United Ways of CaliforniaNon-Profit

The Organization did not establish written procedures as required by 2 CFR section 200.305 (Federal payment ‐ advances) [2 CFR section 200.302(b)(6)].

1. Of the sample of 40 expenditures selected for testing by the auditor, four of the 40 items did not have the documentation available at the time reimbursement was sought that met the “adequate” standard supporting its allowability. 2. The Organization did not properly utilize its accounting records in order to general the billings for reimbursement from its pass‐through agency, resulting in billings not being always fully supported.

Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (vii) Support the distribution of the employee's salary or wages among specific activities or cost objectives if the employee works on more than one Federal award. The Organization did not comply with the requirements at the payroll level, since timesheets were not always maintained and signed by the employee as evidence of work performed on the federal contract.

Criteria: Nonfederal entities must establish written procedures to implement the requirements of 2 CFR section 200.305 (Federal payment - advances) [2 CFR section 200.302(b)(6)]. Condition: The Organization did not establish written procedures as required by the criteria above. Cause: The Organization was required by the granting agency to quickly implement the program. Accordingly, the Organization was not able to first put the required policies in place. Effect: The Organization was advanced certain funds, prior to incurring the related expenditures and in the absence of the written policies. Questioned Costs: Although the Organization was advanced funds which at the time could be considered questioned, ultimately the costs were incurred. Accordingly, there is no questioned cost. Context: Management has stated that it was effectively advised by the pass-through agency to obtain an advance by billing for cost that had not yet been incurred. The window of time to setup the necessary systems in order to execute the program was limited and advances were needed in order to retain the resources to operate the program. This is why the Organization did what it did. Repeat finding: This is not a repeat finding Recommendations: The Organization should a) establish written procedures related to requesting advances and b) contemporaneously document its communication with its pass- through agency with respect to this area. View of responsible officials: Management acknowledges that we did not have documentation of the policies, or contemporaneous documentation of communication with our pass-through agency with respect to 2CFR Section 200.302. However, what we were advised to do appeared reasonable given the brief window of time to set up and execute the program and we did ultimately incur and pay the expenditures.

Criteria: Nonfederal entities other than states, including those operating federal programs as subrecipients of states, must follow the procurement standards set out at 2 CFR sections 200.318 through 200.326. They must use their own documented procurement procedures, which reflect applicable state and local laws and regulations, provided that the procurements conform to applicable federal statutes and the procurement requirements identified in 2 CFR part 200. Condition: The Organization did not always appear to comply with these procurement requirements. Several large contracts with vendors and subcontractors were entered into without the documentation in place at the time for the rationale for such. Cause: The Organization was required by the granting agency to quickly implement the program. Accordingly, the Organization was not able to first put the required procurement policies in place. Effect: The risk exists that better terms could have been obtained for the subcontracted services. Questioned Costs: None. See View of Responsible Officials below. This is considered a documentation issue only. Context: This was the first single audit since the Uniform Guidance became effective where the Organization?s procurement standards were called into question. The pass-through entity put considerable pressure on the Organization to commence work and as a result, the Organization did not adequately review all the policies and procedures prior to the start of the contract. Repeat finding: This is not a repeat finding Recommendations: The Organization should implement the required procurement procedures and related documentation. View of responsible officials: Management acknowledges that we did not a have documented procurement policies that conformed exactly to Federal guidelines. The sub-contractors we contracted with were entities with which we had existing knowledge that they could do the work at a fair price and may have delayed our ability to deliver the services that were contracted for. A formalized procurement process would not have changed the subcontractor or price. We have since improved our procurement policies and documentation.

Criteria: 2 CFR section 200.403 Factors affecting allowability of costs: Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: .. (g) Be adequately documented. Conditions: 1. Of the sample of 40 expenditures selected for testing by the auditor, five of the 40 items did not have the documentation available at the time reimbursement was sought that met the ?adequate? standard supporting its allowability. 2. The Organization did not properly utilize its accounting records in order to general the billings for reimbursement from its pass-through agency, resulting in billings not being. Cause: The Organization was required by the granting agency to quickly implement the program. Accordingly, the Organization was not able to first put the required procedures in place to support its billings.Effect: The risk existed the expenditures billed for would ultimately not be supported and that it could ultimately be disallowed. Questioned Costs: The questioned costs were adjusted out of the 2019 expenditures on the Schedule of Expenditures of Federal Awards. Also, the accounting records were adjusted so that 2019 revenues recognized corresponded to expenses incurred. Subsequent to reimbursement, in 2020 the documentation for the expenditure was obtained or generated. Hence there is no questioned cost. Context: The pass-through entity put considerable pressure on the Organization to commence work and not all the policies and procedures could be put in place prior to the start of the contract. Repeat finding: This is not a repeat finding Recommendation: The Organization should implement appropriate proceduresto ensure it a) hasthe support related to each billing for costsitsubmits and b) utilizesits accounting records in order the generate the billings. View of responsible officials: Management acknowledges that we did not always have documentation to support the costs on each billing at the time of the billing. We have since remedied this by improving our procedures and substituting experienced internal staff in place of the outside accounting service in place at the time of the grant.

Criteria: 2 CFR section 200. (b) Schedule of expenditures of Federal awards. The auditee must prepare a schedule of expenditures of Federal awards (?SEFA?) for the period covered by the auditee's financial statements which must include the total Federal awards expended as determined in accordance with section 200.502. Condition: The Organization could not initially prepare an accurate schedule of expenditures of federal awards. Cause: The Organization was required by the granting agency to quickly implement the program. Accordingly, the Organization was not able to retain team members with the experience to prepare an accurate SEFA. Effect: The Organization was not able to fulfil its obligation Questioned Costs: This is an internal control issue. Accordingly, there is no questioned cost. Context: The Organization did not initially have the in-house expertise to prepare the required schedule Repeat finding: This is not a repeat finding Recommendation: The Organization should implement appropriate training so that the schedule of expenditures of federal awards can be prepared View of responsible officials: Management agrees that we did not initially have the in-house expertise to put together the schedule. We subsequently hired the personnel with the expertise and this matter is considered remediated by us.