EDCO COLLABORATIVELocal Government

Condition- The financial system allowed several transactions within the audited period to be dated after the fiscal year end that misstated various accounts. Various accounts were not maintained in accordance with generally accepted accounting principles (GAAP) and bank accounts could not be properly reconciled. As a result, numerous adjustments and reclassifications to the financial statements occurred after the fiscal year end. Criteria- Accurate and timely financial reporting and reconciliations are required to enable management and Board of Directors to make timely and effective decisions. Accounting standards also require financial statements to be prepared in accordance with GAAP. Cause- Lack of proper oversight and reconciliations over the accounting functions, and transitions of personnel with experience who performed critical functions in the financial management system. Potential effect- The Collaborative was not able to produce complete and accurate financial statements or reports for management and the Board of Directors in order to make timely decisions relating to the operations of the Collaborative. Recommendation- Reconciliations and management review of financial activity should be performed on a monthly basis to ensure proper functions and reporting are being performed. Management's response - In December 2020 the EDCO accountant went on a leave of absence and never returned. Once the EDCO Board voted for dissolution, the decision was made not to replace the position. EDCO used a number of individuals within the organization to assist in managing the EDCO finances. All transactions were logged in the accounting systems and all efforts were made to ensure the transactions were performed in the manner the accountant had designed. This proved to be very difficult and resulted in the findings above. The additional complications with reconciliations came with the closing of EDCO offices and programs. EDCO lost a month of system access that delayed reconciliations of fiscal year 2021 and 2022 transactions. For fiscal year 2022, EDCO moved to QuickBooks to simplify the systems and reduce costs. The intention was to keep the fiscal year 2021 and 2022 transactions separate to provide additional clarity. Questioned Costs - None identified related to the major Federal Program. Context - This finding is relevant to the Collaborative as a whole and is not specific to this Federal Program. No questioned costs were identified as a result of this finding but the item could apply to Federal awards as a whole.

Condition - The Collaborative had several documentation issues related to its payable and disbursement function and personnel files. Specific issues included names of former employees on credit card accounts and purchase orders, missing signatures on warrants and missing or incomplete personnel files. Criteria - All transactions are required to be documented completely, especially pertaining to use of funds and proper approval. Cause - Former employee names were included on credit card statements and purchase orders. In addition several warrants at the end of the fiscal year were not signed by board members and certain personnel files could not be obtained. Potential effect - Purchases or payroll transactions that are not budgeted or approved could be made inappropriately. Recommendation - Management should ensure that all transactions receive approval from an appropriate level of supervisor/manager and names of former employees are not utilized on credit cards or purchase orders. Warrants should be signed in a timely manner by members of the board of directors. All personnel files should be maintained in a centralized location complete and intact. Management's response - All transactions were reviewed within the business office and with the executive director. The departure of the IT department prevented us from making updates to the accounting system signatures on purchase orders. All purchase orders were reviewed and approved. General fund purchases went through the executive director for preapproval. All grants and contracts were approved to spend within their budgets and all transactions were reviewed. Several attempts were made to have the credit cards updated and closed out without impacting operations and student services. This took longer than anticipated but was accomplished. Because the Board was not meeting in person due to Covid, signatures on warrants took longer to obtain. All warrants were reviewed within the business office and by the Treasurer. We are continuing to pursue signatures in person and will close all open warrants prior to EDCO?s closure. Questioned Costs - None identified related to the major Federal Programs. Context - This finding is relevant to the Collaborative as a whole and is not specific to the Federal programs. No questioned costs were identified as a result of this finding but the item could apply to Federal awards as a whole.

Condition - The Collaborative entered into certain credit card transactions during fiscal 2020 that did not have supporting documentation. Criteria - All transactions are required to be documented, especially pertaining to use of funds and proper approval. Cause - Several credit card transactions did not have supporting documentation for the charges. Potential effect - Credit cards could be used inappropriately for expenditures that are not budgeted or approved. Recommendation - Management should ensure that all credit card transactions receive approval from an appropriate level of supervisor/manager and should receive receipts or other documentation prior to paying the credit card bill. Management's response - Management agrees with the finding. EDCO Collaborative had several changes in the business office staff in fiscal year 2020. This created issues when tracking down receipts and documentation for credit card transactions. In fiscal year 2021 and going forward all transactions on a credit card will require a pre-approved purchase order. These purchase orders go through levels of approval by supervisors, administration and the business office. Documentation and/or receipts for credit card transactions will be provided to the business office and this documentation will be filed with the warrants. The business office and Treasurer will review all credit card statements, transactions and documentation as part of the warrant review and filing. In addition, the EDCO credit cards are being closed and consolidated to one credit card that will be housed in the central office and used only for pre-approved expense transactions. Questioned Costs - None identified related to the major Federal Program. Context - This finding is relevant to the Collaborative as a whole and is not specific to this Federal Program. No questioned costs were identified as a result of this finding but the item could apply to Federal awards as a whole.

Condition - The Collaborative entered into an agreement with a construction company to build out certain facilities and relevant procurement or bid documentation could not be produced. Criteria - Under Massachusetts and Federal procurement laws, all procurement transactions at certain dollar thresholds are required to go to bid and are required to be documented. Cause - A contract signed by both parties was produced indicating the project was entered into under state procurement laws. However, the original documentation of the procurement and bid process could not be produced during the audit. Potential effect - Violation of Federal or state regulations related to procurement and improper bid/procurement processes. Recommendation - Management should review its procurement policies and document all procurements. Procurements above requisite dollar thresholds should be documented appropriately. The Executive Director should sign off approval of such procurements and should ensure that the procurement was performed within the board's approval and budget process. Management's response - Management agrees with this finding. Procurement policies and procedures were inconsistent or non-existent, resulting in ineffective procurement documentation. In fiscal year 2021, procurement is reviewed by the business office and administration to ensure compliance with state and federal laws. In addition, all contracts, quotes and bids will be documented and filed appropriately with the business office. The business office and administration will continue to review procedures to ensure they are appropriate and will provide training to staff on procurement practices. The current contracted business service provider is a Massachusetts Certified Public Purchasing Official and is knowledgeable in the procurement requirements. Questioned Costs - None identified related to the major Federal Program. Context - This finding is relevant to the Collaborative as a whole and is not specific to this Federal Program. No questioned costs were identified as a result of this finding but the item could apply to Federal awards as a whole.