California Community FoundationLocal Government

Inaccurate reporting of the Schedule of Expenditures of Federal Awards

Finding 2024-001 – Procurement Federal Agency: U.S. Department of Treasury Federal Program Name: COVID-19 – Coronavirus State and Local Fiscal Recovery Funds Assistance Listing No.: No. 21.027 Federal Award Number: ASST_NON_SLFRP0137_2001 Grant Award Period: 9/1/2022 – 8/31/2024 Pass Through Entity: Los Angeles County - Department of Public Health Repeat Finding – No Statistically Valid Sample – The sample was not intended to be, and was not, a statistically valid sample Criteria 2 CFR 200.324 requires that the non-federal entity perform a cost or price analysis in connection with every procurement action in excess of the Simplified Acquisition Threshold, including contract modifications. The method and degree of analysis is dependent on the facts surrounding the particular procurement situation, but as a starting point, the non-federal entity must make independent estimates before receiving bids or proposals. 2 CFR 200.303 requires the recipient of federal funds establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition/Context For both of the samples selected for testing which had related procurements above the California Community Foundation’s (the Foundation's) Simplified Acquisition Threshold, there was no support evidencing a cost or price analysis performed by management before receiving the corresponding proposals, although multiple bids were received as part of these procurements. Cause Although the Foundation included the requirement in its procurement policies that the cost or price analysis needed to be performed before bids or proposals are received the Foundation did not have sufficient controls in place to ensure that a cost or price analysis is performed prior to receiving bids or proposals. Effect Because the Foundation was not in compliance with one of the procurement requirements this could result in disallowed costs if procurement amounts aren't considered reasonable. The Foundation did, however, receive multiple bids as part of the procurement process for each of the samples noted above to demonstrate the costs claimed for reimbursement under the contract were reasonable and under the budget provided to the Foundation by the passthrough awarding entity. Questioned Costs None noted. Auditors’ Recommendation We recommend that the Foundation strengthen processes and internal controls to ensure that a cost or price analysis is performed, reviewed, and substantiated with formal documentation prior to receiving bids or proposals for all procurement actions above the Simplified Acquisition Threshold. Views of Responsible Officials The Foundation acknowledges the finding and will enhance compliance with federal procurement standards by reinforcing staff training on cost and price analysis requirements, strengthening internal oversight mechanisms, and implementing a formalized process to ensure proper documentation is completed and retained. Periodic reviews and audits will verify adherence to these standards and maintain consistent implementation.

Finding 2024-002 – Allowable Costs Federal Agency: U.S. Department of Treasury Federal Program Name: COVID-19 – Coronavirus State and Local Fiscal Recovery Funds Assistance Listing No.: No. 21.027 Federal Award Number: ASST_NON_SLFRP0137_2001 Grant Award Period: 9/1/2022 – 8/31/2024 Pass Through Entity: Los Angeles County - Department of Public Health Repeat Finding: No Statistically Valid Sample: The sample was not intended to be, and was not, a statistically valid sample Criteria 2 CFR 200.303 requires the recipient of federal funds establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition/Context For 1 of the 28 invoices reviewed, which includes 25 subrecipient invoices and 3 vendor invoices, representing $76,549 of the $439,088 of underlying invoices reviewed, we noted that there was insufficient documentation to demonstrate management completed the invoice review process as the review and approval of this invoice was not documented. The Foundation had an agreement with its contractor to pay for services performed according to an agreed payment schedule. While the Foundation reviewed payments made to the contractors, it did not review the underlying invoice detailing the work performed for the payment. Cause Although the Foundation has a process in place to review invoices for allowability of the underlying costs, management inadvertently failed to formally document their review of one of the invoices we selected for testing. Effect or Potential Effect By not maintain formal evidence that a review of an invoice, there is a risk that costs could be charged to the grant that are ultimately deemed unallowable. Questioned Costs None noted. Auditors’ Recommendation We recommend that the Foundation strengthen its documentation requirements over the review and approval of invoices for costs claimed for federal reimbursement. Views of Responsible Officials The Foundation acknowledges the finding and will implement corrective measures by updating its invoice review procedures to formally record review dates and approvals in compliance with 2 CFR 200.303. Additionally, we will reinforce staff training and supervisory reviews to ensure that all invoice documentation meets federal standards, and we will conduct periodic internal reviews and audits to verify adherence to these enhanced procedures. These actions will mitigate the risk of unallowable cost charges and ensure ongoing compliance with federal procurement standards.

Finding 2024-003 – Reporting Federal Agency: U.S. Department of Treasury Federal Program Name: COVID-19 – Coronavirus State and Local Fiscal Recovery Funds Assistance Listing No.: No. 21.027 Federal Award Number: ASST_NON_SLFRP0137_2001 Grant Award Period: 9/1/2022 – 8/31/2024 Pass Through Entity: Los Angeles County - Department of Public Health Repeat Finding: No Statistically Valid Sample: The sample was not intended to be, and was not, a statistically valid sample Criteria As set forth in 2 CFR 200.328 and in 31 CFR Section 35.4(c), entities receiving Coronavirus State and Local Fiscal Recovery Funds are required to submit quarterly and annually project and expenditure reports to meet compliance and reporting responsibilities under the program. As the Foundation is a subrecipient to the County of Los Angeles (the County), section 6.2 and section 7.0 of Exhibit A of the Agreement between the County and the Foundation for American Rescue Plan Act Trauma Prevention Partnerships provides the reporting requirements by the Foundation to the County including, among other things, the expenditures reported to date by the Foundation. 2 CFR 200.303 requires the recipient of federal funds establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition/Context During fiscal the fiscal year ending June 30, 2024, the Foundation overstated expenditures incurred by its two vendors by $203,629 and a corresponding overstatement of $20,363 in indirect costs in the schedule of expenditures of federal awards (SEFA). Additionally, in the June 30, 2024 Quarterly Performance Report to the County, the Foundation overstated the advances to its vendors by $120,000 and understated expenditures incurred by its two vendors by $519,259. Finally, in the June 30, 2024 Quarterly Invoice to the County, the Foundation overstated the amounts advances to its vendors by $120,000 (however the remaining $807,000 of advances were correctly reported.) Management also failed to separately report the actual expenditures incurred by the vendors in the "Contracts" section of the invoice. However, in the total invoiced amount summarized in the invoice for fiscal 2024 approximated the total expenditures on the June 30, 2024 schedule of expenditures of federal awards. Based on our discussion with management, we understand that the Foundation and the County mutually understood that the June 30, 2024 quarterly invoice was preliminary, as it was submitted by CCF prior to the fiscal year-end. Consequently, the Foundation reflected the final expenditures and payments in the September 30, 2024 invoice. In this invoice, the Foundation removed the previously overstated amount of $120,000 of advances to a vendor. Cause The Foundation had reported all of the amounts advanced to its two vendors in the SEFA and in its quarterly reporting to the County with the understanding that those amounts were the actual expenditures incurred by the vendors during the year. Additionally, there were not sufficient controls in place to ensure that the amounts reported in the SEFA and June 30, 2024 quarterly performance report submitted to the County reconciled to the actual expenditures incurred by the Foundation’s vendors for the year ending June 30, 2024. Effect or Potential Effect The expenditures reported in the schedule of expenditures of federal awards for the year ended June 30, 2024 and in quarterly reporting to the County were incorrect. Questioned Costs None noted. Auditors’ Recommendation We recommend that the Foundation strengthen its reconciliation controls between the amounts reported in the SEFA and County invoices to ensure the amounts are accurate and consistently reported. Views of Responsible Officials CCF acknowledges the finding and is implementing corrective measures to strengthen the accuracy and integrity of its financial and programmatic reporting. CCF has enhanced its internal review process and implemented a reconciliation protocol to ensure consistency between internal records and external reports. Finance staff have received additional training, and final reports are now subject to dual validation by both the Compliance and Finance teams prior to submission.