APPALACHIAN HEADWATERS INCNon-Profit

Condition: The Organization does not maintain a mapping schedule or other means to efficiently determine that expenses charged to the federal grant represent expenses incurred and paid as reflected in the general ledger. Criteria: Controls are not in place to ensure all expenses charged to the grant have been incurred and paid as reflected in the general ledger. Cause: The details of federal expenses are maintained outside of the general ledger and there is no efficient means to reconcile to the general ledger. Effect: Amounts reported as eligible grant expenses may be incorrect. Questioned Costs: N/A Recommendation: We recommend that the Organization consider incorporating a chart of accounts specifically used for federal grant expenditures. Alternatively, additional detail could be included in its grant spreadsheet to clearly indicate which expense account was charged in order to agree these amounts to the general ledger. This will allow the entity to ensure the accuracy of its grant reporting in a more efficient manner. Views of Responsible Officials and Planned Corrective Action: Management stated that they disagree with the audit finding. Management notes that all expenses are documented in spreadsheets, invoice form, and available for review. However, management indicates that it will begin reclassifying federal grant expenditures in the accounting software. Auditor notes that this is consistent with the auditor’s finding that the entity lacks a means to efficiently determine that expenses charged to the grant are included in the general ledger, and the auditor’s recommendation to consider incorporating a chart of accounts specifically used for federal grant expenditures.

Condition: The Organization does not maintain time and effort reports to support time allocations for salaried employees who are charged to the federal grant. Criteria: In accordance with 2 CFR section 200.430(g) charges to federal awards for salaries and wages must be based on records that accurately reflect the work performed. Cause: The Organization does not maintain time and effort reports to support allocations of salaried employees charged to the grant. Effect: With no time and effort reporting, the allocations for salaried employees for a particular pay period are not supported. Context: Of 25 payroll transactions tested from a population of approximately 300 transactions, we noted that payroll and related costs of $8,999 for four administrative employees were allocated to the grant, but those costs were not supported by time records or time studies. Upon further analysis of payroll costs, a total of $177,140 was determined to have been allocated to the grant for administrative employees but not supported by time records or time studies. Questioned Costs: Potential questioned costs of approximately $177,140. Recommendation: We recommend that management review controls over employee time reporting and determine an appropriate form to document time and effort for each pay period. This should include appropriate documentation of the employees time allocation between program and administrative duties based on work performed. These time and effort reports should be reviewed and approved by the employee’s direct supervisor or the Executive Director. Views of Responsible Officials and Planned Corrective Action: Management stated they will purchase a professional time tracking software program to help all employees track their work hours and activities.

Condition: The Organization did not submit the Single Audit Reporting Package to the Federal Audit Clearinghouse prior to the September 30, 2024, deadline. Criteria: Based on requirements set forth by 2 CFR section 200.512(a), the Organization is required to submit the Single Audit Reporting Package to the Federal Audit Clearinghouse by the earlier of thirty calendar days after receipt of the auditor's reports or nine months after the end of the audit period. Cause: The Organization’s audit was not completed and submitted to the Federal Audit Clearinghouse prior to the deadline for the year ended December 31, 2023. Effect: The Organization was not in compliance with the requirements of 2 CFR section 200.512(a) regarding the timely submission of the Single Audit Reporting Package to the Federal Audit Clearinghouse. The effect will not allow the Organization to be considered a low risk auditee for their next two annual Single Audits. Questioned Costs: N/A Recommendation: We recommend the Organization complete and submit all future annual Single Audits to the Federal Audit Clearinghouse prior to the required deadline to ensure all compliance requirements are met. Views of Responsible Officials and Planned Corrective Action: Management stated they intend to complete and submit all future audits prior to the required deadline. Management stated the failure was due solely to delays by the auditor. The auditor disagrees with this assertion, based upon the audit timeline evidenced in the audit documentation.

Condition: The Organization did not obtain detailed receipts to support certain employee reimbursements. Criteria: Controls are not in place to ensure all reimbursements are properly supported and classified. Cause: We noted that the Organization self-constructed several assets during the year which included construction supplies purchased directly by the Organization’s employees from a local vendor using personal funds. Documentation was then submitted to the Organization for reimbursement. We noted certain instances where the employee reimbursement requests were supported by monthly statements of account rather than itemized invoices. Effect: Amounts may be reimbursed without proper supporting documentation and items purchased may not benefit the Organization. Recommendation: We recommend the Organization request and receive detailed invoices for all employee reimbursements which include amounts, descriptions of items purchased, and delivery locations, if applicable. We also recommend the Organization pay vendors directly when a significant project is undertaken. Views of Responsible Officials and Planned Corrective Action: Corrective action has already been taken. Appalachian Headwaters requests and receives detailed invoices for all employee reimbursements which include amounts, descriptions of items purchased, and delivery locations, when possible. Appalachian Headwaters pays vendors directly whenever possible. Context: Of 25 expenses selected for testing, a reimbursement to the employee of $18,752 was determined to be a duplicate payment for an earlier reimbursement. One of the payments was supported by a summarized statement of account from the vendor, and further analysis of the vendor’s statements indicate that the duplicate payment was not credited to the Organization’s account. Questioned Costs: N/A - Below reporting threshold.

Condition: The Organization did not submit the Single Audit Reporting Package to the Federal Audit Clearinghouse prior to the September 30, 2023 deadline. Criteria: Based on requirements set forth by 2 CFR section 200.512(a), the Organization is required to submit the Single Audit Reporting Package to the Federal Audit Clearinghouse by the earlier of thirty calendar days after receipt of the auditor's reports or nine months after the end of the audit period. Cause: The Organization’s audit was not completed and submitted to the Federal Audit Clearinghouse prior to the deadline for the year ended December 31, 2022. Effect: The Organization was not in compliance with the requirements of 2 CFR section 200.512(a) regarding the timely submission of the Single Audit Reporting Package to the Federal Audit Clearinghouse. The effect will not allow the Organization to be considered a low risk auditee for their next two annual Single Audits. Views of Responsible Officials and Planned Corrective Action: Appalachian Headwaters aims to submit future Single Audits to the Federal Audit Clearinghouse prior to the required deadline to ensure all compliance requirements are met.

2020-001 Procurement documentation Criteria: Under the compliance requirements set forth in the Compliance Supplement, the Organization must maintain documentation related to their adherence to their written procurement policies and procedures. Such documentation should demonstrate the Organization's efforts to follow the federal procurement policies with respect to pricing as well the federal procurement policies with respect to the evaluation to determine if vendors are listed as suspended or debarred. Condition: The Organization did not maintain adequate records demonstrating compliance with this compliance requirement. Effect: The Organization could enter into transactions with suspended or debarred individuals or enter into contracts and or purchase goods from vendors at prices higher than necessary.