AMERICANS FOR THE ARTSNon-Profit

ALN #45.024 Finding No. 2022-002: Reporting – Compliance Finding and Material Weakness in Internal Control Over Compliance Criteria Federal regulations require that the Data Collection Form be submitted within 30 days of management’s receipt of the audited reports or within nine months of an organization’s fiscal year end, whichever is earliest. Context The Organization did not timely submit its Data Collection Form to the Federal Clearinghouse by the required due date for its 2022 fiscal year end. Cause The delay in filing was the result of delay in the year-end close process for the year ended December 31, 2022. Effect Noncompliance under the Uniform Guidance could be considered as part of any future award decisions by federal agencies. Questioned Cost: None Repeat Finding Yes, this is a repeat of finding number 2021-002 Recommendation We recommend that management enhance its year end financial close process to include sufficient procedures to adequately prepare for the performance of a Single Audit within the prescribed reporting deadline. Views of Responsible Officials and Planned Corrective Actions See Correction Action Plan.

ALN #45.024 Finding No. 2021-002: Reporting ? Compliance Finding and Material Weakness in Internal Control Over Compliance Criteria Federal regulations require that the Data Collection Form be submitted within 30 days of management?s receipt of the audited reports or within nine months of an organization?s fiscal year end, whichever is earliest. Context The Organization did not timely submit its Data Collection Form to the Federal Clearinghouse by the required due date for its 2021 fiscal year end. Cause The delay in filing was the result of delay in the year-end close process for the year ended December 31, 2021. Effect Noncompliance under the Uniform Guidance could be considered as part of any future award decisions by federal agencies. Questioned Cost: None Recommendation We recommend that management enhance its year end financial close process to include sufficient procedures to adequately prepare for the performance of a Single Audit within the prescribed reporting deadline Views of Responsible Officials and Planned Corrective Actions See Correction Action Plan.

Finding No. 2019-003: Payroll ? Material Weakness in Internal Control Over Compliance ? CFDA 45.024 Finding No. 2019-002 in Section B is II is also a finding with respect to the major federal program. The payroll costs for some employees in quarter 1 of 2019 were estimated based on timesheets from quarter 2 of 2019. The estimate was done in 2020. Finding No. 2019-002: Payroll ? Significant Deficiency in Internal Control over Financial Reporting: Condition: Payroll charged to a federal award was not always based on hours worked on the program per employee timesheets. In some instances the payroll charged was based on an estimate of time worked in the first quarter of 2019 using the 2nd quarter?s timesheets. Context: The Organization was not aware of all requirements of federal awards. Criteria: Salaries and wages charged to the federal awards must be based on records that accurately reflect the work performed; the records must comply with an organization?s internal controls and established accounting policies. Cause: The Organization did not follow the related compliance requirements under the Uniform Guidance until the start of the 2018 audit in April 2019. Effect: Noncompliance under the Uniform Guidance could be considered as part of any future award decisions by federal agencies. Management reports issued during the year were not accurate. Questioned Cost: The total amount charged to the federal award that was based on an estimate was $130,198. Repeat Finding: No Recommendation: We recommend that payroll charges to the federal awards be supported by timesheets. Additionally, we recommend that the Organization obtain an indirect cost rate as the payroll of administrative employees may be charged through a cost pool based on the approved indirect cost rate.

Finding No. 2019-004: Reporting ? Material Weakness in Internal Control Over Compliance ? CFDA 45.024 Condition: The Organization did not track expenses separately, either in the general ledger or outside the general ledger, for two federal awards. Context: The Organization was unable to determine total federal expenditures specifically related to two federal awards totaling $110,000 because expenses related to other funding sources for the same program were included within the same general ledger cost center. Criteria: In accordance with ?200.510 the Organization must prepare a schedule of expenditures of federal awards for the period covered by the auditee?s financial statements which must include the total federal awards expended as determined in accordance with ?200.502, which states the determination of when a federal award is expended must be based on when the activity related to the federal award occurs. Cause: The Organization tracks expenditures by project and since they were unaware that their NEA funding required a Single Audit, they were not specifically tracking expenditures related to the federal funding portion of the project separately from the overall project. Effect: The Organization was unable to determine the exact expenditures related to two awards from NEA. Questioned Cost: None. The Organization incurred expenses totaling more than the amount of the expenses included on the Schedule of Expenditures of Federal Awards related to both of the awards. Repeat Finding: Yes ? Finding 2018 ? 003. Recommendation: We recommend that the Organization establish procedures to better manage the tracking of its federal awards in its chart of accounts so that expenses can be recorded and tracked at the grant level. Further, expense coding training may be required of employees who are responsible for coding expenses to ensure that the new coding is being properly utilized.

Finding No. 2019-005: Reporting ? Significant Deficiency in Internal Control over Compliance ? CFDA 45.024 Condition: The Schedule of Federal Expenditures (the Schedule) was not prepared correctly. Context: Management included awards that should not have been included in the Schedule based on the supporting agreements provided. Criteria: Management is responsible for (a) identifying all federal awards received, (b) preparing the Schedule (including notes and noncash assistance received) in accordance with the Uniform Guidance. Cause: Management was not aware of all requirements under the Uniform Guidance. Effect: Failure to comply with reporting requirements under the grant agreement could be considered as part of any future award decisions by the federal agency. Questioned Cost: None. Repeat Finding: No. Recommendation: We recommend that management enhance its understanding of Single Audit compliance requirements through additional training.

Finding No. 2019-006: Reporting ? Material Weakness in Internal Control Over Compliance ? CFDA 45.024 Condition: The Organization did not timely submit its Data Collection Form to the Federal Clearinghouse by the required due date for its 2019 fiscal year end. Context: The 2018 Single Audit was finalized on March 4, 2020. Management needed sufficient time to prepare for the Single Audit procedures and reporting for 2019. Criteria: Federal regulations require the Data Collection Form be submitted within 30 days of management?s receipt of the audited reports or within nine months of an organization?s fiscal year end, whichever is earliest. The deadline for the 2019 fiscal year end was moved due to the COVID pandemic to December 31, 2020. Cause: The 2019 audit was not ready to be finalized prior to December 31, 2020. Effect: Noncompliance under the Uniform Guidance could be considered as part of any future award decisions by federal agencies. Questioned Cost: None. Repeat Finding: Yes, Finding 2018 ? 002. Recommendation: We recommend that the Organization?s year-end financial close include sufficient procedures to adequately prepare for the performance of a Single Audit within the prescribed reporting deadline.

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