Vermont Adult Learning, Inc.Non-Profit

Finding # 2023-001 Issue: During our audit procedures we identified instances where there was no documented approval of invoices over expense transactions. Expenses should be reviewed and approved by someone other than the purchaser. Root Cause: The Organization is not properly following the internal controls in place over the approval of such expense transactions. Corrective Action Plan: We are committed to ensuring that we have approval of all expense transactions. To that end we have: ● VAL implemented procedures that all expenses must be accompanied by a purchase approval form for approval before the payment occurs. The purchase approval form is initiated by the purchaser, then signed by a manager or director and is submitted with the invoice or credit card receipt to Bill.com (A/P) or Dext (CC transactions) for payment and/or documentation retention. Multiple levels of additional approval are documented and retained in Bill.com (A/P). Purchases through vendor websites also include a level of approval (for example Staples and Amazon). In these cases, staff create an order and submit it for approval. The order is not processed until the Office Administrator approves every order. Invoices from these vendors still go through the regular approval process. There is just an extra layer of approval to ensure accuracy in reporting. ● Recurring expenses - The purchase approval process is also initiated for the initial payment of a recurring expense, noting that the expense will be a recurring charge. When expenses occur after the initial expense, any documentation related to the expense will be saved, but no approval form is required for future expenses as long as the amount or coding doesn’t change. This includes, but is not limited to, monthly lease payments, job search subscriptions, parking subscriptions, health/dental/vision/FSA expenses, etc. Timeline: This updated process has been implemented as of April 2023. Staff and management have been more diligent regarding including purchase approval forms to all expenses incurred. VAL has also verified that all expenses are reviewed for accuracy by managers, directors, and the outsourced accounting firm. Person Responsible for Corrective Action Plan: Joe Przyperhart, Program Director/Interim Executive Director, David Justice, Program Director/Interim Executive Director, Grant Managers and Regional Directors will oversee changes to ensure all expenses include the appropriate approval documentation.

Finding # 2023 -002 Issue: During our audit procedures we identified instances where there was no documented rate approval or pay rate support within personnel files. Pay rates and pay rate changes should be reviewed and approved by department supervisors and human resource director at the time of pay changes and documented in personnel files. Root Cause: The Organization is not properly following the internal controls in place over the documentation of such pay rate changes. Corrective Action Plan: ● The Organization has discussed internally how to more accurately and efficiently submit, sign and record pay rates and pay rate changes. The Human Resources department, as well as all supervisors are dedicated to retaining accurate and complete personnel records. The Organization will send each employee a letter when their raise comes up that documents their old rate and new rate. This letter will be signed by the employee, then the Supervisor, as well as the HR Director. Once all three signatures are obtained, HR will send a final, signed copy to the supervisor, and will keep a copy in a secure, central location that is accessible to the Supervisors and Directors. Timeline: This will be implemented as soon as possible Person Responsible for Corrective Action Plan: Joe Przyperhart, Program Director/Interim Executive Director, David Justice, Program Director/Interim Executive Director, Human Resources Director, Grant Managers and Regional Directors will oversee changes to ensure all payroll rate changes are reviewed, approved and appropriately filed in a secure location.

Corrective Action Plan Date: March 30, 2021 To: McSoley, McCoy & Co. From: Vermont Adult Learning, Inc. 1. Finding # 2020-001 Issue: During the audit, McSoley McCoy and Co., our auditors noted the organization charged 28% of payroll costs for fringe benefits to grants for reimbursement. Actual fringe benefits represent 25% of payroll costs. Fringe benefits charged to grants for reimbursement should be made on a reasonable basis, based on actual costs incurred. Root Cause: The Executive Director takes full responsibility for this finding. He had anticipated additional healthcare care costs and other employee fringe benefit costs that did not materialize. In the midst of the COVID-19 crisis the rate was not adjusted. Corrective Action Plan: ? The organization will reimburse the state and federal funding sources immediately. Additionally, the current Director of Finance, Darlene Cloutier, has made the appropriate change to the FY21 benefit rate. The applied rate of 25% currently being used closely reflects the actual benefit costs. The financial statements are monitored on a monthly basis to determine whether an adjustment to the applied rate is necessary. A calculation will be done at the end of the fiscal year to true up fringe benefits charged to grants based on actual costs incurred. Anticipated Date of Reimbursement: State and federal funding sources will be contacted by 4/2/21 and payment will be made immediately thereafter. Completion date in regard to correct applied fringe rate was done 8/1/20 Persons Responsible for Corrective Actions: Hal Cohen, Executive Director and Finance Director, Darlene Cloutier