The Skillsource Group, Inc.

Finding: 2024-001: Improper Preparation of the Schedule of Expenditures of Federal Awards Information on the Federal Program: Assistance Listing Numbers 21.027 and 21.019 Criteria or Specific Requirement: According to 2 CFR 200.303, non-Federal entities should establish and maintain effective internal controls over compliance and financial management and reporting. These internal controls should be in compliance with guidance in the “Internal Control Integrated Framework,” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). These controls should include timely reconciliation of Federal grant expenditures to ensure that the Schedule of Expenditures of Federal Awards (SEFA) is accurate and complete. Condition: During our audit procedures over the SEFA, we noticed that one Federal award (ALN 21.027) was not included on the SEFA when it should have been included. In addition, one award was improperly labeled as being a part of ALN 21.027, when it was in fact determined to be included in ALN 21.019. We also discovered another award was included in the SEFA, when it was determined that the award was not Federally funded and should have been removed from the SEFA. Cause: The identified condition was attributable to lack of sufficient internal control and review procedures in place over the SEFA. The award not included on the SEFA when it should have been was tracked within the accounting system as a Federal award, but was not properly recorded on the SEFA. The award tracked with the incorrect ALN and the award that was recorded on the SEFA when it should have been removed were both caused by error. Effect or Potential Effect: Significant time was required to receive an appropriately completed and accurate SEFA from management during the audit. Failure to provide an accurate SEFA during the audit could result in an incorrect major program determination and incomplete testing over the SEFA. Questioned Costs: N/A - Management ultimately corrected the errors identified during preparation of the SEFA. Context: We test the accuracy of the SEFA information by tracing to the grant agreements. Identification as a Repeat Finding: Not a repeat finding. Recommendation: We recommend that management design and implement a procedure to ensure that the SEFA, once prepared by the accounting team, is reviewed and approved by the Director of Operations to ensure that all Federal awards are properly included and tracked on the SEFA.

Views of Responsible Officials: Upon review, the issues and errors stemmed from misclassification and oversight in the award review and categorization process, primarily due to the onboarding of a new accounting team for the organization. Moreover, the SEFA was not presented for review by agency management before the presentation to the auditors. To correct for the future, management will implement the following corrective actions: Enhance and Expand Review Process for SEFA Preparation  Establish a checklist and review protocol to ensure that all funding awards are properly identified and classified before inclusion in the SEFA.  Conduct a secondary review of the SEFA by the Senior Vice President for Operations and the President and CEO before submission to the auditors. Cross-Referencing with Award Documentation  Implement a mandatory cross-referencing procedure to match each award’s Assistance Listing Number (ALN) with award documentation.  Require verification of funding sources, ensuring that only Federally funded awards are included on the SEFA.