ST. VINCENT FAMILY CENTERS

Finding 2021-001 SEFA Internal Control ? Significant Deficiency Criteria: The Organization must establish and maintain effective internal control over federal award programs that provides reasonable assurance that the Organization is managing its federal programs in accordance with required federal regulations, statutes, contract terms and conditions. Management is responsible for determining applicable program requirements and establishing procedures to assure program costs and activities are reported properly. Condition: The Organization initially included loss revenues as a basis for federal award expenditure. One of the programs included on the Statement of Federal Award Expenditures was through CARES Act funding which did not provide revenue loss as a basis for recovery. The funding passed through to the Organization through the CARES Act allowed organization to pay for expenses related to costs incurred as a result of reacting to the coronavirus impact to operations. In its initial schedule of federal expenditures the Organization included revenue loss as the basis for the expenditure. Cause: The Organization did not have in place internal control procedures to properly understand CARES Act program requirements as it related to allowable activities and allowable costs for the program, which were newly issued and revised as funding was distributed. Effect: The Organization internal controls initially allowed unallowable activities and costs to be included in the schedule of federal awards. Questioned Costs: None Recommendation: We recommend the Organization implement procedures to ensure proper understanding of funding requirements are implemented. The procedures implemented should ensure that a clear understanding of program allowable activities and costs are reviewed and adequate safeguards and controls are implemented to assure program reporting compliance.

Management response: On July 27, 2020, OBM gave a training on the relief funding. The training was completely on reporting the agency?s lost revenues in the application process. The conclusion that the CFO reached was that the funds could be used to replace lost revenues. The auditors noted that the OBM funds came from the CARES Act, which required all funding to be justified using expenditures. The American Rescue Act funding that was introduced a few months later allowed for loss revenue as a justification. Many of the funding opportunities to support agencies during the pandemic moved quickly with insufficient documentation or instructions. Confusing the regulations for different pandemic funding was a risk our agency tried to avoid but proved difficult.