CHICAGO MINORITY SUPPLIER DEVELOPMENT COUNCIL, INC.Non-Profit

Finding 2022-002, Noncompliance with Uniform Guidance’s Report Submission Requirements – Repeat Finding 2021-002, 2020-001 Federal Agency: U.S. Department of Commerce Program Name: MBDA Business Center Assistance Listing #: 11.805 Questioned Costs: None Condition/Context CMSDC did not submit its audit and data collection form to the Federal Audit Clearinghouse within nine months after the end of the audit period. Criteria Uniform Guidance requires that audits must be completed and the data collection form must be submitted within the earlier of 30 calendar days after receipt of the auditor's report(s), or nine months after the end of the audit period. Cause The 2021 audit was completed in March 2024. Due to time constraints, the 2022 audit and data collection form were not submitted in the required timeline. Effect CMSDC did not comply with Uniform Guidance’s requirement for report submission. Recommendation We recommend that management completes the financial close and reporting process three months after end of the fiscal year, to allow for timely completion of audits and submissions of data collection forms. Organization’s Management Response See corrective action plan.

Finding 2022-003 Cash Management – Repeat Finding 2021-003 Federal Agency: U.S. Department of Commerce Program Name: MBDA Business Center Assistance Listing #: 11.805 Questioned Costs: None Condition/Context We tested a sample consisting of six cash drawdowns from a total of twenty-two amounting to $264,870. Our audit procedures indicated that $81,023 were not disbursed in a timely manner. In addition, our SEFA reconciliation procedures revealed that an additional $9,497 had not been disbursed timely by the end of the year. As of December 31, 2022, CMSDC had accumulated $206,746 in grant advances, of which $197,249 pertain to 2021. Criteria Uniform Guidance requires that non-federal entities minimize the time elapsing between the transfer of funds and disbursements by the non-federal entity. Per 2 CFR 200.344, unobligated funds must be promptly refunded to the Federal agency that paid those funds. Cause CMSDC did not reconcile expenditures to cash drawdowns. Effect CMSDC did not comply with Uniform Guidance and closed the year with a grant advance of $206,746. Recommendation We recommend that CMSDC updates it policies and procedures to include procedures for reconciling expenditures to cash drawdowns. In addition, we recommend that CMSDC reconciles expenditures and cash drawdowns on a monthly basis. Unobligated funds should also be refunded to the U.S. Department of Commerce. Organization’s Management Response See corrective action plan.

Finding 2022-004 Procurement, Suspension & Debarment – Repeat Finding 2021-004 Federal Agency: U.S. Department of Commerce Program Name: MBDA Business Center Assistance Listing #: 11.805 Questioned Costs: None Condition/Context CMSDC did not document its history of procurement, or perform suspension or debarment checks. Criteria The Uniform Guidance requires recipients (i.e., CMSDC) to have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards set forth in Title 2, Section 200.318 of the Code of Federal Regulations, including, recipients must maintain records sufficient to detail the history of procurement. Cause As a response to the COVID-19 pandemic, CMSDC had to provide services in a short period of time, as such, procurement procedures were not performed. Effect CMSDC did not comply with the procurement standards for documentation, suspension and debarment set forth in the Uniform Guidance. Recommendation We recommend that CMSDC performs procurement in accordance with Uniform Guidance, updates its Accounting Policies and Procedures Manual for procurement to ensure it aligns to Uniform Guidance, and that CMSDC adheres to such policies. Organization’s Management Response See corrective action plan.

Finding 2022-005 Preparation of Schedule of Expenditures of Federal Awards Condition/Context Our reconciliation of the Schedule of expenditures of Federal awards (“schedule”) to the underlying accounting and other records used in preparing the financial statements revealed that the Coronavirus State and Local Fiscal Recovery Funds Federal award program had been excluded from the schedule. Federal expenditures for this Federal award program totaled $14,798 in 2022. Criteria Uniform Guidance requires that auditees prepare a schedule for the period presented in the financial statements. The schedule must include the total Federal awards expensed during the period represented in the financial statements. Cause CMSDC did not properly reconciled the schedule to the underlying accounting and other records used to prepare the financial statements. Effect The schedule was understated by $14,798. Recommendation We recommend that CMSDC updates its processes for the preparation of the schedule to include more levels of review of the schedule, accounting and other records used to prepare it. Organization’s Management Response See corrective action plan.

Finding 2021-002, 2020-001 Noncompliance with Uniform Guidance's Report Submission Requirements - Repeat Finding Federal Agency: U.S. Department of Commerce Program Name: MBDA Business Center Assistance Listing #: 11.805 Questioned Costs: None Condition/Context CMSDC did not submit its audit and data collection form to the Audit Clearinghouse within nine months after the end of the audit period. Criteria Uniform Guidance requires that audits must be completed and the data collection form must be submitted within the earlier of 30 calendar days after receipt of the auditor's report(s), or nine months after the end of the audit period. Cause In 2021, CMSDC experienced turnover in key personnel. In the third quarter of 2021, CMSDC hired an external CPA firm (comptroller) to conduct the accounting and assist with the financial close and reporting process. The 2020 audit was completed in March 2023. Due to time constraints, the 2021 audit and data collection form were not submitted in the required timeline. Effect CMSDC did not comply with Uniform Guidance's requirement for report submission. Recommendation We recommend that management completes the financial close and reporting process three months after end of the fiscal year, to allow for timely completion of audits and submissions of data collection forms. Organization's Management Response See corrective action plan.

Finding 2021-003 Cash Management Federal Agency: U.S. Department of Commerce Program Name: MBDA Business Center Assistance Listing #: 11.805 Questioned Costs: None Condition/Context We tested a sample of four cash drawdowns out of thirty-seven drawdowns totaling $140,926, our audit procedures revealed $13,600 were not disbursed timely. In addition, our SEFA reconciliation procedures revealed that $197,249 had not been disbursed timely at the end of the fiscal year. Criteria Uniform Guidance requires that non-federal entities minimize the time elapsing between the transfer of funds and disbursements by the non-federal entity. Cause CMSDC did not reconcile expenditures to cash drawdowns. Effect CMSDC did not comply with Uniform Guidance and closed the year with a grant advance of $197,249. Recommendation We recommend that CMSDC updates it policies and procedures to include procedures for reconciling expenditures to cash drawdowns. In addition, we recommend that CMSDC reconciles expenditures and cash drawdowns on a monthly basis. Organization's Management Response See corrective action plan.

Finding 2021-004 Procurement, Suspension & Debarment Federal Agency: U.S. Department of Commerce Program Name: MBDA Business Center Assistance Listing #: 11.805 Questioned Costs: None Condition/Context CMSDC was not able to produce evidence that demonstrates it documented its history of procurement, or that it performed suspension or debarment checks. Criteria The Uniform Guidance requires recipients (i.e., CMSDC) to have and use document procurement procedures, consistent with State, local, and tribal laws and regulations and the standards set forth in Title 2, Section 200.318 of the Code of Federal Regulations, including, recipients must maintain records sufficient to detail the history of procurement. Cause In 2021, CMSDC experienced turnover in key personnel. Current personnel was not able to provide documentation of its history of procurement or evidence that it performed suspension and debarment checks. Effect CMSDC did not comply with the procurement standards for documentation, suspension and debarment set forth in the Uniform Guidance. Recommendation We recommend that CMSDC performs procurement in accordance with Uniform Guidance, updates its Accounting Policies and Procedures Manual for procurement to ensure it aligns to Uniform Guidance, and that CMSDC adheres to such policies. Organization's Management Response See corrective plan.

Uniform Guidance requires that single audits be completed and the reporting package submitted to the Federal Audit Clearinghouse within the earlier of thirty (30) calendar days after receipt of the auditor?s report or nine (9) months after the end of the audit period. The Office of Management and Budget (OMB) issued a memorandum granting extensions to the due date for entities affected by the COVID-19 pandemic. The extended due date was December 31, 2021 for CMSDC. Illinois? Grant Accountability and Transparency Act (GATA) has similar reporting deadlines to Uniform Guidance. CMSDC did not submit its single audit and reporting package to the Federal Audit Clearinghouse and its reporting package and CYEFR to the GATA financial reporting unit prior to the extended deadlines