CAPITAL AREA COMMUNITY ACTION AGENCY INC

2024-001 – Improper Payroll Approvals Information on the Federal Program: Assistance Listing Number 93.569—Community Service Block Grant, United States Department of Health and Human Services. Pass-Through Entity: State of Florida, Department of Commerce. Award Number: E-1994 (CSBG) Type of Finding: Material Weakness. Criteria: In accordance with the Agency’s written internal controls, for employee timesheets, “Supervisors review and approve subordinate’s time at the end of the pay period”. Condition: For 21 of 40 payroll transactions selected for testing during the year under audit, there was no approval of the employee’s timesheet by a Supervisor. Cause: Control activities relating to payroll timesheet approvals are not functioning properly, and the Agency was unable to provide supporting documentation that timesheets were approved by a Supervisor. Effect: The Agency is not following its documented internal controls relating to payroll timesheet approvals on a consistent basis. Recommendation: We recommend that the Agency adhere to written internal controls and ensure that all employee timesheets are approved at a level higher than the employee themselves. Additionally, we recommend that appropriate documentation of the approvals is retained.

2024-002 – Special Tests and Provisions (Tri-Partite Board) - Community Service Block Grant (CSBG) Information on the Federal Program: Assistance Listing Number 93.569—Community Service Block Grant, United States Department of Health and Human Services. Pass-Through Entity: State of Florida, Department of Commerce. Award Number: E-1994 (CSBG) Compliance Requirements: Special Tests and Provisions. Type of Finding: Significant Deficiency. Criteria: In accordance with the requirements of the Program outlined in ALN 93.569, CSBG and the CSBG Act at 42 USC 9910 nonprofit organizations administer CSBG through a board comprising of one third (1/3) of the board members chosen in a democratic selection process adequate to assure that these members are representative of the low-income individuals and families served and an additional 1/3 of the board comprising of public elected and/or appointed officials. Condition: The Agency was unable to meet the 1/3 requirements for the public elected/appointed officials and the 1/3 requirement for low-income individuals and families served during the year ended September 30, 2024. Cause: While the Agency's controls did identify a lack of participation in these areas, they did not include control activities to resolve the non-compliance in a timely manner. Effect: The Agency is out of compliance with the provisions requiring Tri-Partite Board as defined by the CSBG Act at 42 USC 9910. Recommendation: We recommend the Agency recruit board members from the areas identified in order to be in compliance with this requirement.

Criteria: In accordance with the requirements of the Program outlined in CFDA 93.569, CSBG and the CSBG ACT at 42 USC 9910 (a) nonprofit organizations administer CSBG through a board comprising of one third (1/3) of the board members are chosen in a democratic selection process adequate to assure that these members of the board are representative of the low-income individuals and families served. Condition: The Agency was unable to meet the 1/3 requirements for the public elected/appointed officials and the 1/3 requirement for low income individuals and families served during the year ended September 30, 2023. Questioned Costs: N/A Effect: The Agency is out of compliance with the provisions requiring Tri-Partite Board as defined by The CSBG ACT at 42 USC 9910. Cause: While the Agency's controls did identify a lack of participation in these areas, they did not include control activities to resolve the non-compliance in a timely manner. Recommendation: The Agency should implement procedures to mitigate the risk of prolonged non-compliance that are triggered when non-compliance with Tri-Partite Board requirements are identified. Management's Response: The Capital Area Community Action Agency Board membership fluctuates over time. Sometimes there are several public representatives or their designees on the board. Other times there are several private sector representatives. As a tri-partite board, low-income representatives are always on the board. While the numbers are not always equal, the Agency strives to meet the spirit of the law in its recruitment efforts. The Board will work to develop a more robust recruitment method to ensure a balance of representation from the three sectors.

Criteria: White House OMB Memo M20-26 which states, "payroll costs paid with the Paycheck Protection Program (PPP) loans or any other Federal CARES Act programs must not be also charged to current Federal awards as it would result in the Federal government paying for the same expenditures twice." 2 CFR 200.403 states that "except where otherwise authorized by statute, costs must meet the following general criterai in order to allowable under Federal awards...(f) not be included as a cost or used to meet cost sharing or matching requirements of any other federally-financed program in either the current or a prior period. Condition: Management used payroll from a federal grant (Head Start) to apply for PPP loan forgiveness. This same payroll was requested for reimbursement. Such payroll amounts cannot be reimbursed by both the PPP program and other federal funding. Effect: Previous reporting for Headstart grant expenditures was not accurate due to subsequent receipt of PPP funds forgiveness. The Agency is out of compliance with the PPP requirements, standards of White House OMB Memo M20-26 and 2 CFR 200.403. Cause: Management applied for the PPP loan not knowing if their grant funds were going to continue during the Covid-19 pandemic. The PPP loan was applied for 6 weeks prior to the White House OMB Memo M20-26 being issued, therefore Management's interpretation of the rules at that time did not contemplate the disallowance for costs also covered by a separate federal grant program. Recommendation: The Agency should seek grantor guidance regarding deferred grant funds. Management's Response: See the Management's Response to Findings section for management's detailed response to item 2022-001.

Criteria: Rents paid between the Agency and its subsidiary resulted in amounts charged to the program in amounts greater than the allowable amounts based on 2 CFR 200.465. Condition: The Agency leases office space from its subsidiary, Capital Area Community Action Agency Holdings, Inc. (Holdings). Rental payments are based on a set monthly rate. However, rental costs under less-than-arm's-length leases are allowable only up to the amount of actual costs incurred to own the property. This amount would include expenses such as depreciation, maintenance, taxes, and insurance. Management calculation of rental costs included unallowable components such as loan principle, future planned repairs and maintenance, and the amortization of a future loan payment. These costs are not allowable under 2 CFR 200. Questioned Costs: $20,679 Effect: The Agency is out of compliance with the allowable costs principles concerning related party rental payments. Cause: Management's interpretation of the allowable costs principles included various other costs such as principal payments, future repairs, and the amortization of future principle payments. Recommendation: The Agency should review its lease agreement and reconcile payments made to Holdings for allowable expenditures and determine if any amounts are due back to the grantor. The Agency should also amend their lease agreement to include only allowable costs. Management's Response: See the Management's Response to Findings section for management's detailed response to item 2022-002.

Criteria: Rents paid between the Agency and its subsidiary resulted in amounts charged to the program in amounts greater than the allowable amounts based on 2 CFR 200.465. Condition: The Agency leases office space from its subsidiary, Capital Area Community Action Agency Holdings, Inc. (Holdings). Rental payments are based on a set monthly rate. However, rental costs under less-than-arm's-length leases are allowable only up to the amount of actual costs incurred to own the property. This amount would include expenses such as depreciation, maintenance, taxes, and insurance. Management calculation of rental costs included unallowable components such as loan principle, future planned repairs and maintenance, and the amortization of a future loan payment. These costs are not allowable under 2 CFR 200. Questioned Costs: $13,587. These costs were satisfied with the settlement agreement with the Florida Department of Commerce as described in note 15. Effect: The Agency is out of compliance with the allowable costs principles concerning related party rental payments. Cause: Management's interpretation of the allowable costs principles included various other costs such as principal payments, future repairs, and the amortization of future principle payments. Recommendation: The Agency should review its lease agreement and reconcile payments made to Holdings for allowable expenditures anddetermine if any amounts are due back to the grantor. The Agency should also amend their lease agreement to include only allowable costs. Management's Response: See the Management's Response to Findings section for management's detailed response to item 2022-003.

Criteria: In accordance with the requirements of the Program outlined in CFDA 93.569, CGSB and the CSBG Act at 42 USC 9910(a) nonprofit organizations administer CSBG through a board comprising of one third (1/3) of the members be elected representatives in the community or their designee. Additionally, not fewer than one-third (1/3) of the board members are chosen in a democratic selection process adequate to assure that these members of the board are representative of the low-income individuals and families served. Condition: The Agency was unable to meet the 1/3 requirement for public elected/appointed officials and/or the 1/3 requirement for low income individuals and families served during the year ended September 30, 2022. Questioned Costs: N/A Effect: The Agency is out of compliance with the provisions requiring Tri-Partite Board as defined by The CSBG Act at 42 USC 9910. Cause: While the Agency's internal controls did identify a lack of participation in these areas, they did not include control activities to resolve the non-compliance in a timely manner. Recommendation: The Agency should implement procedures to mitigate the risk of prolonged non-compliance that are triggered when noncompliance with Tri-Partite Board requirements are identified. Management's Response: See the Management's Response to Findings section for management' s detailed response to item 2022-004.

Criteria: In accordance with the requirements of the Program outlined in CFDA 93.569, when a pass-through entity provides federal awards to a subrecipient, the pass through entity must monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with federal statutes, regulations, and the terms and conditions of the subaward. Condition: The Agency did not monitor their processes for participant eligibility with CSBG criteria. Questioned Costs: N/A Effect: The Agency's risk for approving ineligible funding to their subrecipient for individual assistance is increased. Cause: The Agency does not historically passthrough CSBG funds to third parties and was required to pass these funds through based on the contract requirements. While they were aware of the requirements to perform subrecipient monitoring, they did not perform those procedures on the subrecipients internal controls over eligibility determination. Recommendation: The Agency should implement procedures to ensure that subrecipient monitoring procedures are implemented for all compliance requirements and perform these procedures on a routine basis. Management's Response: See the Management's Response to Findings section for management' s detailed response to item 2022-005.

Criteria: In accordance with the requirements of the Program outlined in CFDA 93.569, the official guidelines as revised annually by HHS shall be used to determine eligibility. Condition: The test of the Agency's controls over compliance with eligibility compliance requirements resulted in four of 25 samples where the controls were not documented and as such could not be determined to be in place. The test of the Agency's controls over compliance with eligibility compliance requirements resulted in two of 25 samples where the controls did not detect errors in the determination of income for eligibility. Questioned Costs: N/A Effect: The Agency's risk for approving ineligible funding for individual assistance is increased. Cause: Pressures from COVID-19 resulted in controls being performed by others during an absence of qualified personnel and other communication issues. These pressures caused certain procedures in the process to be over-looked, improperly documented, or performed by someone without the requisite knowledge or training. Recommendation: The Agency should implement procedures to ensure that when pressures arise that create additional risk for error and/or noncompliance, additional safeguards are put in place including routine monitoring and cross training. Management's Response: See the Management's Response to Findings section for management' s detailed response to item 2022-006.

2021-002 Internal Controls Over Compliance - Special Tests and Provisions (Tri-Partite Board) - Community Service Block Grant Program (CSBG) - CFDA 93.569 - Grant Period Year Ended September 30, 2021 Criteria: In accordance with the requirements of the Program outlined in CFDA 93.569, CSBG and The CSBG Act at 42 USC 9910(a) nonprofit organizations administer CSBG through a board comprising one-third (1/3) of the members be elected representatives in the community or their designee. Condition: The Agency was unable to meet the 1/3 requirement for public elected/appointed officials during the year ended September 30, 2021. Questioned Costs: N/A Effect: The Agency is out of Compliance with the provision requiring a Tri-Partite Board as defined by The CSBG Act at 42 USC 9910. Cause: While the Agency's internal controls did identify a lack of participation in this area, they did not include control activities to resolve the non-compliance in a timely manner. Recommendation: The Agency should implement procedures to mitigate the risk of prolonged non-compliance that are triggered when noncompliance with Tri-Partite Board requirements are identified.

2021-003 Internal Controls Over Compliance - Sub-recipient Monitoring - Community Service Block Grant Program (CSBG) - CFDA 93.569 - Grant Period Year Ended September 30, 2021 Criteria: In accordance with the requirements of the Program outlined in CFDA 93.569, when a pass-through entity provides a federal award to a subrecipient, the pass-through entity must monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with federal statutes, regulations, and the terms and conditions of the subaward. Condition: The Agency did not monitor their sub-recipients processes for participant eligibility with CSBG criteria. Questioned Costs: N/A Effect: The Agency's risk for approving ineligible funding to their subrecipient for individual assistance is increased. Cause: The Agency does not historically passthrough CSBG funds to a third party and was required to pass these funds through based on the contract requirements. While they were aware of the requirement to perform subrecipient monitoring, they did not perform those procedures to the subrecipients internal controls over eligibility determination. Recommendation: The Agency should implement procedures to ensure that subrecipient monitoring procedures are implemented for all compliance requirements and perform these procedures on a routine basis.

2021-004 Internal Controls Over Compliance - Eligibility - Community Service Block Grant Program (CSBG) - CFDA 93.569 - Grant Period Year Ended September 30, 2021. Criteria: In accordance with the requirements of the Program outlined in CFDA 93.569, the official poverty guidelines as revised annually by HHS shall be used to determine eligibility. The CARES Act allows a state to adopt a revised poverty guideline but it may not exceed 200 percent of the HHS-determined poverty guidelines. Condition: The test of the Agency's controls over compliance with eligibility compliance requirements resulted in two of 40 samples where the controls were not documented and as such could not be determined to be in place. The test of the Agency's controls over compliance with eligibility compliance requirements resulted in one of 40 samples where the controls did not detect errors in the determination of income for eligibility. Questioned Costs: N/A Effect: The Agency's risk for approving ineligible funding for individual assistance is increased. Cause: Pressures from COVID-19 resulted in controls being performed by others during an absence of qualified personnel and other communication issues. These pressures caused certain procedures in the process to be over-looked, improperly documented, or performed by someone without the requisite knowledge or training. Recommendation: The Agency should implement procedures to ensure that when pressures arise that create additional risk for error and/or noncompliance, additional safeguards are put in place including routine monitoring and cross training.

2020-001 Payment Calculation Inconsistencies - Low-Income Home Energy Assistance Program - CFDA 93.568 Criteria: In accordance with the requirements of the Program outlined in CFDA 93.568, LIHEAP crisis payments are to be used only for the past due portion of the applicant's utility bill and should not be used for the current portion of the applicant's utility bill. Condition: The intake workers who recommend LIHEAP payments are not required to attend training regularly to go over what items are allowed and disallowed. Additionally, the supervisors approving LIHEAP payments are also not required to attend training regularly. Documentation maintained for support of the payments does not clearly identify the criteria applied. Questioned Costs: $9 Effect: A recipient was approved for a crisis payment in the amount of the current portion of the energy bill due instead of the past due amount. However, during the audit process, it was determined that the recipient was eligible for a home energy payment in addition to the crisis payment, which would have resulted in a payment of $9 less. Therefore, the questioned cost is the difference of $9. Cause: The Agency's internal controls did not identify or prevent the recipient from receiving a payment that included the current portion of the utility bill as a crisis payment.