INSTITUTE FOR APPLIED ECOLOGY

Type: Material weakness over preparation of schedule of expenditures of federal awards (SEFA). Condition/Context There were errors in the schedule of federal expenditures (SEFA) that was provided for the audit. Certain expenditures were not included which resulted in a material error in the amount reported. Cause Amounts billed did not agree to the SEFA. No review of the SEFA was performed. Questioned Costs None. Recommendation The Organization should implement additional procedures and controls to accurately capture all activity under federal awards in preparing the SEFA. The SEFA should be reviewed by a senior member of management and reconciled to the accounting records. Management’s Response We agree with the recommendation and acknowledge that the initial SEFA included errors. During the initial SEFA preparation, our finance team was short-staffed due to the recent departure of a staff person familiar with SEFA preparation and review. Thus, the initial report was prepared and submitted only by our Controller without the review of another individual. As the team is staffed-up in 2025, we will ensure we hire and/or train additional individuals to have the skills, knowledge, and expertise to identify errors in the SEFA.

The Institute provided a corrected report for the purposes of the Audit and will identify and implement enhanced procedures and controls to correctly produce and review the SEFA for future submissions. Anticipated Completion Date: June 2025

Finding 2019-001: Approval of billings and invoices Type: Financial Statements, Significant Deficiency Type: Federal Awards, Significant Deficiency CFDA: 15.231 Agency: U.S. Department of the Interior, Bureau of Land Management Criteria: There should be documented review and approval on all invoices, expense reimbursements, and indirect costs charged by an appropriate member of management other than the preparer prior to payment or submission. Condition: There was no documentation indicating approval to pay invoices or expense reimbursements or approval to billings agencies for reimbursement. Cause: The Institute?s control policies for documented review and approval were not followed. Effect: While no errors were identified, invoices and expense reimbursements may be charged inaccurately to awards and incorrect amounts could be billed. Questioned Costs: None. Recommendation: All invoices, expense reimbursements and contract billings should have documented approval by appropriate personnel prior to processing of disbursements and submission of requests for reimbursement. Management's Response: Existing policies and procedures have been reiterated and all parties understand steps that should be taken (invoice/expense reimbursements approved by budget manager, entered in accounting system, payment approved/check issued).

Institute for Applied Ecology respectfully submits the following corrective action plan for the year ended December 31, 2019. Contact Person of Institute for Applied Ecology Tom Kaye Name and Address of Independent Public Accounting Firm: McDonald Jacobs, P.C. 520 SW Yamhill, Suite 500 Portland, OR 97204 Audit Period: January 1, 2019 through December 31, 2019. The findings from the December 31, 2019 schedule of findings and questioned costs are discussed below. The findings are numbered consistently with the number assigned in the schedule. Finding 2019-001: Approval of billings and invoices CFDA: 15.231 Agency: U.S. Department of the Interior, Bureau of Land Management Significant Deficiency: There was no documentation indicating approval to pay invoices or expense reimbursements or approval of billings to agencies for reimbursement. Recommendation: All invoices, expense reimbursements and contract billings should have documented approval by appropriate personnel prior to processing of disbursements and submission of requests for reimbursement. Corrective Action: Existing policies and procedures have been reiterated and all parties understand steps that should be taken (invoice/expense reimbursements approved by budget manager, entered in accounting system, payment approved/check issued). Anticipated Completion Date: This adjustment/retraining was completed in January 2020.

Finding 2019-002: Employee and supervisor review of time sheets Type: Financial Statements, Significant Deficiency Type: Federal Awards, Significant Deficiency CFDA: 15.231 Agency: U.S. Department of the Interior, Bureau of Land Management Criteria: All time sheets or other tracking method should have employee and supervisor review documented. Condition: Three timesheets of forty tested did not have documentation of employee signature certifying accuracy and two time sheets did not have documentation of supervisor approval per organization policy. Cause: The Institute changed the time sheet tracking system and control policies were not updated. Effect: While charges appear appropriate to federal programs tested, the potential exists for hours to be inaccurately recorded or charged to programs. Questioned Costs: None. Recommendation: All time sheets should be reviewed and signed or certified by the employee supporting the accuracy of hours recorded, as well as documented for review by supervisor. Management's Response: The Institute returned to using an online timesheet tracking application. This application requires both employee approval and then manager approval of timesheets before the timesheet can be imported to the accounting system.

Finding 2019-002: Employee and supervisor review of time sheets CFDA: 15.231 Agency: U.S. Department of the Interior, Bureau of Land Management Significant Deficiency: Three timesheets of forty tested did not have documentation of employee signature certifying accuracy and two time sheets did not have documentation of supervisor approval per organization policy. Recommendation: All time sheets should be reviewed and signed or certified by the employee supporting the accuracy of hours recorded, as well as documented for review by supervisor. Corrective Action: The Institute returned to using an online timesheet tracking application. This application requires both employee approval and then manager approval of timesheets before the timesheet can be imported to the accounting system. Anticipated Completion Date: This online tracking system has been in place since April 2020.

Finding 2019-003: Review of payroll reports Type: Financial Statements, Significant Deficiency Criteria: Payroll reports should be reviewed for each pay period for accuracy. Condition: The payroll review process did not detect an underpayment of one employee?s payroll due to incorrect hours during one pay period. Cause: Although the review control was in place, there was insufficient scrutiny of the records to detect the underpayment. Effect: One employee needed to have additional compensation for hours not paid. Recommendation: While the Institute currently reviews payroll detail year-to-date reports, we recommend reviewing each payroll report, including comparison of hours paid to time sheets for each pay period prior to processing. Management's Response: The Institute has revised procedures and is reviewing payroll reports for each pay period including comparison of hours paid to time sheets. At this time, there is not enough time between the end of the pay period and pay day for this review to occur prior to processing payroll, so the review occurs as soon after payroll has been completed as is possible. The Institute is considering changing its pay period to allow for more review time prior to processing payroll.

Finding 2019-003: Review of payroll report CFDA: 15.231 Agency: U.S. Department of the Interior, Bureau of Land Management Significant Deficiency: The payroll review process did not detect an underpayment of one employee?s payroll due to incorrect hours during one pay period. Recommendation: While the Institute currently reviews payroll detail year-to-date reports, we recommend reviewing each payroll report, including comparison of hours paid to time sheets for each pay period prior to processing. Corrective Action: The Institute has revised procedures and is reviewing payroll reports for each pay period including comparison of hours paid to time sheets. At this time, there is not enough time between the end of the pay period and pay day for this review to occur prior to processing payroll, so the review occurs as soon after payroll has been completed as is possible. The Institute is considering changing its pay period to allow for more review time prior to processing payroll. Anticipated Completion Date: The change in reports being reviewed was implement in June 2020.