FOOTHILL HOUSE OF HOSPITALITY

2024-001 Timely Submission of Single Audit Data Collection Form U.S. Department of Health & Human Services - Assistance listing #93.243 / 93.323 / 93.268 Criteria: Uniform Guidance requires Organizations that expend $750,000 and greater federal funds to conduct a single audit and submit the data collection form to the Federal Audit Clearinghouse the earlier of 30 days after receiving the report or nine months after the end of the fiscal year. Condition: The Organization has experienced significant delays in the preparation and issuance of the May 31, 2024, financial statements and its Single Audit required under the Uniform Guidance. Cause: Due to turnover and vacancy in the accounting function positions and changes in the outsourced accounting firm, the Organization’s audit was delayed and the annual single audit report for fiscal year May 31, 2024, was not submitted within the required timeframe. Effect: The failure to submit single audits within the time frame prescribed by Uniform Guidance causes the Organization to be considered a high-risk auditee. In addition, the Organization is required to adhere to strict reporting deadlines set by regulatory bodies, including federal grantors. Failure to meet these deadlines can result in compliance issues and penalties and ultimately jeopardize the renewal of funding. Questioned costs: None Repeat Finding: Yes Recommendation: The Organization has employed the necessary accounting personnel and contracted with an experienced accounting firm and continues to make progress towards ensuring the accounting functions and audits are completed within nine months of year end. Response: The Organization agrees with the finding. The Organization has made changes in management of the accounting function and has contracted with a new accounting firm for bookkeeping services. The delinquent audits are being completed as efficiently as possible.

2023-001 Timely Submission of Single Audit Data Collection Form Criteria: Uniform Guidance requires Organizations that expend $750,000 and greater of federal funds to conduct a single audit and submit the data collection form to the Federal Audit Clearinghouse the earlier of 30 days after receiving the report or nine months after the end of the fiscal year. Condition: The Organization has experienced significant delays in the preparation and issuance of the May 31, 2023, financial statements and its Single Audit required under the Uniform Guidance. Cause: Due to turnover and vacancy in the accounting function positions and changes in the outsourced accounting firm, the Organization’s audit was delayed and the annual single audit report for fiscal year May 31, 2023, was not submitted within the required timeframe. Effect: The failure to submit single audits within the time frame prescribed by Uniform Guidance causes the Organization to be considered a high-risk auditee. In addition, the Organization is required to adhere to strict reporting deadlines set by regulatory bodies, including federal grantors. Failure to meet these deadlines can result in compliance issues and penalties and ultimately jeopardize the renewal of funding. Questioned costs: None Repeat Finding: No Recommendation: Employ the necessary accounting personnel and contract with an experienced accounting firm to ensure the accounting functions and audit are completed within nine months of year end. Response: The Organization agrees with the finding. The Organization has made changes in management of the accounting function and has contracted with a new accounting firm for bookkeeping services. The delinquent audits are being completed as efficiently as possible.

2022-002 Internal Controls Over Receivables and Grant Billings Condition: Grant billings and payments were not posted correctly during the fiscal year. The error was found during the audit and records had to be reconstructed and corrected. Records for some months were not available for testing. Criteria: Grant billing and subsequent payments should be easily traced from which expenses were being billed, to the invoice and then subsequent payment. If changes are made, those changes should be well documented and adjusted throughout the accounting process. Documentation should be maintained in such a way that it can be retrieved when needed. Cause: There were multiple changes in the accounting staff. This was compounded by the new federal funds that were being administered by a subrecipient that was not able to provide feedback when payments were made for amounts different than the amounts invoiced. Effect/Context: Additional time was required by staff to reconstruct and reconcile a number of the grant billings and subsequent payments. There were some months that were not able to be directly tested and alternative testing had to be developed to obtain sufficient audit evidence for reporting. Significant adjustments were required for grant revenues, receivables and advances. Questioned Costs: None Recommendation: We recommend that management and staff receive training on nonprofit and federal award accounting to enhance their new understanding of what is required to account for and report on grant funds. Internal controls and procedures should be developed, documented and implemented to ensure that grant state and federal funds are properly recorded and when staff changes, there will not be a loss of continuity for reporting. Response: Management has worked with a few outside accounting firms over the last year and believes they have found a competent accounting person to assist with the financial statements and processes. Management is working with the new accounting firm to document the procedures and maintaining records.

2022-003 Internal Controls Over Cost Allocations and Administrative Costs Condition: Invoices and disbursements tested did not always indicate the allocation of costs between programs and grants. There were invoices that did not include the approval to pay and some invoices were not available to be tested. Criteria: Invoices should indicate the approval to pay as well as the appropriate account and allocation of the cost to ensure proper recording of the expense. There are multiple types of funding and a staff person, well versed on what is allowable and not allowable to be charged to grants, should be reviewing and approving the expense and allocation prior to payment. Cause: There are multiple grants that have different requirements. Due to changes in the accounting staff position, there were weaknesses in the processes for the controls over the disbursements and allocation to the grant funds. Effect/Context: It was very difficult to determine if disbursements were appropriately allocated based on the cost allocation plan in place. Disbursements could be paid incorrectly or allocated incorrectly without the proper oversight. Questioned Costs: None Recommendation: We recommend that management and staff receive training on nonprofit and federal award accounting to enhance their new understanding of what is required to account for and report on grant funds. Internal controls and procedures should be developed, documented and implemented to ensure that grant state and federal funds are properly recorded and when staff changes, there will not be a loss of continuity for reporting. Response: Management has worked with a few outside accounting firms over the last year and believes they have found a competent accounting person to assist with the financial statements and processes. Management is working with the new accounting firm to document the procedures and maintaining records.