NATIONAL DISABILITY INSTITUTE

Finding 2022-001: Subrecipient Risk Assessment Federal Program: ALN 59.077 Criteria or Specific Requirement: As stated in 2 CFR 200.331 part (b), all pass-through entities must evaluate each subrecipient?s risk of noncompliance with Federal statutes, regulations, and the terms and conditions of the subaward for purposes of determining the appropriate subrecipient monitoring procedures to prescribe to each individual subrecipient. Condition: The Organization did not document the pre-award risk assessment process on its subrecipients that detailed monitoring procedures based on the assessed level of risk. While we noted that the Institute performed an internal pre-award review of all sub-awardees UG audits, and the institute performed monitoring procedures, those procedures were not linked to the initial risk assessment as detailed in a formal policy. Cause: The Organization does not have a formal subaward policy that details the risk assessment process for potential subrecipients. Effect or Potential Effect: The Organization could inadvertently engage in relationships with subrecipients of higher risk without the appropriate level of oversight (i.e. monitoring) to ensure subrecipients are expending funds in accordance with the provisions and terms of the subaward. Questioned Costs: None noted. Context: The Organization did not document the pre-award risk assessment procedures. Our audit work in this area consisted of substantive testwork over a sample of subrecipient expenditures that were selected based on a defined threshold. We consider our sample to be representative of the populations, and thus, is a statistically valid sample. The issue is deemed to be systemic. Identification as a Repeat Finding: Not applicable. Recommendation: We recommend the Organization establish subaward policy and ensure the risk assessment procedures over its subrecipients are performed and documented prior to engagement. Based on these risk assessments, the Organization should assign a risk level to each, and then determine the monitoring tools to apply based on these risk levels.

Finding 2021-001: Lack of Reconciliation of Schedule of Expenditures of Federal Awards to Revenue from Federal Sources Information on the Federal Program: All Federal Programs Criteria or Specific Requirement: As stated in 2 CFR 200.510 part (b), the auditee (i.e. the Institute) must prepare a schedule of expenditures of Federal awards (SEFA) for the period covered by the auditee?s financial statements, which must include the total Federal awards expended as well as other minimum data requirements (as detailed within this section of 2 CFR 200). Furthermore, 2 CFR 200.62 part (a) requires that the auditee maintain internal control over compliance requirements for Federal awards to ensure that transactions are properly recorded and accounted for in order to permit the preparation of reliable financial statements and Federal reports. The above includes the requirement for auditees to appropriately reconcile total federal expenditures per the SEFA to revenue earned from Federal sources. Condition: During our audit, we noted that a Federal award for $60,000 and corresponding expenditures of approximately $42,000 during the year ended December 31, 2021, had not been included on the SEFA. Cause: The Institute did not have appropriate internal controls in place to ensure the accurate identification of Federal funds passed through non-Federal entities. Effect or Potential Effect: Without timely and accurate reconciliation of its SEFA, there exists the potential for undetected errors or misreporting of expenditures to the U.S. Government, or the revenue recorded from Federal sources. Questioned Costs: None noted. Context: Reconciliation of the SEFA was completed on a quarterly basis; however, the Institute did not recognize Federal funding passed through a non-Federal entity as a Federal award required to be included in the SEFA. Identification as a Repeat Finding: 2020-001. Recommendation: It is our recommendation that management enhance its internal control over the preparation of the SEFA and ensure more timely completion of the schedule, ideally on a monthly or quarterly basis (at minimum). This procedure will also ensure that internal financial statements are accurate and reliable, as well as financial reports submitted to the U.S. Government. Anticipated Completion Date: August 31, 2022. Responsible Official: Gail Watson, Director of Finance

Finding 2020-001: Lack of Reconciliation of Schedule of Expenditures of Federal Awards to Revenue from Federal Sources Criteria or Specific Requirement: As stated in 2 CFR 200.510 part (b), the auditee (i.e. the Institute) must prepare a schedule of expenditures of Federal awards (SEFA) for the period covered by the auditee?s financial statements, which must include the total Federal awards expended as well as other minimum data requirements (as detailed within this section of 2 CFR 200). Furthermore, 2 CFR 200.62 part (a) requires that the auditee maintain internal control over compliance requirements for Federal awards to ensure that transactions are properly recorded and accounted for in order to permit the preparation of reliable financial statements and Federal reports. The above includes the requirement for auditees to appropriately reconcile total federal expenditures per the SEFA to revenue earned from Federal sources. Condition: During our audit, we noted a variance of approximately $32,000 between total Federal grant expenditures per the SEFA, and Federal revenue recorded in the general ledger. Cause: The Institute did not have appropriate internal controls in place to ensure the timely and accurate reconciliation of all expenditures under Federal grants to the corresponding revenue recorded. Effect or Potential Effect: Without timely and accurate reconciliation of its SEFA, there exists the potential for undetected errors or misreporting of expenditures to the U.S. Government, or the revenue recorded from Federal sources. Questioned Costs: None noted. Context: Reconciliation of the SEFA was not prepared on a timely basis. Identification as a Repeat Finding: Not applicable. Recommendation: It is our recommendation that management enhance its internal control over the preparation of the SEFA and ensure more timely completion of the schedule, ideally on a monthly or quarterly basis (at minimum). This procedure will also ensure that internal financial statements are accurate and reliable, as well as financial reports submitted to the U.S. Government.