Family G.A.P. FoundationNon-Profit

Late Submission of Audit to Federal Audit Clearinghouse (Repeat Finding) Criteria Title 2 Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements of Federal Awards (Uniform Guidance), paragraph 200.512(a)(1), states that the audit must be completed and the data collection form submitted within the earlier of 30 calendar days after receipt of the auditor's report or nine months after the end of the audit period, whichever is earlier. Condition The Organization's audit reporting package for the 2019 audit was not completed and submitted to the Federal Audit Clearinghouse, as required until December 1, 2020. Cause Audit delays including the need for significant audit adjustments caused delays in the audit's completion and submission to the Clearinghouse. Effect The Organization did not comply with the terms of the Uniform Guidance Subpart F audit report submission requirements. Recommendations We recommend that management of the Organization hire an outside bookkeeper to properly prepare its accounting records and financial reports in a more timely manner. Grantee Response The organization has engaged Bench, a bookkeeping service, who will reconcile bank accounts, record all accounting transactions and maintain a general ledger and all subsidiary ledgers on a monthly basis, to provide the necessary accounting records and documents to the auditing firm in a timely manner.

Adequacy of Accounting and Financial Records (Repeat Finding) Criteria In accordance with 2 CFR Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements of Federal Awards (Uniform Guidance), paragraph 200.302, Non-federal entities receiving federal funds must, in part, provide for the "accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with reporting requirements..." Condition During our audit, we found that the Organization used the accounting software application (QuickBooks) for check writing purposes only. While reviewing the recorded disbursement transactions, we discovered that all costs were classified as general administrative (functional category) rather than in a specific program cost account (natural classification) (i.e., salaries, office expense, postage, rent). Accordingly, financial transactions were not properly recorded and the accounting records were incomplete and consequently inaccurate. Cause The QuickBooks software application is capable of providing the Organization with a complete accounting system for all of the basic accounting applications (cash receipts, cash deposits, bank account reconciliation, cash disbursement, general journal, journal entries, accounts receivable and payable, payroll processing, invoicing, general ledger, and financial statement preparation). Management did not fully implement and utilize all of the available accounting applications of its accounting system. Effect Failure to maintain an adequate financial accounting system, resulting in inaccurate, untimely, and incomplete financial disclosures. Additionally, this deficiency could result in the disallowance of costs incurred under the federal award, because the nature of the program cost is not properly established. Recommendation During the conduct of the extended audit procedures were required to establish the reasonableness of account balances and resulting in significant adjustments required for fair presentation. We recommend that the Organization set up a chart of accounts within the accounting system applications to properly categorize, record and report program cost. Grantee Response We have a financial accounting software and have not discontinued its use. It has only served the purpose to handle the federal awards for writing checks to employees, bills, and providers. We are in the process of hiring a bookkeeper/accounting firm to handle all financial records for 2019.

Payroll Tax Payments and Reporting (Repeat Finding) Criteria The Internal Revenue Service requires that employers withhold from employees' pay amounts for federal income tax, social security and Medicare tax. Employers are also required to pay the liability for the employer's share of social security and Medicare taxes, which is not withheld from the employee. Each quarter, if wages subject to income tax withholding or social security and Medicare taxes are paid, Form 941, Employer's Quarterly Federal Tax Return, must be filed by the last day of the month that follows the end of the quarter. Generally, federal payroll tax deposits are required to be filed either on a monthly or semi-weekly schedule. However, if total taxes for the quarter are less than $2,500 for the current or prior quarter, the IRS permits the payment in full of the quarterly tax liability along with the filing of Form 941. Condition During our audit, we documented that the Organization only filed quarterly Form 941 returns for the quarters ended March 31, 2018 and December 31, 2018, although they were required to do so for all four quarters of calendar year 2018. Cause According to the Owner, payroll tax forms were not timely remitted due to a lack of funds necessary to pay the liability. Effect If federal income, social security, or Medicare taxes that must be withheld (referred to as trust fund taxes) are not deposited or paid to the U.S. Treasury, the trust fund recovery penalty may apply. This penalty is 100% of the unpaid trust fund tax. If these unpaid taxes cannot be immediately collected from the employer or business, the trust fund penalty may be imposed on all persons who are determined to be responsible for collecting, accounting for, or paying over these taxes. Uniform Guidance paragraph 200.441, states that costs resulting from a non-Federal entity's "violation of, alleged violations of, or failure to comply with, Federal, state, tribal, local or foreign laws and regulations are unallowable." Recommendation We recommend that the Organization strictly comply with all tax regulations. Grantee Response We are in the process of hiring a bookkeeper/accounting firm to handle all finances.

Reconciliation of Cash Accounts (Repeat Finding) Criteria Under Title 2 Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements of Federal Awards (Uniform Guidance), paragraph 200.302, Non-federal entities receiving federal funds must, in part, "accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with reporting requirements..." Further, part of a proper internal control framework requires procedures are put implemented to ensure the achievement of operational objectives. Condition During our audit, we found that management did not reconcile it's cash accounts during the year. Cause Policies and procedures have not been established to require the regular reconciliation of the Organizations cash accounts to its financial records. Additionally, the organization is not using the bank account reconciliation function provided in its QuickBooks accounting system. Effect The Organization's failure to reconcile their bank statements could potentially cause errors to go undetected. Also, failure to reconcile bank statements could cause management to be unaware of cash shortfalls or other income issues. Recommendations We recommend that the Organization develop policies and procedures to ensure that reconciliations are prepared on a monthly basis. Grantee Response The Organization will correct this deficiency by reconciling the bank statement to the general ledger on a monthly basis.

Late Submission of Audit to Federal Audit Clearinghouse Criteria Title 2 Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements of Federal Awards (Uniform Guidance), paragraph 200.512(a)(1), states that the audit must be completed and the data collection form submitted within the earlier of 30 calendar days after receipt of the auditor's report or nine months after the end of the audit period, whichever is earlier. Condition The Organization's audit reporting package for the 2018 audit was not completed and submitted to the Federal Audit Clearinghouse, as required until June 5, 2019. Cause Audit delays including the need for significant audit adjustments caused delays in the audit's completion and submission to the Clearinghouse. Effect The Organization did not comply with the terms of the Uniform Guidance Subpart F audit report submission requirements. Recommendations We recommend that management of the Organization take steps either to hire an outside bookkeeper to properly prepare its accounting records. Grantee Response We are in the process of hiring a bookkeeper/accounting firm to handle all finances.

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