AREA AGENCY ON AGING OF WESTERN MICHIGAN, INC.Non-Profit

#2023-001 – Significant Deficiency in Internal Controls over Allowable Costs/Improper Payments Compliance Finding: Allowable Costs/Improper Payments Criteria: Costs charged to federal awards must meet certain general criteria as defined in the cost principles contained in 2 CFR Part 200. The basic guidelines include such requirements as: costs be necessary and reasonable for the administration of the program, be allocable under the cost principles, be accorded consistent treatment, be determined in accordance with generally accepted accounting principles, not be included as a cost used to meet matching requirements and be adequately documented, among other requirements. Further criteria are set forth as line items within the categories provided in contract and grant budgets. Condition/Cause: The Agency included a general ledger account in the calculation of cost reimbursement requests that represented the value of donated volunteer time. The value of donated time is recorded as in-kind support and in-kind expense in the general ledger. The value of donated services does not meet the standards of the cost principles. The Agency has documented procedures in place to review costs charged to federal awards; however, the procedures failed to identify this error. Questioned Costs: $26,200 Identification of How Questioned Costs Were Computed: Upon review of expenditures charged to the grants, a questioned cost was identified for costs relating to the donated volunteer time. Costs appear to be confined to one general ledger account that was included in cash request calculations. Of note, a portion of the questioned costs above includes charges to a grant outside of the major program (Federal Assistance Listing #93.052). Effect: An overstatement of expenditures for the grant was reported and submitted for reimbursement. Recommendation: • We recommend that the Agency enhance its procedures to promote future compliance with all cost principles in the regulations, as well as those outlined in contracts and grant agreements. • We recommend that the Agency separate in-kind donation accounts from account groupings that are used for grant billings. Views of Responsible Officials and Planned Corrective Actions: Management of the Agency concurs with the audit finding. The individual preparing the reports this year did not realize that the account was included in the group of accounts used for billings. Additional training will be provided, and management will perform a quality control review over future grant billings to ensure that costs meet the criteria defined by the regulations and included in contracts and grant agreements. The Agency’s CFO will implement a process to reconcile match amounts, on a monthly basis beginning July 2024, to insure compliance.

Aging Cluster ? Assistance Listing #94.044, #93.045, #93.053 #2022-001 ? Significant Deficiency in Internal Controls over Reporting, and Compliance Finding: Grant and Contract Management; Reporting This is a repeat of prior year finding 2021-001 Conditions/Cause ? The Agency has a documented system in place to track the numerous reporting requirements and deadlines. However, the system was not followed. As a result, the Agency was late in filing required reports. The third of the quarterly CARES Act Financial Status Reports for the Aging Cluster was submitted late. The report was due on July 15, 2022 and was submitted August 3, 2022. Criteria ? Reports are required to be filed by the deadlines provided in the grant agreements. Controls surrounding reporting responsibilities should follow written policies that establish procedures for periodic monitoring, verification and timely reporting. A tracking system should be in place to promote compliance with reporting deadlines. Context/Effect ? The CARES FFCRA report for the period ended June 30, 2022, was submitted on August 3, 2022. The report is due 15 days after the period end. The funding agency reached out to management after the due date to inquire of the status. No extension was requested until after the due date. Recommendations: ? We recommend the Agency utilizes its documented tracking system for reports according to the deadlines provided by the funding entity. In the event an extension is necessary, that extension should be requested prior to the due date and should be documented. SCHEDULE OF FINDINGS AND QUESTIONED COSTS (CONTINUED) Year Ended September 30, 2022 Views of Responsible Officials and Planned Corrective Actions Management concurs with the observations of the auditors. Reports are to be reviewed and submitted prior to each deadline. The Agency has a tracking system to support compliance with reporting deadlines.

Aging Cluster ? Assistance Listing #94.044, #93.045, #93.053 #2021-001 ? Significant Deficiency in Internal Controls over Reporting, and Compliance Finding: Grant and Contract Management; Reporting Conditions/Cause Knowledge related to certain grant reporting requirements and deadlines was limited to one person within the Agency, and there was not a documented system in place to track the numerous reporting requirements and deadlines. As a result, the Agency was late in filing required reports. The second of the quarterly CARES Act Financial Status Reports for the Aging Cluster was submitted late. The report was due on April 15, 2021 and was submitted April 21, 2021.The fourth of the quarterly FSR reports for the Aging Cluster were also submitted late despite being provided multiple extensions. Criteria Reports are required to be filed by the deadlines provided in the grant agreements. Controls surrounding reporting responsibilities should follow written policies that establish procedures for periodic monitoring, verification and timely reporting. A tracking system should be in place to promote compliance with reporting deadlines. Context/Effect The CARES FFCRA report for the period ended March 31, 2021, was submitted on April 21, 2021. The reports are due 15 days after the period end. The funding agency reached out to management after the due date to inquire of the status. No extension was requested. The 4th quarter and final FSR report for the period ended September 30, 2021, was submitted on January 11, 2022. The final reports are typically due December 15. Management requested an extension and one was granted until December 31, 2021. Extensions were requested after this date and granted, but the report was still submitted after the extended deadline. Recommendations: We recommend implementation of a documented tracking system for reports according to the deadlines provided by the funding entity. In the event an extension is necessary, that extension should be requested prior to the due date and should be documented. We also recommend that multiple people be involved in the reporting process, so that reports can still be filed timely in the event of unexpected absences or turnover in staff. Views of Responsible Officials and Planned Corrective Actions Management concurs with the observations of the auditors. Reports are to be reviewed and submitted prior to each deadline. The Agency will work to develop a tracking system to support compliance with reporting deadlines.