Shores of HopeNon-Profit

Condition & Criteria: California Governor?s Office of Emergency Services requires that the grantee submit their annual audit report and single audit report within 9 months of the Organization?s year end. Cause: Failure to submit the annual audit and single audit reports within the required timeframe. Effect: Due to late reports, grantors may reduce or cease funding. Recommendation: We recommend that the Organization devote necessary resources to submit all required grant reports and ensure the audit is completed within nine months of year end. Response: The Organization agrees with the finding and the recommended procedures have been implemented.

Condition: Direct grant expenditures include items not identified in the approved budget or items included in the wrong category of the approved budget. All expenditures were allowable by Cal OES in the subrecipient handbook. Criteria: 2CFR part 200 uniform administrative requirements, cost principles, and audit requirements for federal awards requires grant expenditures to match approved budget line items. Cal OES subrecipient handbook requires prior approval for budget modifications which transfer funds from one approved budget category to another and/or add a new line-item to any budget category. Cause: Cost reimbursements were requested for items unidentified in the approved budget Effect: If prior approval is not obtained for budget modifications, the grant subaward reimbursement may be reduced by the amount of the unauthorized expenditures. Recommendation: Develop a schedule to track the original budget line items, any approved changes to the budget by OES, with a reconciliation to the actual costs reported on the internal income statement. Effective September 9, 2022, the organization has developed a schedule as described and has retroactively implemented it to July 1, 2021. Response: The organization agrees with the finding and the recommended procedures are being implemented effective July 1, 2021.

Condition: The modified total direct cost base (used to determine the $ amount of indirect costs allowed) was not calculated according to the approved budget. Criteria: 2CFR part 200 uniform administrative requirements, cost principles, and audit requirements for federal awards requires grantees that elect to use the de minimis indirect cost rate to consistently charge costs as either indirect or direct costs, but not double charge or inconsistently charge costs as both. to include only direct costs identified in the approved budget in the modified total direct cost base. not to include indirect costs in the modified total direct cost base. Cause: The client did not have a schedule for accurately calculating the modified total direct cost base used each month for their request for reimbursement. Effect: Miscalculation of the modified total direct cost base results in an inaccurate request for indirect cost reimbursement. Recommendation: Develop a schedule to ensure that the grant billing preparer calculates a correct modified total direct cost base. Effective September 9, 2022, the organization has developed a schedule as described and has retroactively implemented it to July 1, 2021. Response: The organization agrees with the finding and the recommended procedures are being implemented effective July 1, 2021.

Condition: Allocable costs were not allocated using a consistent methodology. Criteria: Cal OES requires grantees with more than one funding source to maintain a written allocation plan that identifies the allocation of allowable costs. Cause: No adequate cost allocation plan has been written and maintained. Effect: If costs are not allocated consistently, the cost reimbursement request could be inaccurate Recommendation: Develop and document a cost allocation plan that includes a worksheet reflecting the percentage and methodology used to allocate costs to more than one funding source. Effective September 9, 2022, OES has approved the cost allocation plan developed and submitted by the organization and it has been retroactively implemented to July 1, 2021. Response: The organization agrees with the finding and has recently received approval for their cost allocation plan which will be implemented effective July 1, 2021.

Condition & Criteria: California Governor?s Office of Emergency Services requires that the grantee submit their annual audit report and single audit report (if applicable) within 9 months of the Organization?s year end. Cause: Failure to submit the annual audit and single audit reports within the required timeframe. Effect: Due to late reports, grantors may reduce or cease funding. Recommendation: We recommend that the Organization devote necessary resources to submit all required grant reports and ensure the audit is completed within nine months of year end. Response: The Organization agrees with the finding and the recommended procedures have been implemented.

Condition: Direct grant expenditures include items not identified in the approved budget or items included in the wrong category of the approved budget. All expenditures were allowable by Cal OES in the subrecipient handbook. Criteria: 2CFR part 200 uniform administrative requirements, cost principles, and audit requirements for federal awards requires grant expenditures to match approved budget line items. Cal OES subrecipient handbook requires prior approval for budget modifications which transfer funds from one approved budget category to another and/or add a new line-item to any budget category. Cause: Cost reimbursements were requested for items unidentified in the approved budget Effect: If prior approval is not obtained for budget modifications, the grant subaward reimbursement may be reduced by the amount of the unauthorized expenditures. Recommendation: Develop a schedule to track the original budget line items, any approved changes to the budget by OES, with a reconciliation to the actual costs reported on the internal income statement. Response: The organization agrees with the finding and the recommended procedures are being developed and will be implemented going forward.

2020-003 Condition: The modified total direct cost base (used to determine the $ amount of indirect costs allowed) was not calculated according to the approved budget. Criteria: 2CFR part 200 uniform administrative requirements, cost principles, and audit requirements for federal awards requires grantees that elect to use the de minimis indirect cost rate ? to consistently charge costs as either indirect or direct costs, but not double charge or inconsistently charge costs as both. ? to include only direct costs identified in the approved budget in the modified total direct cost base. ? not to include indirect costs in the modified total direct cost base. Cause: The client did not have a schedule for accurately calculating the modified total direct cost base used each month for their request for reimbursement. Effect: Miscalculation of the modified total direct cost base results in an inaccurate request for indirect cost reimbursement. Recommendation: Develop a schedule to ensure that the grant billing preparer calculates a correct modified total direct cost base. Response: The organization agrees with the finding and the recommended procedures are being developed and will be implemented going forward.

2020-004 Condition: Allocable costs were not allocated using a consistent methodology. Criteria: Cal OES requires grantees with more than one funding source to maintain a written allocation plan that identifies the allocation of allowable costs. Cause: No adequate cost allocation plan has been written and maintained. Effect: If costs are not allocated consistently, the cost reimbursement request could be inaccurate Recommendation: Develop and document a cost allocation plan that includes a worksheet reflecting the percentage and methodology used to allocate costs to more than one funding source. Response: The organization agrees with the finding and the recommended development of a thorough cost allocation plan (narrative, worksheet reflecting the percentage of distribution to each funding source, and methodology for distribution) to support modified total direct costs used in the 10% de minimis. This will be implemented going forward.