MOUNTAIN CIRCLE FAMILY SERVICES, INC.

In our testing of cash disbursements, we noted that the Organization did not maintain proper controls over cash disbursements and credit card transactions. The Organization follows the practice of using signature stamps for both signatures on cash disbursements, and disbursements to vendors and employees do not have sufficient documentation before payment is made.

After completion of the previous year?s audit, the Organization redesigned and began implementation of revised accounting policies and procedures, with an emphasis on segregation of duties and internal controls.

2019-002

In our testing of revenue, and payments to foster parents we noted that the Organization lacks procedures for reviewing and reconciling the monthly billing for services it performs, as well as the monthly payments to foster care parents.

The Organization developed and is in the process of implementing new policies, procedures, and internal controls for all aspects of accounting, including the foster care payment and billing process. The processes emphasize the involvement of both financial and non-financial personnel and the segregation of duties.

2019-003

In our testing of cash disbursements we noted that the Organization did not maintain proper controls over cash disbursements, payroll, and credit card transactions. The Organization follows the practice of using signature stamps for both signatures on cash disbursements, and disbursements to vendors and employees are not sufficiently documented. Payroll transactions during the year included bonuses paid, as well as payroll advances, without Executive Director, or Board approval. Overall, there was insufficient documentation regarding the rate of pay for employees, and the rates of withholding for benefits.

Upon discovery of the misappropriation of funds, the Organization immediately terminated employees suspected to be involved, consulted its attorney, and is currently working on implementing control processes that are more effective. This includes the transfer of the main office to a location near the Executive Director in order to maintain sufficient oversight.

2018-001

In our testing of revenue, and payments to foster parents we noted that the Organization lacks procedures for reviewing and reconciling the monthly billing for services it performs, as well as the monthly payments to foster care parents.

The Organization will be developing and implementing a new procedures to ensure the foster care parent payment process, and the billing process for services is completed accurately and properly reviewed.

We noted in our audit fieldwork that there appears to have been a failure in leadership at the Management and Board of Directors level. This has contributed to a environment which allowed for the apparent misappropriation of assets, and other deficiencies in complying with state and federal requirements, as reported in this audit report.

The Organization will be combining the Finance office and the executive office at one location. We will also be reevaluating the working relationship and reporting lines & responsibilities between the Board, Executive Director, the Finance office & other managers.

Payroll charges for salaried employees were not supported by time and attendance records and salary distribution reports.

Mountain Circle Family Services will be receiving training on the new Uniform Guidance Requirements, and then designing the correct documentation to comply with this requirement.

Even though the Board of Directors approved, the Organization cannot use federal money for rental of residential property for purposes such as a home office from anyone affiliated with the Organization. Additionally, even though the Board of Directors approved, the federal regulations prohibit the use of federal money for fringe benefits, such as repayment of student loans, without prior approval. We were unable to determine that there was prior approval from the pass-through grantor for these expenses provided as a fringe benefit to the Executive Director. The Board of Directors may use federal monies to pay bonuses, but must first establish and approve a reasonable, measurable plan prior to the issuance of any bonuses.

Mountain Circle Family Services will be receiving training on the new Uniform Guidance Requirements, and then designing the Executive Director?s compensation accordingly.