Center for the Future of ArizonaNon-Profit

Preparation of the Financial Statements, Schedule of Expenditures of Federal Awards and Material Audit Adjustments Material Weakness Criteria: Complete controls over financial reporting include the ability to prepare financial statements and accompanying notes to the financial statements and the schedule of expenditures of federal awards that are materially correct and include all required disclosures. Condition: As auditors, we were requested to draft the financial statements from data provided by CFA. The data included material misstatements which, if not corrected through audit adjustments, would have resulted in financial statements that were materially misstated. The data also contained an error considered to be a prior period adjustment that overstated current revenue by $129,408. Additionally, the schedule of expenditures of federal awards was completed by the auditors with data provided by CFA that was incorrect as a result of audit adjustments. Cause: CFA has limited staff to prepare full disclosure financial statements. Effect: There is a reasonable possibility that CFA would not be able to draft the financial statements and schedule of expenditures of federal awards that are correct without assistance of auditors. Recommendation: While we recognize that this condition is not unusual for an organization with limited staffing, it is important that CFA is aware of this condition on financial reporting purposes. Management and the board of directors should continually be aware of the financial accounting and reporting of CFA and changes in the accounting and reporting requirements. Views of Responsible Officials: Management agrees with the finding.

U.S. Department of Education Education Innovation and Research CFDA #84.411C Activities Allowed Allowable Costs Period of Performance Material Weakness in Internal Control Criteria: A complete system of internal controls requires all expenditures to be properly approved and supported by appropriate documentation. In addition, all expenditures charged to the federal programs are required to be allowable costs under the program and allocated in accordance with CFA?s cost allocation plan. Condition: One out of 19 non-payroll expenditures tested lacked the required signature of the Director of Fiscal and Business Operations. Cause: Due to an oversight by CFA, the signatures of both the Director of Fiscal and Business Operations and the Manager of Business Operations were not present on the expenditure documentation. Effect: Improper expenses may be improperly approved. Questioned Costs: $0 Context/Sampling: A nonstatistical sample of 27 transactions out of 135 total transactions were selected for testing which accounted for $203,609 of $774,665 total federal program expenditures. Repeat Finding from Prior Year : No. Recommendation: We recommend CFA's management require both the Director of Fiscal and Business Operations and the Manager of Business Operations to review and approve all non-payroll expenditures. Views of Responsible Officials: Management agrees with the finding.

U.S. Department of Education Education Innovation and Research CFDA #84.411C Activities Allowed Allowable Costs Period of Performance Material Weakness in Internal Control Criteria: A complete system of internal controls requires all expenditures to be properly approved and supported by appropriate documentation. In addition, all expenditures charged to the federal programs are required to be allowable costs under the program and allocated in accordance with CFA’s cost allocation plan. Condition: One out of 19 non‐payroll expenditures tested lacked the required signature of the Director of Fiscal and Business Operations. Cause: Due to an oversight by CFA, the signatures of both the Director of Fiscal and Business Operations and the Manager of Business Operations were not present on the expenditure documentation. Effect: Improper expenses may be improperly approved. Questioned Costs: $0 Context/Sampling: A nonstatistical sample of 27 transactions out of 135 total transactions were selected for testing which accounted for $203,609 of $774,665 total federal program expenditures. Repeat Finding from Prior Year: No. Recommendation: We recommend CFA’s management require both the Director of Fiscal and Business Operations and the Manager of Business Operations to review and approve all non‐payroll expenditures. Views of Responsible Officials: Management agrees with the finding.

U.S. Department of Education COVID‐19 Governor’s Emergency Education Relief (GEER) CFDA #84.425C Activities Allowed Allowable Costs Significant Deficiency in Internal Control over Compliance and Noncompliance Criteria: A complete system of internal controls requires all expenditures to be properly approved and supported by appropriate documentation. In addition, all expenditures charged to the federal programs are required to be allowable costs under the program and allocated in accordance with CFA’s cost allocation plan. Condition: One out of 15 payroll expenditures tested lacked the required support to show that hours billed by program employees were allocated in accordance with actual time spent rather than predetermined budgeted amounts. Cause: Due to an oversight by CFA, documentation was not retained supporting actual time spent. Effect: Improper expenses may be charged to the federal program or charged at the wrong amount. Questioned Costs: $228 Context/Sampling: A nonstatistical sample of 60 transactions out of 361 total transactions were selected for testing which accounted for $62,746 of $819,086 total federal program expenditures. Repeat Finding from Prior Year: No. Recommendation: We recommend CFA require all documentation surrounding time spent on programs be retained. Views of Responsible Officials: Management agrees with the finding.

U.S. Department of Education COVID‐19 Governor’s Emergency Education Relief (GEER) CFDA #84.425C Activities Allowed Allowable Costs Significant Deficiency in Internal Control over Compliance and Noncompliance Criteria: A complete system of internal controls requires all expenditures to be properly approved and supported by appropriate documentation. In addition, all expenditures charged to the federal programs are required to be allowable costs under the program and allocated in accordance with CFA’s cost allocation plan. Condition: One out of 15 payroll expenditures tested allocated more time to the program than what was actually spent. Seven out of 15 payroll expenditures tested were improperly applied to the grant. Cause: Due to an oversight by CFA, the monthly payroll report was not updated to match the actual time spent on the program. Effect: Costs could be incorrectly applied to the program. Questioned Costs: $447 Context/Sampling: A nonstatistical sample of 60 transactions out of 361 total transactions were selected for testing which accounted for $62,746 of $819,086 total federal program expenditures. Repeat Finding from Prior Year: No. Recommendation: We recommend CFA implement controls to ensure payroll applied to the program matches time spent per supporting documentation. Views of Responsible Officials: Management agrees with the finding.

Preparation of the Financial Statements, Schedule of Expenditures of Federal Awards and Material Audit Adjustments Material Weakness Criteria: Complete controls over financial reporting include the ability to prepare financial statements and accompanying notes to the financial statements and the schedule of expenditures of federal awards that are materially correct and include all required disclosures. Condition: As auditors, we were requested to draft the financial statements from data provided by CFA. The data included material misstatements which, if not corrected through audit adjustments, would have resulted in financial statements that were materially misstated. The data also contained an error considered to be a prior period adjustment that overstated current revenue by $129,408. Additionally, the schedule of expenditures of federal awards was completed by the auditors with data provided by CFA that was incorrect as a result of audit adjustments. Cause: CFA has limited staff to prepare full disclosure financial statements. Effect: There is a reasonable possibility that CFA would not be able to draft the financial statements and schedule of expenditures of federal awards that are correct without assistance of auditors. Recommendation: While we recognize that this condition is not unusual for an organization with limited staffing, it is important that CFA is aware of this condition on financial reporting purposes. Management and the board of directors should continually be aware of the financial accounting and reporting of CFA and changes in the accounting and reporting requirements. Views of Responsible Officials: Management agrees with the finding.

U.S. Department of Education Education Innovation and Research CFDA #84.411C Activities Allowed Allowable Costs Period of Performance Material Weakness in Internal Control Criteria: A complete system of internal controls requires all expenditures to be properly approved and supported by appropriate documentation. In addition, all expenditures charged to the federal programs are required to be allowable costs under the program and allocated in accordance with CFA?s cost allocation plan. Condition: One out of 19 non-payroll expenditures tested lacked the required signature of the Director of Fiscal and Business Operations. Cause: Due to an oversight by CFA, the signatures of both the Director of Fiscal and Business Operations and the Manager of Business Operations were not present on the expenditure documentation. Effect: Improper expenses may be improperly approved. Questioned Costs: $0 Context/Sampling: A nonstatistical sample of 27 transactions out of 135 total transactions were selected for testing which accounted for $203,609 of $774,665 total federal program expenditures. Repeat Finding from Prior Year : No. Recommendation: We recommend CFA's management require both the Director of Fiscal and Business Operations and the Manager of Business Operations to review and approve all non-payroll expenditures. Views of Responsible Officials: Management agrees with the finding.

U.S. Department of Education Education Innovation and Research CFDA #84.411C Activities Allowed Allowable Costs Period of Performance Material Weakness in Internal Control Criteria: A complete system of internal controls requires all expenditures to be properly approved and supported by appropriate documentation. In addition, all expenditures charged to the federal programs are required to be allowable costs under the program and allocated in accordance with CFA’s cost allocation plan. Condition: One out of 19 non‐payroll expenditures tested lacked the required signature of the Director of Fiscal and Business Operations. Cause: Due to an oversight by CFA, the signatures of both the Director of Fiscal and Business Operations and the Manager of Business Operations were not present on the expenditure documentation. Effect: Improper expenses may be improperly approved. Questioned Costs: $0 Context/Sampling: A nonstatistical sample of 27 transactions out of 135 total transactions were selected for testing which accounted for $203,609 of $774,665 total federal program expenditures. Repeat Finding from Prior Year: No. Recommendation: We recommend CFA’s management require both the Director of Fiscal and Business Operations and the Manager of Business Operations to review and approve all non‐payroll expenditures. Views of Responsible Officials: Management agrees with the finding.

U.S. Department of Education COVID‐19 Governor’s Emergency Education Relief (GEER) CFDA #84.425C Activities Allowed Allowable Costs Significant Deficiency in Internal Control over Compliance and Noncompliance Criteria: A complete system of internal controls requires all expenditures to be properly approved and supported by appropriate documentation. In addition, all expenditures charged to the federal programs are required to be allowable costs under the program and allocated in accordance with CFA’s cost allocation plan. Condition: One out of 15 payroll expenditures tested lacked the required support to show that hours billed by program employees were allocated in accordance with actual time spent rather than predetermined budgeted amounts. Cause: Due to an oversight by CFA, documentation was not retained supporting actual time spent. Effect: Improper expenses may be charged to the federal program or charged at the wrong amount. Questioned Costs: $228 Context/Sampling: A nonstatistical sample of 60 transactions out of 361 total transactions were selected for testing which accounted for $62,746 of $819,086 total federal program expenditures. Repeat Finding from Prior Year: No. Recommendation: We recommend CFA require all documentation surrounding time spent on programs be retained. Views of Responsible Officials: Management agrees with the finding.

U.S. Department of Education COVID‐19 Governor’s Emergency Education Relief (GEER) CFDA #84.425C Activities Allowed Allowable Costs Significant Deficiency in Internal Control over Compliance and Noncompliance Criteria: A complete system of internal controls requires all expenditures to be properly approved and supported by appropriate documentation. In addition, all expenditures charged to the federal programs are required to be allowable costs under the program and allocated in accordance with CFA’s cost allocation plan. Condition: One out of 15 payroll expenditures tested allocated more time to the program than what was actually spent. Seven out of 15 payroll expenditures tested were improperly applied to the grant. Cause: Due to an oversight by CFA, the monthly payroll report was not updated to match the actual time spent on the program. Effect: Costs could be incorrectly applied to the program. Questioned Costs: $447 Context/Sampling: A nonstatistical sample of 60 transactions out of 361 total transactions were selected for testing which accounted for $62,746 of $819,086 total federal program expenditures. Repeat Finding from Prior Year: No. Recommendation: We recommend CFA implement controls to ensure payroll applied to the program matches time spent per supporting documentation. Views of Responsible Officials: Management agrees with the finding.

Criteria: A complete system of internal controls requires all expenditures to be properly approved and supported by appropriate documentation. In addition, all expenditures charged to the federal programs are required to be allowable costs under the program and allocated in accordance with CFA?s cost allocation plan. Condition: Ten out of 23 expenditures tested lacked the required support to show that hours billed by program employees were allocated in accordance with actual time spent rather than predetermined budgeted amounts. Cause: Due to an oversight by CFA, detailed timecards were not retained supporting actual time spent rather than predetermined budgets. Effect: Improper expenses may be paid and charged to the federal program or charged at the wrong amount. Questioned Costs: Employees? time charged to the program could be over or understated compared to actual time worked on the program by an amount that has not been determined. Total payroll expenditures were $243,913. Context/Sampling: A nonstatistical sample of 23 transactions out of 99 total transactions were selected for testing which accounted for $151,822 of $557,193 total federal program expenditures. Repeat Finding from Prior Year: No. Recommendation: We recommend CFA?s management implement a process that allows for actual hours for time spent to be billed to the program and ensure that supporting documents are retained. Views of Responsible Officials: Management agrees with the finding.

Criteria: Uniform Guidance requires all costs reimbursed by federal awards be for costs incurred and paid prior to receiving reimbursement. Condition: One out of four cash drawdowns tested included reimbursement for costs not yet incurred totaling $37,580. Management corrected the error during the year ended June 30, 2021. Cause: Due to an oversight by CFA, an error in the detail of expenditures submitted for reimbursement was not identified prior to submitting for reimbursement. Effect: CFA was reimbursed for expenses not yet incurred or paid prior to receiving reimbursement as required by Uniform Guidance. Questioned Costs: Management corrected the error with the following reimbursement submission, resulting in $0 of questioned costs. Context/Sampling: 100% of cash drawdowns (4 out of 4 total drawdowns) were selected for testing which accounted for $557,953 total federal program reimbursements. Repeat Finding from Prior Year: No. Recommendation: We recommend CFA?s management ensure costs submitted for reimbursement are costs that were incurred and paid prior to the reimbursement request. Views of Responsible Officials: Management agrees with the finding.