EIN: 813859588
UEI: G1NMA2GL72D7
Data as of August 27, 2026
Management decision deadline — for entities that funded this organization
The FAC accepted this audit on September 27, 2022. Under 2 CFR 200.521(d), a pass-through entity that provided federal funds to this organization for this audit period must issue a management decision on these findings by March 27, 2023 (1250 days ago).
What is a management decision? →CRITERIA: The Organization is required to implement internal controls over financial reporting to ensure compliance with federal program requirements and to ensure these controls are operating as designed. CONDITION: The Organization does not have adequate segregation of duties for financial reporting purposes. CONTEXT: During dual purpose tests of controls and compliance over payroll disbursements, we noted there is no review and approval of payroll prior to processing, and that payroll allocations are not reviewed for accuracy. Our sample consisted of six bi-weekly pay periods. Additionally, the Organization does not have an independent Board of Directors to oversee the activities of management. No questioned costs were identified as a result of this finding. This finding was also reported for the year ended December 31, 2020, as noted in the Summary Schedule of Prior Audit Findings. The draft audit report for the year ended December 31, 2020 was issued in December 2021; therefore, management did not have an opportunity to address recommendations from that audit during 2021. EFFECT: This circumstance increases the opportunity for errors and misstatements to go undetected. CAUSE: Management feels that they are appropriately staffed given their operations and funding, and feel that adding administrative staff would not be a prudent use of their funding. Further, the Organization commenced operations in 2019; volunteer directors were not sought out until the Organization?s programmatic initiatives were solidified. RECOMMENDATION: Additional inquiry and procedures noted that steps have been taken to mitigate this finding: the CFO?s signature authority on the bank account was rescinded effective December 30, 2021; four independent board members were appointed in 2022; the CEO began reviewing payroll prior to processing, including allocations to programs, in 2022; additional reviews are conducted by the President in 2022. We recommend that management continue to look for opportunities to improve segregation among staff involved with financial reporting. VIEWS OF RESPONSIBLE OFFICIALS: The Organization does not concur with the finding. Their views, as well as any planned corrective actions, are included in the following corrective action plan.
Show full finding ▾Hide full finding ▴CRITERIA: The Organization is required to implement internal controls over financial reporting to ensure compliance with federal program requirements and to ensure these controls are operating as designed. CONDITION: The Organization does not have adequate segregation of duties for financial reporting purposes. CONTEXT: During dual purpose tests of controls and compliance over payroll disbursements, we noted there is no review and approval of payroll prior to processing, and that payroll allocations are not reviewed for accuracy. Our sample consisted of six bi-weekly pay periods. Additionally, the Organization does not have an independent Board of Directors to oversee the activities of management. No questioned costs were identified as a result of this finding. This finding was also reported for the year ended December 31, 2020, as noted in the Summary Schedule of Prior Audit Findings. The draft audit report for the year ended December 31, 2020 was issued in December 2021; therefore, management did not have an opportunity to address recommendations from that audit during 2021. EFFECT: This circumstance increases the opportunity for errors and misstatements to go undetected. CAUSE: Management feels that they are appropriately staffed given their operations and funding, and feel that adding administrative staff would not be a prudent use of their funding. Further, the Organization commenced operations in 2019; volunteer directors were not sought out until the Organization?s programmatic initiatives were solidified. RECOMMENDATION: Additional inquiry and procedures noted that steps have been taken to mitigate this finding: the CFO?s signature authority on the bank account was rescinded effective December 30, 2021; four independent board members were appointed in 2022; the CEO began reviewing payroll prior to processing, including allocations to programs, in 2022; additional reviews are conducted by the President in 2022. We recommend that management continue to look for opportunities to improve segregation among staff involved with financial reporting. VIEWS OF RESPONSIBLE OFFICIALS: The Organization does not concur with the finding. Their views, as well as any planned corrective actions, are included in the following corrective action plan.
With regard to the FINANCIAL STATEMENT FINDINGS and the FEDERAL AWARD FINDINGS AND QUESTIONED COSTS, LAPPA does not concur with the auditor?s finding that it does not have adequate segregation of duties for financial reporting purposes. LAPPA acknowledges that Government Auditing Standards require any internal control findings that affect both the federal audit and the financial audit to be reported as two separate findings. For purposes of this communication, LAPPA has consolidated its response. LAPPA acknowledges that segregation of duty opportunities within the organization are necessarily limited by the organization?s size and structure; however, LAPPA has implemented a series of effective controls that meet or exceed the industry standard for a small non-profit and that have shown in practice to be capable of preventing errors and misstatements. Should errors and misstatements occur, LAPPA has implemented systems capable of immediately detecting and correcting any such errors or misstatements. LAPPA disagrees with the Audit?s finding that there is not adequate segregation of duties for financial reporting purposes. LAPPA has three officers: the Chief Executive Officer (CEO), the Chief Financial Officer (CFO), and the President. LAPPA?s CFO is a licensed Certified Public Accountant (CPA), who has experience with not-for-profit organizations and audit compliance. LAPPA?s CEO and President together have over six decades of combined experience working with not-for-profits and federal grants at the highest level, including providing financial oversight at a variety of organizations. As a CPA, LAPPA?s CFO can address all the organization?s accounting needs. LAPPA and its CFO have all the resources needed to maintain high standards of internal financial control and keep LAPPA in good financial standing both as a stand-alone entity and as the recipient of federal grant funds. LAPPA?s officers each have a clearly designated role related to financial controls and two of those officers devote nearly 100 percent of their respective time to financial management and compliance. These individuals work together but also provide checks of tasks completed by the other. Having three out of eight (the number of LAPPA employees in 2021) involved in financial reporting matters is more than enough to meet the stated standard of ?adequate segregation.? With regard to the FINANCIAL STATEMENT FINDINGS, LAPPA disagrees that its officer employees are tasked with incompatible duties. LAPPA employs a highly competent CFO, who is a CPA, to manage the organization?s accounting and related financial needs. LAPPA?s CEO has significant experience managing federal grant awards and overseeing all aspects of internal financial control, both as CEO at LAPPA and in previous positions. LAPPA?s President is involved in all financial decisions and participates in monthly meetings at which all aspects of LAPPA?s operation, including financial controls and reporting, are thoroughly discussed. To increase the number of parties involved in the accounting process, beyond the three referenced above, would require either (1) assigning executive duties to unqualified existing staff or (2) hiring additional individuals to act in executive capacity to oversee the accounting process. Neither of these steps is warranted, however, since LAPPA has a system in place that already meets and, in many cases, exceeds what are considered standard financial control policies and procedures for an organization of LAPPA?s size, with a not-for-profit research and education mission, that currently operates under one modest federal grant. LAPPA removed the CFO as a signatory on its bank account, leaving the CEO and President as the only individuals with full authority on the bank account ? the CFO will continue to have viewing access so that she can reconcile the monthly financials. With regard to the FEDERAL AWARD FINDINGS AND QUESTIONED COSTS, LAPPA disagrees that there is no review and approval of payroll prior to processing, and that payroll allocations are not reviewed for accuracy. LAPPA?s CFO completes a thorough multi-step process every two weeks, prior to processing payroll, and the entire process is reviewed by the CEO. The process is as follows: 1) The CEO and CFO review every staff member?s electronically submitted timesheet, after said timesheets have already been independently reviewed and approved by each staff member?s immediate supervisor. 2) The hours provided on the timesheets are used to calculate net and gross pay every two weeks. 3) Information is entered into ADP?s (LAPPA?s payroll provider) electronic portal and then reviewed again for accuracy before processing. 4) Funds are deposited electronically into each staff member?s bank account, and the CEO reviews electronic paystubs for any inaccuracies, which are unlikely given the fact the LAPPA?s payroll remains the same every two weeks throughout the grant term. 5) When changes are made to LAPPA?s payroll, an infrequent occurrence, the CFO and CEO review the changes both before and after the first payroll to be affected by the change, in addition to the standard review procedure described above. 6) While LAPPA believes the steps outlined above are sufficient, LAPPA?s CEO will also now review a selection of journal reports from Quick Books to ensure the proper allocation of salaries across grant programs. 7) In December 2021, immediately after receiving its prior year audit, LAPPA?s CEO and President began reviewing bi-weekly payroll reports for accuracy. See Corrective Action Plan for remainder of response ? response here limited due to character limitations.
2020-002
FAC accepted this audit on January 31, 2022 — management decision was due July 31, 2022.
CRITERIA: The Organization is required to implement internal controls over financial reporting to ensure compliance with federal program requirements and to ensure these controls are operating as designed. CONDITION: The Organization does not have adequate segregation of duties for financial reporting purposes. CONTEXT: During dual purpose tests of controls and compliance over payroll disbursements, we noted there is no review and approval, by the CEO, of payroll prior to processing, and that payroll allocations are not reviewed for accuracy. Our sample consisted of six bi-weekly pay periods. Additionally, the Organization does not have an independent Board of Directors to oversee the activities of management. No questioned costs were identified as a result of this finding. EFFECT: This circumstance increases the opportunity for errors and misstatements to go undetected. CAUSE: This situation is a result of management?s cost-benefit analysis related to staffing of the Organization, with prudent use of funds as the key factor in their analysis. Further, the Organization commenced operations in 2019; volunteer directors were not sought out until the Organization?s programmatic initiatives were solidified. RECOMMENDATION: We recommend that management continue to look for opportunities to improve segregation among staff involved with financial reporting, as well as expand the Board of Directors to include volunteer members to provide oversight. VIEWS OF RESPONSIBLE OFFICIALS: The Organization does not concur with the finding. Their views, as well as any planned corrective actions, are included in the following corrective action plan.
Show full finding ▾Hide full finding ▴CRITERIA: The Organization is required to implement internal controls over financial reporting to ensure compliance with federal program requirements and to ensure these controls are operating as designed. CONDITION: The Organization does not have adequate segregation of duties for financial reporting purposes. CONTEXT: During dual purpose tests of controls and compliance over payroll disbursements, we noted there is no review and approval, by the CEO, of payroll prior to processing, and that payroll allocations are not reviewed for accuracy. Our sample consisted of six bi-weekly pay periods. Additionally, the Organization does not have an independent Board of Directors to oversee the activities of management. No questioned costs were identified as a result of this finding. EFFECT: This circumstance increases the opportunity for errors and misstatements to go undetected. CAUSE: This situation is a result of management?s cost-benefit analysis related to staffing of the Organization, with prudent use of funds as the key factor in their analysis. Further, the Organization commenced operations in 2019; volunteer directors were not sought out until the Organization?s programmatic initiatives were solidified. RECOMMENDATION: We recommend that management continue to look for opportunities to improve segregation among staff involved with financial reporting, as well as expand the Board of Directors to include volunteer members to provide oversight. VIEWS OF RESPONSIBLE OFFICIALS: The Organization does not concur with the finding. Their views, as well as any planned corrective actions, are included in the following corrective action plan.
LAPPA does not concur with the finding that it does not have adequate segregation of duties for financial reporting purposes as related to compliance with federal program requirements. LAPPA acknowledges that Government Auditing Standards require any internal control findings that affect both the federal audit and the financial audit to be reported as two separate findings. For purposes of this communication, LAPPA has separated its response into Section A above, relative to the financial audit, and Section B, relative to the federal audit. LAPPA?s direct response to the language listed on Page 22 is as follows, with the Audit?s language in plain text and LAPPA?s response noted in italics: Criteria: The Organization is required to implement internal controls over financial reporting to ensure compliance with federal program requirements and to ensure these controls are operating as designed. Criteria Response: LAPPA confirms this requirement has been met. LAPPA developed, implemented, and follows a comprehensive Financial Policies and Procedures Manual that contains a section dedicated to the financial management of Federal Awards. This document implements internal controls over financial reporting as required for compliance with federal grant award programs. This document is reviewed on a continual basis by LAPPA?s CEO, CFO, and President and is amended and updated as needed. A complete copy of this document was provided to Hantzmon Wiebel. Condition: The Organization does not have adequate segregation of duties for financial reporting purposes. Condition Response:LAPPA disagrees with the Audit?s finding that there is not adequate segregation of duties for financial reporting purposes. LAPPA has three officers: the Chief Executive Officer (CEO), the Chief Financial Officer (CFO), and the President. LAPPA?s CFO is a licensed Certified Public Accountant (CPA), in good standing, who has experience with not-for-profit organizations such as LAPPA and with audit compliance. LAPPA?s CEO and President together have over six decades of combined experience working with not-for-profits and federal grants at the highest level, including providing financial oversight at a variety of organizations. As a CPA, LAPPA?s CFO can address all the organization?s accounting needs. LAPPA and its CFO have all the resources needed to maintain high standards of internal financial control and keep LAPPA in good financial standing both as a stand-alone entity and as the recipient of federal grant funds. LAPPA?s officers each have a clearly designated role related to financial controls and two of those officers devote nearly 100 percent of their respective time to financial management and compliance. These individuals work together but also provide checks of tasks completed by the other. As evidence of proper segregation of duties among those who are involved in federal program compliance and related aspects of LAPPA?s operation, please note the following description of how (1) LAPPA requests grant funds from its current grantor and (2) files required federal financial reports: Fund Requests 1)LAPPA?s CFO prepares a bi-weekly request for funds from the Office of National Drug Control Policy, LAPPA?s current grantor. 2)This request is reviewed by LAPPA?s CEO for accuracy and then submitted to ONDCP for review and approval. 3)Once a request is approved, and the funds are deposited in LAPPA?s banking institution, LAPPA?s CFO and CEO note the amount to check for accuracy before writing any checks off the deposit. 4)These requests are maintained in the Excel format and cumulative so that the CFO, CEO, and President have immediate access to a real-time snapshot of all funds expended to date and all funds being requested for a certain bi-weekly draw. 5)In addition to being reviewed at the time of the draw request, and upon funds being deposited, this information is reviewed on scheduled monthly calls between the CEO, CFO, and President. Required Financial Reporting 1)As a grant funds recipient, LAPPA is required to file a series of quarterly financial reports; LAPPA?s CFO reviews internal records and prepares these reports in a timely fashion. 2)LAPPA?s CEO reviews and certifies these reports prior to their being filed with the appropriate agency. 3)LAPPA has filed these reports in compliance with all standards and timelines and has never, to our knowledge, filed any reports containing errors; all the reports LAPPA has filed, were reviewed, and accepted as accurate by the Office of National Drug Control Policy and federal government?s Payment management System. These two processes described above are representative of the type of policies and procedures LAPPA employs to ensure multiple staff members are involved in federal financial compliance, ensuring ?adequate segregation.? Context: During dual purpose tests of controls and compliance over payroll disbursements, we noted there is no review and approval, by the CEO, of payroll prior to processing, and that payroll allocations are not reviewed for accuracy. Our sample consisted of six bi-weekly pay periods. Additionally, the Organization does not have an independent Board of Directors to oversee the activities of management. No questioned costs were identified as a result of this finding. Context Response: LAPPA disagrees that there is no review and approval, by the CEO, of payroll prior to processing, and that payroll allocations are not reviewed for accuracy. LAPPA?s CFO completes a thorough multi-step process every two weeks, prior to processing payroll, and the entire process is reviewed by the CEO. The process is as follows: 1)The CEO and CFO review every staff member?s electronically submitted timesheet, after said timesheets have already been independently reviewed and approved by each staff member?s immediate supervisor. 2)The hours provided on the timesheets are used to calculate net and gross pay every two weeks. 3)Information is entered into ADP?s (LAPPA?s payroll provider) electronic portal and then reviewed again for accuracy before processing. 4)Funds are deposited electronically into each staff member?s bank account, and the CEO reviews electronic paystubs for any inaccuracies, which are unlikely given the fact the LAPPA?s payroll remains the same every two weeks throughout the grant term. 5)When changes are made to LAPPA?s payroll, an infrequent occurrence, the CFO and CEO review the changes both before and after the first payroll to be affected by the change, in addition to the standard review procedure described above. 6)While LAPPA believes the steps outlines above are sufficient, LAPPA?s CEO will also now review a selection of journal reports from Quick Books to ensure the proper allocation of salaries across grant programs.With regards to having such activities overseen by an independent board of directors, it would be considered highly irregular for a member of a board of directors to oversee in any way payroll operations in a small not-for-profit organization. Boards of directors for 501c3 organizations that conduct public policy research, such as LAPPA, are typically small and are primarily dedicated (1) to fundraising and (2) to providing oversight on the types of substantive issues on which the organization will focus its research and organization efforts. LAPPA has expanded its Board of Directors (BOD), and while policy boards are not typically involved in day-to-day financial oversight, each LAPPA Board Member will be provided with copies of all monthly financial statements, tax returns, audit findings, and any other documents they wish to review. LAPPA?s BOD currently consists of LAPPA?s CEO, President, and CFO, as well as four independent members ? a licensed counselor, a non-profit certified public accountant, an analyst for the Virginia State Supreme Court, and the executive director of a national peer recovery organization. Effect: This circumstance increases the opportunity for errors and misstatements to go undetected. Effect Response: LAPPA disagrees with this conclusion and points to the evidence provided throughout this response. Errors and misstatements are part of the ordinary course of business, but LAPPA contends the designation of duties assigned to each party involved in accounting services, financial oversight, and federal reporting/compliance, and clearly delineated in LAPPA?s Financial Policies and Procedures Manual, minimizes errors and misstatements. Further, with clearly defined and standardized practices within each executive?s job description and controls / checks / balances that meet or exceed the standard for an organization such as LAPPA, such errors or misstatements are not an ordinary part of LAPPA?s course of business, as our record of compliance clearly shows. Cause: This situation is a result of management?s cost-benefit analysis related to staffing of the Organization, with prudent use of funds as the key factor in their analysis. Further, the Organization commenced operations in 2019; volunteer directors were not sought out until the Organization?s programmatic initiatives were solidified. LAPPA concurs with the ?Cause? as it is stated above. Recommendation: We recommend that management continue to look for opportunities to improve segregation among staff involved with financial reporting, as well as expand the Board of Directors to include volunteer members to provide oversight. Recommendation Response: Please see responses above, as they reflect LAPPA?s conclusion that it has more than adequate segregation among staff involved with financial reporting. As outlined above, LAPPA has already expanded its Board of Directors, and while policy boards are not typically involved in day-to-day financial oversight and/or federal award compliance, each LAPPA Board Member will be provided with copies of all monthly financial statements, tax returns, audit findings, and any other documents they wish to re
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