Hospitality House of Northwest North CarolinNon-Profit

CRITERIA: Failure in the operation of effectively designed internal controls over compliance requirements Reporting and Special Tests and Provisions noted in findings 2021-4 and 2021-5. CONDITION: Insufficient application of internal controls over compliance and related financial reporting. EFFECT: Material noncompliance under Special Tests and Provisions and Reporting compliance requirements. CAUSE: Staffing constraints and turnover related to the COVID-19 pandemic, insufficient cross training in the finance position, and failure to note specific contract requirements of a new source of funding. RECOMMENDATION: Organization should review specifics of grant contracts to ensure the system of internal control adequately covers requirements noted there. Management should staff the finance position in such a way that those requirements are reliably achieved. VIEWS OF RESPONSIBLE OFFICIALS AND PLANNED CORRECTIVE ACTIONS: Hospitality House of Northwest North Carolina agrees with this finding. The finance department will be staffed sufficiently and internal control procedures will be cross-referenced to requirements of new and existing sources of grant funding.

CRITERIA: Special Tests & Provisions of the major program require grantees to ensure recipients, subrecipients, and vendors paid over $50,000 with the grant award are registered with www.sam.gov and to obtain a DUNS number. CONDITION: Two vendors meeting the criteria were not registered with www.sam.gov and the Organization was unable to verify if the vendors obtained DUNS numbers. EFFECT: Use of grant funding was not disclosed according to provisions of the award causing program data not to be available at the federal level for future evaluation. CAUSE: Rapid onset of the COVID-19 pandemic influenced management's ability to evaluate and implement a new grant funding source with similar requirements to existing contracts held. RECOMMENDATION: Management and the Board should carefully review grant documentation and clearly communicate requirements to staff implementing the program. The budget process for federal funds should include vetting of vendor payments against such requirements. VIEWS OF RESPONSIBLE OFFICIALS AND PLANNED CORRECTIVE ACTIONS: Hospitality House of Northwest North Carolina agrees with this finding. Management and governance will review future grant requirements carefully and ensure staff reliably implement them.

CRITERIA: CFR 200.512 requires the audit to be completed and data collection form to be 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. CONDITION: The audit was unable to conclude or be submitted within nine months of the audit period. EFFECT: Current and future grant funding is at risk of nonrenewal and potential clawback. The Organization is precluded from being considered a low-risk auditee in the subsequent audit engagement. CAUSE: Staffing constraints and turnover related to the COVID-19 pandemic and insufficient cross training in the finance position. RECOMMENDATION: Management and the Board should ensure the finance department remains sufficiently staffed. Those individuals should be cross-trained in the duties of the finance function to insulate the Organization from effects of potential future turnover. VIEWS OF RESPONSIBLE OFFICIALS AND PLANNED CORRECTIVE ACTIONS: Hospitality House of Northwest North Carolina agrees with this finding. The finance department will be staffed sufficiently and procedures will be implemented to cross-train where possible.