K9 Partners for Patriots, Inc.

Finding Reference # 2020-002 Federal Program Uniformed Services University CFDA No. 12.750 Compliance Requirement Allowable Costs Type of Finding Material Weakness in Internal Control Questioned Costs $0 Criteria. The Organization is required to comply with Cost Principles of Uniform Guidance, Subpart E. Conditions. ? The Organization?s chart of accounts was modified subsequent to receipt of the previous audit report; however, not all costs of fundraising were reclassified to fundraising account codes. ? The Organization reported certain fundraising costs as allowable for its major program. ? Job descriptions for certain employees include unallowable and overhead activities; however, the Organization does not have a process for allocation of payroll costs. Most payroll costs are reported as direct costs of the major federal program. ? The Organization?s chart of accounts does not identify indirect costs and the Organization does not employ a process of allocation of indirect costs to allowable and unallowable activities. Perspectives. ? The Organization is relatively small, the majority of the Organization?s expenses are allowable, and the majority of indirect costs would be allocable to the grant. ? Although we noted fundraising costs that were included in costs reported to the major program, we also noticed costs that could have been reported to the major program that were not. The amounts netted to an under-reporting of allowable costs. This amount was trivial to the major program and no questioned costs are reported. Cause. The Organization is not familiar with the processes of allocation of indirect costs among direct cost pools. Recommendations. ? The Organization?s chart of accounts should provide for mutually exclusive identification of indirect costs and direct costs. Direct costs should include costs reimbursable from the Organization?s major program, other programmatic costs, fundraising and any other unallowable costs. ? The Organization should consider time reporting systems for its employees that comply with Standards for Documentation of Personnel Expenses found in Section 200.430, Uniform Guidance. ? The Organization should develop a method for allocation of indirect costs to direct cost activities. Views of Responsible Officials. Views of responsible officials are included in the attached corrective action plan.

Finding Reference # 2020-003 Federal Program Uniformed Services University CFDA No. 12.750 Compliance Requirement Reporting Type of Finding Significant Deficiency in Internal Control Questioned Costs $0 Criteria. The Organization is required to comply with the Performance and Financial Monitoring and Reporting section of Uniform Guidance, Sections 200.327 and 200.328. Condition. We tested whether the amounts reported on Standard Form 425, Federal Financial Report, agreed to underlying accounting records. The table below displays the results of that testing: Grant # Grant Period Reporting Period End Amount Reported Amounts from Accounting Worksheets Differences HU0001-18-1-0048 9/24/2018 to 9/23/2019 3/24/2019 $ 431,132 $440,234 ($9,102) HU0001-18-1-0048 9/24/2018 to 9/23/2019 9/23/2019 $ 885,830 $ 885,830 -- HU0001-91-0023 8/1/2019 to 7/31/2020 1/31/2020 $ 442,875 $437,266 $ 5,609 HU0001-91-0023 8/1/2019 to 7/31/2020 7/31/20 $ 1,022,996 $ 1,022,996 -- We were able to agree amounts reported at the end of each grant period to the underlying accounting records. However, we were not able to agree the amounts reported in the mid-year reports. When we totaled amounts reported during the interim period from the annual reports, we noted the above differences. Perspectives. The amounts reported at the end of each grant period were supported by underlying documentation and were in excess of the total grant amounts. Therefore, we have reported no questioned costs. Cause. The cause of this deficiency is unknown. Recommendations. The Organization should retain records of amounts reported to Uniformed Services University. In addition, the Organization should retain documentation of its review process whereby one individual prepares the report and another performs a quality review. Such documentation could include an email from the reviewer to the preparer. Views of Responsible Officials. Views of responsible officials are included in the attached corrective action plan.

Finding Reference # 2019-003 Federal Program Uniformed Services University CFDA No. 12.750 Compliance Requirement Procurement Type of Finding Compliance and Material Weakness in Internal Control Questioned Costs Not required to be reported Criteria. The Organization is required to comply with Procurement Standards of Uniform Guidance, Sections 200.317 to 200.326. Conditions. ? The Organization had not adopted a procurement policy. ? The Organization did not always enter into written contracts for the procurement of personal services. Cause. The Organization was not aware that professional services should be subjected to procurement policies. Perspective. The number of agreements to purchase goods or services that exceed the small dollar threshold of $10,000 are generally limited. In addition, the Organization has been working with many of its contracted service providers for several years. Recommendations. The Organization should adopt and implement a procurement policy that complies with the relevant provisions of Uniform Guidance. Views of Responsible Officials. Views of responsible officials are included in the attached corrective action plan.

2019-004 Federal Program Uniformed Services University CFDA No. 12.750 Compliance Requirement Allowable Costs Type of Finding Compliance and Material Weakness in Internal Control Questioned Costs $138,603 Criteria. The Organization is required to comply with Cost Principles of Uniform Guidance, Subpart E. Conditions. 1. Invoices for services did not contain sufficient detailed descriptions to determine what portion of services were for allowable vs. unallowable activities. 2. The Organization did not always utilize written agreements for professional services. In the cases where written contracts were utilized, the contracts did not contain sufficient detail to determine whether or how much of the services performed are allowable. 3. The Organization reported the costs of professional services that may include fundraising activities as expenditures of the federal award. Payments for these professional services were $138,603, the amount of the questioned costs reported above. Perspective. It is clear that at least some portion of the payments represent allowable grant administration costs. Cause. We were not able to identify a cause. Recommendations. The Organization should enter into written agreements for the purchase of professional services. The agreements should contain sufficient detail to determine the services provided and amounts paid for those services. Specifically, any services that represent unallowable activities and costs, such as fundraising, should be clearly identified. In accordance with the Organization?s procurement policies, the Organization should have these agreements approved by the Board of Directors. Views of Responsible Officials. Views of responsible officials are included in the attached corrective action plan.

Finding Reference # 2019-005 Federal Program Uniformed Services University CFDA No. 12.750 Compliance Requirement Allowable Costs Type of Finding Significant Deficiency in Internal Control Questioned Costs $0 Criteria. The Organization is required to comply with Cost Principles of Uniform Guidance, Subpart E. Conditions. The Organization?s chart of accounts does not identify fundraising and other unallowable costs. In addition, the Organization?s chart of accounts does not identify indirect costs. Finally, the Organization does not employ a process of allocation of indirect costs to allowable and unallowable activities. Perspective. The Organization is relatively small, the majority of the Organization?s expenses are allowable, and the majority of indirect costs would be allocated to the grant. However, as the Organization grows, a chart of accounts and accounting process will need to be utilized to properly identify indirect and unallowable costs. Cause. We were unable to identify a cause. Recommendations. The Organization?s chart of accounts should provide for identification of fundraising and indirect costs and for allocation of indirect costs to allowable and unallowable activities. Views of Responsible Officials. Views of responsible officials are included in the attached corrective action plan.

Finding Reference # 2019-006 Federal Program Uniformed Services University CFDA No. 12.750 Compliance Requirement Allowable Costs Type of Finding Compliance and Material Weakness in Internal Control Questioned Costs $2,146 Criteria. The Organization is required to comply with Cost Principles of Uniform Guidance, Subpart E. Those cost principles require that expenditures support allowable activities and be adequately documented. Conditions. ? The Organization was unable to provide supporting documentation for two out of a sample of sixty disbursements. In addition, documentation did not always include notations explaining the purpose of the purchase. ? Two out of the sample of sixty disbursements were in support of fundraising activities. ? One out of the sample of sixty disbursements was for an amount in excess of the supporting documentation. Perspective. ? We requested other documentation as part of our audit that was not part of the sample and all of those documents were available. ? Our sample was non-statistical. Cause. We were unable to identify a cause. Recommendations. ? All expenditures should be documented with written receipts or invoices which include sufficient detail to determine what was purchased and for what purpose. ? When the purpose is not obvious from the documentation obtained from external sources, notations should be included by management of the Organization. ? The amount due to vendors should be verified to ensure that the vendor invoices are for proper amounts. Views of Responsible Officials. Views of responsible officials are included in the attached corrective action plan.

Finding Reference # 2019-007 Federal Program Uniformed Services University CFDA No. 12.750 Compliance Requirement Reporting Type of Finding Significant Deficiency in Internal Control Questioned Costs $0 Criteria. The Organization is required to comply with the Performance and Financial Monitoring and Reporting section of Uniform Guidance, Sections 200.327 and 200.328. Condition. During the year under audit, the Organization provided Standard Form 425, Federal Financial Report, for the reporting period ended September 30, 2018. However, the Organization was unable to provide supporting documentation that agreed to the amounts reported. Perspectives. The amounts reported and the amounts that were supported by underlying documentation were well in excess of the total grant amount. Therefore, we have reported no questioned costs. Cause. The cause of this deficiency is unknown. Recommendations. The Organization should retain records of amounts reported to Uniformed Services University. In addition, the Organization should implement a review process whereby one individual prepares the report and another performs a quality review. These control procedures should be documented. Views of Responsible Officials. Views of responsible officials are included in the attached corrective action plan.