PALMER SENIOR CITIZENS CENTER, INC.

2022-002 Significant Deficiency in Compliance and Internal Controls over Compliance - Allowable Costs/Cost Principles Identification of federal program: 93.044,93.045,93.053 Aging Cluster Criteria: Title 2 U.S. Code Part 200.403(g) requires that for costs charged to a federal program to be allowable, they must be adequately documented. Condition: Certain approved costs charged to this program by management were unable to be substantiated by through adequate payroll and purchasing documentation supporting the allocated expense. Cause: There was a significant amount of turnover in key positions for both accounting and management with limited personnel working for during the course of the year under audit and consequently some of the supporting documentation was not sufficiently maintained. Effect or potential effect: Documentation for some costs charged to the program via allocation of cost pools were not supported in accordance with allowable cost principles. Questioned Costs: $8,180 Known $116,687 Likely. Context: During sample testing for allowable costs, we identified 12 out of 22 transactions (error rate of 54.5%) where documentation of underlying support for cost was not able to be located or identified. Management charges costs to grants based on cost pools created via monthly expenditure reports exported directly from the financial system. Of 40 samples tested, 22 were allocations and no deviations were noted in sample testing of 18 direct expenditures. Expenditures tested via sampling were $315,093. Cost charged via allocations were 68% of the population sampled. Identification of Repeat Finding: Not applicable. Recommendations: We recommend management ensure its internal control design and procedures account for proper record retention during unusual circumstances such as a period of turnover and limited personnel. Views of Responsible Officials: See Corrective Action Plan

2022-003 Significant Deficiency in Compliance and Internal Controls over Compliance – Reporting - Monitoring of Grant Budget and Expenditures Identification of federal program: 93.044,93.045,93.053 Aging Cluster Criteria: Per State of Alaska grant agreement #607-309-22033: General Administration: ii. Reporting schedules are outlined in the Reporting section of GEMS. The grantee will submit expenditures using Cumulative Fiscal Reports (CFR) to the grantor in the format prescribed by the grantor through GEMS. Unless the grantor approves an extension of time, the grantee will submit a CFR to reach the grantor by the due dates indicated in the Reporting section of GEMS. CFRs must advise the grantor of the grantee's expenditures for costs allowable under 7 AAC 78.160 and the terms of this agreement. iii. Due with the final year-end CFR grantees must also provide to their grants administrator listed on the face page of this grant agreement a detailed list of encumbrances that have been included as current year expenditures in the year-end CFR, as required in 7 AAC 78.190(d), and defined in 7 AAC 78.950(13) or those costs will be disallowed. 7 AAC 78.190(d) - Payment (d) A grantee shall reimburse the department for a payment to the grantee to the extent that the grantee does not expend or encumber the money before the end of the grant period. A grantee shall submit a final cumulative fiscal report prepared in accordance with the grant agreement, and shall notify the department in writing of any outstanding encumbrance made under the grant. Unless the department approves an extension of time, the grantee shall submit the final cumulative fiscal report and the written notice of any outstanding encumbrance no later than 30 days after the end of the grant period. To be eligible for reimbursement by the department for an encumbrance reported under this subsection, the encumbrance must (1) require the use of the encumbered money no later than one year after the end of the grant period; and (2) relate to a cost that is (A) reflected in the budget or an approved budget amendment; and (B) allowed under 7 AAC 78.160. Condition: It was noted during the audit of fiscal year 2022 that adjustments to accounts payable and pass-through grant expense were required to properly capture grant activity within the correct period and accrue liabilities of the organization at year-end in accordance with the grant terms and conditions. Cause: During the period under audit, there was a significant amount of turnover in key positions (CFO, CEO) that normally provide oversight and monitoring of grant budgeting and reporting. Controls normally performed by these positions were not operating effectively. Effect or potential effect: Grant expenditures reported to the State of Alaska were not properly supported in grant reports as financial records did not appropriately document grant activity. Questioned Costs: None. Context: During audit of program expenditures, it was noted that as of yearend grant monies in the amount of $239,160.52 and $10,230.52 were not passed down to Wasilla Area Seniors, Inc. and Upper Susitna Seniors, Inc. respectively, until after year end and not accrued as an outstanding liability. The error was discovered by management in preparation for the fiscal year 2023 grant cycle. The error resulted in an adjustment to accrue a year-end liability to properly reflect expenditures in appropriate period and as a result, financial records did not appropriately support grant reporting for the second half of fiscal year 2022. Identification of Repeat Finding: Not applicable. Recommendations: We recommend Palmer Senior Citizen’s Center, Inc. dba Mat-Su Senior Services adopt policies and procedures to ensure appropriate tracking of grant expenditures during times of personnel turnover. Views of Responsible Officials: See Corrective Action Plan