BOYS AND GIRLS CLUBS OF GREATER HOUSTON INC.Non-Profit

Finding #2024-001 – Material Weakness and Material Noncompliance. Applicable federal program: U. S. Department of Education, COVID-19 – Education Stabilization Fund, Assistance Listing #84.425U, Passed through Texas Education Agency, Contract period: 01/31/22 – 05/31/24, Contract number: 215280587110020, Passed through Lamar Consolidated Independent School District, Contract period: 09/01/22 – 06/30/24, Contract number: None, Passed through Wharton Independent School District, Contract period: 01/01/22 – 06/30/24, Contract number: None. Criteria: Allowable costs – The Uniform Guidance, Subpart E Cost Principles, requires that charges to federal awards for salaries and wages be based on records that accurately reflect work performed and support the distribution of an employee’s salary or wages among specific activities or cost objectives, which includes being supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Condition and context: In a sample of 30 payroll transactions, 7 did not have timesheets to support the allocation of salary costs charged to the major program. Further investigation revealed that Boys and Girls Clubs did not require time and effort reporting for program management personnel whose time charged to the awards totaled approximately $98,000. Repeat finding of #2023-003. Cause: A lack of understanding that all time charged to the award must be supported by time and effort reporting. Effect: Failure to establish controls for adherence with the Uniform Guidance for allowable costs may result in unallowed costs charged to the program. Questioned costs: Unknown. Recommendation: Strengthen controls to require time and effort reporting of actual time incurred for all salaries and wages charged to federal programs. Views of responsible officials and planned corrective actions: Management agrees with the finding. See Corrective Action Plan.

Finding #2023-002 – Material Weakness. Applicable federal program: U. S. Department of Education, COVID-19 – Education Stabilization Fund, Assistance Listing #84.425U, Passed through Texas Education Agency, Contract period: 01/31/22 – 05/31/24. Contract number: 215280587110020. Passed through Lamar Consolidated Independent School District, Contract period: 09/01/22 – 06/30/24, Contract number: None. Passed through Wharton Independent School District, Contract period: 01/01/22 – 06/30/24, Contract number: None. Criteria: Allowable costs – Same as finding #2023-001. Condition and context: Same as finding #2023-001. Cause: Same as finding #2023-001. Effect: Same as finding #2023-001. Questioned costs: Unknown. Recommendation: Same as finding #2023-001. Views of responsible officials and planned corrective actions: Management agrees with the finding. See Corrective Action Plan.

Finding #2023-003 – Material Weakness and Material Noncompliance. Applicable federal program: U. S. Department of Education, COVID-19 – Education Stabilization Fund, Assistance Listing #84.425U, Passed through Texas Education Agency, Contract period: 01/31/22 – 05/31/24, Contract number: 215280587110020. Passed through Lamar Consolidated Independent School District, Contract period: 09/01/22 – 06/30/24, Contract number: None, Passed through Wharton Independent School District, Contract period: 01/01/22 – 06/30/24, Contract number: None. Criteria: Allowable costs – The Uniform Guidance, Subpart E Cost Principles, requires that charges to federal awards for salaries and wages be based on records that accurately reflect work performed and support the distribution of an employee’s salary or wages among specific activities or cost objectives, which includes being supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Condition and context: In a sample of 30 payroll transactions, 7 did not have timesheets to support the allocation of salary costs charged to the major program; however, 1 of the 7 was charged 100% to the award. Further investigation revealed that Boys and Girls Clubs did not require time and effort reporting for program management personnel whose time charged to the awards totaled approximately $245,000. Cause: A lack of understanding that all time charged to the award must be supported by time and effort reporting. Effect: Failure to establish controls for adherence with the Uniform Guidance for allowable costs may result in unallowed costs charged to the program. Questioned costs: Unknown. Recommendation: Strengthen controls to require time and effort reporting of actual time incurred for all salaries and wages charged to federal programs. Views of responsible officials and planned corrective actions: Management agrees with the finding. See Corrective Action Plan.

Finding #2022-001 ? Significant Deficiency and Other Noncompliance Applicable federal program: U. S. Department of Treasury Coronavirus State and Local Fiscal Recovery Funds Assistance Listing #: 21.027 Contract Number: None Contract Year: 03/03/21 ? 12/31/24 Criteria: Procurement ? Nonprofit organizations are required to conduct procurement transactions in a manner providing full and open competition consistent with standards prescribed in Uniform Guidance, Subtitle III Procurement Standards and conform to federal and state laws and regulations and other contractual requirements. Uniform Guidance requires that for small purchase procedures, price or rate quotations must be obtained from an adequate number of qualified sources, which for Boys and Girls Clubs is 3 sources. Condition and context: Of the two expenditures charged to the grant, which met or exceeded Boys and Girls Clubs? micro-purchase threshold, one did not go through a procurement process in accordance with Boys and Girls Clubs? policies and the Uniform Guidance. Cause: Failure to follow Boys and Girls Clubs? procurement policy by those responsible for procurement. Effect: Failure to follow formal procurement methods may result in Boys and Girls Clubs purchasing goods or services for more than would be necessary if required competitive procurement procedures had been followed. Recommendation: Provide additional education to employees responsible for procurement on Boys and Girls Clubs? procurement policy. Views of responsible officials: Management agrees with the finding. See Corrective Action Plan.

Finding #2019-001 ? Material Weakness Applicable federal program: U. S. Department of Agriculture Passed through The Houston Food Bank Emergency Food Assistance Program (Food Commodities) CFDA #10.569 Contract #101-0452K9 Contract year: 01/01/19 ? 12/31/19 Criteria: Preparation of Schedule of Expenditures of Federal Awards ? In accordance with the Uniform Guidance ?200.508 and ?200.510, management is to prepare a schedule of expenditures of federal wards (SEFA) for the period covered by the auditee?s financial statements which must include the total federal awards expended. Condition and context: Boys and Girls Clubs prepared a SEFA that included all cash expenditures. However, the food commodities were not included in the SEFA. Cause: Food commodities received from the pass-through organization include both federally funded and non-federally funded commodities. Policies and procedures have not been established to identify federally funded food commodities. Effect: Failure to establish and maintain internal control procedures over the preparation of the SEFA may result in Boys and Girls Clubs? not reporting all of the federal expenditures on its SEFA and improper determination of major programs. Recommendation: Boys and Girls Clubs should develop policies and procedures to identify federally funded commodities and to ensure that the SEFA includes all federal expenditures. Views of responsible officers and planned corrective action: Management agrees with the finding. See Corrective Action Plan.