CHAPIN HALL CENTER FOR CHILDREN

2020-001 Internal Control Over Compliance and Compliance with Reporting (Preparation of theSchedule of Expenditures of Federal Awards)Identification of the federal program:Research and Development ClusterCriteria: CFR Section ?200.510(b) states in part: ?The auditee must also prepare a schedule of expenditures of federal awards for the period covered by the auditee?s financial statements, which must include the total federal awards expended as determined in accordance with CFR Section?200.502 Basis for determining federal awards expended.? The schedule must provide total federal awards expended for each individual federal program.In accordance with ?200.302 Financial Management, a non-federal entity?s financial management systems, including records documenting compliance with federal statutes, regulations, and the terms and conditions of the federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions; and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the federal statutes, regulations, and the terms and conditions of the federal award. The financial management system of each non-federal entity must provide for the following:(1) Identification, in its accounts, of all federal awards received and expended and the federal programs under which they were received.(2) Accurate, current, and complete disclosure of the financial results of each federal award or program in accordance with the reporting requirements set forth in ?200.327, Financial Reporting, and ?200.328, Monitoring and Reporting Program Performance.(3) Records that identify adequately the source and application of funds for federally funded activities.(4) Effective control over, and accountability for, all funds, property, and other assets.Condition: The Organization receives multiple grants related to the R&D Cluster for which a CFDA number is not available. During management?s preparation of the schedule of expenditures of federal awards (SEFA), the accounting and finance team confirms the CFDA number for awards directly with the funder, and if the CFDA number is unavailable, management follows the reporting format prescribed by the Federal Audit Clearinghouse (FAC).During our major program grant population completeness and accuracy procedures, we identified that one of the programs listed on the SEFA was confirmed as a sub-contract rather than a sub- award by the funding agency. Upon examination of other grant agreements listed on the SEFA, we requested management to ascertain if other awards presented on the SEFA were sub-awards or sub- contracts. Management obtained confirmations from the funder for all awards initially reported on the SEFA and noted that they had incorrectly identified several sub-contracts as sub-awards. As such, management excluded the CFDA numbers from the SEFA after determining and confirming with the funding agency/pass-through agency the nature of the contract and that those contracts were, in fact, sub-contracts and not sub-awards. These adjustments reduced total federal expenditures by $1,588,882 and are now correctly reflected in the final SEFA as presented.Questioned Costs: There are no questioned costs related to the items described above.Context: The conditions outlined above are based on our testing of Chapin Hall's Research and Development Cluster and our overall testing of the accuracy of the SEFA and our testing of certain expenses that were considered to be individually significant. The nature of these findings is detailed in the condition section above.Cause: The agency agreements provided to Chapin Hall were not clearly stated that the agreement was a sub-contract and not a sub-award. As such, the SEFA was not accurately presented.Effect: The SEFA provided for the audit was inaccurate for the reasons outlined in the condition section above. Failure to accurately report expenditures and programs on the SEFA result in changes to the presentation of the SEFA.Repeat Finding: This is not a repeat finding.Recommendation: We recommend management require agreements to explicitly state whether the grant is a sub-award or a sub-contract. This will ensure that federal funds are reported accurately on the SEFA and that programs are reported under the correct CFDA number.Views of Responsible Officials: Chapin Hall management agrees with the finding and recommendations set forth within and has developed a corrective action plan to address the instances of noncompliance identified and lapses in prescribed internal controls. See management?s corrective action plan filed separately.

2020-002 Internal Control Over Compliance and Compliance with Procurement (ProcurementPolicy)Identification of the federal program:Research and Development ClusterCriteria: In accordance with ?200.318(a), General Procurement Standards, the non-federal entity must use its own documented procurement procedures which reflect applicable State, local, and tribal laws and regulations, provided that the procurements conform to applicable federal law and the standards identified in General Procurement Standards. Additionally, ?200.318(i) states that the non-federal entity must maintain records sufficient to detail the history of the procurement. These records are required to include, but are not necessarily limited to the following: rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. All procurement transactions must be conducted in a manner providing full and open competition consistent in accordance with ?200.319 and must be performed using the appropriate procurement method as outlined in ?200.320.Condition: Chapin Hall did not have appropriately detailed policies as defined by the U.S. Code of Federal Regulations.Questioned Costs: There were no questioned costs identified.Context: We reviewed Chapin Hall's procurement policies for these programs in their entirety and noted that they were not updated to the applicable policies prescribed by the U.S. Code of FederalRegulations, Sections 200.319 and 200.213 as of June 30, 2020. These conditions were identified through our audit process and communicated to management as identified.Effect: Failure to adhere to federal procurement policies could result in findings upon review by the funding agency and possible disallowance of future funding.Cause: Chapin Hall did not detail in its internal procurement policies the impact of competition standards to adhere to federal policies.Recommendation: Chapin Hall should modify its current procurement policies to adhere to the procurement policies as set forth in the U.S. Code of Federal Regulations.Views of Responsible Officials: Management agrees with the finding. See management?s corrective action plan filed separately.

2020-003 Internal Control Over Compliance and Compliance with Procurement (Procurement -Full and Open Competition)Identification of the federal program:Research and Development ClusterCriteria: Chapin Hall must establish and maintain effective internal control over federal awards that provides reasonable assurance that the Organization is managing the federal awards in compliance with federal statutes, regulations and terms and conditions of the federal award. Management is responsible for establishing and maintaining a system of internal control that should include controls over its procurement process.In addition, Section 200.318-326 of the CFR states that all procurement transactions must be conducted in a manner providing full and open competition. A non-federal entity must have written policies and procedures on procurement, which should define required approvals for purchases and thresholds for each procurement method defined under Section 200-320.Moreover, Section 200.318(i) of the CFR states that a non-federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Section 200.333 of the CFR states that financial records, supporting documents and all other non-federal entity records pertinent to a federal award must be retained for a period of three years from the date of submission of the final expenditure report.It also states that a non-federal entity must award contracts only to responsible contractors possessing the ability to perform successfully under the terms and conditions of a proposed procurement. Consideration will be given to such matters as contractor integrity, compliance with public policy, record of past performance, and financial and technical resources. Award recipients must not utilize any vendor which is suspended or debarred or is otherwise excluded from the central contactor registry.Condition: As noted under finding 2020-002, the Organization did not have appropriated detailed policies as defined by the CFR. As such, the Organization followed the policies as defined by the CFR which states that purchases of more than $10,000 require a formal Request for Quote (RFQ) tobe issued to at least two potential vendors. The RFQ should detail information including, but not limited to, the following: anticipated level of effort, quantity, description, delivery terms, special conditions, drawings, specifications, and vendor response deadlines. Records and justification for a purchase should be attached to the purchase request submitted to the buyer?s manager and sent to the Finance Department. Records of all requests to potential vendors, including vendor questions and bid responses, and purchase justifications will be retained by the Finance Department for the applicable records retention period or the period required under the terms of the applicable contract, but in no case less than five years.During our testing of 36 items (from four vendors), we noted that vendor solicitation requirements, in accordance with the policies defined by the CFR, was not conducted for one of 36 transactions tested, totaling $44,206.Questioned Costs: $44,206Context: See the condition section for the sample size relative to the population. This is a condition identified per review of the Organization?s compliance with specified requirements using a statistically valid sample.Effect: Failure to obtain vendor solicitation for procurements above small purchase acquisition threshold is noncompliance with federal regulations.Cause: As noted at finding 2020-002, Chapin Hall did not have appropriately detailed policies as defined by the CFR. As such, management followed the guidelines outlined in the CFR for procurement. The item tested was a yearly subscription that the Organization has renewed for several years and did not perform the bidding process for fiscal year 2020.Recommendation: Chapin Hall should ensure that all procurement items adhere to the procurement policy outlined by the Organization, as noted at finding 2020-002.Views of Responsible Officials: Management agrees with the finding. See management?s corrective action plan filed separately.