VillageReachNon-Profit

Finding 2023-002 Significant deficiency in internal control over compliance for allowable costs related to cost allocation. Federal Agency: United States Agency for International Development Program Titles: USAID Foreign Assistance for Programs Overseas Assistance Listing Number: 98.001 Pass-Through Entity: N/A Award Numbers: 72065618CA00001 Award Periods: May 14, 2018 through April 23, 2024 Criteria Internal controls requirements contained in Title 2 U.S. Code of Federal Regulations Uniform Administrative Requirements, Cost Principles and Audit Requirements for Federal Awards, Subpart D ‐ Post Federal Award Requirements, Section 200.303, Internal Controls, require that a non‐Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non‐Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition/Context In our review of one employee's compensation, we discovered that the gross salary registered in the allocator for January did not account for travel pay. This oversight led to an undercharge of $371 to the federal award associated with our selection. The issue was not unique to this incident, resulting in a total under allocation to the award for January amounting to $658. It is important to note, however, that all affected employees received the correct pay for this month. Upon reviewing the records of three other employees, we found that the gross salary entered in the allocator did not include holiday or retroactive pay. Consequently, this resulted in an undercharge to the federal award, amounting $4,077. However, despite this discrepancy, all the employees were paid correctly. Cause The Organization’s internal controls failed to prevent, or detect and timely correct, these payroll errors from occurring. Effect These payroll errors resulted in over and under charges to the federal awards which could result in questioned costs. Questioned Costs Not determinable. Repeat Finding This is a repeat finding of finding 2022-001. Recommendation We recommend the Organization evaluate where manual payroll processes could be automated to reduce input errors and provide continuous oversight of cost allocations to ensure they are accurately calculated and recorded. Views of Responsible Individual and Corrective Action Plan Management agrees with the finding and has provided the accompanying corrective action plan.

Finding 2023-003 Significant deficiency in internal control over compliance for procurement standards Federal Agency: United States Agency for International Development Program Titles: USAID Foreign Assistance for Programs Overseas Assistance Listing Number: 98.001 Pass-Through Entity: N/A Award Numbers: 72065618CA00001 Award Periods: May 14, 2018 through April 23, 2024 Criteria Internal controls requirements contained in Title 2 U.S. Code of Federal Regulations Uniform Administrative Requirements, Cost Principles and Audit Requirements for Federal Awards, Subpart D ‐ Post Federal Award Requirements, Section 200.320, Internal Controls, require that a non‐Federal entity can use noncompetitive procurement if one or more of the following circumstances apply: (1) The acquisition of property or services, the aggregate dollar amount of which does not exceed the micro-purchase threshold; (2) The item is available only from a single source: (3) The public exigency or emergency for the requirement will not permit a delay resulting from publicizing a competitive solicitation: (4) The Federal awarding agency or pass-through entity expressly authorizes a noncompetitive procurement in response to a written request from the non-Federal entity or: (5) After solicitation of a number of sources, competition is determined inadequate. Condition/Context In our sampling of procurement transactions, we found two procurements utilizing the noncompetitive procurement method that did not contain adequate justification for the use of the noncompetitive procurement method. Management asserted to have requested and obtained approval from the funder. However, the communication we examined between VillageReach and USAID did not explicitly authorize the use of this specific vendor for these noncompetitive procurement transactions. Cause The Organization’s justification for the use of the noncompetitive method was not adequately documented. Effect The use of the noncompetitive procurement method was not adequately justified given the documentation tested. Questioned Costs Not determinable Repeat Finding No Recommendation We recommend the Organization enforces the use of its noncompetitive procurement justification form and ensure that the applicable circumstance is adequately documented and justified. Views of Responsible Individual and Corrective Action Plan Management agrees with the finding and has provided the accompanying corrective action plan.

Significant deficiency in internal control over compliance for allowable costs related to cost allocation. Federal Agency: United States Agency for International Development Program Titles: USAID Foreign Assistance for Programs Overseas Assistance Listing Number: 98.001 Pass ? Through Entity: PATH Award Numbers: 72065618CA00001, AID.2134.01708827-SUB Award Periods: May 14, 2018 through April 23, 2024 and February 12, 2021 to December 12, 2021 Criteria Internal controls requirements contained in Title 2 U.S. Code of Federal Regulations Uniform Administrative Requirements, Cost Principles and Audit Requirements for Federal Awards, Subpart D - Post Federal Award Requirements, Section 200.303, Internal Controls, require that a non-Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition/Context The Organization?s internal controls require review and approval of costs charged to the Federal awards by a knowledgeable and authorized individual to ensure that costs are accurately allocated and charged. For one of employee selections out of the 40 total selections tested, we noted that the gross salary entered in the allocator for several months was higher than the actual gross wages earned. This resulted in an overcharge of $150 to the federal award. However, the employee was paid correctly for these months. For another selected employee from the 40 selections we tested, the June backpay was inadvertently included in the August payroll allocation resulting in an overall allocation error of $1,957. However, the overcharge to the federal award out of this total error was $1,161. Again, the employee was paid correctly. For one other selection tested, the payroll allocation was pulling May and June hours in the calculation instead of just June, resulting in an undercharge of $240 to the federal award. Management performed additional follow up and noted that this allocation error for June 2022 affected 7 employees in total including the one above. The known extrapolated misstatement was approximately $1,951. The employees were correctly paid. Cause The Organization?s internal controls failed to prevent, or detect and timely correct, these payroll errors from occurring. Effect These payroll errors resulted in over and under charges to the federal awards which could result in questioned costs. Questioned Costs Not determinable. Repeat Finding This is a repeat finding of finding 2021-003. Recommendation We recommend the Organization evaluate where manual payroll processes could be automated to reduce input errors and provide continuous oversight of cost allocations to ensure they are accurately calculated and recorded. Views of Responsible Individual and Corrective Action Plan Management agrees with the finding and has provided the accompanying corrective action plan.

Finding 2021-002 Significant deficiency in internal control over compliance and instances of noncompliance for allowable costs related to cost allocation. Federal Agency: United States Agency for International Development Program Title: USAID Foreign Assistance for Programs Overseas - Last Mile Supply Chain (LMSC) Assistance Listing Number: 98.001 Award Number: 72065618CA00001 Award Period: May 14, 2018 through April 23, 2024 Criteria Allowable costs requirements contained in Title 2 U.S. Code of Federal Regulations Uniform Administrative Requirements, Cost Principles and Audit Requirements for Federal Awards, Subpart E - Cost Principles, Section 200.405, Allowable Costs, a cost is allocable to a particular Federal award or other cost objective if the goods or services involved are chargeable or assignable to that Federal award or cost objective in accordance with relative benefits received. Condition/Context The Organization has a policy to allocate shared payroll costs within a country office that benefit multiple programs within each country in reasonable and measurable proportion to the benefit provided to each project. The shared costs are allocated to all projects within the country that have absorbed at least 5% or more of personnel costs in a given month. Of 25 payroll transactions tested, we noted 1 instance in which the payroll allocation calculation did not accurately include all projects that met the 5% threshold for cost allocation in Mozambique and Malawi. Specifically, one nonfederal project was undercharged by $16,014. Upon further testing, we discovered that 5 additional nonfederal projects were also excluded from the cost allocation totaling $87,357. Although the grant agreements for these nonfederal projects prohibited shared costs, these costs should be allocated to federal and nonfederal awards based on relative benefits received. Cause The Organization?s internal controls failed to prevent, or detect and timely correct, this error. Effect Federal awards were allocated a disproportionate share of shared costs in Mozambique and Malawi and may be disallowed by the federal agency, and thus required to be refunded if not corrected timely. Questioned Costs Known questioned costs of $103,371. Repeat Finding This is not a repeat finding. Recommendation We recommend the Organization provide continuous training of staff to ensure that cost allocations are accurately calculated and comply with the requirements of 2 CFR 200.405. Views of Responsible Individual and Corrective Action Plan Management agrees with the finding and has provided the accompanying corrective action plan.

Finding 2021-003 Significant deficiency in internal control over compliance for allowable costs related to data entry. Federal Agency: United States Agency for International Development Program Title: USAID Foreign Assistance for Programs Overseas - Last Mile Supply Chain (LMSC) Assistance Listing Number: 98.001 Project Number: 72065618CA00001 Award Period: May 14, 2018 through April 23, 2024 Criteria Internal controls requirements contained in Title 2 U.S. Code of Federal Regulations Uniform Administrative Requirements, Cost Principles and Audit Requirements for Federal Awards, Subpart D - Post Federal Award Requirements, Section 200.303, Internal Controls, require that a non-Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework?, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition/Context The Organization?s internal controls require review and approval of costs charged to Federal awards by a knowledgeable and authorized individual to ensure that costs are accurately recorded. Of approximately 50 items tested for non-payroll and payroll costs, we noted 2 instances in which the amounts charged to the Federal award were incorrect due to input error. A non-payroll transaction for consulting services was underpaid, and the Federal award was undercharged approximately $972. A payroll transaction reflected the incorrect employee salary, and the Federal award was overcharged $99. Cause The Organization?s internal controls did not prevent, or detect timely correct, input errors during the review and approval process. Effect Deficiencies in internal controls related to cost recognition could result in disallowed costs under 2 CFR 200.403. Questioned Costs None. Repeat Finding This is not a repeat finding. Recommendation We recommend the Organization enforce its policies for checking the accuracy of amounts against supporting documentation prior to approval. Views of Responsible Individuals and Corrective Action Plan Management agrees with the finding and has provided the accompanying corrective action plan.

Finding 2021-004 Significant deficiency in internal control over compliance and instances of noncompliance related to reporting for the Federal Funding Accountability and Transparency Act. Federal Agency: United States Agency for International Development Program Title: USAID Foreign Assistance for Programs Overseas - Last Mile Supply Chain (LMSC) Assistance Listing Number: 98.001 Award Number: 72065618CA00001 Award Period: May 14, 2018 through April 23, 2024 Criteria Under the requirements of the Federal Funding Accountability and Transparency Act (Pub. L. No. 109-282) (FFATA) that are codified in Title 2 U.S. Code of Federal Regulations, Part 170 - Reporting Subaward and Executive Compensation Information, prime grant recipients awarded a new Federal grant greater than or equal to $25,000 are subject to FFATA sub-award reporting requirements. The prime awardee is required to file a FFATA sub-award report by the end of the month following the month in which the prime recipient awards any sub-grant greater than or equal to $25,000. The report must be filed in the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Condition/Context The Organization had established a process by which to perform FFATA reporting. Of 2 sub-awards selected for testing, support of FFATA filing was unavailable and the filings had not been made. See Schedule of Findings and Questioned Costs for table. Cause The Organization?s internal controls over FFATA reporting were not implemented. Finding 2021-004 (Continued) Effect The Organization did not comply with the FFATA sub-award reporting requirements that are codified in Title 2 U.S. Code of Federal Regulations. Questioned Costs None. Repeat Finding This is not a repeat finding. Recommendation We recommend the Organization provide additional training to staff and update its procedures to ensure timely and accurate reported as required in 2 CFR Part 170, even in the event of personnel changes. Views of Responsible Individual and Corrective Action Plan Management agrees with the finding and has provided the accompanying corrective action plan.

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