The Alston Wilkes Society

Finding 2022-4 Utilities Expense Improperly Classified as Rent Name of Federal Agency: Listing Award Number Number 64.033 13-ZZ-134 U. S. Department of Veterans Affairs (VA) Program Title VA Supportive Services for Veteran Families (SSVF) Criteria or specific requirement: Generally Accepted Accounting Principles (GAAP) requires financial transactions be properly classified as to purpose and function. 13 THE ALSTON WILKES SOCIETY SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR THE YEAR ENDED DECEMBER 31, 2022 Section III - Federal Award Findings and Questioned Costs (continued) Condition: We selected a judgmental sample of 40 transactions to test. One out of the 40 sample items appears to be improperly classified. Our audit testing identified a transaction in the amount of $6,596.26 (sample item # 21) out of $134,400.16 total sample items that was recorded as" Rent, Penalties, Fees," when evidence shows it should have been recorded as utility expenses. Cause of condition: Existing internal controls did not properly function, where an employee performing their normal duties, in the normal course of business, should have identified the error and corrected it in a timely manner. Potential effect of condition: This condition results in a noncompliance finding for the period under audit. Questioned Costs: The costs are allowable, but improperly classified. No questioned costs identified. Prevalence and Consequence: A judgmental sample of 40 items was selected. Out of the 40 sample items tested, one was found to be improperly classified. This condition appears to be an isolated incident. Repeat Finding: No Recommendation: We recommend management continue to peruse effective internal controls to enable an employee, during the performance of their normal course duties, to identify errors in a reasonable amount of time, in order to enable management to identify and correct such errors at the time, or before they are recorded in the accounting records.

Finding 2022-5 No Prior Written Approval for Capital Disbursements in Excess of $10,000 Name of Federal Agency: Listing Award Number Number 64.033 13-ZZ-134 U. S. Department of Veterans Affairs (VA) Program Title VA Supportive Services for Veteran Families (SSVF) Criteria or specific requirement: 2 CFR 200.1 Definition for: Capital Expenditures means expenditures to acquire capital assets or expenditures to make additions, improvements, modifications, replacements, rearrangements, reinstallations, renovations, or alterations to capital assets that materially increase their value or useful life. 14 THE ALSTON WILKES SOCIETY SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR THE YEAR ENDED DECEMBER 31, 2022 Section III - Federal Award Findings and Questioned Costs (continued) 2 CFR 200.452 Maintenance and repair costs states: Costs incurred for utilities, insurance, security, necessary maintenance, janitorial services, repair, or upkeep of buildings and equipment (including Federal property unless otherwise provided for) which neither add to the permanent value of the property nor appreciably prolong its intended life, but keep it in an efficient operating condition, are allowable. Costs incurred for improvements that add to the permanent value of the buildings and equipment or appreciably prolong their intended life must be treated as capital expenditures (see § 200.439). These costs are only allowable to the extent not paid through rental or other agreements. 2 CFR 200.439 Equipment and Other Capital Expenditures, (b) (1-3) 1 Capital expenditures for general purpose equipment, buildings, and land are allowable as direct costs, but only with the prior written approval of the Federal agency or pass-through entity. 2 Capital expenditures for special purpose equipment are allowable as direct costs, provided that items with a unit cost of $10,000 or more have the prior written approval of the Federal agency or pass-through entity, and 3 Capital expenditures for improvements to land, buildings, or equipment that materially increase their value or useful life are allowable as a direct cost, but only with the prior written approval of the Federal agency or pass-through entity. Condition: We identified two transactions where the Society should have received prior written approval from the awarding agency, before incurring the costs. The transactions, in the amounts of $26,057 and $18,000, were recorded as equipment maintenance expense, and floor repairs, respectively. In accordance 2 CFR 200.439 b, it appears the cost should have had prior written approval. Cause of condition: The reason the condition occurred appears to be the lack of a thorough understanding of the cost principles under the Uniform Guidance (2 CFR Part 200, Subpart E - Cost Principles). Potential effect of condition: The possible effect of this condition is non-compliance with prior written approval requirements for disbursements totaling $44,057.51. Section III - Federal Award Findings and Questioned Costs (continued) Questioned Costs: This condition resulted in questioned costs totaling $44,057.51. The questioned cost amount was computed by adding the total of the two sample items tested for this condition, as shown below: Sample # Description 28 Floor Repairs 29 Equipment Maintenance Amount $18,000.00 26,057.51 $ 44,057.51 Prevalence and Consequence: A judgmental sample of 40 disbursements totaling $134,400.16 was selected. Out of the 40 sample items tested, two were identified where prior written approval was not obtained, totaling $44,057.51. Repeat Finding: No Recommendation: We recommend management ensure accounting personnel responsible for the administration of funds related to award programs, refamiliarize themselves with 2 CFR 200 Subpart E - Cost Principles, to enable them to recognize when prior written approval is required, and when to capitalize certain capital expenditures when the federal criteria are met for nongovernmental entities.

Section III ? Federal Award Findings and Questioned Costs Finding 2019-004 Compliance with Grant Terms Federal program: CFDA #64.033 VA Supportive Services for Veteran Families Program (?SSVF?) Criteria or specific requirement: The U.S. Department of Veterans Affairs Award Number: 13-ZZ-134 dated October 1, 2019 general terms #17 specifies that ?You may not be delinquent in the repayment of any Federal debt. Examples of relevant debt include delinquent payroll or other taxes ?..? Condition: The Society did not remit employer and employee payroll taxes in a timely manner to the U.S. Treasury. As a result of auditor review of the grant agreement, and interaction with the Executive Director, the Society became aware that the grant agreement terms had been violated by not timely remitting the payroll taxes. No Federal grants were signed during this time frame. Questioned costs: None Context: The Society did not timely remit payroll taxes for the June 2018, September 2018, December 2018, March 2019 calendar quarters to the U.S. Treasury. The Society entered into an agreement with the IRS on August 15, 2019 whereby the Society brought current all tax periods with the exception of the December 2018 and March 2019 calendar quarters. For the December 2018 and March 2019 calendar quarters the IRS and the Society have agreed to a $10,000 per month payment schedule to remit past due taxes, penalties, and interest until the balance is paid in full. Effect: The Society, due to not timely remitting payroll taxes, did not comply with the grant agreement provision #17 requirement to remain current on all amounts due to the Federal Government. Cause: The Society experienced negative operating cash flows for the years ended December 31, 2018 and 2017, and as such experienced difficulties in paying ongoing financial obligations. Recommendation: The Society should continue to more closely monitor financial operations and in difficult times reduce expense so that it can pay debts as they come due.