The Resource Connection of Amador and Calaveras Counties, Inc.

Finding 2023-001 Repeat Finding: No Program Name: Community Development Financial Institutions Grants Federal Agency: U.S. Department of the Treasury Questioned Costs: N/A Type of finding: Significant deficiency in internal controls Compliance Requirement: Reporting Condition: Northwest Side Community Development Corporation did not accurately report certain information on its Transaction Level Report (TLR) for the year ended December 31, 2022 and Uses of Award reports for the year ended December 31, 2023. Criteria: Northwest Side Community Development Corporation is required to file are required to file various reports as part of the grant requirements. Cause: Certain information was not properly gathered and reported on the the TLR and Uses of Awards reports. Effect: The reports needed to be amended in order to properly report certain items on the TLR and Uses of Awards reports. Recommendation: We recommend that precedures are put in place so information reported on the various reports is reviewed and support is retained prior to submission of the reports. View of Responsible Officials: Management has committed to a corrective action plan to ensure information reported is accurate.

Fiscal Internal Controls Condition: IMPACT Community Action Partnership, Inc. (IMPACT) did not reconcile cash, grant revenue, accounts receivable, or refundable advances during fiscal year 2023. Criteria or Specific Requirement: An accounting system should provide timely and accurate information for management. The reconciliation of account balances is an integral internal control activity to determine that stated account balances are accurate and fairly reported. Organization management and accounting personnel should reconcile general ledger accounts to subsidiary ledgers and other supporting documents in a timely and effective manner. Uniform Guidance 200.302(b)(4) states each non-federal entity must provide for “effective control over, and accountability for, all funds, property, and other assets.” Effect: Without performing adequate account reconciliations, information provided to management is inaccurate. Also, the probability that fraud or material errors will occur and go undetected generally increases. Cause: Rapid growth of new funding without a corresponding increase in fiscal personnel, combined with the late issuance of the September 30, 2022, audited financial statements resulted in significant delays in reconciliations and preparing for the September 30, 2023 audit. Repeat: Yes - Years as Repeat Finding: Three 2022-001 Auditor's Recommendations: We recommend IMPACT implement procedures to ensure accounts are reconciled timely and accurately. View of Responsible Officials: Management agrees with the finding and has developed and begun implementation of a corrective action plan.

Journal Entry Review and Segregation of Duties Condition: IMPACT does not have a written fiscal procedure for the review of journal entries. The Chief Financial Officer is responsible to preparing and posting journal entries to the general ledger. IMPACT’s practice is the Chief Operating Officer would review and approve the journal entries posted by the Chief Financial Officer. During the audit, Wipfli selected 9 journal entries to review for the Chief Operations Officer's approval. 7 of the 9 entries selected were missing approvals. The Chief Financial Officer is also an authorized check signer for the agency, has access to the checks, and maintains the user rights within the accounting software. A segregation of duties does not exist within the responsibilities of the Chief Financial Officer as this role has full access to the accounting system, have physical access to IMPACT’s cash, and is an authorized check signer. Criteria or Specific Requirement: Uniform Guidance 200.303(a) states a non-federal entity must “establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States and the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).” Effect: A material weakness in internal control over financial reporting exists due to the lack of reviews surrounding journal entries, missing supporting documentation for journal entries, and a lack of segregations of duties within the Chief Financial Officer position. Cause: Rapid growth of new funding without a corresponding increase in fiscal personnel has resulted in additional responsibilities placed on the Chief Financial Officer and Chief Operating Officer. The transition to remote working has also resulted in difficulties with handling electronic documentation and approvals. Repeat: Yes - Years as repeat finding: Two 2022-002 Auditor's Recommendation: We recommend IMPACT implement procedures surrounding the journal entry review and approval process and review the duties assigned to the Chief Financial Officer position. View of Responsible Officials: Management agrees with the finding and has developed and begun implementation of a corrective action plan.

Tri-Partite Board Composition Federal Program Information: Funding agency: Passed through: Department of Health and Human Services Iowa Department of Health and Human Services Title: Community Services Block Grant AL number: 93.569 Award number: CSBG-22-12 CSBG-23-12 Criteria or Specific Requirement: The CSBG Act at 42 USC 9910(b), requires that public organizations administer the CSBG program through a Tri-Partite board. Condition: Less than 1/3 of the members of the board of directors of IMPACT Community Action Partnership, Inc. were representative of the low-income sector in accordance with Community Service Block Grant (CSBG) requirements. Questioned Costs: None Effect: Due to the above noted conditions IMPACT Community Action Partnership, Inc. was not in compliance with this particular CSBG compliance requirement. Cause: IMPACT Community Action Partnership, Inc. had board vacancies and experienced board recruiting difficulties during the year, causing it to not be in compliance with the tri-partite board requirement. Repeat: Yes - Years as Repeat Finding: One Auditor's Recommendation: We recommend IMPACT Community Action Partnership, Inc. recruit board members to comply with the tri-partite board composition requirement. View of Responsible Officials: Management agrees with the finding and has developed and begun implementation of a corrective action plan.