EIN: 521166432
UEI: DHKND8K1LY49
Audited by: Jones Maresca & McElwaney, P.A.
Oversight agency: 45 [National Endowment for the Arts / National Endowment for the Humanities]
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Data as of August 31, 2026
Management decision deadline — for entities that funded this organization
The FAC accepted this audit on April 24, 2025. Under 2 CFR 200.521(d), a pass-through entity that provided federal funds to this organization for this audit period must issue a management decision on these findings by October 24, 2025 (311 days ago).
What is a management decision? →FAC accepted this audit on April 22, 2024 — management decision was due October 22, 2024.
FAC accepted this audit on September 7, 2023 — management decision was due March 7, 2024.
FAC accepted this audit on January 4, 2022 — management decision was due July 4, 2022.
The Organization experienced difficulty in preparing and ensuring that all Federal expenditures were identified, categorized and included in the Schedule of Expenditures of Federal Awards. The preparation of the Organization's SEFA required manual adjustments of Federal costs to the programs due to amounts expended in excess of award amounts. Such adjustments were not completed prior to the start of the audit. The condition impacted the entire SEFA and appeared to be systematic in nature. Cause: The Organization experienced a transition in the accounting department during the year. Effect or Potential Effect: Without periodic training and consistent application of the Organization?s internal policies and procedures, this could potentially result in material noncompliance with donor terms and misappropriation of funds. Questioned Costs: None noted Context: The SEFA was not accurately completed at year-end and required additional modifications. Identification as a Repeat Finding: This is not a repeat finding. Recommendation: We recommend the Organization establish internal controls to correctly identify and track all Federal awards received either directly or indirectly. Responsible Official/Anticipated Completion Date: Valerie Graff/September 2021
Show full finding ▾Hide full finding ▴Finding 2020-002: Preparation of the Schedule of Expenditures of Federal Awards (SEFA) Information of the Federal Programs: CFDA 45.129 Criteria: In accordance with 2 CFR 200.508 ?Auditee Responsibilities?, the auditee must prepare appropriate financial statements, including the Schedule of Expenditures of Federal Awards (as specifically defined under 2 CFR 200.510 ?Financial Statements?). Title 2 CFR 200 Section 200.510 ?Financial Statements? requires recipients of Federal funds to prepare a Schedule of Expenditures of Federal Awards (SEFA) for the period covered by the auditee's financial statements, which must include the total Federal awards expended. Additionally, in accordance with CFR 200.303, the non- Federal entity must: establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition: The Organization experienced difficulty in preparing and ensuring that all Federal expenditures were identified, categorized and included in the Schedule of Expenditures of Federal Awards. The preparation of the Organization's SEFA required manual adjustments of Federal costs to the programs due to amounts expended in excess of award amounts. Such adjustments were not completed prior to the start of the audit. The condition impacted the entire SEFA and appeared to be systematic in nature. Cause: The Organization experienced a transition in the accounting department during the year. Effect or Potential Effect: Without periodic training and consistent application of the Organization?s internal policies and procedures, this could potentially result in material noncompliance with donor terms and misappropriation of funds. Questioned Costs: None noted Context: The SEFA was not accurately completed at year-end and required additional modifications. Identification as a Repeat Finding: This is not a repeat finding. Recommendation: We recommend the Organization establish internal controls to correctly identify and track all Federal awards received either directly or indirectly. Responsible Official/Anticipated Completion Date: Valerie Graff/September 2021
Views of Responsible Officials and Planned Corrective Actions: In the summer of 2020, corrections to improper processes were put into place. At that time, several transactions were identified as being miscategorized by the previous accounting firm. To prevent future expenses from being miscategorized, HDC has updated program expense tracking (including an updated timesheet for staff to accurately record their time). Additionally, the expenses are reviewed on a monthly basis to ensure they were categorized to the correct program. The initial SEFA was prepared without issues. However, with the expense realignments and corrections done for FY20 as a result of the audit, the 'Total Federal Expenditures' number fluctuated some. This was unavoidable to ensure all expenses were recorded to the correct program/donor.
The Organization did not consistently adhere to written policies with respect to the procurement process, as bids/quotes were not consistently performed or documenting the single source justification was not adequately documented. Cause: The Organization internal policies and procedures governing procurement were not consistently applied. Effect or Potential Effect: Without proper and complete procurement documentation, there is a risk that the Organization will not perform proper evaluation of each element of cost to determine reasonableness. Questioned Costs: None noted Context: Our audit procedures consisted of internal control testwork over the cash disbursement cycle over a sample population of expenditures. We consider our sample to be representative of the population. The condition appeared to be systematic in nature. Identification as a Repeat Finding: This is not a repeat finding. Recommendation: We recommend that management strengthen internal controls over this process and ensure full compliance with the above-noted regulations. Additionally, we recommend conclusions reached should be clearly documented and accompany the procurement documentation. Responsible Official/Anticipated Completion Date: Valerie Graff/September 2021
Show full finding ▾Hide full finding ▴Finding 2020-003: Compliance with Procurement Policies and Procedures Information of the Federal Programs: CFDA 45.129 Criteria or Specific Requirement: Procurement standards articulated at 2 CFR 200.318, require that for all procurement of goods and services, some form of cost or price analysis shall be made and documented in the procurement files in connection with every procurement action. Price analysis may be accomplished in various ways, including the comparison of price quotations submitted, market prices and similar indicia, together with discounts. Cost analysis is the review and evaluation of each element of cost to determine reasonableness, allocability and allowability. Condition: The Organization did not consistently adhere to written policies with respect to the procurement process, as bids/quotes were not consistently performed or documenting the single source justification was not adequately documented. Cause: The Organization internal policies and procedures governing procurement were not consistently applied. Effect or Potential Effect: Without proper and complete procurement documentation, there is a risk that the Organization will not perform proper evaluation of each element of cost to determine reasonableness. Questioned Costs: None noted Context: Our audit procedures consisted of internal control testwork over the cash disbursement cycle over a sample population of expenditures. We consider our sample to be representative of the population. The condition appeared to be systematic in nature. Identification as a Repeat Finding: This is not a repeat finding. Recommendation: We recommend that management strengthen internal controls over this process and ensure full compliance with the above-noted regulations. Additionally, we recommend conclusions reached should be clearly documented and accompany the procurement documentation. Responsible Official/Anticipated Completion Date: Valerie Graff/September 2021
Views of Responsible Officials and Planned Corrective Actions: Beginning in May 2020, new internal practices were put into place to address these deficiencies; they have been followed with a few mistakes made. Internal policies have been updated and reinforced with current staff and are being followed. HDC will consider raising the purchase threshold and look at policies that cover different kinds of purchases.
The Organization did not consistently perform screenings for its potential and current vendors, contractors, subrecipients, employees, suppliers, etc. that were paid with Federal funds. Cause: The Organization did not follow their internal policy with respect to screening vendors to adhere to compliance over suspension and debarment. Effect or Potential Effect: Failure to screen potential vendors, suppliers, contractors, subrecipients, employees, suppliers, etc. against the suspended and debarred list increases the possibility that Federal funds may inadvertently be provided to parties deemed to be excluded by the United States Government. Questioned Costs: Undetermined Context: Our audit procedures consisted of statistical sampling as well as substantive testwork over various samples of expenditures, and were deemed to be representative of the population for the fiscal year under audit. We determined that the issue was systemic in nature. Identification as a Repeat Finding: This is not a repeat finding. Recommendation: We recommend that the screening of potential vendors and suppliers be completed (and documented) prior to entering into the transactions or making payments, and should be periodically revisited (and documentation updated) for ongoing relationships with parties. All documentation in connection with every procurement or hiring contract should be maintained in the procurement, subcontractor or employee file. Responsible Official/Anticipated Completion Date: Valerie Graff/September 2021
Show full finding ▾Hide full finding ▴Finding 2020-004: Suspension and Debarment Information of the Federal Programs: CFDA 45.129 Criteria or Specific Requirement: Recipients of Federal funding must adhere to specific requirements on screening all potential vendors, contractors, subrecipients, employees, suppliers, etc. to ensure the organization is not conducting business with excluded parties (as defined by the United States Government). This screening process must also be documented in writing. Condition: The Organization did not consistently perform screenings for its potential and current vendors, contractors, subrecipients, employees, suppliers, etc. that were paid with Federal funds. Cause: The Organization did not follow their internal policy with respect to screening vendors to adhere to compliance over suspension and debarment. Effect or Potential Effect: Failure to screen potential vendors, suppliers, contractors, subrecipients, employees, suppliers, etc. against the suspended and debarred list increases the possibility that Federal funds may inadvertently be provided to parties deemed to be excluded by the United States Government. Questioned Costs: Undetermined Context: Our audit procedures consisted of statistical sampling as well as substantive testwork over various samples of expenditures, and were deemed to be representative of the population for the fiscal year under audit. We determined that the issue was systemic in nature. Identification as a Repeat Finding: This is not a repeat finding. Recommendation: We recommend that the screening of potential vendors and suppliers be completed (and documented) prior to entering into the transactions or making payments, and should be periodically revisited (and documentation updated) for ongoing relationships with parties. All documentation in connection with every procurement or hiring contract should be maintained in the procurement, subcontractor or employee file. Responsible Official/Anticipated Completion Date: Valerie Graff/September 2021
Views of Responsible Officials and Planned Corrective Actions: To address inconsistencies, HDC will review with the staff, the required screening requirements and processes. Recipients of NEH grants monies who were subject to the federal audit were required to furnish those audits.
The Organization does not consistently maintain an appropriate level of documentation with respect to monitoring activities of the sub-recipients. We also noted instances when the Organization did not obtain current applicable reports from its sub-recipients. Our audit procedures consisted of substantive testwork over a sample of sub-recipient expenditures that were selected based on a threshold. We consider our sample to be representative of the population. Cause: The Organization does not have a formal policy governing risk assessment procedures over its sub-recipients. Effect or Potential Effect: The Organization could inadvertently engage in relationships with subrecipients of higher risk without the appropriate level of oversight (monitoring) to ensure sub-recipients are expending funds in accordance with the provisions and terms of the subaward. Questioned Costs: Undetermined Context: The Organization failed to adequately perform risk assessment procedures, or document its risk assessment procedures, over each of its sub-recipients. Identification as a Repeat Finding: This is not a repeat finding. Recommendation: We recommend the Organization review its procedures to ensure pre-risk assessment documentation is maintained for all sub-recipients. Based on these risk assessments, the Organization should assign a risk level to each, and then determine the monitoring tools to apply based on these risk levels. We also recommend the Organization require its subrecipients to submit financial reports demonstrating use of each advance before advancing more funds, to ensure subrecipients are expending funds appropriately. Responsible Official/Anticipated Completion Date: Valerie Graff/September 2021
Show full finding ▾Hide full finding ▴Finding 2020-005: Sub-recipient Monitoring Information of the Federal Programs: CFDA 45.129 Criteria or Specific Requirement: As noted in 2 CFR 200.331 part (d): ?Monitor the activities of the sub-recipient as necessary to ensure that the sub-award is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the sub-award; and that sub-award performance goals are achieved?. Pass-through entity monitoring of the sub-recipient must include: 1. Reviewing financial and programmatic reports required by the pass-through entity. 2. Following-up and ensuring that the sub-recipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the sub-recipient from the pass-through entity detected through audits, on-site reviews, and other means. Condition: The Organization does not consistently maintain an appropriate level of documentation with respect to monitoring activities of the sub-recipients. We also noted instances when the Organization did not obtain current applicable reports from its sub-recipients. Our audit procedures consisted of substantive testwork over a sample of sub-recipient expenditures that were selected based on a threshold. We consider our sample to be representative of the population. Cause: The Organization does not have a formal policy governing risk assessment procedures over its sub-recipients. Effect or Potential Effect: The Organization could inadvertently engage in relationships with subrecipients of higher risk without the appropriate level of oversight (monitoring) to ensure sub-recipients are expending funds in accordance with the provisions and terms of the subaward. Questioned Costs: Undetermined Context: The Organization failed to adequately perform risk assessment procedures, or document its risk assessment procedures, over each of its sub-recipients. Identification as a Repeat Finding: This is not a repeat finding. Recommendation: We recommend the Organization review its procedures to ensure pre-risk assessment documentation is maintained for all sub-recipients. Based on these risk assessments, the Organization should assign a risk level to each, and then determine the monitoring tools to apply based on these risk levels. We also recommend the Organization require its subrecipients to submit financial reports demonstrating use of each advance before advancing more funds, to ensure subrecipients are expending funds appropriately. Responsible Official/Anticipated Completion Date: Valerie Graff/September 2021
Views of Responsible Officials and Planned Corrective Actions: We agree that subaward risk assessments need to be done and will work to improve this aspect of the grants awards. We acknowledge the need to note contact with awardees. We disagree regarding documentation for the grants process. HDC has a grants process for staff and evaluators that is being followed and the necessary supporting documentation is saved and was provided. Additionally, all pertinent files are stored based on the grant name/award number on the shared drive.
During our internal control testwork over payroll, we noted employee timesheets are completed based on time incurred by class (project) codes. At month end, management performs an allocation to allocate time incurred to a donor code which is based on donors? budgets and/or management's estimates. Cause: The Organization charges time incurred based on donors' budgets and/or management's estimates. Effect or Potential Effect: The current system does not allow the Organization to accurately track and charge salaries and wages to its various programs. As a result, the Organization could inadvertently mischarge salaries and wages to those programs. Questioned Costs: Undetermined Context: The Organization?s current time-recording system does not capture the actual level of effort per program. The issue is deemed to be systemic in nature. Identification as a Repeat Finding: This is not a repeat finding. Recommendation: We recommend that the Organization revise its chart of accounts to accurately reflect actual costs incurred to each grant by category so that there is a clear audit trail (based on actual costs and not budget) based on supporting documentation for a given expense (i.e. timesheets) to the donors charged. Responsible Official/Anticipated Completion Date: Valerie Graff/November 2021
Show full finding ▾Hide full finding ▴Finding 2020-006: Payroll Allocations Information of the Federal Programs: CFDA 45.129 Criteria or Specific Requirement: Title 2 U.S. Code of Federal Regulations (CFR) Part 200, paragraph 430 ?Compensation ? personal services? requires that charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed, and that these records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Additionally, these records must comply with established accounting policies and practices of the non-Federal entity. Condition: During our internal control testwork over payroll, we noted employee timesheets are completed based on time incurred by class (project) codes. At month end, management performs an allocation to allocate time incurred to a donor code which is based on donors? budgets and/or management's estimates. Cause: The Organization charges time incurred based on donors' budgets and/or management's estimates. Effect or Potential Effect: The current system does not allow the Organization to accurately track and charge salaries and wages to its various programs. As a result, the Organization could inadvertently mischarge salaries and wages to those programs. Questioned Costs: Undetermined Context: The Organization?s current time-recording system does not capture the actual level of effort per program. The issue is deemed to be systemic in nature. Identification as a Repeat Finding: This is not a repeat finding. Recommendation: We recommend that the Organization revise its chart of accounts to accurately reflect actual costs incurred to each grant by category so that there is a clear audit trail (based on actual costs and not budget) based on supporting documentation for a given expense (i.e. timesheets) to the donors charged. Responsible Official/Anticipated Completion Date: Valerie Graff/November 2021
Views of Responsible Officials and Planned Corrective Actions: Disagree. Each donor agreement clearly states what expenses they will and will not pay. As a result, the Executive Director reviews the overall budget and expenses and determines the amount of overhead, based on each allowable program, can be accurately charged to the donor. Each timecard requires an employee and supervisor/manager signature before processed for payroll. The indirect costs associated with the organization should be divided based on the overall donor?s program/requirements. In this case, NEH is one of the largest donors therefore a large portion of the non-program related expenses will be applied to their funds. The current timecard system is accurate and could be more efficient for staff, the bookkeeping function and audit. HDC will implement a new timecard system at the start of a new fiscal year. This will allow for ample setup and training for all involved. The current process allows each employee to accurately track their hours by program/task.
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