THE STEPPING STONE OF SAN DIEGO

Condition: We noted that the Organization did not have a formal policy on the approval of cash disbursements. The Organization makes use of a payment summary form, but we noted that this was not consistently used to document approvals. In addition, we noted that some timesheets were missing proper approvals. The Organization is required to maintain support for all costs expended under the Medical Assistance Program in accordance with Regulation 2 CFR Part 200.302 Financial Management and Regulation 2 CFR Part 200.303 Internal Controls (a)(e). Criteria: Invoices and timesheets should be properly reviewed and approved to ensure that they are correctly coded and appropriately billed to grants and contracts. Cause: Internal control systems were not in place to ensure that the review and approval of invoices and timesheets were completed. Effect: The lack of a review and approval of invoices and labor distribution reports could result in errors in the billing to specific grants and contracts which could result in questioned or disallowed costs. Recommendation: The Organization should implement a formal policy such that all invoices and timesheets are reviewed and approved and that the policy is consistently followed.

Condition: The Organization did not prepare a proper Schedule of Expenditures of Federal Awards (SEFA). Criteria: Per the Code of Federal Regulations Title 2 - Subtitle A - Chapter II ? Part 200.508 (b), each auditee must prepare appropriate financial statements, including the schedule of expenditures of federal and state awards, in accordance with 200.510 Financial Statements. Cause: Internal control systems were not in place to ensure that the preparation and review of the SEFA was completed. Effect: The Organization did not prepare a proper SEFA. Recommendation: We recommend that the Organization review the required elements of the schedule and document its internal controls to ensure compliance with Uniform Guidance. Additionally, we recommend a review of any contracts and agreements along with an inquiry of the grantor as to the amount of federal awards included in the contract. If exact federal awards cannot be determined immediately, the use of historical data and grantor estimates should lead to a reasonable expectation. This reasonable expectation is required to properly plan the single audit, determine which programs are to be tested, and avoid duplicate efforts.

Condition: The Organization did not submit complete quarterly status reports on time. Criteria: Per 8.6 of Exhibit A ? Statement of Work Documentation, Data Collection, and Reporting Requirements, the Organization is required to submit quarterly status reports. These reports are due quarterly on the 20th of the following month after quarter ends. Cause: Internal control systems were not in place to ensure that completion and submission of the reports were completed on time. Effect: The Organization submitted incomplete reports past the due date. Recommendation: We recommend that the Organization review the required elements of the quarterly status reports and implement a process of preparing, reviewing, and submitting the required reports on time.