HYDABURG COOPERATIVE ASSOCIATIONTribal Government

Finding 2023-006 Lack of Internal Control over Activities allowed or Unallowed and Allowable Costs/Cost Principles Federal Agency: U.S. Department of Transportation / U.S. Department of the Treasury Federal Program: Tribal Transportation Program / Coronavirus State and Local Fiscal Recovery Fund Assistance Listing Number: 20.205/21.027 Award Number: 693JG41830026K600AK0053 / None Award Years: 2017 / 2021 Type of Finding: Material weakness in internal control over compliance and material noncompliance. Criteria: Adequate internal control over payroll transactions should be in place to ensure that personnel files are complete with all necessary documentation, which includes proof of approved pay rates, documentation of where payroll expense should be coded, and support for optional deductions. Employees should complete timesheets that agree to the paystub that has been reviewed by a supervisor and signed by both the employee and supervisor. Additionally, all expenditure transactions should be supported by adequate documentation. Condition and Context: We selected a sample of 21 payroll transactions for the program. Out of those transactions, we did not receive supporting documentation for one of the transactions. We found several deficiencies in internal controls over compliance. One transaction we were only provided with the paystub. We noted that on 7 of the transactions, although there was a completed timesheet, there was no documentation to indicate that the timesheet was reviewed and approved by an authorized person. We noted that we were not provided with adequate documentation to support an authorized payrate on 5 of the 21 transactions. Additionally, we reviewed a sample of 9 expenditure transactions. Out of the 9 transactions, we did not receive supporting documentation for 2 of the transactions. During our testing of expenses for CSLFRF, we selected a sample of payroll and nonpayroll trasnactions. We were unable to receive support for 2 of the 23 nonpayroll transactions. Additionally, we were unable to review support that 4 general assistance applications were adeqately approved. Although the application was provided to us, they were missing signatures that the application had been reviewed and approved. Cause: Lack of internal controls over activities allowed or unallowed and allowable costs/cost principles. Effect: The lack of supporting documentation allows for the potential for misstatement of expenditures due to employees being paid incorrectly and lack of documentation of timesheets and approved wages. Lack of supporting documentation for expenditures could lead to unallowed costs being charged to the program. Questioned Costs: Actual and likely questioned costs are estimated to be below the reporting threshold of $25,000. Based on the auditors’ review of pay rates, all employees were being paid a reasonable amount based on their position and the auditors’ experience with similar entities. Additionally, transactions without adequate support were under the threshold. Repeat Finding: This is a repeat of Finding 2022-011 and since it is a repeat finding, we believe this to be a systemic issue. Recommendation: We recommend the Association adhere to their internal control policies to ensure accurate reporting of payroll transactions. Management’s Response: Management agrees with this finding. See Corrective Action Plan.

Section III ? Federal Award Findings and Questioned Costs Finding 2022-009 Noncompliance with Reporting Requirements Federal Agency: U.S. Department of the Treasury Federal Program: Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027 Award Number: None Award Years: 2021 Type of Finding: Material weakness in internal control over compliance and material noncompliance. Criteria: The Association was required to submit an interim financial report for the Coronavirus State and Local Fiscal Recovery Funds during the fiscal year. Condition and Context: The Association did not provide documentation for the required interim report required by the Department of the Treasury for the Coronavirus State and Local Fiscal Recovery Funds. Cause: Lack of internal controls over reporting requirements. Effect: The Association was not in compliance with reporting requirements. Questioned Costs: None noted. Repeat Finding: This is a repeat of Finding 2021-006 and since it is a repeat finding, we believe this to be a systemic issue. Recommendation: We recommend that management comply with reporting requirements. Management?s Response: Management agrees with this finding. See Corrective Action Plan.

Finding 2022-010 Lack of Internal Control over Procurement Federal Agency: U.S. Department of the Treasury Federal Program: Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027 Award Number: None Award Years: 2021 Type of Finding: Material weakness in internal control over compliance and material noncompliance. Criteria: Uniform Guidance requires that entities receiving federal funding must have written policies and procedures related to procurement that meet the criteria listed in 2 CFR 200.318 and 200.320. Condition and Context: During our compliance testing of the program, management was unable to provide adequate supporting documentation to demonstrate that proper procurement procedures were followed in the purchase of an ambulance, a vehicle, and contract services. Cause: Lack of internal controls over procurement requirements. Effect: Failure to follow compliance requirements could result in loss of federal funding. Questioned Costs: None noted. Costs incurred under the program appeared reasonable based on our review. However, we were unable to determine procurement method or how the vendor was selected in the transaction. Repeat Finding: This is a repeat of Finding 2021-007 and since it is a repeat finding, we believe this to be a systemic issue. Recommendation: We recommend that all necessary purchases go through a formal procurement process to comply with grant requirements and that documentation of procurement is stored in an organized manner so that documentation can be provided to the auditors timely. Management?s Response: Management agrees with this finding. See Corrective Action Plan.

Finding 2022-011 Lack of Internal Control over Activities allowed or Unallowed and Allowable Costs/Cost Principles Federal Agency: U.S. Department of Transportation Federal Program: Tribal Transportation Program Assistance Listing Number: 20.205 Award Number: 693JG41830026K600AK0053 Award Years: 2017 Type of Finding: Material weakness in internal control over compliance and material noncompliance. Criteria: Adequate internal control over payroll transactions should be in place to ensure that personnel files are complete with all necessary documentation, which includes proof of approved pay rates, documentation of where payroll expense should be coded, and support for optional deductions. Employees should complete timesheets that agree to the paystub that has been reviewed by a supervisor and signed by both the employee and supervisor. Condition and Context: We selected a sample of 22 payroll transactions for the program. Out of those transactions, we did not receive supporting documentation for one of the transactions. Additionally, we noted that two transactions did not have approved pay rates, one transaction did not have proper supervisor approval, and one transaction found an employee was paid an incorrect rate. Cause: Lack of internal controls over payroll transactions charged to the program. Effect: The lack of supporting documentation allows for the potential for misstatement of expenditures due to employees being paid incorrectly and lack of documentation of timesheets and approved wages. Questioned Costs: Actual and likely questioned costs estimated to be below the reporting threshold of $25,000. Based on the auditors? review of pay rates, all employees were being paid a reasonable amount based on their position and the auditors? experience with similar entities. Repeat Finding: This is a repeat of Finding 2021-008 and since it is a repeat finding, we believe this to be a systemic issue. Recommendation: We recommend the Association adhere to their internal control policies to ensure accurate reporting of payroll transactions. Management?s Response: Management agrees with this finding. See Corrective Action Plan.

Finding 2020-007 Late Reporting and Noncompliance with Reporting Requirements Federal Agency: U.S. Department of the Treasury, U.S. Department of Transportation Federal Program: Coronavirus Relief Fund, Tribal Transportation Program Assistance Listing Number #: 21.019 and 20.205, respectively Award Number: None and 693JG41830026K600AK0053, respectively Award Years: 2020 and 2017, respectively Type of Finding: Material weakness in internal control over compliance and material noncompliance Criteria: In accordance with 2 CFR Section 200.512, the reporting package must be submitted within the earlier of 30 days after the report issuance or nine months of year end. The nine months requirement was extended an additional 6 months due to the COVID-19 pandemic. The Association is also required to submit quarterly reports for the Coronavirus Relief Fund. Condition and Context: The Association did not adhere to the Uniform Guidance requirement of submitting the reporting package by the required date. Management also did not provide documentation for the required quarterly reports required by the Department of the Treasury for the Coronavirus Relief Fund. Cause: Lack of internal controls over Uniform Guidance and reporting requirements. Questioned Costs: None noted. Repeat Finding: This was not a repeat finding and we consider it a systemic issue. Recommendation: We recommend that management comply with Uniform Guidance and reporting requirements. Management's Response: Management agrees with this finding. See Corrective Action Plan.

GSA_MIGRATION