Walnut Hills Redevelopment FoundationNon-Profit

Reference Number: 2024-001 Internal control material weakness Program: 21.027 CORONAVIRUS STATE AND LOCAL FISCAL RECOVERY FUNDS Criteria: Proper recording of transactions in accordance with GAAP as agreements are signed and/or when funds are received. Condition: The agreements to receive these grants and loan them out to a specific development project were signed in July and October 2024 for $648,718 and $525,000, respectively. The funds for the July agreement of $648,718 were received by the entity and paid back out to the development project. The $648,718 was recorded to the general ledger twice. It was recorded once when the funds were received and paid out to the development project and a second time when the Organization was closings its books for the fiscal year. When the funds were paid out to the development, the funds were also incorrectly recorded as an expense instead of a loan receivable. Questioned Costs: $648,718 Effect: Expenses and revenue were overstated by $648,718. Recommendation: The Organization should employ financial literate staff who are familiar with GAAP accounting to ensure financial transactions are recorded in accordance with current accounting standards. Also, the Organization should implement a process for a final detailed review of financial data when performing post-closing audit adjustments to ensure proper and complete capture of all transactions. Management’s Response: Management understands the audit findings and the associated risks and will take the appropriate action to hire either staff or vendors with appropriate financial statement review skills and knowledge of GAAP. The Organization will implement a process for a final detailed financial statement review before providing final yearend financial statements to the auditors.

Reference Number: 2024-002 Program: 21.027 CORONAVIRUS STATE AND LOCAL FISCAL RECOVERY FUNDS Criteria: Reports to the Federal Audit Clearinghouse (FAC) are due within 30 days of receiving the auditors’ report or nine months after the end of the fiscal year, whichever is earlier Condition: The December 31, 2023 reporting package dated November 7, 2025 was submitted to the Federal Audit Clearinghouse (FAC) in November 2025. Questioned Costs: N/A Effect: Single audit reports submitted late to the audit clearinghouse could face consequences like follow-up actions from federal funding agencies, potential delays in receiving future federal funding, and may be flagged as non-compliant, potentially leading to increased scrutiny on future. Recommendation: Review total federal funding each year and engage or amend auditor engagement letter as necessary to ensure a single audit is performed if federal funding received during the year exceeds the limit for single audit completion. Management’s Response: Management understands the audit findings and the associated risks and will take the appropriate action to monitor the need for single audits in the future.

Significant Transactions and Financial Review Condition: There are no procedures in place to identify and record significant transactions. The entity level financial statement control in place for the Executive Director and accounting contracted company is not sufficient to detect and/or correct material misstatements of the financial statements including the identification and recording of significant material transactions. Criteria: Significant one time transactions may occur during the year that require specific accounting guidance consideration at the time of the transaction or as part of the year end closing process. Processes in place to review the financial statements at the end of the year are not considered sufficient to detect and/or correct material misstatements to the financial statements. Cause: There are no procedures in place regarding identifying personnel and assigning procedures concerning recording significant transactions as they occur. Adequate year end financial review closing processes to identify that these significant transactions were not established or implemented. Effect: Three significant and material transactions were not recorded to the yearend financial statements. The transactions were identified as unaccounted for by the auditor and subsequently recorded in accordance with recommended audit adjusting entries. Recommendation: Procedures should be implemented to identify and record significant transactions as they occur or by the end of the year. The Executive Director and key board personnel should obtain additional training regarding the proper supervision of financial statement reviews and should implement new procedures accordingly. View of Responsible Official and Planned Corrective Actions: Walnut Hills Redevelopment Foundation agrees with the finding and the recommended procedures will be implemented.

Condition: Three invoices, of thirty-five randomly selected for testing, were paid without supporting documentation being archived correctly. Criteria: It is important to keep these documents because they support the entries in the Organization?s books and prove tax deductibility. Documents should be organized in an orderly fashion and in a safe place. Cause: Procedures are in place for supervisory approval of documentation before payments are authorized but documentation was not filed or archived correctly. Effect: Because of the failure to retain supporting documentation, improper expenditures could be made or expenses paid could be disallowed by funding agencies. Recommendation: The Organization should be diligent in requiring and retaining documentation either in paper or electronic form. Views of Responsible Officials and Planned Corrective Actions: Walnut Hills Redevelopment Foundation agrees with the finding and the recommended procedures have been implemented.