The Recovery Research Network Foundation, Inc.Non-Profit

IC 2021-01 Internal controls over the approval of invoices Internal Control Impact: Significant deficiency Compliance Impact: None Questioned Costs: None Identified Repeat finding: Yes ? IC 2020-02 Criteria: Invoices should be approved by the Chief Executive Officer or an official designated in the Foundation?s policies and procedure manual. Condition: For the fiscal year ended December 31, 2021, third-party invoices that were reviewed as part of our tests of controls, which had no indication of approval from the Chief Executive Officer. Cause: The Foundation did not properly review and approve invoices before they were paid. Potential Effect: Without proper approval, funds may be used for expenses that are not related to the operations of the Foundation. Perspective Information: Our sample size totaled 51 invoices tested. Of the 51 invoices, 25 invoices had no evidence of proper approval. This sample approximates to 87% of the Foundation?s total expenses for the year ended December 31, 2021. Recommendation: Invoices from the Foundation should be reviewed and stamped ?approved?, or a signature evidenced, prior to payment.

IC 2021-02 Internal controls over financial reporting Internal Control Impact: Material weakness Compliance Impact: None Questioned Costs: None Identified Repeat finding: No Criteria: The Foundation is required to prepare the financial statements in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP). Furthermore, U.S. GAAP requires the accrual basis of accounting to be used in preparing the financial statements. Condition: The financial statements provided at the commencement of fieldwork were materially misstated. Audit procedures performed resulted in 15 adjusting journal entries. Cause: During 2021, the Foundation did not maintain its accounting records in accordance with U.S. GAAP. During 2022, the Foundation engaged an external accounting firm to maintain the accounting records in accordance with U.S. GAAP, however fiscal year 2021 was not adjusted or closed properly using the accrual basis of accounting. Potential Effect: Without proper controls and review over the accounting system and financial reporting, the Foundation could fail to adhere to debt covenants and grant reporting requirements. The lack of proper controls and review procedures may also contribute to inefficiencies and higher costs incurred in retroactively correcting the accounting records. Perspective Information: Our audit resulted in 15 adjusting journal entries. These entries included, but were not limited to, reversal of prior period accrual entries, reclassification of grant revenues, reclassification of direct and indirect expenses, reverse improper netting of revenues and expenses, and record accrued interest receivable from related party. Recommendation: The Foundation should ensure that a qualified individual or company be retained to oversee the proper application of U.S. GAAP and integrity of the accounting system.

IC 2020-01 Accounting controls over recognition of grant revenue Internal Control Impact: Material Weakness Compliance Impact: None Questioned Costs: None Identified Repeat finding: No Criteria: Accounting guidance and accrual basis accounting require revenue earned in a reporting period be recorded in that reporting period?s financial statements. Condition: The policies and procedures of the Foundation did not provide adequate internal controls over the proper recording of grant revenue and required the Foundation?s beginning net asset balance to be restated by a material amount. Cause: Poorly designed policies and procedures and lack of continuity of adequately trained finance and accounting personnel with an understanding of the accrual basis of accounting. Effect or Potential Effect: The beginning balance of the Foundation?s net assets without donor restrictions was restated and material audit adjustments were recorded. Recommendation: We recommend that the Foundation?s management hire or retain a qualified accounting professional to assist in the completion of the Foundation?s monthly and annual financial reporting. The Foundation should further modify its accounting policies and procedures along with monitoring procedures to ensure compliance with accurate and complete financial reports and related compliance requirements.

IC 2020-02 Internal controls over the approval of invoices Internal Control Impact: Significant deficiency Compliance Impact: None Questioned Costs: None Identified Repeat finding: No Criteria: Invoices should be approved by the Chief Operating Officer or an official designated in the Foundation?s policies and procedure manual. Condition: Invoices that were reviewed showed no indication of approval from the Chief Operating Officer. Cause: The Foundation did not properly review and approve invoices before they were paid. Potential Effect: Without proper approval, funds may be used for expenses that are not related to the operations of the Foundation. Perspective Information: Our sample size totaled 31 invoices inspected with 12 invoices of the sample having no evidence of proper approval. This sample approximates to 90% of the Foundation?s total expenses for the year ended December 31, 2020. Recommendation: Invoices from the Foundation should be reviewed and marked approved prior to payment.