Walker's Point Youth and Family Center, Inc

Item 2025-002: Material Weakness in Internal Control over Financial Reporting, Material Weakness in Internal Control over Compliance, and Noncompliance 14.218 Community Development Block Grants Cluster Entitlements/Special Purpose 14.267 Continuum of Care Program Criteria: An organization’s accounting records must support reported program outlays and income. Accurate, allowable cost allocation in the general ledger ensures grant compliance that there are allowable costs to be claimed and enables timely detection and correction of misstatements in the financial statements. Timely preparation of grant cost reports and related recording of revenue earned, supported by those allowable costs, allows an organization to monitor that revenue and allowable costs are reported accurately and within the correct award period. Condition: The Organization’s accounting system did not include a full allocation of direct and indirect costs to each grant causing a delay in the claiming of costs for programs and reporting of related revenue. Cause: The Organization underwent a complete staff turnover causing accounting processes to lapse for a period of time. The lapse in account procedures caused significant delays in allocating costs, preparing grant cost reports and recording accounting transactions. Effect: The Organization claimed costs after a significant delay in time. The Organization could not timely maintain the financial system and reporting of grant revenue and costs. Without timely allocation of costs, the Organization could not monitor that grants had allowable costs and were being spent according to budget. The Organization could not claim and report revenue on a timely basis. Therefore, the Organization did not have a complete accounting of revenue and expenses. Questioned costs: No questioned costs Prevalence or consequence: For the year under audit, the finding is considered systemic. Finding occurrence: Not a repeated audit finding Recommendation to prevent future occurrences. We recommend that the Organization improve its internal accounting by correctly and accurately using the class functions within QuickBooks more effectively to track revenues and expenses by function and funding source. We also recommend that the statement of activities by class be reviewed by the Organization’s management and board of directors monthly. To implement these changes, the Organization should consider procuring additional accounting support. Views of responsible officials at auditee: Responsible Party: Kali Daugherty Action to be taken: We will ensure that the general ledgers and cost reports match for all payments. The individual who was previously in this role is no longer in their position. I have hired a new firm to support with this. Anticipated completion date: 5/1/26

Item 2025-003 Material Weakness in Internal Control Over Compliance and Noncompliance 14.218 Community Development Block Grants Cluster Entitlements/Special Purpose 14.267 Continuum of Care Program Criteria: The Organization is required to maintain documentation to support allowable costs. In addition, the internal control system must have a method to determine costs are allowable. Conditions: The Organization did not maintain adequate documentation to support allowable costs for payroll and non-payroll expenses. • Non-payroll expenses - during the review of 25 non-payroll expenses, eight expenses were missing documentation, and one was missing documentation of approval. • Payroll expenses - o Agreements supporting the approved rates of pay for five of six employees tested could not be located. o During a review of the allocation of payroll for six employees, it was noted that two individuals were not charged to grants as expected per the Organization’s allocation plan. o During testing of hourly employees, time sheets to support the claimed costs could not be located for the employee tested. Cause: The Organization had complete turnover of staff. The Organization’s documentation was not filed using a method that made it possible for new staff to locate documentation. Effect: Audit procedures could not determine if non-payroll expenses were allowable costs because of the lack of documentation. Audit procedures could not determine if the salaries and wages paid were based on approved rates because of the lack of pay-rate documentation. Costs reported by program were not accurate during the year because the allocations were not completed accurately, however, it appears that year-to-date costs on the final grant claims were appropriate for payroll expenses. Questioned costs: Unable to be determined for non-payroll expenses. Prevalence or consequence: For the year under audit, the inability to find documentation and allocate accurately are considered systemic. Finding occurrence: Not a repeated audit finding Recommendation to prevent future occurrences: We recommend that documentation be maintained for all non-payroll expenses and approval be documented for each expense. We recommend that 1) the personnel files for all current employees be reviewed and updated to properly document employee pay-rate agreements and management approval; 2) personnel files for all new employees include documentation of initial pay-rate agreements; 3) all future changes in pay-rates be documented in the personnel files; 4) payroll be allocated to grants based on the actual work performed by employees, and documentation of that allocation and approval of it be maintained, including all time sheets. We also recommend that the record retention policy and filing/storage methods be reviewed so that documentation is readily available to users of the financial system now and in the future. Views of responsible officials at auditee. Responsible Party: Kali Daugherty Action to be taken: We have hired a new firm to do our payroll. With the change in leadership there has been a lot of turn over and we have been working to ensure that things are more streamlined. I have already implemented the paperwork being completed when there are changes to payroll. All expenses are now being put into bill.com and being approved by me and stored in bill.com Anticipated completion date: 5/1/26