Finding 555238 (2024-002)

Significant Deficiency
Requirement
P
Questioned Costs
-
Year
2024
Accepted
2025-04-16
Audit: 353872
Auditor: Yeo & Yeo PC

AI Summary

  • Core Issue: The Organization struggled with record retention and succession planning, leading to difficulties in managing federal awards after key staff departures.
  • Impacted Requirements: Inaccurate records increased the risk of non-compliance with federal regulations and delayed the audit process.
  • Recommended Follow-Up: Implement a record retention policy, create detailed procedure manuals, establish succession planning, and consider a document management system.

Finding Text

Criteria: Proper internal controls and compliance with federal regulations require the maintenance of accurate and complete records to support federal award transactions. Additionally, effective succession planning is necessary to ensure continuity of operations and knowledge transfer. Condition: During our audit, we noted that the Organization had to recreate records and supporting documentation for federal transactions due to the departure of key staff members responsible for managing federal awards. Cause: The Organization lacked adequate procedures for record retention and succession planning for staff managing federal awards. When key personnel left, critical information and documentation were not readily available or properly transferred to new staff. Effect: this deficiency resulted in: 1. Significant time and resources spent recreating necessary documentation; 2. Increased risk of non-compliance with federal award requirements; 3. Potential for errors or misstatements in financial reporting related to federal awards; 4. Delays in the audit process. Recommendation: We recommend that the Organization: 1. Implement a comprehensive record retention policy specific to federal award management; 2. Develop and maintain detailed procedure manuals for federal award processes; 3. Establish a formal succession planning process for key positions, including cross-training of staff; 4. Consider implementing a document management system to centralize and secure critical records. Auditee Response: Management concurs with the finding and is committed to improving its record retention practices and succession planning for federal award management and has taken steps under its new leadership team to address these issues.

Corrective Action Plan

Management concurs with the finding and has initiated immediate steps to strengthen record retention and succession planning for federal award management. A key element of our response is the engagement of RDM Associates, our outsourced accounting provider, to ensure compliance with federal regulations and establish robust processes. To address this finding, the following actions are underway: By June 30, 2025, management, with the expertise of RDM Associates, will implement a comprehensive record retention policy tailored to federal award management. This policy will outline retention periods, storage protocols, and access requirements, ensuring all documentation is systematically organized and readily available. For fiscal year 2025, RDM Associates is assisting in the creation and retention of adequate reconciling schedules to support all grant draw requests, aligning our processes with federal compliance standards. RDM Associates is also supporting the development of detailed procedure manuals for federal award processes and the implementation of a document management system to centralize and secure critical records. These efforts will mitigate the risks associated with staff turnover and ensure continuity of operations. By June 30, 2025, management will formalize a succession planning process for key positions involved in federal award management, incorporating cross-training of staff under the guidance of RDM Associates to facilitate knowledge transfer and operational resilience. The transition to RDM Associates as our outsourced accounting provider addresses the root causes of this finding by bringing specialized expertise and structured processes to our federal award management. We are confident that these actions will result in sustainable improvements and full compliance with federal requirements. Anticipated completion date for these initiatives is June 30, 2025.

Categories

Reporting Internal Control / Segregation of Duties

Other Findings in this Audit

  • 555239 2024-002
    Significant Deficiency
  • 555240 2024-002
    Significant Deficiency
  • 1131680 2024-002
    Significant Deficiency
  • 1131681 2024-002
    Significant Deficiency
  • 1131682 2024-002
    Significant Deficiency

Programs in Audit

ALN Program Name Expenditures
14.913 Healthy Homes Production Program $738,499
14.278 Veterans Housing Rehabilitation and Modification Program $387,399
21.027 Coronavirus State and Local Fiscal Recovery Funds $320,151
21.000 Round I Network Expendable and Capital Grant Request $296,000
21.000 Housing Stability Consueling Program Application $53,040
14.169 Housing Counseling Assistance Program $38,000
10.466 Minority-Serving Institutions Partnership $12,716
21.000 Network Supplemental Request Internal 2024 $5,500
21.000 Network Supplemental Request Internal 2023 $1,000
21.000 Neighborworks Week Request 2024 $1,000