MEETING THE CHALLENGE INCNon-Profit

Criteria or specific requirement ? Management is required to ensure that there is a formal, written procurement policy in place to ensure that procurements of goods and services are in compliance with applicable federal cost rules. Conditions ? At the beginning of the fiscal year, the Organization did not have a formal, written procurement policy for purchases of goods and services. During the year, management became aware of the requirement to have a formal, written procurement policy and implemented such a policy effective December 12, 2019. Context ? In our testing of 40 non-direct-labor expenditures, we found that 13 of our selections of goods and services were purchased without following a formal, written procurement policy. All of these instances occurred prior to December 12, 2019. Cause ? Management was unaware of the requirement for a written procurement policy in place for the procurements of goods and services. Effect ? We noted no purchases exceeding the simplified acquisition threshold. However, there were 2 procurements considered small purchases for which documentation of price or rate quotations obtained from an adequate number of qualified sources were not available. Recommendation ? No recommendation as the policy was put in place in December 2019. Views of responsible officials and planned corrective actions ? A formal written procurement policy was created and put into effect as of December 12, 2019. Proposed Completion Date: Completed

2019-001

Criteria or specific requirement ? Management is required to have internal controls in place to ensure that Quarterly and Annual Financial Status Reports (SF-425) are submitted in a timely manner. Conditions ? Internal controls over timely submission of reports were not in place during part of the year. Context ? During our testing of reporting, we noted that there were no controls in place for the first Quarterly Financial Status Report to ensure reports are submitted timely. Cause ? Procedures were not in place to ensure the timely submission of the first Quarterly Financial Status Report. Effect ? We found no instances where reports were not submitted to Federal officials in a timely manner. However, procedures were not in place to ensure the timely submission of the first Quarterly Financial Status Report. Recommendation ? No recommendation as the policy was put in place during the current year. Views of responsible officials and planned corrective actions ? A calendar reminder has been set up in Outlook to begin 10 days prior to the submission deadline of each quarterly SF-425 report as of the second quarter of the current fiscal year. Proposed Completion Date: Completed

2019-002

Criteria or specific requirement ? Management is required to ensure that there is a formal, written procurement policy in place to ensure that procurements of goods and services are in compliance with applicable federal cost rules. Conditions ? Purchases of goods and services do not follow a formal, written procurement policy. Context ? In our testing of 30 non-direct-labor expenditures, we noted that goods and services were purchased without following a formal, written procurement policy. Cause ? Management was unaware of the requirement for a written procurement policy in place for the procurements of goods and services. Effect ? We noted no purchases exceeding the simplified acquisition threshold. However, there were procurements considered small purchases for which price or rate quotations were not obtained from an adequate number of qualified sources. Recommendation ? We recommend that management create a formal, written procurement policy and ensure all personnel are made aware of the importance of the policy to ensure future procurement of goods and services are appropriate and are in compliance with applicable federal cost rules. Views of responsible officials and planned corrective actions ? A formal written procurement policy was created and put into effect as of December 12, 2019. Proposed Completion Date: Immediately

2018-001

Criteria or specific requirement ? Management is required to submit Quarterly and Annual Financial Status Reports (SF-425) in a timely manner. Conditions ? Some reports were not submitted by the date they were due. Context ? During our testing of reporting, we noted that there were no controls in place to ensure reports are submitted timely. Cause ? Procedures were not in place to ensure the timely submission of the Quarterly and Annual Financial Status Reports. Effect ? In certain instances reports were not received by Federal officials in a timely manner. We found that the Q4 SF-425, due on October 30, 2019, was submitted untimely on November 5, 2019. Recommendation ? We recommend that management ensure that controls are in place to ensure that reports are submitted timely. Views of responsible officials and planned corrective actions ? A calendar reminder has been set up in Outlook to begin 10 days prior to the submission deadline of each quarterly SF-425 report. Proposed Completion Date: Immediately

2018-002

Criteria or specific requirement ? Management is required to ensure that there are sufficient internal controls in place over the non-direct labor costs charged to the program. This includes internal controls that ensure that all non-direct labor costs are appropriate and properly documented. Conditions ? Documentation supporting the non-direct labor costs were not on file. Context ? During our testing of allowable costs and activities, we noted that five of our 30 non-direct labor cost selections charged to the program did not have the supporting documentation on file. Cause ? Supporting documentation was not consistently maintained. Effect ? Non-direct labor costs for five of our thirty selections did not have supporting documentation. During the performance of audit procedures, we noted that non-direct labor costs totaling $5,485 were charged to the program for which complete supporting documentation was not available, with total questioned costs of $31,180. The sample consisted of 30 selections totaling $72,169 with a total population of $410,260. Recommendation ? We recommend that management maintain appropriate and proper documentation for non-direct labor costs charged to the program to ensure future compliance with applicable federal cost rules. Views of responsible officials and planned corrective actions ? At this time, all vendor invoices that are entered into the accounting system are input with the invoice as an accompanying attachment for documentation. Proposed Completion Date: Immediately

2018-006

Criteria or specific requirement ? Management is required to have internal controls in place to ensure that the pay rates of program employees charged to the program are appropriate. This includes internal controls that ensure that all pay rates charged to the program are appropriate. Conditions ? Employee pay rates for certain employees charged to the program did not agree with the actual rate paid to the employees. Context ? During our testing of allowable costs and activities, we noted that one employee was being charged to the program at a rate different than the actual rate paid to the employee. Cause ? Existing procedures surrounding the charging of payroll costs to the program were not followed. Effect ? The pay rate of one employee charged to the program was different than the actual rate paid to the employee. The employee was selected in four different pay periods, out of a sample of 30 totaling $2,569. We reviewed all pay periods for the employee and noted the program was overcharged $111. Recommendation ? We recommend that management ensure that employee payroll costs charged to the program are consistent with the actual rate paid to employees to ensure future compliance with applicable federal cost rules. Views of responsible officials and planned corrective actions ? Hourly rates are kept in the accounting system and will be reviewed by our Manager of Benefits and Compensation when there is any change. Proposed Completion Date: Immediately

2018-004

Criteria or specific requirement ? Management is required to ensure that there are sufficient internal controls in place over the payroll costs of program employees charged to the program. This includes internal controls that ensure that all payroll charges are allowable costs. Conditions ? Unallowable hours were charged to the program. Context ? During our testing of allowable costs and activities, we noted that two employees, out of a sample of 30 employees, had their PTO, vacation and sick hours charged to the program. Cause ? Existing procedures surrounding the allowable costs of payroll charges were not followed on a consistent basis. Effect ? PTO, vacation and sick hours of two employees was charged to the program. During the performance of audit procedures, we noted that unallowed hours equating to $2,391 was charged to the program. The sample totaled $43,194 with a total population of $343,230. Recommendation ? We recommend that management ensure that program employee payroll costs charged to the program are allowable costs to ensure future compliance with applicable federal cost rules. Views of responsible officials and planned corrective actions ? All payroll hours submitted by employees are reviewed by a supervisor before being approved. This supervisor review includes which projects are being charged along with other internal coding. Management has emphasized the requirements for supervisors to review timesheets to verify projects are being properly charged along with other internal coding. Proposed Completion Date: Immediately

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2017-001

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2017-002

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2017-003

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2017-004

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2017-006

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