Safenet, Inc.

FINDING 2022-005: CRIME VICTIM ASSISTANCE (16.575) ? CASH MANAGEMENT ? REIMBURSEMENT REQUESTS AND SUPPORTING DOCUMENTATION FINDING TYPE: Federal Awards ? Material Weakness/Noncompliance CRITERIA: 2 CFR section 200.305(b)(3) states that a non-Federal entity must incur costs prior to the date of the reimbursement request when the reimbursement method is used. Supporting documentation must be maintained. CONDITION: The auditor noted, while testing a sample of reimbursement requests for Crime Victim Assistance for compliance and adherence to internal controls, that several reimbursement requests in excess of materiality were requested in advance of any expenses being incurred. The auditor noted, in particular, several large final drawdowns for a grant with a period ending on 9/30/21. The amounts requested were based off budgeted and estimated amounts. It was difficult for the auditor to determine that eligible costs were incurred before the close of the grant period. CAUSE: Turnover at the accounting position and override of controls lead to accidental and non-compliant reimbursement requests. EFFECT: Safenet, Inc. was not in compliance with cash management compliance requirements and internal controls were not functioning in a manner that would ensure proper reimbursement requests. Excess funds could have potentially been drawn and not expended. QUESTIONED COST: Undetermined RECOMMENDATION: Management should ensure internal controls are designed in a manner that ensures reimbursement requests are based off expenses that have been incurred prior to the date of the reimbursement request. Requests should be reviewed by someone other than the preparer and should agree to supporting documentation. VIEWS OF RESPONSIBLE OFFICIALS: Management agrees with the finding.

FINDING 2022-006: CRIME VICTIM ASSISTANCE (16.575) ? ALLOWABLE COSTS AND COST PRINCIPLES ? PAYROLL CHARGES AND COST ALLOCATION FINDING TYPE: Federal Awards ? Material Weakness/Noncompliance CRITERIA: 2 CFR Section 200.430 states charges to Federal awards for wages and salaries must be based off records that support actual work performed. For employees that work on more than one Federal award, records must support the distribution. Time and effort reporting must be supported by a system of internal controls which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. The Organization must, also, have an overall cost allocation plan that is in adherence with the Uniform Guidance. CONDITION: The auditor noted, while testing a sample of reimbursement requests for Crime Victim Assistance for compliance and adherence to internal controls, that several reimbursement requests lacked contemporaneous backup for wages charged. It was extremely difficult for the auditor to determine how wages were being distributed between each program in sufficient detail. Amounts appeared to have been charged and based off budgeted and estimated amounts in some cases. These amounts were not promptly reconciled for accuracy until well after reimbursement and close of the grant period. The auditor also noted through discussion and observation that the Organization did not have a well-defined and compliant cost allocation plan. CAUSE: Turnover at the accounting position and insufficient internal controls led to accidental and non-compliant reimbursement requests and missing documentation. Management?s cost allocation plan was not adequate to support charges to federal awards. EFFECT: Safenet, Inc. was not in compliance with payroll documentation compliance requirements. Internal controls were not functioning or designed in a manner that would ensure payroll charges to federal awards were accurate and based off actual time spent on each award. Improper amounts could have been charged to federal awards. Wages could have been requested for reimbursement from periods after grants were closed. A non-compliant cost allocation plan could lead to charges being used for multiple awards and inequitable distribution between awards. QUESTIONED COST: Undetermined RECOMMENDATION: Management should ensure internal controls are designed in a manner that charges wages and salaries to Federal awards based off actual time worked for each grant. They should also ensure supporting documentation is maintained that agrees to the reimbursement request and the underlying accounting records. Management must ensure that a sound cost allocation plan is in place that outlines the methods and procedures that Safenet, Inc. will use to allocate costs to various grants. It will ensure shared (indirect) costs are equitably charged to each of its grants. VIEWS OF RESPONSIBLE OFFICIALS: Management agrees with the finding.

Findings and Questioned Costs for Major Federal Award Programs Audit U.S. Department of the Treasury 2021-002 Coronavirus Relief Fund CFDA No 21.019? Year Ended June 30, 2021 ? Significant Deficiency Condition: Procurement policies were not followed for several purchases over the $10,000 micro-purchase threshold. Quotes were not received from multiple vendors. Criteria: Per ? 200.320 of the Uniform Guidance, ??price or rate quotations must be obtained from an adequate number of qualified sources.? Cause: Management did not follow the Organization?s financial policies. The policy correctly states informal quotes must be obtained for purchases over $10,000 along with Board approval. Effect: The Organization did not comply with procurement requirements. Context: The auditor noted several technology purchases, both individually and in the aggregate, that exceeded the $10,000 micro-purchase threshold. Upon further examination, multiple quotes were not obtained for the purchases. Recommendation: Management must review and follow financial policies in regards to procurement. Management must also maintain informal documentation of quotes received. Planned Corrective Action: Management agrees that the policies need to be reviewed and implemented in an effective manner. Management will obtain informal quotes for purchases exceeding $10,000 and will also submit for Board approval. Management is currently working on implementation.