Finding 576208 (2025-001)

Finding 2025-001: Material Weakness: Reporting Criteria: Section A of the CDFI FA grant agreement (#221FA059865) outlines the annual reports required to be provided by Freedom First Federal Credit Union (the Credit Union) to the CDFI which includes Performance Progress Reports (PPR). Section B of the grant agreement provides the due dates when the reports are due. The PPR allows the Credit Union to report whether it has met the benchmarks specified in the CDFI grant agreement. Condition and Context: For the year ended March 31, 2025, we noted that the amounts reported on the PPR for the various goals and measures outlined in the grant agreement did not agree with the underlying loan data provided to us during the audit. Specifically: 1. The amount of qualified lending reported on the PPR for Performance Goals 1-1, 1-3 and 2-1 were not in agreement with the underlying loan reports. 2. The Credit Union reported on the PPR that they did not meet Performance Goal 1-1 for year 1 of the performance period. The Credit Union placed a work order with the CDFI prior to the commencement of the audit to amend the grant performance goal requirements to a more achievable level. Effect or potential effect: Performance goals as stipulated in the grant agreement may not be met or reported accurately. Recommendation: Establish control procedures to identify and track eligible loans deployed to meet the various goals and measures stipulated in the grant agreement. The underlying loan reports should be reconciled to the amount reported in the PPR prior to submission to the CDFI. We would also recommend the following to further enhance controls: 1. A person independent of the loan report generation and submission to the CDFI should review the reports and submission data for accuracy prior to submitting the PPR. 2. The underlying loan reports used to meet the performance goals should be memorialized and saved in a manner that they cannot be further edited or manipulated. Saving documents in a non-editable format ensures that the version used to support the PPR is final. It also avoids potential confusion form multiple versions or accidental overwrites. Questioned costs: None. Views of responsible o􀇆cials: Management agrees with the finding and will establish the internal control recommendations outlined above. Additionally, management will work with the CDFI to amend (reduce) the goal 1-1 performance goal requirements. A determination will also be made if performance goal 1-1 would have been met had the loans reported under goal 1-3 been included with the goal 1-1 requirements, as permitted in the grant agreement.