Experiment in Self Reliance Inc.Non-Profit

Condition: Certain check sequences were backdated during the year. Same finding as 2023-002. Criteria: Grant expenditures for the Community Services Block Grant must be incurred before they can be reimbursed by grantor. To the extent possible, sufficient liquidity should be maintained to ensure funds are expended before reimbursement from the CSBG grantor is requested. Cause: The Organization could not provide an explanation for why the backdating of checks occurred. Effects: As a result, in some cases, reimbursement of grant expenditures for the Community Services Block Grant were requested before they were actually paid out of cash. Cash and accounts payable balances were also materially misstated. Recommendation: Checks should be dated the day they are cut and entered in the accounting system as of that date to ensure expenses are recorded in the proper period and grant reimbursements are not made until after the expense is paid. Views of Responsible Officials and Planned Corrective Actions: The Organization agrees with the finding and will implement the recommended procedures as soon as possible.

Condition: Organization does not have personnel available with qualifications and training to properly charge the CSBG grant for allowable expenditures. Same finding as 2023-004. Criteria: One of the criteria established under the Uniform Guidance for the Community Services Block Grant is for the Organization to establish adequate controls to ensure the Allowable Costs requirements for the Uniform Guidance are followed. Cause: Accounting personnel did not have sufficient understanding and training to properly request reimbursements from the grantor. Effects: As a result, the wrong percentage was used to calculate certain employee salaries charged to the CSBG grant, resulting in the Organization improperly reporting grant expenses and receiving more grant funding than was allowable under the grant. These overcharged amounts, totaling $13,637, were owed back to the grantor as of year-end. Recommendation: The auditor recommends that additional sufficient understanding and training be obtained by accounting department personnel so they can properly request reimbursements from grantors. Views of Responsible Officials and Planned Corrective Actions: The Organization agrees with the finding and is working to establish a clear understanding of the grant reimbursement process to ensure the proper amounts are charged to each grant.

Condition: Out of thirty participants tested, auditor determined three of the participants had their annual income calculated incorrectly. All three would have otherwise not been eligible for aid based on federal poverty guidelines. Criteria: One of the criteria established under the Uniform Guidance for the Community Services Block Grant is for the Organization to establish adequate controls to ensure the Eligibility requirements for the Uniform Guidance are followed. Cause: Some grant coordinators did not have sufficient understanding and training to properly calculate and document eligibility for the CSBG program. Effects: As a result, certain ineligible participants were allowed to enroll in the program. Recommendation: The auditor recommends that additional sufficient understanding and training be obtained by the grant coordinators to ensure eligibility requirements for the Uniform Guidance are followed. Views of Responsible Officials and Planned Corrective Actions: The Organization agrees with the finding and is working to establish a clear understanding of the grant eligibility requirements with the grant coordinators to ensure eligibility requirements for the Uniform Guidance are followed.

2019-2 Applicant Eligibility for CFDA #93.569 Criteria: One of the criteria established by the Compliance Supplement issued in conformity with the Uniform Guidance for the Community Services Block Grant under CFDA# 93.569, is for the client to establish internal controls over individual's eligiblity to participate in this program. This eligibility is established in the Compliance Supplement to not exceed 125 percent of the HHS-determined poverty guidelines for a particular year. To facilitate this, the client makes all applicants provide check stubs for the prior three months from application date, and then they multiply times four to get to annualized income. Condition: Out of 44 participants tested, auditor determined that the client calculated 6 applicant's annual income materially incorrect. Of these 6 applicants, this would have made 5 of them not qualify for aid based upon the HHS-determined poverty guidelines. The actual and probable questioned costs are under the reportable threshold. Effect: Individuals are qualifying for funding that should not qualify. Cause: The causes can vary, but the predominant cause is due to the YTD column on pay stubs that the client puts in their files. The following are a few examples: 1.) An applicant will come in in May, and bring in February and April pay stubs. Then they will claim that they did not work and were not paid in March. However, on the first April pay stub, the beginning YTD column will not match the last February pay stub ending YTD column, and the difference is around one month's normal wages for the applicant. This would indicate that the applicant actually did work in March, and these wages should be factored into calculation. 2.) An applicant will come in in May, and bring in 5 bi-monthly pay stubs. There should be 6 bi-monthly pay stubs in a 3 month period, but the applicant only brings 5. There may or may not be a note that the applicant claims they did not work in the first pay period of the 90 day lookback. However, the first pay stub they bring in (second half of February) has around 3 bi-monthly pay periods of pay in the beginning balance YTD column, indicating that in all likelihood the applicant did work that first pay period in February. 3.) An applicant comes in with the correct number of pay stubs. The program worker then used net income to annualize income, instead of gross income. Recommendation: The client should implement additional training for their program workers, getting one streamlined process. Management should ensure that the annualization process is done correctly (correct number of pay-stubs, correctly using total gross pay, etc.), and actively train employees in regards to eligibility. Management should also instruct their program workers on the level of professional skepticism that they need to apply when determining eligiblity, and how to identify probable misstatements by applicants, either intentional or unintentional, and to flag questionable annualized income based on their judgement. At the very least, there should not be documentation in the applicant's files that seems to indicate that they do not qualify when they have been approved for the program. Management response: Based on the information/report received from the auditors, the Self Sufficiency Team has modified the calculation process to include the income year to date line on applicable pay stubs. Also, two checkpoints are in place to review the eligibility process/outcome to prevent numerical mistakes. The first check point consists of the Success Coach reviewing the eligibility calculation and documenting the calculation outcome on paper. The second check point is the final review of the documented outcome via the Self Sufficiency Manager. The modification was implemented on December 9, 2019.