Goodwill Industries of Greater Cleveland and East Central, Ohio, Inc.

Condition: During our testing of compliance billing of units of parenting skills classes to Stark County Department of Job and Family Services, we noted out of a sample to 40 participant billings, the number of units billed for 3 of the 40 were subtotaled incorrectly. We consider this instance to be a significant deficiency over compliance relating to allowable and unallowable activities. Criteria: Internal controls should be in place to ensure amounts billed to federal agencies are accurate and supported by documentation of a participant’s attendance. Cause: Internal control procedures are not designed effectively to detect and correct errors in billing units of the parenting skills program prior to submission to the grantor. Effect: As a result of the deficiency noted above, audit procedures identified certain over‐billings to the grantor. Context: A sample of 40 billing units totaling $41,221 was selected for testing from a population of total units billed of $231,685. The test found errors in 3 billings totaling $477. Statistical sampling was not used in making sample selections. Recommendation: We recommend management review current internal controls and ensure they are designed effectively over billing of parenting skills units, including review by an employee knowledgeable of compliance requirements.

Condition: During our testing of federal expenditures, we noted fringe benefits were billed to federal grants based on the Organization’s budgeted 2020 fringe rate with no reconciliation to actual fringe benefits paid during 2023. We consider this instance to be a significant deficiency over compliance relating to allowable costs and the cost principles. Criteria: Expenditures charged to the federal grant must follow the cost principles outlined in 2 CFR Part 200, Subpart E including “Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles.” Cause: Internal billing calculation sheets were not updated for actual 2023 fringe rates and management did not perform reconciliation of budgeted rate to actual paid as the rate being used and charged to the federal awards was included in the grant budgets submitted grantors. Effect: As a result of the deficiency noted, federal grants could be charged in excess of actual expenditures necessary and reasonable to run the programs. Context: A sample of 40 payroll expenditures totaling $62,412, including related fringe benefits of $11,274. For all fringe rates reviewed, the budgeted rates from 2020 were used to determine amounts billed to the grant. Statistical sampling was not used in making sample selections. Recommendation: We recommend management review their calculations of fringe benefits on a periodic basis to ensure the amounts being billed to federal grants are reasonable and in line with actual costs incurred.

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