Arrow Child & Family MinistriesNon-Profit

Finding #2020-001 ? Significant Deficiency and Other Noncompliance Applicable federal program: Federal: U. S. Department of Justice Passed through Texas Office of the Governor ? Criminal Justice Division, CFDA #16.575 Crime Victim Assistance Grant numbers: 2648305 10/01/17 ? 09/30/19 2648306 10/01/19 ? 09/30/21 2549706 10/01/18 ? 09/30/20 Criteria: Allowable costs ? An effective internal control system includes timely review of transactions for verification of accuracy as to amount and period. Management is responsible for having an internal control system in place to ensure that allowable costs in accordance with the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards ?200.400 are timely and accurately billed. Condition and context: An Excel worksheet used to accumulate costs for grant billing is manually input from source documents. Grant transactions are not recorded separately from nongrant expenses in the general ledger or other tracking system so there is no independent source against which to compare the grant billing worksheet to ensure accuracy. During our testing of payroll costs, we noted that February 2020 payroll costs were input to the grant billing worksheet based on the date paid rather than on the date services were performed. This error was identified in May 2020 and corrected. However, an input error to the correction worksheet resulted in a $500 overbilling for one transaction in our sample of 40 payroll transactions. This finding was previously reported as part of #2019-001. Cause: Policies and procedures are not sufficient to ensure transactions are accurately input into the grant billing worksheet. Effect: Failure to adequately review underlying billing data could result in unallowable costs being charged to a grant. Questioned costs: $500 Recommendation: Implement a system to timely review information input into the billing worksheets and to periodically reconcile billing worksheets to payroll system and general ledger information to ensure accuracy and completeness. Views of responsible officials and planned corrective actions: Arrow Child & Family Ministries will continue to use source documents to enter grant expenses into the general ledger. We will continue to prepare grant billing monthly. We will continue to conduct internal reviews to identify errors in preparation of grant billing. We will continue to use source documents recorded in the general ledger to prepare the grant billing worksheet. The preparer will continue to review source documents and will prepare reclassifying entries as appropriate in the general ledger. The preparer will continue entering data from source documents into the billing worksheet. The reviewer will continue to verify and research discrepancies between amounts and dates in source documents, calculations, general ledger transactions, and submissions for reimbursement.

Finding #2019-001 ? Significant Deficiency and Other Noncompliance Applicable federal and state programs: Federal: U. S. Department of Justice Passed through Texas Office of the Governor ? Criminal Justice Division, CFDA #16.575 Crime Victim Assistance Grant numbers: 2648305 10/01/17 ? 09/30/19 2549705 10/01/16 ? 09/30/18 2549706 10/01/18 ? 09/30/20 State: Texas Office of the Governor ? Criminal Justice Division Grant number: 3269201 06/01/17 ? 09/30/19 Criteria: Allowable Costs ? Section 200.430 of the Uniform Guidance and Section II (B)(11)(h) of the Uniform Grant Management Standards of the State of Texas provide documentation standards for employee compensation charged to grants. These standards require that charges for salaries and wages be based on records that accurately reflect the work performed and that charges be supported by a system of internal control that provides reasonable assurance that charges are accurate, allowable, and properly allocated. Support such as personnel activity reports that reflect an after-the-fact distribution of the actual activity of each employee should be prepared at least monthly in sufficient detail to ensure that the activity performed is allowable. In certain circumstances, employees who devote 100% of their time to a single grant may submit periodic certifications in lieu of activity reports. Budget estimates alone do not qualify as support. Condition and context: During our testing of support for payroll costs charged in grant billings, we identified the following: ? For 21 of 86 sample items tested, the activity timesheet used for billing purposes did not match the activity recorded in the payroll system for paid time off. ? For 4 of 86 sample items tested, the activity timesheet used for billing purposes did not sufficiently identify for which grant the activity was performed. ? For 4 of 86 sample items tested, no activity timesheet could be located. ? For 1 of 86 sample items tested, the activity timesheet documented time for a different grant than the one that was billed. A similar finding was previously reported as #2018-001. Cause: Policies and procedures are not sufficient to ensure activity timesheets contain sufficient information to ensure accurate billings to grants are properly input into the grant billing worksheets and maintained for recordkeeping. Effect: Failure to follow appropriate documentation standards and to perform reviews to ensure that documentation standards are followed could result in unallowable costs charged to a grant and to disallowance of costs by the federal or state grantor or pass through agency for failure to comply with documentation standards. Questioned costs: Unknown Recommendation: Ensure written policies and procedures adhere to federal and state documentation standards and include procedures to ensure documentation is appropriately completed and reviewed and that it supports costs billed to grants. Provide training to ensure all employees involved in grant activities are aware of requirements. Design activity timesheets to allow for accurate identification of the grant to be billed. Implement a system to review information input into the billing worksheets, and to periodically reconcile billing worksheets to payroll system and general ledger information to ensure accuracy and completeness, and to maintain activity timesheets for recordkeeping. Views of responsible officials and planned corrective actions: Grant activities have been manually tracked on paper timesheets throughout each grant period for 200+ grant-funded employees. Findings represent 15 grant-funded employees and supervisors that require re-training on the preparation of grant activity reports. Management agrees with this finding but does not believe these documented deficiencies result in systemic billing errors or unallowable costs.

Finding #2019-002 ? Significant Deficiency and Other Noncompliance Applicable federal and state programs: Federal: U. S. Department of Justice Passed through Texas Office of the Governor ? Criminal Justice Division, CFDA #16.575 Crime Victim Assistance Grant numbers: 2648305 10/01/17 ? 09/30/19 2549705 10/01/16 ? 09/30/18 2549706 10/01/18 ? 09/30/20 State: Texas Office of the Governor ? Criminal Justice Division Grant number: 3269201 06/01/17 ? 09/30/19 Criteria: Procurement ? Nonprofit organizations are required to have written procurement procedures that conform to federal and state laws and regulations as identified in the Uniform Guidance, Subtitle III Procurement Standards and the State of Texas Uniform Grant Management Standards and other specific contractual requirements. Condition and context: Written procurement procedures do not conform to applicable federal and state requirements. During our testing of support for non-payroll items in grant billings, we identified 5 of 16 items that were subject to procurement standards for which there was not sufficient documentation that appropriate procurement standards had been followed and the rationale for the procurement decision documented. The lack of written procurement procedures that comply with federal and state requirements was previously reported as #2018-003. Cause: Purchasing procedures were not written to conform with applicable federal and state requirements, thresholds, and documentation standards. Effect: Failure to have a procurement policy that is in accordance with the Uniform Guidance and the State of Texas Uniform Grant Management Standards and a lack of document decisions could result in non-compliance and lack of competition in selected vendors. Recommendation: Develop procurement procedures that comply with federal and state requirements and include provide for documentation and retention of documents evidencing compliance. Periodically evaluate budgeted purchases to ensure purchases are appropriately aggregated and evaluated for compliance with procurement standards. Provide training to ensure personnel are aware of specific requirements. Develop a process for review and approval of all goods and services procured with federal and state grant awards to ensure compliance. Views of responsible officials and planned corrective actions: Organizational purchasing policies meet accreditation standards and reference applicable grant management guidance. Revisions to incorporate specific requirements and the new federal guidelines were drafted during the audit period. These changes are pending grantor feedback prior to finalization. A new role has been established to centralize procurement activities and ensure compliance requirements are met.

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