Boys & Girls Club of Huntington County, Inc.

2024-001 Twenty-First Century Community Learning Centers – Assistance Listing No. 84.287 Material Weakness in Internal Control Over Compliance and Noncompliance – Inadequate Payroll Documentation B. Allowable Costs/Cost Principles Criteria: Per 2 CFR § 200.430(g), charges to federal awards for salaries and wages must be based on records that accurately reflect the work performed and are supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. As part of the Organization’s internal controls, time and effort documentation—such as timecards—should be reviewed and approved by the employee to confirm accuracy. Condition and Context: We selected 40 individuals paid in randomly selected pay periods for testing. Our sample was not statistically valid. During our testing of payroll expenses charged to the federal program, we noted that 2 out of 40 of the employee timecards selected for review were not signed or electronically certified by the respective employee. Without employee attestation, the accuracy of the reported time cannot be verified in accordance with Uniform Guidance requirements. This resulted in total questioned costs of $763. Based on an error rate of 3.23%, the likely questioned costs for the full payroll population are projected to be $14,578. Additionally, we identified 10 instances where the number of hours reported on employee timecards did not match the hours recorded in the payroll system and charged to the federal award. The total questioned costs for these discrepancies were $569. Based on an error rate of 2.41%, the likely questioned costs for the full payroll population are projected to be $10,878. This is a repeat finding of 2023-003. Cause and Effect: The lack of employee signatures appears to be due to inconsistent enforcement of timecard approval procedures. The discrepancies in the number of hours charged to the federal award appear to be due to a lack of effective reconciliation procedures between timekeeping and payroll records. As a result of these items noted above, the Organization charged unsubstantiated payroll costs to the federal award. Recommendation: We recommend that management ensure all employee timecards are signed or electronically certified by the employee in a timely manner. We also recommend a process is implemented to reconcile time charge to federal award to underlying payroll report. Internal controls should be reinforced to verify that no payroll costs are charged to federal programs without appropriate documentation and approval. Views of Responsible Officials and Planned Corrective Action: We agree with the recommendation and updated our written policy in 2024. The policy was reviewed by the Finance Committee and approved by the full Board of Directors in December 2024.

2024-002 Twenty-First Century Community Learning Centers – Assistance Listing No. 84.287 Significant Deficiency in Internal Control Over Compliance and Noncompliance – Appropriate Review of Expenditures Claimed B. Allowable Costs/Cost Principles and C. Cash Management Criteria: In accordance with 2 CFR § 200.403(e), expenses must be determined under generally accepted accounting principles (GAAP) to be considered allowable unless otherwise noted in 2 CFR 200. In accordance with 2 CFR § 200.305(b), the draws under reimbursable grants must be limited to the minimum amount needed and drawn down after expenses have incurred. Condition and Context: During our testing of expenses charged to the federal program, we identified one transaction which the Organization prepaid for services to be rendered in 2025. The prepaid expense were charged to the SEFA in 2024 which does not match when they should be recognized as expenses under GAAP. The expenses were claimed for reimbursement prior to being incurred based on GAAP. Total questioned costs for this instance were $8,750. The population was considered the month of December as these were went the prepayments were made. The error rate for the defined population was 93.85% resulting in likely questioned costs of $14,393. Our sample was not statistically valid. Cause and Effect: The issue appears to have resulted from a lack of adequate review procedures to ensure that expenses charged to the federal award align with recognition under GAAP. As a result, the entity claimed expenditures which may be unallowable. Claimed expenditures which may be unallowable and drawn prior to being incurred. Recommendation: We recommend that management strengthen its review procedures over expense cutoff to ensure that expenditures are recognized on the SEFA in alignment with GAAP and are drawn down appropriately under the cost reimbursement method. Additionally, training should be provided to accounting personnel on Uniform Guidance compliance and GAAP requirements related to expense recognition. Views of Responsible Officials and Planned Corrective Action: We agree with the recommendation and plan to have the corrective action implemented by August 2025.

2024-003 Twenty-First Century Community Learning Centers – Assistance Listing No. 84.287 Significant Deficiency in Internal Control Over Compliance and Noncompliance – Appropriate Internal Control Structure Related to Compliance Requirements A. Activities Allowed or Unallowed, B. Allowable Costs/Cost Principles, and C. Cash Management Criteria: Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) requires non-Federal entities receiving Federal funds to have certain written policies, procedures, and standards of conduct (policies) in place. Condition and Context: Throughout the entirety of 2024 the Organization did not have the written policies in place in accordance with §200.302 Financial Management paragraph (b)(6) and (b)(7), which requires written procedures for policies on drawing federal funds and written policies for determining the allowability of costs in accordance with Subpart E of the Uniform Guidance and the terms and conditions of the federal award. This is a repeat finding of 2023-001. Cause and Effect: As the policies referenced above are not written, the Organization is not in compliance with the requirements. In addition, lack of written policies related to federal awards may lead to noncompliance with other federal requirements and the terms and conditions of federal awards. Recommendation: We recommend the policies in accordance with §200.302 Financial Management paragraph (b)(6) and (b)(7) be written by the Organization, approved by the Board of Directors, and included in the permanent files of the Organization. Views of Responsible Officials and Planned Corrective Action: We agree with the recommendation, and updated our policies in accordance with §200.302 Financial Management paragraph (b)(7) in December 2024 and will update our policies in accordance with (b)(6) by August 2025.

2023-001 Twenty-First Century Community Learning Centers – Assistance Listing No. 84.287 Significant Deficiency in Internal Control Over Compliance and Noncompliance – Appropriate Internal Control Structure Related to Compliance Requirements A. Activities Allowed or Unallowed, B. Allowable Costs/Cost Principles, and C. Cash Management Criteria: Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) requires non-Federal entities receiving Federal funds to have certain written policies, procedures, and standards of conduct (policies) in place. Condition and Context: The Organization does not have the written policies in place in accordance with §200.302 Financial Management paragraph (b)(6) and (b)(7), which requires written procedures for determining the allowability of costs in accordance with Subpart E of the Uniform Guidance and the terms and conditions of the federal award. Cause and Effect: As the policies referenced above are not written, the Organization is not in compliance with the requirements. In addition, lack of written policies related to federal awards may lead to noncompliance with other federal requirements and the terms and conditions of federal awards. Recommendation: We recommend the policies in accordance with §200.302 Financial Management paragraph (b)(6) and (b)(7) be written by the Organization, approved by the Board of Directors, and included in the permanent files of BGCH. Views of Responsible Officials and Planned Corrective Action: We agree with the recommendation and plan to have the corrective action implemented by December 31, 2024. Boys & Girls Club of Huntington has always followed the Twenty-First Century Community Learning Centers policy on activities allowed or unallowed, but had not put a written policy in place to recognize this, so will create the written policy and have it approved by the end of 2024.

2023-002 Twenty-First Century Community Learning Centers – Assistance Listing No. 84.287 Significant Deficiency in Internal Control Over Compliance – Appropriate Monitoring of Levels of Federal Funding Criteria: 2 CFR §200.501 Audit Requirements, establishes that a non-Federal entity that expends $750,000 or more during the non-Federal entity's fiscal year in Federal awards must have a single or program-specific audit conducted for that year in accordance with the provisions of the Uniform Guidance. Condition and Context: The Organization did not have procedures in place to timely identify that federal expenditures for the year ended December 31, 2023, exceeded $750,000 and that an audit in accordance with the provisions of Uniform Guidance was required. However, an audit firm was ultimately engaged to perform the applicable audit prior to the deadline for submission. Cause and Effect: The deficiency in internal control over compliance could lead to the failure to comply with audit requirements under the Uniform Guidance. Recommendation: The Organization should implement policies and procedures to periodically monitor federal funding and expenditure levels throughout the year to ensure a level of awareness regarding whether an audit under the Uniform Guidance may be applicable for the current year. In addition, the Organization should prepare a schedule of federal expenditures (SEFA) as part of its year-end closing process, which reconciles to the general ledger. The SEFA and data used to prepare the SEFA should be reviewed by a separate individual within the Organization with knowledge of the related reporting requirements, as outlined in the Uniform Guidance, to ensure its accuracy and completeness. The schedule should be used to determine whether an audit in accordance with the provisions of the Uniform Guidance is required so that an auditor may be engaged to perform a timely audit. Views of Responsible Officials and Planned Corrective Action: We agree with the recommendation and plan to have the corrective action implemented by December 31, 2024. Boys & Girls Club of Huntington Finance Board Subcommitee discusses this item throughout the fiscal year and is in the Board minutes, but has not put a written policy in place. A policy will be created by the Finance Board Subcommittee at the October meeting, presented to the full Board or Directors at the November Board meeting and voted on at the December 2024 Board meeting.

2023-003 Twenty-First Century Community Learning Centers – Assistance Listing No. 84.287 Material Weakness in Internal Control Over Compliance and Noncompliance – A. Activities Allowed or Unallowed and B. Allowable Costs/Cost Principles Criteria: 2 CFR 200.430(i) indicates costs must be based on records that accurately reflect the work performed to be considered allowable. These records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Condition and Context: We selected a sample of 25 instances of time allocated to the grant. We noted 20 instances where time allocated to the grant which lacked formal review of the time allocated. We noted 1 instance of time allocated which lacked adequate documentation resulting in questioned costs of $689. We identified likely questioned costs of $20,367 based on applying an error rate of 4.71% from our sample. Our sample was not statistically valid. Cause and Effect: Policies and procedures were inconsistently applied to personnel costs, resulting in questioned costs. Recommendation: We recommend that the Organization establish a formal documentation process to ensure personnel costs are adequately documented, reviewed, and allocated to the federal award. Views of Responsible Officials and Planned Corrective Action: We agree with the recommendation and plan to have corrective action implemented by December 31, 2024. An updated timesheet policy with the correct wording will be created by the Finance Board Subcommitee at the October meeting, presented to the full Board of Directors at the November Board meeting and voted on at the December 2024 Board meeting.