BOYS & GIRLS CLUBS OF THE SIOUX EMPIRE, INC.

2022-003 Department of Education and Passed through State of South Dakota Department of Education Federal Financial Assistance Listing #84.425C, 2021G-798, 03/13/2020 ? 09/30/2022 COVID-19 Education Stabilization Fund - Governor?s Emergency Education Relief (GEER) Fund Federal Financial Assistance Listing #84.287C, 21-80064-22, 21-80064-23, 7/1/2021 ? 6/30/2022, 7/1/2022 ? 6/30/2023 Twenty-First Century Community Learning Centers Program Activities Allowed or Unallowed and Allowable Costs/Cost Principles Significant Deficiency in Internal Control over Compliance Criteria: The Organization is required to have procedures in place to ensure that federal awards are expended only for allowable costs in accordance with Subpart E ? Cost Principles of the Uniform Guidance. Allowable costs are supported by appropriate documentation and correctly charged as to account, amount, and period. 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. 2 CFR 200.430(i) establishes the standards for documentation of personnel expenses including charges to Federal awards for salaries and wages. Charges must be based on records that accurately reflect the work performed with the records meeting the following standards: a) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. b) Be incorporated into the official records of the non-Federal entity. c) Reasonably reflect the total activity for which the employee is compensated by the non-Federal entity, not exceeding 100% of compensated activities. d) Encompass both federally assisted, and all other activities compensated by the non-Federal entity on an integrated basis, but may include the use of subsidiary records as defined in the non-Federal entity?s written policy. e) Comply with the established accounting policies and practices of the non-Federal entity. f) Support the distribution of the employee?s salary or wages among specific activities or cost objectives. g) Budget estimates alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes. Condition: The amount of payroll taxes allocated to the GEER program exceeded the amount of payroll taxes actually paid for two of two employees tested. Additionally, one instance in which an employee?s overtime hours was not charged to the Twenty First Century Program. Lastly, one instance in which one employee?s biweekly wages were not charged to the Twenty First Century Program. Cause: Tracking of grant-related payroll is a manual process which increases the likelihood of error. Effect: Payroll and related costs were not properly reported by an insignificant amount. Questioned Costs: None reported Context: For the GEER program, a non-statistical sample of 6 employees were selected for testing of approximately 17 total employees whose time was charged to the federal award. The 6 employees selected for testing accounted for $53,784 of the $146,073 payroll costs charged to the federal award in the fiscal year. For the Twenty First Century Community Learning Centers Program, a non-statistical sample of 60 expenditures were selected for testing, including 56 payroll transactions and 4 nonpayroll transactions. The 56 payroll transactions accounted for $35,585 of $213,359 total payroll costs charged to the federal award. Repeat Finding from Prior Year: Yes, prior year finding 2021-003 Recommendation: We recommend management implement procedures and control processes to comply with the federal requirements noted above. Views of Responsible Officials: Management is in agreement.

Finding 2022-003 Federal Agency Name: Department of Education and Passed through State of South Dakota Department of Education Program Names: COVID-19 Education Stabilization Fund- Governor?s Emergency Education Relief (GEER) Fund and Twenty-First Century Community Learning Centers Program FFAL # 84.425C and 84.287C Finding Summary: The amount of payroll taxes allocated to the GEER program exceeded the amount of payroll taxes actually paid for two of two employees tested. Additionally, one instance in which an employee?s overtime hours was not charged to the Twenty First Century Program. Lastly, one instance in which one employee?s biweekly wages were not charged to the Twenty First Century Program. Responsible Individuals: Scott Hupke CFO Corrective Action Plan: We have added an additional person in the review of the manual process for accuracy and to eliminate the errors. We will also continue to explore ways to automate the process from our payroll provider to the accounting software. Anticipated Completion Date: October 2022 for the manual process review and ongoing for the ways to automate the process.

2021-003

2022-004 Department of Education and Passed through State of South Dakota Department of Education Federal Financial Assistance Listing / CFDA #84.425C, 2021G-798, 03/13/2020 ? 09/30/2022 COVID-19 Education Stabilization Fund - Governor?s Emergency Education Relief (GEER) Fund Activities Allowed or Unallowed and Allowable Costs/Cost Principles Significant Deficiency in Internal Control over Compliance Criteria: The Organization is required to have procedures in place to ensure that federal awards are expended only for allowable costs in accordance with Subpart E ? Cost Principles of the Uniform Guidance. Allowable costs are supported by appropriate documentation and correctly charged as to account, amount, and period. 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition: Four instances identified in which documentation could not be provided to support a formal review and approval of the expenditures prior to payment. Cause: Documentation to support the review of expenditures prior to payment was not retained. Effect: Without documentation to support of the review and approval of disbursements, demonstrating that costs comply with laws, regulations, and other compliance requirements is difficult. Questioned Costs: None reported. Context: A non-statistical sample of 12 non-payroll transactions were selected for testing out of approximately 60 total nonpayroll transactions, accounting for approximately $135,799 of $206,855 total nonpayroll costs charged to the federal award. Repeat Finding from Prior Year: Yes, prior year finding 2021-004 Recommendation: We recommend that management retain documentation to support the review process was performed. Views of Responsible Officials: Management is in agreement.

Finding 2022-004 Federal Agency Name: Department of Education and Passed through State of South Dakota Department of Education Program Name: COVID-19 Education Stabilization Fund- Governor?s Emergency Education Relief (GEER) Fund FFAL # 84.425C Finding Summary: Four instances identified in which documentation could not be provided to support a formal review and approval of the expenditures prior to payment. Responsible Individuals: Scott Hupke CFO Corrective Action Plan: The State of SD, at the end of the grant period, allowed us to reallocate some of the funding to cover other expenses that went back to prior periods. Those expenses were missing the proof of formal review as the new process had not yet been put into place. We have taken corrective action and implemented an independent review of purchases to ensure they have been approved. Anticipated Completion Date: September 2022

2021-004

2021-003 Department of Education and Passed through State of South Dakota Department of Education Federal Financial Assistance Listing / CFDA #84.425C, 2021G-798, 03/13/2020 ? 09/30/2022 COVID-19 Education Stabilization Fund - Governor?s Emergency Education Relief (GEER) Fund Federal Financial Assistance Listing / CFDA #84.287C, 21-80064-22, S287C200042, 7/1/2020 ? 6/30/2021, 7/1/2021 ? 6/30/2022 Twenty-First Century Community Learning Centers Program Activities Allowed or Unallowed and Allowable Costs/Cost Principles Significant Deficiency in Internal Control over Compliance Criteria: The Organization is required to have procedures in place to ensure that federal awards are expended only for allowable costs in accordance with Subpart E ? Cost Principles of the Uniform Guidance. Allowable costs are supported by appropriate documentation and correctly charged as to account, amount, and period. 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. 2 CFR 200.430(i) establishes the standards for documentation of personnel expenses including charges to Federal awards for salaries and wages (applicable to Twenty First Century Program only). Charges must be based on records that accurately reflect the work performed with the records meeting the following standards: a) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. b) Be incorporated into the office records of the non-Federal entity. c) Reasonably reflect the total activity for which the employee is compensated by the non-Federal entity, not exceeding 100% of compensated activities. d) Encompass both federally assisted, and all other activities compensated by the non-Federal entity on an integrated basis, but may include the use of subsidiary records as defined in the non-Federal entity?s written policy. e) Comply with the established accounting policies and practices of the non-Federal entity. f) Support the distribution of the employee?s salary or wages among specific activities or cost objectives. g) Budget estimates alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes. Condition: Two instances in which the amount of payroll taxes allocated to the GEER program exceeded the amount of payroll taxes actually paid. One instance in which there was a manual error in calculating the monthly wages charged to the Twenty First Century Program. Cause: Tracking of grant-related payroll is a manual process which increases the likelihood of error. Effect: Payroll and related costs were not properly reported by an insignificant amount. Questioned Costs: None reported Context: For the GEER program, a non-statistical sample of 8 employees were selected for testing of approximately 24 total employees whose time was charged to the federal award. The 8 employees selected for testing accounted for $131,000 of the $293,900 payroll costs charged to the federal award in the fiscal year. For the Twenty First Century Community Learning Centers Program, a non-statistical sample of 60 expenditures were selected for testing, including 53 payroll transactions and 7 nonpayroll transactions. The 53 payroll transactions accounted for $28,700 of $218,600 total payroll costs charged to the federal award. Repeat Finding from Prior Year: No Recommendation: We recommend management implement procedures and control processes to comply with the federal requirements noted above. Views of Responsible Officials: Management is in agreement.

Finding 2021-003 Federal Agency Name: Department of Education and Passed through State of South Dakota Department of Education Program Names: COVID-19 Education Stabilization Fund- Governor?s Emergency Education Relief (GEER) Fund and Twenty-First Century Community Learning Centers Program CFDA # 84.425C and 84.287C Finding Summary: Two instances in which the amount of payroll taxes allocated to the GEER program exceeded the amount of payroll taxes actually paid. One instance in which there was a manual error in calculating the monthly wages charged to the Twenty First Century Program. Responsible Individuals: Scott Hupke CFO Corrective Action Plan: We will continue to explore ways to automate the process from our payroll provider to the accounting software. At the same time, we will continue to have another person review the manual process for accuracy to eliminate the errors. Anticipated Completion Date: October 2022 for the manual process review and ongoing for the ways to automate the process.

2021-004 Department of Education and Passed through State of South Dakota Department of Education Federal Financial Assistance Listing / CFDA #84.425C, 2021G-798, 03/13/2020 ? 09/30/2022 COVID-19 Education Stabilization Fund - Governor?s Emergency Education Relief (GEER) Fund Federal Financial Assistance Listing / CFDA #84.287C, 21-80064-22, S287C200042, 7/1/2020 ? 6/30/2021, 7/1/2021 ? 6/30/2022 Twenty-First Century Community Learning Centers Program Activities Allowed or Unallowed and Allowable Costs/Cost Principles Material Weakness in Internal Control over Compliance Criteria: The Organization is required to have procedures in place to ensure that federal awards are expended only for allowable costs in accordance with Subpart E ? Cost Principles of the Uniform Guidance. Allowable costs are supported by appropriate documentation and correctly charged as to account, amount, and period. 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. In addition, 2 CFR 200.302 establishes that the financial management system of the entity must provide written procedures for determining allowability of costs in accordance with Subpart E ? Cost Principles of this part and the terms and conditions of the Federal award. Condition: The Organization did not have written policies and procedures covering Activities Allowed or Unallowed and Allowable Costs and Cost Principles. Additionally, in our sample of expenditures selected for testing, 12 instances identified in which documentation could not be provided to support a formal review and approval of the expenditures prior to payment. Cause: The Organization hasn?t formally implemented written policies and procedures over the compliance requirement. Documentation to support the review of expenditures prior to payment was not retained. Effect: Without the review and approval of disbursements, demonstrating that costs comply with laws, regulations, and other compliance requirements is difficult. Questioned Costs: None reported. Context: For the GEER Program, a non-statistical sample of 5 non-payroll transactions were selected for testing out of approximately 13 total nonpayroll transactions, accounting for approximately $70,975 of $106,280 total nonpayroll costs charged to the federal award. For the Twenty First Century Community Learning Centers Program, a non-statistical sample of 60 expenditures were selected for testing, including 53 payroll transactions and 7 nonpayroll transactions. The 7 nonpayroll transactions accounted for $8,370 of $30,870 total nonpayroll costs charged to the federal award. Repeat Finding from Prior Year: No Recommendation: We recommend that management implement procedures and control processes to comply with the federal requirements noted above and retain documentation to support the review was performed. Views of Responsible Officials: Management is in agreement.

Finding 2021-004 Federal Agency Name: Department of Education and Passed through State of South Dakota Department of Education Program Name: COVID-19 Education Stabilization Fund- Governor?s Emergency Education Relief (GEER) Fund and Twenty-First Century Community Learning Centers Program CFDA # 84.425C and 84.287C Finding Summary: The Organization did not have written policies and procedures covering Activities Allowed or Unallowed and Allowable Costs and Cost Principles. Additionally, in the sample of expenditures selected for testing, 12 instances identified in which documentation could not be provided to support a formal review and approval of the expenditures prior to payment. Responsible Individuals: Scott Hupke CFO Corrective Action Plan: We will continue to explore ways to automate the process with a document management software and a potential new accounting software. At the same time, we will continue to have another person review the purchase orders to ensure that the proper approval has been given before making payments and will retain documentation to support the review process. Anticipated Completion Date: September 2022