THE SALVATION ARMY ROCHESTER AREA SERVICESNon-Profit

Statement of Condition: The reporting package and data collection form for the year ended September 30, 2022, was not filed by the deadline of June 30, 2023, to the Federal Audit Clearinghouse. Criteria: In accordance with 2 CFR Section 200.512(a), the audit must be completed and the data collection form and reporting package must be submitted within the earlier of 30 calendar days after receipt of the auditor’s report, or nine months after the end of the audit period, adjusted for any extensions permitted by the Office of Management and Budget. Effect of Condition: The reporting package and data collection form for the year ended September 30, 2022, was not accessible on the Federal Audit Clearinghouse in a timely manner. Cause of Condition: The audit of the financial statements, preparation of the Single Audit Reporting Package, and preparation and submission of the Data Collection Form was not completed in sufficient time due to the change in the audit firm and delays in obtaining information to complete the audit. Further, the organization did not make the auditor aware that its federal awards exceeded the threshold for a Single Audit until after the required due date. Recommendation: We recommend the organization adopt policies and procedures, including tracking and monitoring of reporting requirements, to ensure that the audit, reporting package, and data collection form are electronically filed with the Federal Audit Clearinghouse within the applicable deadline. Further, we recommend that management review the current resources, capabilities and responsibilities within its finance department to ensure that information can be provided in a timely manner to complete the audit. Views of Responsible Officials: The organization agrees with the finding. Please refer to corrective action plan on page 46.

Statement of Condition:The organization incorrectly reported federal cash-cash disbursements, cash on hand, total federal funds authorized and federal share of expenditures twice in their submitted FY 2022 Federal Financial Report SF-425 during the required time frame. A third version prepared with correct information has not been submitted, and therefore, did not meet the required time frame. The third version of SF-425 indicated an overstatement of allowable expenses of $50,750. Criteria: SF-425 Federal Financial Report Instructions, Page 2 defines Federal Cash-cash disbursements as the amount of federal fund disbursements for actual cash disbursements for direct charges for goods and services and the amount of indirect expenses. Cash on hand is the amount of cash receipts less cash disbursements and represents the immediate cash needs. Total Federal share of expenditures for reports prepared on an accrual basis should include the sum of cash disbursements for direct charges, the amount of indirect expense incurred, and the net increase or decrease in the amounts owed by the recipient for goods and other property received; service performed by employees and other payees; and programs for which no current services or performance are required. Effect of Condition: The organization did not meet the timely submission requirement and cannot be considered a low-risk auditee in the next single audit reporting period. In addition, they understated the amount of cash disbursements. Further, failure to submit a timely and accurate SF-425 prevents the VA from conducting proper oversight of the grantee’s award. Incorrect SF-425 submissions have a direct impact on the ability of the agency to recoup funds, perform follow-up activities, and develop corrective action plans, if required. Cause of Condition: Management acknowledged a general lack of understanding of the SF-425 and what constituted allowable expenses and cash disbursements. Recommendation: As previously recommended by the Office of Business Oversight (OBO), the organization should develop standard operating procedures, and related oversight activities ensuring accurate SF-425 information reporting. Further, it should provide training to staff on the updated policies. Finally, it should submit the revised SF-425 with the correct allowable expense reported for the program. Views of Responsible Officials: The organization agrees with the finding. Please refer to corrective action plan on page 46.

Statement of Condition: We found issues with 22 of the 60 expenses reviewed, totaling $18,363.61 that were either incorrectly charged to the program or the invoice could not be located. The following table provides specific details on the noted exceptions/questioned costs. Criteria: Financial records, supporting documents and all other non-Federal entity records pertinent to a Federal Award must be retained for a period of three years from the date of submission of the final expenditure report or, for Federal awards that are renewed quarterly or annually, from the date of submission of the quarterly or annual report, respectively. Further, 2 CFR 200 Subpart E, Cost Principles section 200.406 Applicable credits states “Applicable credits refer to transactions that offset or reduce direct or indirect costs allocable to a federal award. To the extent that such credits accruing to or received by the recipient relate to allowable costs, they must be credited to the Federal award as either a cost reduction or cash refund, as appropriate.” Effect of Condition: Failure to ensure only allowable and properly supported expenses are charged to the program reduces funding availability for allowable grant activities. Cause of Condition: With respect to those invoices that could not be located, the organization internal audit department reviewed those invoices as part of their audit and the documents could not be located for this audit. In regard to the unallowable expenditures, these relate to gifts in kind, and management was unaware of the regulations relating to applicable credits when filling out the SF-425. Recommendation: As previously recommended by the OBO, the organization should update policies and procedures surrounding the award programs cost allowability to ensure unallowable costs are not charged to the program. Further, it should provide training to staff on updated policies, Federal and Grant Per Diem Program cost allowability requirements, proper expense documentation and retention procedures. Views of Responsible Officials: The organization agrees with the finding. Please refer to corrective action plan on page 47. FY 2022 Expenses Sample # GL Expense Description Issue Questioned Costs 10 Food and Beverage Lack of supporting documentation $333.17 11 Food and Beverage Lack of supporting documentation $277.73 25-44 Specific Assistance to Individuals Unallowable expenditures $17,752.71 Total $18,363.61

Criteria and Condition: Emergency Food and Shelter National Board Program requires a final report for each phase confirming how funds were used. Count errors were noted in the final reports.Context: During the audit, review of the July 2019 report disclosed errors in the count of nights spent. This appeared to occur for other months as well.Cause: The report preparer did not verify counts with the Organization's records of nights spent.Effect: Although it appears the funds were, in fact, spent properly, the reports were inaccurate as to certain counts.Recommendation: The Organization should ensure that the process for recording the number of meals and nights spent is proper and should have a review of reports before they are submitted to the funder.Views of Responsible Officials and Planned Corrective Actions: The Organization is in the process of ensuring that report preparation procedures are clearly understood, and that the final reports are reviewed for accuracy.