NEW YORK ASSOCIATION ON INDEPENDENT LIVING, INC.Non-Profit

Supervisory Review of Accounting Function Criteria: Accurate and timely records are required for GAAP and grant reporting. Condition: The Supervisory review of various accounting functions was lacking. We noted the following during the audit: • The trial balance we were given for the audit indicated a profit of $742,000. The nature of the organization makes it highly unlikely that a profit at this level could be achieved, which should have been investigated and resolved. (The final audited profit was $3,000.) • Cash accounts had inaccurate reconciling items requiring a $39,000 adjustment to cash. • The detail of accounts receivable did not agree to the general ledger by $253,000. • The detail of accounts payable includes two debit balances totaling $19,000 which appear incorrect. • The opening balance of opening equity did not agree to the previous years audited balance by $635,000. • The Profit and Loss by Job report profit did not agree to the general ledger by $5,668. Additionally, we noted that RTH Rental Subsidies were $4,106,618 per the Profit and Loss by Job report, but $4,099,230 per the general ledger. • There is a procedure to close the books monthly by a certain date, even if certain subcontractors have not submitted invoices for that time period. While this procedure may be fine for the interim period, at September 30, all subcontractor invoices must be recognized. We made an adjustment of $215,682 for August and September subcontractor invoices that had not been accrued. • There were no procedures to reconcile grant receivables and revenues. Our reconciliations resulted in adjustments (mostly immaterial) to all grant receivable and revenue accounts. • There was a mechanism to record unbilled grant receivables. At September 30, 2024, three of the four accounts used to record unbilled receivables had credit balances, which is not possible. Cause: There was no written procedures to require account reconciliations and the supervisory review of those reconciliations. Effect: In order for the financial statements to be fairly stated, the auditors made many adjustments, some of which were material. Recommendation: We recommend that management develop and implement procedure to perform and review all account reconciliations on a timely basis.

Late filing of Form SF-SAC Data Collection Form The Uniform Guidance requires that Form SF-SAC be filed no later than nine months after year end, in this case by June 30, 2025. Condition: The Form SF-SAC will be filed late for the year ended September 30, 2024. Cause: Turnover of accounting staff. Effect: The Association is not in compliance with Uniform Guidance requirements. Recommendation: Procedures should be developed and implemented to ensure timely filings.

Criteria: The allocation of direct and indirect costs of grants should be reasonable and fair. Condition: The allocation of grant expenses, for which budget approval is pending, were improperly included as administrative expenses and no accrual of grant revenue was recorded. Cause: Allocation system was flawed. Effect: The matching of revenues and expenses to the proper period was not accounted for properly. Recommendation: We recommend that management develop and implement procedures to allocate direct and indirect costs fairly, and to provide a review process for the same.

2021-01 Expense Allocation Criteria: The allocation of direct and indirect costs to grants should be reasonable and fair. Condition: The schedule of functional expenses indicates negative expenses in membership and administration of $28,743 as follows: Subcontractors Transitional Services Professional Fees Communications Travel Postage and Printing$ 14,526 1,800 8,645 2,579 29 1,164 $ 28,743 Cause: The allocation system is flawed. Effect: This results in overcharging grants by at least this amount. (The amount would be increased to the extent membership and administration should have been allocated some amount of these expenses). Recommendation: We recommend that management immediately develop and implement procedures to allocate direct and indirect costs fairly, and to provide a review process for the same.

2021-02 Late Filing of Form SF-SAC Data Collection Form Criteria: The Uniform Guidance requires that Form SF-SAC be filed no later than nine months after year end, in this case by June 30, 2022. Condition: The Form SF-SAC will be filed late for the year ended September 30, 2021. Cause: Turnover in the Director of Finance position and other accounting staff. Effect: The Association is not in compliance with the Uniform Guidance requirements. Recommendation: Procedures should be developed and implemented to ensure timely filings.

Criteria: The Uniform Guidance requires the Association to develop and implement procedures to monitor subrecipients. A significant portion of the Association?s Federal Awards (56%) were passed through to subrecipients. Condition: The Association does have established policies for subrecipients monitoring including 1) obtaining subrecipients annual audits and management letters and reviewing them for pertinent findings and 2) selecting one test month per year for each subrecipient to obtain all support documentation for an invoice and to examine the support documentation. These procedures were not performed during the year. Cause: Turnover in the Director of Finance position and other accounting staff. Effect: There were no questioned costs as a result of this finding. Subrecipients, as a result of grantor requirements, provide extensive documentation with each invoice, making it unlikely that lack subrecipients monitoring would have led to adjustments. Recommendation: We recommend that management immediately implement established procedures for subrecipients monitoring and that those procedures and resulting actions be documented. Client Response: We have requested that all subcontractors submit back-up documentation for MFP August 2021 and financial statements for ?audit?. We have received responses with supporting documentation and are reviewing their responses and documents. Starting in October 2021, we will follow the written policy of selecting one test month for each subcontractor and requesting supporting documentation as well as audited financial statements. The results of these ?audits? will be documented.

Criteria: Generally Accepted Accounting Principles and the Uniform Guidance require that the Association?s records be maintained on an accrual basis, which includes proper cut-off of revenue and expenses. Condition: During the audit we noted approximately $444,000 ($235,000 of which related to a federal program) of expenses that had inaccurately been reported in 2021 instead of 2020. Cause: Oversight Effect: There were no questioned costs as a result of this finding as the additional expenses generated an equal amount of additional revenue and an adjustment was made. Recommendation: Procedures should be developed and implemented to verify that a proper cut-off revenues and expenses is made. Client Response: The Director of Finance will leave the accounting period open for a period to allow for bills to be received and invoices be generated. The Director of Finance will review all bills following period close date to assure proper coding and recording into the accounting system. The Director of Finance will also reconcile all prepaids, accrued, and deferred accounts shown on the balance sheet to assure revenue and expenses are posted into the correct period.

Criteria: The Uniform Guidance requires that Form SF-SAC be filed no later than nine months after year end, in this case by June 30, 2021. Condition: The Form SF-SAC will be filed late for the year ended September 30, 2020. Cause: Turnover in the Director of Finance position and other accounting staff. Effect: The Association is not in compliance with the Uniform Guidance requirements. Recommendation: Procedures should be developed and implemented to ensure timely filings. Client Response: The late completion of the audit and as a result Form SF-SAC was primarily due to a change in fiscal staff. NYAIL is committed to completing the annual audit work in a timely manner that should allow sufficient time to complete all audit requirements and reporting.