AFRICAN ECONOMIC DEVELOPMENT SOLUTIONSNon-Profit

Condition: During our audit, we noted a significant number of errors on the SEFA related to calculations of federal expenditures. Criteria: Uniform Guidance requires proper reporting of federal expenditures. Cause: Management did not track the information needed to properly prepare the Schedule of Expenditures of Federal Awards. Effect: Federal expenditures under two CFDA numbers and three federal awards were excluded from the Schedule of Expenditures of Federal Awards, resulting in expenditures being materially understated. Recommendation: We recommend that the Organization track the necessary information during the year and implement a review process to ensure correct reporting on the Schedule of Expenditures of Federal Awards prior to the audit.

Condition: There were several transactions that could not be traced from the reported expenditures to the bank activity. Criteria: Uniform Guidance requires that reported expenditures agree to the actual expenditures. Cause: A sufficient record trail was not kept to ensure and support that amounts requested from Federal funds through the State were disbursed to the appropriate recipients. Effect: Grants payments totaling $90,000 were received from the State of Minnesota but could not be located being disbursed from the bank to the grant recipients. Recommendation: Sufficient records should be kept to accurately track receipts of funds and the subsequent disbursements to recipients to ensure that all funds are properly disbursed.

Condition: Several grants could not be matched to supporting authorization of payments to grantees. Criteria: Uniform Guidance requires that recipients establish and maintain internal controls to prevent and detect unallowable expenditures. Cause: The Organization could not substantiate that the controls around maintaining documentation for disbursements were effective. Controls around disbursement approval and the related documentation were not maintained appropriately to comply with control requirements. Effect: Payments may have been made that would not have been approved. Recommendation: We recommend that controls be set up and documented to ensure that payments of funds are not made without approval. In addition, we recommend that documentation of approved disbursements be kept in records for a reasonable time from 5-7 years.

Condition: Payments were made to small businesses directly and through cultural mall grants to the same small businesses. In addition, payments were made twice to the same small business. Criteria: The grant that the Organization received had two main objectives: grants to small businesses and grants to cultural malls. The cultural mall grants include payments to mall tenants. The State of Minnesota requires that grantees are not paid more than once in the form of either small business grants or cultural mall grants. Cause: The cultural mall request information was not reviewed thoroughly enough to find that payments were disallowed because of previous payment. In addition, previous payments were not reviewed thoroughly enough to ensure that small businesses were not receiving two payments from two applications and grants. Effect: Grantees were improperly paid twice. Recommendation: We recommend that grants be checked for accuracy or duplication before they are approved.

Condition: The Organization did not present a payroll allocation report to support COVID-19 payroll distributions for employees whose work was not substantially dedicated to COVID-19 response. Criteria: Funds used for payroll sourced from the Coronavirus Relief Fund must be paid to employees who substantially use all of their time for COVID-19 response. Alternatively, the funds can be paid to employees for their time spent on COVID-19 response if they are not substantially dedicated to COVID-19 response and have a payroll activity report to support their time allocation. This payroll activity report must report real hours worked and cannot report estimated or budgeted hours worked on COVID-19 response. Cause: The Organization did not implement an effective strategy for tracking employee time spent working on COVID-19 projects. Effect: Payroll funds may have been spent from Federal funds that were not allowable. Recommendation: We recommend that payroll activity reports be kept when it is required by Federal funding.