EPILEPSY FOUNDATION OF AMERICA

Condition: One contractor was selected for testing procurement, suspension, and debarment. Our test work indicated that there was no documentation for the verification of suspension and debarment for the contractor selected for testing. Criteria: Suspension and debarment regulations under 2 CFR should be followed. Cause: Procedures were not consistently implemented to verify if vendors contracted with the Foundation related to the federal program in excess of $25,000 are not suspended, debarred or otherwise excluded from doing business. Effect: Noncompliance with the federal award program’s suspension and debarment compliance requirements could occur and not be detected and corrected timely. Recommendation: We noted that management implemented procedures to address suspension and debarment toward the end of the fiscal year. We recommend that the Foundation ensure the established procedures are consistently followed and documented for all contracts entered into using federal awards. Views of Responsible Officials and Planned Corrective Actions: The Foundation has consistently maintained procedures to verify whether an organization is suspended or debarred and the enhanced process of documenting these procedures as recommended during the prior year audit was implemented by the Foundation during 2024.

Condition: A sample of four (4) drawdowns were selected for testing cash management procedures. While we noted the drawdowns were adequately supported by documentation of expenses, our test work found that there was no documentation of management approval of drawdowns before the drawdown occurred. Criteria: The Uniform Guidance requires organizations who receive funds on a cost reimbursement basis to draw down funds based on allowable expenditures under the grant. Cause: Implementation of policies and procedures regarding approval of drawdowns was not consistent throughout the fiscal year. Effect: Noncompliance with the federal award program’s cash management compliance requirements could occur and not be detected and corrected timely. Recommendation: We noted that management established policies and procedures toward the end of the fiscal year to ensure drawdowns were approved prior to the drawdown occurring. We recommend that the Foundation ensure the recently implemented procedures for approval of drawdowns are consistently documented. Views of Responsible Officials and Planned Corrective Actions: While all drawdown amounts were in alignment with incurred expenses, the Foundation recognizes the importance of maintaining proper documentation to ensure compliance with federal cash management requirements. The Foundation has established a formal practice requiring documented management approval for all drawdowns before they are initiated.

Condition: Our test work over the reporting compliance requirement included a sample of financial and performance reports. We noted that one financial report and one performance report did not have a documented review prior to submission. Criteria: The Uniform Guidance requires organizations to establish internal controls to detect potential noncompliance. Cause: Policies and procedures regarding retention of review documentation were not consistently applied. Effect: Noncompliance with adequate review over required financial and program reports. Recommendation: We noted that management established procedures to document the review and approval of the required financial and performance reports toward the end of the fiscal year. We recommend those procedures are consistently applied. Views of Responsible Officials and Planned Corrective Actions: The Foundation has established a formal review and approval process for all financial and performance reports prior to submission. This process includes requiring documented management review and approval, which will be retained for audit purposes as well as training to be provided to staff involved in grant reporting.

Condition: Our examination of the Foundation’s Schedule of Expenditures of Federal Awards (SEFA) found various errors that resulted in adjustments to both direct and indirect grant revenue. We received several iterations of the SEFA and adjustments had to be made to each version before a complete SEFA was received that reconciled to the general ledger. Criteria: The SEFA is used to determine the amount expended for federal grants that is reported to the government. Cause: There is a lack of established procedures for preparing and reviewing the SEFA. Effect: Multiple iterations of the SEFA were received and adjustments had to be made to each version causing a delay in finalizing our single audit procedures. Recommendation: We recommend management implement procedures to prepare an accurate SEFA and a second layer of review is performed before the SEFA is finalized to identify any inaccuracies or inconsistencies with the general ledger. Views of Responsible Officials and Planned Corrective Actions: The Foundation is strictly enforcing a policy that AMEX receipts from staff are due three days after the statement is posted to ensure all expenditure information is received and recorded timely for purposes of inclusion in the SEFA.

Condition: A sample of three (3) contractors were selected for testing procurement, suspension, and debarment. Our test work indicated that there was no documentation for the verification of suspension and debarment for all three contractors selected for testing. Criteria: Suspension and debarment regulations under 2 CFR should be followed. Cause: Procedures have not been established to verify if vendors contracted with the Foundation related to the federal program in excess of $25,000 are not suspended, debarred or otherwise excluded from doing business. Effect: Noncompliance with the federal award program’s suspension and debarment compliance requirements could occur and not be detected and corrected timely. Recommendation: We recommend that the Foundation establish and document suspension and debarment reviews for all contracts entered into using federal awards. Views of Responsible Officials and Planned Corrective Actions: The Foundation has always had procedures in place to research whether an organization is suspended and debarred. The Foundation has also developed a process by which the grant administration team both looks up and takes screen shots of the search for each vendor’s status in the database (both upon contract renewal or when entering a new contract with a value of more than $25,000). This information is maintained by the grant administration team.

Condition: A sample of four (4) drawdowns were selected for testing cash management procedures. Our test work found that the Foundation could not produce adequate documentation of the expenses supporting each drawdown request and the drawdown requests did not have documented approvals. Additionally, we found that there is no process in place to prevent entries from being recorded in the accounting ledger once a period has been closed. In reviewing the federal drawdowns made during the year, we determined that the Foundation rounded drawdowns to the nearest hundred dollar. As a result of our review of the federal grants receivable general ledger, we also found that the Foundation erroneously failed to drawdown $76,235 of federal funds related to FY23 expenditures incurred. We notified management of this matter and the amount was subsequently drawn down. Criteria: The Uniform Guidance requires organizations who receive funds on a cost reimbursement basis to draw down funds based on allowable expenditures under the grant. Cause: Overall lack of policies and procedures regarding retention of drawdown documentation and approval of drawdowns. Effect: Reports showing expenses for drawdowns were run real-time and were not maintained. Accounting records are not closed at each period end, which allows for erroneous journal entries to be made. Based on our tests performed over federal expenditures, we found no unallowable costs included in the drawdown request. Additionally, there was an outstanding receivable at the end of FY23, which was drawn down subsequent to year end. Recommendation: We recommend that the Foundation save all supporting schedules used to calculate each drawdown. We also recommend that the Foundation drawdown federal funds in an amount equal to the exact expenses incurred during the period and the drawdowns are approved. Furthermore, we recommend that only the accounting team have ability to affect the accounting records. Lastly, we recommend that the Foundation reconcile and review the grants receivable balance monthly to ensure all drawdowns occur on a timely basis. Views of Responsible Officials and Planned Corrective Actions: The Foundation is strictly enforcing a policy that AMEX receipts from staff are due three days after the statement is posted. With this clear policy in place, the period end is accurate with drawdowns reflecting the activity incurred in that period. All supporting schedules are being saved.

Condition: A sample of forty (40) payroll transactions were selected for testing, spanning across five (5) months. For one month selected, the Foundation was unable to provide key payroll reports to reconcile payroll to the amount charged to the federal program. Criteria: The Uniform Guidance requires organizations to establish internal controls to detect potential noncompliance. Cause: Overall lack of policies and procedures regarding retention of documentation. Management believes the payroll report was overwritten by a subsequent month. Effect: Noncompliance with the federal award program’s allowance costs compliance requirements could occur and not be detected and corrected timely. Recommendation: We recommend that the Foundation establish procedures to back up all pertinent payroll reports to a secure location to prevent loss of data. Views of Responsible Officials and Planned Corrective Actions: A previous staff member (who is no longer with the Foundation) appears to have erroneously overwritten a payroll report. We now have a process where each month, a payroll folder is created with the correct reports and supporting documents. Once again, this process is in place with documentation. As part of our collation process, these will be gathered into a procedural manual.

Condition: Our testwork over the reporting compliance requirement included a sample of annual and quarterly financial and performance reports. We noted that the reports did not have a documented review of the reports prior to submission. Criteria: The Uniform Guidance requires organizations to establish internal controls to detect potential noncompliance. Cause: Overall lack of policies and procedures regarding retention of review documentation. Effect: Non-compliance with adequate review over required financial and program reports. Recommendation: We recommend that management establish procedures to document the review and approval of the required financial and performance reports. Views of Responsible Officials and Planned Corrective Actions: The reports to the CDC are provided in quarterly meetings. We were able to provide these reports to the Auditors and are now receiving these reports from the program office so that they can be maintained in a file which can be used for audit purposes.

Finding 2022-002: Material Weakness over Reporting - Review of Required Financial and Progress Reports Information on the Federal Program: Department of Human and Health - Center for Disease Control: Improving Epilepsy Programs, Services and Outcomes Through Partnerships, CFDA 93.850 Criteria: The Uniform Guidance requires organizations to establish internal controls to detect potential noncompliance. Condition: Management has an established control in place in that the VP of Finance reviews the financial and progress reports prior to submission, but did not retain evidence of this review occurring during the year. Cause: Due to a lack of policies and procedures regarding retention of review documentation and lack of awareness of the requirement. Effect: Non-compliance with adequate review over required financial and progress reports. Questioned Costs: There were no material questioned costs identified. Context: For all reports chosen for testing in 2022, which included two quarterly FFRs (Federal Financial Report), an annual FFR, and an annual performance progress report, no evidence of approval was retained. Repeat Finding: No. Recommendation: We recommend that management establish procedures to document the review and approval performed over the required reports.

Finding 2022-003: Non-Compliance over Reporting - Reporting of Expenditures in Required Financial Reports Information on the Federal Program: Department of Human and Health - Center for Disease Control: Improving Epilepsy Programs, Services and Outcomes Through Partnerships, CFDA 93.850 Criteria: The Uniform Guidance requires organizations to submit required financial reports with accurate data pertaining to expenditures. Condition: The underlying expenditures support provided for the quarterly and annual Federal Financial Report (FFRs) did not tie to the expenditures reported. Cause: Due to a lack of effective review over required financial reports. Effect: Non-compliance with accuracy of amounts reported in required financial reports. Questioned Costs: There were no material questioned costs identified. Context: For all financial reports chosen for testing in 2022, which included two quarterly FFR and an annual FFR, the underlying expenditures support provided did not tie to the expenditures reported with a variance of $67,890. Repeat Finding: No. Recommendation: We recommend that management establish procedures to review and the financial reports in detail to ensure accuracy to underlying data.

Finding 2022-004: Material Weakness over Allowable Costs - Review of Non-Payroll Expenditures Information on the Federal Program: Department of Human and Health - Center for Disease Control: Improving Epilepsy Programs, Services and Outcomes Through Partnerships, CFDA 93.850 Criteria: The Uniform Guidance requires organizations to establish internal controls to detect potential noncompliance. Condition: Management has an established control in place, in that all expenditures paid through the Concur system were reviewed and approved by an appropriate project manager, but did not retain evidence of this approval occurring during the year for 9 non-payroll expenditures chosen for testing. Cause: Due to a lack of policies and procedures regarding retention of review documentation and lack of awareness of the requirement. Effect: Non-compliance with adequate review over allowable costs. Questioned Costs: There were no material questioned costs identified. Context: All expenditures approved in the Concur payables system chosen for testing did not have retained evidence of approval, totaling 15% of the non-payroll expenditures tested. Repeat Finding: No. Recommendation: We recommend that management establish procedures to document the review and approval performed over non-payroll expenditures.

Finding 2022-005: Material Weakness over Cash Management and Allowable Costs - Review of Cash Drawdowns Information on the Federal Program: Department of Human and Health - Center for Disease Control: Improving Epilepsy Programs, Services and Outcomes Through Partnerships, CFDA 93.850 Criteria: The Uniform Guidance requires organizations to establish internal controls to detect potential noncompliance. The Uniform Guidance also requires organizations who receive funds on a cost reimbursement basis to only draw down funds for allowable expenditures under the grant. Condition: Management has an established control in place, in that the VP of Finance reviews the calculation of expenditures not drawn down prior to the submission of the drawdown request. However, the control was ineffective to prevent and detect an erroneous expense journal entry, considered an unallowable expense and is an instance of noncompliance, from being included in the drawdown. Cause: Due to a lack of policies and procedures regarding retention of review documentation and lack of awareness of the requirement. Effect: Non-compliance with adequate review over cash management and allowable costs. Questioned Costs: $72,514 in known questioned costs were identified, as determined by management as a part of an inspection performed. Context: For one cash drawdown chosen for testing of two (50%), there were expenses that had no supporting documentation and were unallowable under the grant. Repeat Finding: No. Recommendation: We recommend that management establish procedures review cash drawdowns in detail prior to submission and that all expenditures recorded to the grant have appropriate supporting documentation.

Finding 2020-001: Significant Deficiency over Subrecipient Reporting Information on Federal Award: Department of Human and Health - Center for Disease Control: Improving Epilepsy Programs, Services and Outcomes Through Partnerships CFDA Number: 93.110 Criteria: Federal Funding Accountability and Transparency Act (FFATA) reports are required to be filed for subrecipients receiving direct awards in excess of $25,000 by the end of the month following the month the award is given. Condition: The Foundation did not file FFATA reports for 4 subrecipients who were awarded $25,000 or more within a timely manner. Questioned Costs: There were no material questioned costs identified. Context: For 2020, the FFATA reports not filed timely represent 100% of the total population of those reports. Cause: Due to lack of controls surrounding the monitoring of FFATA reporting for subrecipients. Effect: Noncompliance due to failure of filing required FFATA reports. Repeat finding: No. Recommendation: We recommend management establish a control to identify when FFATA reporting is needed and to ensure the respective reports are filed on a timely basis. This can be done as a part of their existing subrecipient monitoring checklist.