services and the Executive
Director.
Cause:
Failure to include a third-party signature in certain legal agreements signed by Executive Director and its immediate
family member as established in the new protocol.
Failure to follow the Conflict-of-interest policy established policies regarding the timely completion of conflict-ofinterest
document, and proper disclosure of such conflict.
The conflict of interest between the professional contractor, the Executive Director and the Director of Services was
not notified to the Board of Directors to take appropriate remedial action.
Context:
Not applicable
Effect or potential effect:
Payments or transactions made between parties that have conflicts of interest and generate economic benefits can
occur without being detected.
Recommendation:
• Review all contracts to ensure that they comply with the conflict-of-interest clause.
• In the event of a potential conflict, establish a third-party signature for the Human Resources director or any
member of the board executive committee.
• Update the employee manual to include the new protocol.
Views of responsible officials:
Management agrees with the audit findings and is committed to addressing the issues identified to ensure compliance
with CFR 200.318, our Conflict-of-Interest policy, and new organizational protocols. We would like to bring to your
attention that effective on November 30, 2024, the Executive Director resigned from his position with Corporacion La
Fondita de Jesús. We will review and revise our Conflict-of-Interest policy and protocols to ensure they are
comprehensive and clear. This includes detailing the steps to be followed when hiring or promoting individuals with
familial relationships within the organization. We will establish an independent review and approval process for all
employment and promotion agreements involving immediate family members of senior management. This process
will include an additional review by a member of the executive committee of the Board of Directors to ensure
objectivity and compliance with policies. We will review all contracts to ensure that they comply with the conflict-ofinterest
clause.