BOYS AND GIRLS CLUBS OF KING COUNTYNon-Profit

Significant deficiency in internal controls over compliance with allowable costs/cost principles compliance requirements. Federal Agency: Department of Labor Program Title: WIOA Cluster Assistance Listing Number: 17.259 Award Number: 24-124-OSY; 24-108-ISY Award Period: July 1, 2024 through June 30, 2025 Criteria 2 U.S. Code of Federal Regulations (CFR) 200 Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards Subpart E requires that costs charged to federal awards be supported by adequate documentation and represent charges for allowable costs. Condition/Context for Evaluation In a sample of 25 payroll selections, we noted three charges made to federal awards for which there were errors in intervening calculations that resulted in incorrect amounts being charged to Federal awards. Cause The Clubs’ internal controls did not include sufficient review of intervening calculations in accumulating costs to be invoiced. Effect or Potential Effect The Clubs did not fully comply with the allowable costs principles as specified in 2 CFR 200, Subpart E. As a result, there may be charges to awards that do not have adequate support. Questioned Costs No known questioned costs. Known errors resulted in amounts undercharged to federal awards. Repeat Finding Not applicable. Recommendation We recommend that the Clubs implement the necessary internal controls to ensure sufficient review of intervening calculations are performed and costs charged to federal awards are based on actual expenses incurred and paid and are supported by adequate documentation. Views of Responsible Officials of Auditee Management agrees with the finding and has provided the accompanying corrective action plan.

Significant deficiency in internal controls over compliance and noncompliance with period of performance compliance requirements. Federal Agency: Department of Labor Program Title: WIOA Cluster Assistance Listing Number: 17.259 Award Number: 24-124-OSY; 24-108-ISY Award Period: July 1, 2024 through June 30, 2025 Criteria 2 U.S. Code of Federal Regulations (CFR) 200 Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards requires that a nonfederal entity may charge only allowable costs incurred during the approved budget period of a federal award’s period of performance and any costs incurred before the federal awarding agency or pass-through entity made the federal award that were authorized by the federal awarding agency or pass-through entity. Condition/Context for Evaluation In a sample of 25 selections, we noted two charges made to federal awards that did not occur during the approved budget period. Cause The Clubs’ internal controls over period of performance failed to identify transactions that were expensed in the incorrect period and thereby charged to the federal award in the incorrect budget period. Effect or Potential Effect The Clubs made charges to federal awards for expenses that were not incurred during the budget period of the awards. Questioned Costs $336.15 for the two charges noted above. Known questioned costs were computed based on the accumulation of the portion of transactions tested that were incurred outside of the period of performance. Repeat Finding Not applicable. Recommendation We recommend that the Clubs enhance its review of expenditures to ensure they are recorded in the correct period thereby ensuring that costs charged to federal awards were incurred during the period of performance of the awards. Views of Responsible Officials of Auditee Management agrees with the finding and has provided the accompanying corrective action plan.

Finding 2020-001 Material weakness in internal controls over compliance and instances of noncompliance related to allowable costs/cost principles compliance requirements. Federal Agency: Department of Labor Program Title: WIOA Cluster Assistance Listing Number: 17.259 Award Number: 19-108-ISY Award Period: July 1, 2019 through June 30, 2020 Criteria 2 U.S. Code of Federal Regulations (CFR) 200 Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards Subpart E require that personnel expenses allocated directly to federal awards be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, properly allocated and supported by adequate documentation based on an after the fact determination. Condition/Context for Evaluation During our testing of allowable costs, we became aware that the Clubs internal controls over payroll costs did not account for one hundred percent of the employee?s time and effort for salaried employees that worked on multiple projects. Additionally, the Clubs internal controls over fringe benefits were not adequate as the Clubs directly charged fringe benefits to federal awards based on a flat rate that was neither negotiated with a federal awarding agency nor updated to actual costs on a regular basis. The sample tested was not a statistical sample. Effect or Potential Effect The Clubs did not fully comply with the allowable cost principles as specified in 2 U.S. Code of Federal Regulations (CFR) 200 Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards Subpart E, Section 200.430. As a result, there may be charges to awards that do not have adequate support. Questioned Costs Indeterminable. Cause The Clubs? internal controls did not ensure that employees time allocated to federal awards was supported by adequate documentation. Repeat Finding Not applicable. Recommendation We recommend that the Clubs implement the necessary internal controls to ensure all worked time is tracked and fringe benefit costs are charged to federal awards based on a fair and equitable distribution method that is adequately documented and in accordance with Federal Regulations. Views of Responsible Officials of Auditee Management agrees with the finding and has provided the accompanying corrective action plan.

Finding 2020-002 Material weakness in internal controls over compliance and instances of noncompliance related to eligibility compliance requirements. Federal Agency: Department of Labor Program Title: WIOA Cluster Assistance Listing Number: 17.259 Award Number: 19-108-ISY Award Period: July 1, 2019 through June 30, 2020 Criteria In accordance with the Workforce Innovation and Opportunity Act, Sec. 129, and per the August 2020 OMB Compliance Supplement, in-school youth participating in the WIOA Youth Activities program are required to meet certain eligibility criteria. Additionally, the grantee should have a system of internal controls in place over the eligibility process to ensure that the required eligibility determinations were made and are supported by required documentation that is easily producible. Condition/Context for Evaluation In a sample of 8 selections, we noted 3 participants for which adequate documentation supporting that the participants were eligible at the time of their participation could not be produced. The sample tested was not a statistical sample. Effect or Potential Effect Individuals participating in the program may be ineligible or lack supporting documentation regarding their eligibility. Questioned Costs Not applicable. Cause Internal controls over eligibility were not effective in ensuring that adequate documentation supporting participants eligibility was retained. Repeat Finding Not applicable. Recommendation We recommend that the Clubs review the internal controls in place over eligibility to create systems to obtain and retain adequate documentation of eligibility. Views of Responsible Officials of Auditee Management agrees with the finding and has provided the accompanying corrective action plan.

Finding 2020-003 Deficiency in internal controls over compliance and instances of noncompliance related to allowable costs/cost principles compliance requirements. Federal Agency: Department of Labor Program Title: WIA Cluster Assistance Listing Number: 17.259 Award Number: 19-108-ISY Award Period: July 1, 2019 through June 30, 2020 Criteria 2 U.S. Code of Federal Regulations (CFR) 200 Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards Subpart E require that costs charged to Federal awards be supported by adequate documentation and represent charges for allowable costs. Condition/Context for Evaluation In a sample of 40 selections, we noted 6 charges made to Federal awards that were not adequately documented or did not represent charges for allowable costs. One selection was erroneously charged to the award twice and the remaining five selections represented expenditures for which adequate supporting documentation was not retained. Our sample was not a statistical sample. Effect or Potential Effect The Clubs did not fully comply with the allowable costs principles as specified in 2 CFR 200, Subpart E. As a result, there may be charges to awards that do not have adequate support or that do not represent allowable costs. Questioned Costs $2,031 for the 6 charges noted above. Cause The Clubs? internal controls did not ensure supporting documentation was retained for costs charged to Federal awards and to ensure that costs accumulated and charged to Federal awards were based on actual expenses recorded in the general ledger. Repeat Finding Not applicable. Recommendation We recommend that the Clubs implement the necessary internal controls to ensure costs are charged to federal awards based on actual expenses incurred and paid and are supported by adequate documentation. Views of Responsible Officials of Auditee Management agrees with the finding and has provided the accompanying corrective action plan.

Finding 2020-004 Deficiency in internal controls over compliance and instances of noncompliance related to reporting requirements. Federal Agency: Department of Labor Program Title: WIA Cluster Assistance Listing Number: 17.259 Award Number: 19-108-ISY Award Period: July 1, 2019 through June 30, 2020 Criteria 2 U.S. Code of Federal Regulations (CFR) 200 Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards Subpart D requires the Club to retain adequate records and other supporting documentation for reports submitted to awarding agencies. Condition/Context for Evaluation In a sample of 3 reports, we noted 1 report for which the Clubs did not maintain sufficient records to support the programmatic information included in the reports submitted to awarding agencies. The sample was not a statistical sample. Effect or Potential Effect The Clubs submitted required reports for federal awards that may lack proper supporting documentation. Questioned Costs Not applicable. Cause The Clubs? internal controls over compliance did not include adequate controls over the retention of supporting documentation for reports submitted to awarding agencies. Repeat Finding Not applicable. Recommendation We recommend that the Clubs implement the necessary internal controls over record retention to maintain sufficient support for reports submitted to federal awarding agencies. Views of Responsible Officials of Auditee Management agrees with the finding and has provided the accompanying corrective action plan.