Chief Seattle ClubNon-Profit

Finding 2024-002 Material weakness in internal controls over procurement and material noncompliance related to procurement compliance requirements. Federal Agency: U.S. Department of Treasury Program Title: Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027 Awards Number: SLFRP0152 Award Period: 1/1/2024 – 12/31/2025 Criteria 2 U.S. Code of Federal Regulations (CFR) 200 Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) requires a non-Federal entity that has expended Federal awards to have written policies to its federal grants for procurement and that the history of each procurement is documented in accordance with 2 CFR section 200.318 to 200.320. Further, the regulations in 2 CFR part 180 restrict making Federal awards, subawards, and contracts with certain parties that are debarred, suspended, or otherwise excluded from receiving or participating in Federal awards. Condition/Context During our testing, for three out of three procurement transactions tested in excess of the micro purchase threshold, the Organization did not maintain documentation sufficient to detail the history of the procurement transaction. The Organization did not maintain contemporaneous documentation identifying the procurement method, contract type selection, contract selection, basis of contract price, and consideration of vendor suspension and debarment. For one selection over the simplified acquisition threshold, the Organization received three proposals based upon a request for proposal process. For two selections above the micro-purchase threshold there was insufficient document to determine if price or rate quotations were obtained from an adequate number of qualified sources and no noncompetitive proposal process was documented in accordance with the Organizations procurement policy. Effect/Potential Effect Procurements were entered into that did not meet the minimum Uniform Guidance procurement standards. Questioned Costs N/A Repeat Finding Not applicable Recommendation We recommend that the Organization maintain records to support that any procurement entered into with federal funds was done so in accordance with its policies and procedures for procuring goods and services with the proceeds of a federal award. We further recommend that a control is implemented to ensure that the organization does not contract with parties that are debarred, suspended, or otherwise excluded from receiving or participating in Federal awards. Views of Responsible Officials Management agrees with the finding and has provided the corrective action plan following the Single Audit Report.

Federal Agency Program Title Assistance Listing Number Award Number Award Period All awards reported on the schedule of expenditures of federal awards Identification as a Repeat Finding: Elements of this finding are repeated from Finding 2022-003 Finding: The Organization did not file its annual 2023 Single Audit and Data Collection form timely. Criteria: The Single Audit Reporting Package and Data Collection Form shall be submitted to the Federal Audit Clearinghouse 30 days after receipt of the auditor’s report, or 9 months after the end of the fiscal year, whichever comes first. Condition and context: Submission of the Single Audit Reporting Package and Data Collection Form to the FAC was not completed within the timeframe required by the Uniform Guidance. During the audit we noted that the Single Audit Reporting Package and Data Collection Form is expected to be submitted to the FAC during November 2024 for the fiscal year ended December 31, 2023. Cause: The Organization implemented a new general ledger system effective January 1, 2024. The time the accounting and finance team devoted to the conversion reduced their availability to prepare for the audit. As such, audit fieldwork commenced three months later than in the prior year. This delay was further compounded by members of the accounting and finance team contracting COVID-19 during audit fieldwork and delays in receiving accurate financial reports from the property managers as noted in Finding 2023-001. Sample size and population: Sampling was not applicable to this finding. Effect: Noncompliance with the Uniform Guidance could reduce access to future funding from Federal sources. Recommendation: General ledger conversions happen infrequently. Therefore, it would be unusual for a similar matter to reoccur; however, it considered a best practice to maintain a schedule of regulatory and compliance deadlines to ensure related tasks are completed in advance of deadlines. Also, see recommendation in Finding 2023-001. Question Costs: None Management Response and Corrective Action Plan: See Corrective Action Plan. Contact Person: Marc Taylor, Chief Finance Officer

See Schedule of Findings and Questioned Costs for chart/table Identification as a repeat finding: Elements of this finding are repeated elements of Finding 2021-002. Finding: Internal control processes over financial accounting did not ensure that the Schedule of Expenditures of Federal Awards (SEFA) provided for audit accurately identified federal expenditures in the year when the activity related to the federal award occurred. Criteria: The Organization is responsible for maintaining accurate information about all federal programs and reporting requirements. The Organization is responsible for using this information to prepare a complete and accurate SEFA on an annual basis in accordance with 2 CFR 200.502 in order to comply with reporting requirements associated with the use of federal funds under the Uniform Guidance. Sample Size and Population: N/A Condition and Context: The initial SEFA provided for audit contained the following errors: ? Contract 21-4619C-200 (ALN 21.027) was stated at the value of $647,709 of cash received in 2022 rather than the accrual value of expenditures in 2022. ? The CDBG (ALN 14.218) outstanding loan balance reported did not include the $430,156 outstanding at the beginning of the year per 2 CFR 500.502(b)(2). ? Contract DA21-1518 (ALN 14.231) was not included on the SEFA. Information on the SEFA is used for audit planning and by grantors. The use of incomplete or incorrect information on the SEFA can result in improper identification of major programs and related compliance requirements. Cause: Accrual accounting was not consistently applied in the preparation of the SEFA. These errors have been corrected in the attached SEFA and financial statements. Recommendation: The Organization must continue to increase its familiarity with federal grant compliance requirements and review contract terms and federal standards for reporting. These procedures should facilitate the Organization?s preparation of the SEFA so that annual expenditures for all grant programs are accurately included on the SEFA per 2 CFR 200.502 and so that the Organization?s ongoing compliance monitoring is accurate. Questioned Costs: None Management Response and Corrective Action Plan: See Corrective Action Plan. Contact Person: Marc Taylor, Director of Finance and Administration

See Schedule of Findings and Questioned Costs for chart/table Identification as a repeat finding: Not a repeat finding. Finding: The Organization was late in filing two reports required by one program contract. Criteria: Federal contracts identify periodic reporting requirement for reports due to funders. Sample Size and Population: From a population of 18 reports identified in the Club?s AL 21.027 contracts, 4 reports were selected for testing, 2 of which were submitted late. Condition and Context: The identified contract requires monthly reports to be submitted on the 10th of the following month and end of contract report be submitted by November 10, 2022. The two reports selected for testing were submitted after the deadline established in the contract. Effect: As a result of late submissions, federal funders did not have timely access to relevant information regarding the Organization?s transactions involving federal funds. Cause: The contract reporting process was not initiated until after the deadline. Recommendation: We recommend the Organization refine its system for tracking grant reporting deadlines in order to ensure that reporting deadlines are met timely in the future. Questioned Costs: None Management Response and Corrective Action Plan: See Corrective Action Plan. Contact Person: Marc Taylor, Director of Finance and Administration

Identification as a repeat finding: Not a repeat finding Finding: Internal control processes over financial accounting did not ensure that the Schedule of Expenditures of Federal Awards (SEFA) provided for audit accurately identified all federal programs and all required reporting elements. Criteria: The Organization is responsible for maintaining accurate information about all federal programs and reporting requirements. The Organization is responsible for using this information to prepare a complete and accurate SEFA on an annual basis in order to comply with reporting requirements associated with the use of federal funds under the Uniform Guidance. Sample Size and Population: N/A Condition and Context: The initial SEFA provided for audit contained the following errors: ? Major program Coronavirus State Local Fiscal Recovery Funds Assistance Listing was misstated and did not identify related pass through entity. ? The prior year major program, HOME Investment Partnership program loan was missing as was the Moving to Work Demonstration Program. ? Assistance to individuals was erroneously reported amounts passed through to subrecipients organizations. ? The CDBG outstanding loan balance reported exceeded total draws on the loan. ? Pass through agencies were not identified. Effect: Information on the SEFA is used for audit planning and by grantors. The use of incomplete or incorrect information on the SEFA can result in improper identification of major programs and related compliance requirements. Cause: Errors or misclassification of the underlying accounting for transactions involving federal funds resulted in incorrect information being used in planning the Single Audit. These errors have been corrected in the attached SEFA and financial statements. Recommendation: The Organization must continue to increase its familiarity with federal grant compliance requirements and improve and refine reconciliation procedures in order to actively maintain grant reporting requirements. These procedures should facilitate the Organization?s preparation of the SEFA so that annual expenditures for all grant programs are accurately included on the SEFA and so that the Organization?s ongoing compliance monitoring is accurate. Questioned Costs: None Management Response and Corrective Action Plan: See Corrective Action Plan. Contact Person: Marc Taylor, Director of Finance and Administration

Identification as a Repeat Finding: Not a repeat finding Finding: Employee time charged to federal programs was based on budgeted activity rather than actual hours worked. Criteria: Chief Seattle Club is responsible for contemporaneous tracking of employee time charged to federal programs. Uniform Guidance section 2CFR 200.430(i)(1), establishes the standards for documentation of personnel expenses and specifies that budget estimates alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes under certain circumstances. Condition and context: During 2021, Chief Seattle Club utilized budgeted activity for federal programs for billing purposes rather than actual hours reported by employees. Cause: The Organization had not implemented a process for utilizing actual hours reported by employees in the billing process for federal programs. Sample size and population: Sampling was not applicable to this finding. Effect: Federal programs may have been charged for time not incurred. The effect of this error is unknown. Recommendation: Implement timekeeping practices to identify hours worked on federal programs and use this data in preparing grant invoices for federal programs. Questioned Costs: Undetermined Management Response and Corrective Action Plan: See Corrective Action Plan. Contact Person: Marc Taylor, Director of Finance and Administration

Identification as a Repeat Finding: Not a repeat finding Finding: The Organization did not retain evidence documenting the eligibility of program recipients to receive assistance provided by federal funds. Criteria: Chief Seattle Club is responsible for determining the eligibility of program recipients receiving assistance from federal funds and maintaining documentation of that determination. Eligibility criteria are unique to each major federal program. Condition and context: Chief Seattle Club was not able to provide documentation of the eligibility of one of 40 program recipients selected for testing. In addition, evidence of management approval of the eligibility of one of 40 program recipients was not maintained. Chief Seattle Club conducted searches for the documentation but could not locate where the documentation was stored. Cause: The Organization experienced turnover in program staff during 2021. Sample size and population: Effect: The auditors could not verify the eligibility of the recipients of federal funds had been determined and approved by management. Unallowable costs could be charged to the program if recipients were not deemed to be eligible. Recommendation: Establish and follow documentation completion and retention policies to ensure eligibility documentation is maintained. Questioned Costs: $248 Management Response and Corrective Action Plan: See Corrective Action Plan. Contact Person: Marc Taylor, Director of Finance and Administration