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Wayne A. Johnson

State Auditor

State of New Mexico

C. Jack Emmons, CPA, CFE

Deputy State Auditor

OFFICE OF THE STATE AUDITOR Via Email

August 22, 2018

Kyky Knowles, Acting Cabinet Secretary

New Mexico Aging and Long Term Services Department

P.O. Box 27118

Santa Fe, New Mexico 87502-7118

Re: Special Audit of the Non-Metro Area Agency on Aging – North Central New Mexico

Economic Development District

Dear Secretary Knowles:

The Office of the State Auditor (“Office”) has completed the review of the audit report required

by the special audit designation of the North Central Economic Development District

(NCNMEDD), related to its role as the state’s Non-Metro Area Agency on Aging under contract

with the New Mexico Aging and Long Term Services Department (ALTSD) as described above,

in accordance with Section 12-6-14(B) and 2.2.2.13 NMAC. This letter is your authorization to

make the final payment to the independent accounting firm (“IPA”) that completed the report.

In accordance with the audit contract, the IPA will deliver to the agency the number of copies of

the report specified in the contract.

This report was presented to the ALTSD on Wednesday, June 22, 2018 at an exit conference,

pursuant to Section 12-6-5 NMSA 1978, and more than five (5) days have passed since the

Agency received the report. The final copy of the report was delivered to the State Auditor’s Office

on August 17, 2018. The report shows a closing date of July 24, 2018. Pursuant to 2.2.2.15

NMAC, all necessary copies of the final report have been provided to the Office. As of today’s

date, the Office will:

• send the report to the Office to the Department of Finance and Administration, the

Legislative Finance Committee and other relevant oversight agencies; and

• post the report on its public website.

The auditor’s findings and comments are included in the report. As you are aware, the special

audit report contains twelve (12) separate findings. The auditor specifically noted in Finding

2018-005 that the NCNMEDD had been improperly billing for administrative services, and had

billed 1/12 of its administrative budget for Title III activities each month. The contract provided

that the NCNMEDD was to be reimbursed based on its actual monthly expenditures. The report

states that the NCNMEDD miscalculated the administrative reimbursements, resulting in an

overdrawn amount of $336,000 for administrative purposes. Following the error, the

NCNMEDD continued submitting incorrect SA-1 reports, which were relied upon by the

ALTSD when it submitted its SF-425 reports to the federal oversight agency. The audit report

notes that the error was not reported by NCNMEDD, but instead was discovered by the Agency

after the end of the fiscal year during a site visit. The error was not corrected until June, 2017,

and was offset by underdrawn amounts for service providers and programs.

Finding No. 2018-006 notes that, after the date of the error in October, 2016, the NCNMEDD

issued bonus pay to 22 of its employees for a total of $19,500. It also paid out $22,900 in

employee bonuses in May, 2017, and an additional $15,000 in bonuses on July 27, 2017. The

independent public accountant (IPA) found that these employee bonuses, totaling $57,400 were

unallowable and noted that the federal government could ask for the return of those funds.

On page 17 of the audit report, the IPA listed $118,395 in “unallowable items, unsupported

through adequate documentation items, incentive pay and waste items.” Those unallowable

expenditures appear to include $2,478 in payments to Eloisa Restaurant in Santa Fe for staff

dinners. That list also includes $1842 in payments to an entertainment venue called the “Main

Event”, as well as $7,921 for a “staff retreat” at the Hotel Andaluz. All of these disallowed

expenditures appear to have occurred during the period when the NCNMEDD had overdrawn

the administrative reimbursements, and was not billing for its administrative expenses in

accordance with the contract.

The audit report notes that the $336,000 error was offset by “undrawn amounts for service

providers and programs.” It appears, therefore, that the NCNMEDD’s expenses for restaurants,

employee entertainment and employee bonuses caused a decrease in the services and programs

provided to senior citizens in the areas of New Mexico outside of Bernalillo County. Those

expenditures also appear to have come at a time when the Agency was working to reduce its own

budget due to budget constraints imposed by the Governor and state legislature.

We strongly recommend that the Agency take appropriate action to ensure that public dollars

intended to benefit New Mexico’s senior citizens are not misspent by working with the

NCNMEDD, or any subsequent non-metro area agency on aging, to correct these issues.

Sincerely,

Wayne A. Johnson

State Auditor

2540 Camino Edward Ortiz, Suite A, Santa Fe, New Mexico 87507

Phone (505) 476-3800 * Fax (505) 827-3512

www.osanm.org * 1-866-OSA-FRAUD

http://www.osanm.org/

REPORT OF INDEPENDENT ACCOUNTANT’S CONSULTING PROCEDURES

NEW MEXICO AGING AND LONG-TERM

SERVICES DEPARTMENT

North Central New Mexico Economic Development District

As Subrecipient for Grant Administration of Title III Federal Awards

July 24, 2018

CER TIFIED PUBLIC ACCOUNTANTS | CONSULTANTSCER TIFIED PUBLIC ACCOUNTANTS | CONSULTANTS

C E R T I F I E D P U B L I C A C C O U N TA N T S | C O N S U LTA N T S

ATKINSON & CO. LTD

6501 AMERICAS PARKWAY NE , SUITE 700, ALBUQUERQUE, NM 87110

PO BOX 25246, ALBUQUERQUE, NM 87125

T 505 843 6492 F 505 843 6817 ATKINSONCPA.COM

PRECISE. PERSONAL. PROACTIVE.

REPORT OF INDEPENDENT ACCOUNTANT’S CONSULTING PROCEDURES To Kyky Knowles, Acting Cabinet Secretary New Mexico Aging and Long-Term Services Department and Wayne Johnson, New Mexico State Auditor Santa Fe, New Mexico Subject: Consulting Procedures Performed for the New Mexico Aging and Long-Term

Services Department (ALTSD) regarding North Central New Mexico Economic Development District (NCNMEDD) operations, grant compliance and administration from fiscal year 2016 to January 31, 2018, as recorded by NCNMEDD who was the subrecipient under the Title III Federal Grant Awards.

Thank you for the opportunity to work with you to complete this consulting engagement for the New Mexico Aging and Long-Term Services Department (ALTSD). This report summarizes our objectives, scope of work, procedures and findings in relation to these consulting procedures. We have performed the consulting procedures enumerated below as items 1-4, which were agreed to by responsible management of the New Mexico Aging and Long-Term Services Department and the Office of the State Auditor, solely to assist you in evaluating the selected transactions, amounts and results of the procedures performed. The period of our engagement is from July 1, 2015, to January 31, 2018. This consulting engagement was conducted in accordance with the 12-6 NMSA 1978, and 2.2.2.15 NMAC and the Standards for Consulting Services established by the American Institute of Certified Public Accountants. The scope of the engagement is outlined in the body of our report. The sufficiency of these procedures is solely the responsibility of those parties specified in this report. Consequently, we make no representation regarding the sufficiency of the consulting procedures described below either for the purpose for which this report has been requested or for any other purpose. The responsible parties to the Title III Federal Awards operations and administration are North Central New Mexico Economic Development District (NCNMEDD) and its operating bureau for the administration of Title III Federal Awards, Non-Metro Area Agency on Aging (NMAAA). The parties remain responsible for the accounting records, fraud prevention and detection, and for maintaining effective internal controls over the financial statements, federal grants, and compliance as subrecipient of subawards each year. The New Mexico Aging and Long-Term Services Department (ALTSD) is primary award recipient and pass-through entity (PTE) to NCNMEDD.

New Mexico Aging and Long-Term Services Department and the New Mexico State Auditor

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ENGAGEMENT PROCEDURES AND SCOPE The following procedures are taken from the signed contract for the Engagement: 1) Review 100% of bank statements and bank reconciliations, including but not limited to cancelled checks, transfers and wires for unusual transactions such as potentially fraudulent endorsements or transfers. Consider expanding if appropriate or necessary the sample on a random basis to ensure that at least 100 disbursements are tested in each fiscal year (minimum sample of 300). Perform additional procedures including the examination of supporting documentation to verify the compliance of such disbursement with federal and state guidelines. 2) Examine reimbursement requests from NMAAA to ALTSD for the six U.S. Department of Health and Human Services Awards including those questioned by ALTSD. These tests will include procedures such as review of journal vouchers to ensure the overhead rates charged are in compliance with federal and state guidelines as well as the contract. 3) Review the timeliness of reimbursement requests from NMAAA to ALTSD, the response time for payments from ALTSD and the timeliness of NCNMEDD payments to subrecipients for compliance with state, federal and contractual requirements. 4) Review and assess paid bonuses to employees for indications of fraud, waste or abuse. DEFINTIONS AND ACRONYMS USED IN THIS REPORT NCNMEDD – North Central New Mexico Economic Development District is a governmental entity classified as a local public body. NMAAA – Non-Metro Area Agency on Aging is an identified segment of NCNMEDD primarily responsible for the administration of Title III funds. It is not a separate government. In this report, most references will be to NCNMEDD but references to NMAAA may exist. Both NCNMEDD and NMAAA are used interchangeably to refer to the operations and administration of subawards of federal funds made by ALTSD. Contracts entered into by the Pass-Through Entity (PTE) and Subrecipient referenced both NCNMEDD and NMAAA. Administrative Costs – Administrative costs used in this report refers to the portion of federal and state funds that are retained by NCNMEDD rather than passed through directly to any of 32 counties served by NCNMEDD under the Title III programs. Retained funds are composed of both direct and indirect costs. Direct Costs – are those costs that can be identified specifically with a federal award (2 CFR 200.413) and can be directly assigned to such activities relatively easily with high accuracy.


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Indirect Costs – are those costs that benefit federal programs in addition to nonfederal programs and the determination of the federal share would be difficult to compute without an inordinate amount of effort. Overhead Cost – is a common business term generally referring to all costs of operating an activity rather than direct materials, direct labor and direct expenses. In this report we will use the terms direct and indirect costs rather than overhead costs. BARs Budget Adjustment Requests – This is a formal amendment of the original budget to incorporate into the budget new funding or new financial circumstances that is subject to approval by the oversight agency. Pass-Through Entity (PTE) – For this report the PTE is the Aging and Long-Term Services Department who receives Title III Federal Awards. Title III Federal funds refers to the following federal awards that are described as the Aging Cluster, CFDA Numbers 93.043, 93.044, 93.053, 93.045, and 93.052, further detailed as follows: Title III Federal funds:

CFDA Number Federal Program

93.044 IIIB Support Services 93.045 IIIC-1 Congregate Meals 93.045 IIIC-2 Home-Delivered Meals 93.043 IIID Health Promotion and Disease Prevention 93.052 IIIE Care Giver Support 93.053 Nutrition Services Incentive Program (NSIP)

State Personal Care Services (State) – State general funding in connection with home and community based federal programs for older Americans in New Mexico. State funding serves as required matching and maintenance of efforts funds to federal programs with excess funds for the program. NFE – “Non Federal Entity” which is a term referring to an entity receiving federal awards that is not associated with the federal government. NCNMEDD as a local government organization is an NFE. Fiscal Years – FY 2016 covers July 1, 2015, through June 30, 2016; FY 2017 covers July 1, 2016, through June 30, 2017; and FY 2018 (partial) covers July 1, 2017, through January 31, 2018


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SCOPES PERFORMED We tested various transactions and documents to equal or exceed our scope of work given in the contract. Test items by area are as follows:

Item FY 2016 FY 2017 FY 2018 – 7 months

Total

Bank statements reviewed - 6 bank accounts including reconciliations and cleared checks

60 76 42 178

Bank reconciling items including: transfer, missing endorsements, signatures and other questionable items

18 12 3 33

Expenditures arising from check disbursements

40 40 40 120

Payroll transactions with staff 14 16 10 40 Service provider payments 14 14 12 40 Credit card statements – 3 cards 22 24 16 62 Payments from ALTSD to NCNMEDD and corresponding payments to Service Providers

6 12 12 30

Total test items as defined 174 194 135 503


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ITEM 1 – REVIEW OF BANK STATEMENTS AND BANK RECONCILIATIONS INCLUDING CANCELLED CHECKS, ACH TRANSFERS AND WIRES NCNMEDD maintained six bank accounts. Their names and purposes are described below.

1. NM Cares Foundation account: solely for operations of NM Cares, mostly Hunger Summit

related amounts. 2. RediNet account: for RediNet specific transactions, stopped being used in June 2016. 3. EDA-RLF (Economic Development RLF): a loan collection account for the Ultimate Sports,

Quickfix Home Improvement, Accu Blueprint, and one of the two NM Algae Production loans. 4. TCR-RLF (Tri County Regional RLF): a loan collection account for the other NM Algae

Production loan, the Comida de Campos Inc. and the Shear Encounters Hair Salon loans. 5. Veterans Program account: used specifically for operations of that program. 6. General Operating account: for all other operations and functions for NCNMEDD, including

receipt of the Title III awards. For the period of our engagement from July 1, 2015, through January 31, 2018, bank statements and reconciliations that we reviewed totaled 178. We reviewed the bank reconciliations for the following information:

1. Timeliness of preparation 2. Proper documented approvals 3. Propriety of outstanding items 4. Agreement of reconciliations to the general ledger 5. Large and unusual payees

The Finance Director or the Accountant Specialist prepares the bank reconciliations. We observed that no documented review or approval for bank reconciliations occurred through June 2016, but we subsequently observed documented review and approval of bank reconciliations starting July 1, 2016, through the end of our engagement period. Bank reconciliations were not current for the earlier months of our engagement period. Account reconciliations were behind by about four to five months. The longest period of late preparation was 185 days observed at May 31, 2016. This improved over the next six months to only 34 days to prepare the reconciliation. A second period of late preparation occurred about one year later, July 2017, for one month. The late preparation in this case was just after the end of the fiscal year. The general trend was improvement in preparation time from May 2016 and thereafter.


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Bank Reconciliations # of Days to Reconcile FY 2016 FY 2017 FY 2018 Total

< 30 days 12 24 23 59 31-90 days 12 18 18 48 91-120 days 8 6 - 14 > 121 days 28 20 - 48 Undetermined - 8 1 9 Total

60

76

42

178

Checks clearing with the bank statements were reviewed for all accounts. We reviewed cancelled checks for proper signatures and endorsements and possible transfers. NCNMEDD’s policy is to sign checks with two electronic signatures consisting of the Executive Director and a Board member. We reviewed vendors paid, endorsements, timeliness of check clearings and any other unusual items. Atkinson noted five checks that were carried as outstanding checks for a period of over a year. These checks were voided after attempts by North Central to contact original payees. Per client interviews and review of supporting documentation including the amounts on the checks, we believe the outstanding checks did not represent any error or irregularity. We observed approximately 13 checks with missing or faded endorsements. The lack of endorsement is a circumstance that can occur in our experience. We researched all available information including vendor files together with client interviews and believe that none of these checks represent an error or irregularity. There were missing signatures observed on eight checks. Six had only one signature and two were stamped “verbally authorized.” These checks were from the first year of our review and four of the eight were in relation to REDInet activity. REDInet checks were unrelated to Title III Federal funds. We concluded that the absence of missing signatures on these items did not indicate an error or irregularity. We reviewed bank transfers whereby an amount was transferred from one account to another exclusive of ACH transfers to service providers or to ALTSD. There were just five total transfers and we concluded that the transfers had a reasonable business purpose. We traced 120 checks to supporting documentation. We selected these checks in a random manner. Items were also selected judgmentally. Certain checks principally in connection with credit card payments had inadequate support documentation in relation to business purpose and did not document individuals receiving training or traveling for training or other purposes.


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We reviewed all credit card statements and noted a lack of supporting documentation and documented purpose for some specific transactions. NCNMEDD did not have a procurement policy or procedures over credit card use before July 21, 2017, but as a governmental entity it is subject to the state procurement code. New Mexico law cited under 13-1-169 NMSA 1978 specifies that requests for procurement shall contain a statement of need and the general characteristics of the procurement. The policy to follow the state procurement code was formally adopted at July 21, 2017. Obtaining and maintaining proper documentation and support for purchases is essential for all state government purchases. See schedule of unallowable, unsupported, and waste transactions on page 17. See Finding 2018-009. Also, during our review of credit card statements, the Organization paid $2,217 of interest calculated on unpaid beginning balances and paid $977 for penalties which included late payment fees on credit cards, a penalty paid to the IRS for a reapplication of tax exempt status for New Mexico Cares and an unemployment insurance assessment of $10,501 including $954 penalty and interest from the state of New Mexico. NCNMEDD is the fiscal agent for New Mexico Cares. The interest and penalty amounts were not charged against federal or state awards but indicate a lack of fiscal responsibility. See Findings 2018-008 and 2018-013. As part of our review of the internal controls surrounding the cash disbursement function we identified a material weakness deficiency in internal control. See Finding 2018-001. In connection with bank reconciliation preparation times, see Finding 2018-010.


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ITEM 2 – EXAMINE REIMBURSEMENT REQUESTS FROM NCNMEDD TO ALTSD FOR THE SIX U.S. HEALTH AND HUMAN SERVICES AWARDS Reimbursement requests are made on form SA-1 (provided by ALTSD) monthly. The billings have two components. First, the service providers entering their unit data monthly into the SAMs system is a significant part of the billing. The second component comes through from NCNMEDD as the administration billing for the month. Per interview with the Finance Director the billing protocol has been to bill 1/12 of the approved budget for the year as adjusted by BARs when applicable. This billing method was in place before the year beginning July 1, 2017. This billing method requires a final reconciliation of actual expenditures by program and fund to amounts reported to ALTSD as program expenditures. However, the contract entered into by NCNMEDD with ALTSD for the year ending June 30, 2017, indicates that “reimbursements shall be made by the Agency on a monthly basis upon receipt of monthly expenditures and reports furnished by the Contractor.” This contract provision does not provide for pro rata billings based on budgeted amounts which was used in previous years. See Finding 2018-005 During the year ending June 30, 2017, two budget modifications were made. After the first BAR was made during October 2016 which provided for additional funds to the program, the budget amount used for billing was miscalculated for the administrative category and the available administrative budget was reported higher than it should have been. Consequently, $336,000 was overdrawn for administrative purposes. The program director of NCNMEDD signed the SA-1 reports after her review and continued to sign monthly SA-1 reports as accurate for those submitted after October 2016. The submitted reports are also reviewed and accepted by ALTSD as the basis for filing the SF-425s. The error was not corrected until June 2017 and at that time revenue amounts in variance were transferred from administration to programs. ALTSD management reports that the error was not reported to them but was instead found by them after year-end during a field visit. Reported overdrawn amounts for administration were offset by underdrawn amounts for service providers and programs during year-end reconciliation procedures. Overall for the year ending June 30, 2017, the total federal and state award amounts drawn was $20,326,154 which was less than the purchase order issued by ALTSD for the year by $57,827. NCNMEDD also reported an amount of $29,953 which is to be reverted to ALTSD for units that were expected to be paid to a certain service provider but were never utilized. The internal controls in relation to the review and certification of SA-1 reporting by NCNMEDD did not catch this error for a significant part of the year and such reports were also accepted by ALTSD. The absence of a reconciliation policy and corresponding procedure indicate material weakness in the controls for this process. There are open questions about the accuracy of the SF-425s filed for this program by ALTSD working from SA-1s submitted by NCNMEDD. See Finding 2018-005.


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We tested individual transactions as indicated in the scope paragraph including time sheets of personnel charging time to the grants, payroll amounts, amounts of non-payroll expenditures, payments to service providers, and flow of information into the correct general ledger accounts which are organized by program. Our test work indicated that for transactions and relationships tested cost allocations were reasonable. In addition to individual test items we also made certain comparisons of data that should reconcile in relation to federal awards or for total program expenditures. Total expenditures for Title III programs, federal and state per program expenditure reports to those reported in the audited financial statements is scheduled below. A variance of $7,657 is reported between the two reports.

Item

Expenditures per YTD expenditures

report

Expenses per FS

Reported Amounts $20,326,154 $21,114,044

Less SEP expenses Not part of Title III

-

($825,500)

Less Audit Adjustment for Reversion

(29,953)

-

Total $20,296,201 $20,288,544

Difference - $7,657

A comparison was made between audited federal revenue per the statement of revenue, expenditures and changes in fund balance and the audited Schedule of Expenditures of Federal Awards (SEFA). There was a difference of $17,419. These amounts should be identical for reimbursement type federal awards.

Item

Audited Expenditures

SEFA

Audited Federal

Revenue

Reported Amounts $7,651,077 $7,561,746 Less Veterans Funds not

Part of Title III

(71,912)

-

Total 7,579,165 7,561,746

Difference - $17,419


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The total revenue, expenditures and changes in fund balances for NMAAA Title III programs presented on pages 54 and 55 of the audited financial statements as of and for the year ending June 30, 2017, report a residual fund balance by program that increased or decreased for the year by the excess or deficiency of revenues in comparison to expenditures. The changes in fund balances were not large by program and netted to an aggregate of $7,665 of revenues in excess of expenditures. There may be a general expectation to revert unused funds under the program or to budget positive fund balances not reverted, but we did not see a provision in the contract award for a reversion. NCNMEDD made a corrective adjustment at year end for the administrative overdraw during the year. The entry booked was as follows:

Item

Debit program revenue

Credit program revenue

Title III Admin $270,707.00 Title III E $ 6,016.72 Title III C-2 19,710.84 Title III C-1 233,603.00 Title III B 11,376.44 Title III Admin State - 77,176.08 State Grant 77,176.08 - $347,883.08 $347,883.08

The total adjustment of $347,883.08 corresponds closely to the $336,000 amount identified as an overdrawn amount. The intention of the entry was to correct NCNMEDD General Ledger accounts revenue to match federal expenditures by program for the year. The entry was recorded August 9, 2017, after year-end but as a year-end adjustment. Atkinson reviewed the support for this entry. The adjustment shown here is incorporated into a reconciliation prepared by the Finance Director of NCNMEDD as part of the consulting procedures. The reconciliation shows federal draws made under Title III programs each month for FY 2017. Certain variances are reported comparing these federal draws made by NCNMEDD to those reported by ALTSD on its federal reports submitted. With the posting of the correcting entry immediately above, total variances are eliminated except for $100 and for an amount of $29,953 which was identified as due back to ALTSD in the external audit. The adjustment was made to align federal revenue to federal expenses incurred by program. We tested the revenues reported and the adjustments made. We did not verify SF-425 amounts reported by ALTSD. The reconciliation is presented as an appendix to the report, pages 50-52. The payment procedures contained in 2 CFR 200.305 indicate that recipients and subrecipients should be paid in advance but only if they meet the requirements of having strong financial and cash systems over federal programs. Under the protocol used by NCNMEDD (1/12 budget billing per month), it is expected that the amount of cash drawn, and the program expenditures would fully align by year end.


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The reconciliations presented report variances that are relatively small. We recommend that NCNMEDD define a monthly closing policy and corresponding procedure that reconciles federal expenditures from program subsidiary records and budget reports to the general ledger monthly. This should be done each month when a reimbursement type payment procedure is in the contract. The schedule of expenditures of federal award amounts for Title III expenditures should agree to subsidiary records and budget reports and to the general ledger for federal expenditures. A listing of federal expenditures, matching and maintenance of effort expenditures, and finally state expenditures should be separately maintained and should balance to total program expenditures. ADJUSTING JOURNAL ENTRIES Adjusting Journal Entries (AJEs) were reviewed and tested throughout the audit. AJEs include the following types; reversing, correcting and reclassification entries. We reviewed all AJEs for reasonableness. For 33 entries, we traced material entries to the accounts adjusted and determined if they were reasonable. For these 33 items, we did not note any AJEs that appeared to be indicative of any remaining error or irregularity after posting. During our testwork procedures performed, we learned that six account codes have to be input for each journal entry. When an entry is entered into the accounting software and an incorrect code is used for any of the six items, the error will later need to be corrected, thus requiring an AJE. Also, AJEs are made on a monthly and annual basis as part of the administration to Title III Federal Awards. These entries are made to adjust or reallocate expenditures to the correct funds and corresponding ledger accounts to properly and accurately report federal expenditures. For cash flow purposes, transfers have been made between federal and state funds under certain circumstances, principally when federal funds have been delayed or there exists an uncertain funding status. In our judgement there was not an excessive amount of correcting AJEs that might indicate possible issues with the initial input of adjustments. Among the 33 AJE’s tested there were nine entries that were not sufficiently documented or did not have documented approval. We observed an entry made to effect instructions from ALTSD to remove a legal expense incorrectly recorded as Title III transactions and we noted one entry proposed by external auditors and booked by NCNMEDD to correct Title III funds for an expenditure that was not part of the program. Documented support that was currently attached to AJEs tested consisted of short explanations and copies of system printouts and in some cases copies of invoices or other items. Explanations for the entries tested in some cases were noted as “correction of an error” which might be viewed as inadequate in the event of federal review. The review of AJEs was documented by signoff of both the Finance Director and the Account Specialist but the character of the review leading to a signoff was unclear. See Finding 2018-002.


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ITEM 3 – REVIEW TIMELINESS OF PAYMENTS TO NCNMEDD BY ALTSD AND THE RESPONSE TIME OF PAYMENTS The most relevant criteria governing cash payments of federal awards is the basic principle found in 2 CFR 200.305 (b).

For Non-Federal Entities (NFEs) other than states, payment methods must minimize the time elapsing between the transfer of funds from the United States Treasury or the pass-through entity and the disbursement by the NFE whether the payment is made by electronic funds transfer or issuance or redemption of checks, warrants or payments by other means.

This standard indicates the federal government wants to put the award to work as soon as possible and not to have idle funds. Our engagement investigated the payment times of the award from the pass-through entity and the subrecipient and the response time for payment from the subrecipient and the next level of subrecipients, the service providers. Tables 1 and 2 below show the various response times for payments under this transaction process. All service providers must have their information (units) submitted to NCNMEDD by the 5th business day of the month. NCMEDD then prepares the SA-1 form and sends to ALTSD for review and approval. There may be questions and revisions to this submission based on ALTSD’s review. Invoicing for the monthly billing by NCNMEDD to ALTSD is prepared once ALTSD approves a payment. Invoicing is the last step in the process and the invoice date is the date it is prepared by NCNMEDD. The length of time from invoice date until payments are received by NCNMEDD is the time interval for ALTSD to prepare the payment and for DFA to pay the warrant. Additionally, we called 6 responsible officials associated with 26 service providers who indicated that it can take up to 2 months to receive payments. All telephone calls indicated that the time to receive payment is increasing since Fall of 2017. Before this period, payments submitted within 5 days of the beginning of a month would normally be paid by the 28-30th of the month. ALTSD indicated to us that they are receiving calls from service providers about this matter. NCNMEDD provided a schedule of payments as part of their response to Finding 2018-012 which demonstrates that NCNMEDD made payments to service providers consistently within three days from the deposit of funds received from ALTSD through the Department of Finance and Administration (DFA). The schedule indicates there was resubmission taking place on five occasions. The total time for service providers to receive their monthly payment would be measured from the 5th business day of the month until NCNMEDD sends payment. The 5th business day is the requirement for service providers to submit operating data. See schedule attached to Finding 2018-012, page 47. The table results show instances where payments took longer than 28 days overall for all periods of the review and also for the seven-month period ending January 31, 2018. There are two instances (months) of payments taking longer than 28 days in this most recent seven-month period. Similar data is reported for the entire 30 months that payment timing was reviewed.


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Table 1 – 30 Months

Monthly Billing 7/2015 - 1/2018

Table 2 – 6 Months

Monthly Billing 7/2017 - 1/2018

Number of Days

5th business day to the invoice date

Invoice date to the deposit to NCNMEDD from Aging

Total time 5th Business day of Month to Subrecipient paid date

Number of Days

5th business day to the invoice date

Invoice date to the deposit to NCNMEDD from Aging

Total time 5th Business day of Month to Subrecipient paid date

0 to 7 days 8 11 0 0 to 7 days 2 2 0 8 to 14 days 17 14 1 8 to 14 days 1 2 1

15 to 21 days 3 4 18 15 to 21 days 2 1 3

22 to 28 days 2 1 7 22 to 28 days 1 1 0

29 and greater 0 0 4

29 and greater 0 0 2

unknown 0 0 0 unknown 0 0 0 Total 30 30 30 Total 6 6 6

Per interview NCNMEDD notes the following factors that can delay a payment: 1. There are instances where payments are withheld from subrecipients due to contract non-compliance. The subrecipients are required to provide insurance documentation for their program, financial reports at the end of each quarter, reports due from site assessments, etc. If the subrecipient fails to provide documents by the contractual due dates, payments are withheld until the program is back in compliance. Non-Metro AAA staff will be in contact with the subrecipient to work with NCNMEDD to get the service provider back into compliance so that ALTSD can release the funds to NCNMEDD as soon as possible. This happens when there is turnover in key positions like a director or fiscal management for the program. Instances of noncompliance as described herein might apply to a small subset of service providers from time to time. It is our observation that this factor would not account for the slowing down of payments in the recent periods unless there has been an increase in the total amount of noncompliance by service providers for the last seven months of our engagement review compared to other periods. NCNMEDD’s policy manual dated December 2015 lists the various reporting requirements that pertain to the operations for Service Providers. 2. NCNMEDD notes that starting in fall 2017, it took longer to get the submitted SA-1 approved by ALTSD which is necessary to receive payments from ALTSD. Questions on submitted reports, errors and changes in reporting certain information requested by ALTSD would cause a revised report to be submitted which lengthened the time it took to approve payments. We observed one AJE posted by NCNMEDD that was in response to instructions from ALTSD to remove a certain expenditure from Title III funds submission because it did not qualify. 3. Cash flows appear to be a factor during this time because the Organization received cash on a reimbursement basis after July 1, 2017. Previously, they billed 1/12 of the annual budget award each month. Per NCNMEDD, cash reserves were not adequate to fund payments to service providers in advance of receiving their monthly award amount. Additionally, advancing funds before receiving that month’s billing assumes all amounts billed would be paid in a timely manner. A delayed payment or a payment of a different amount from ALTSD might affect NCNMEDD’s cash flow. See Finding 2018-012.


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ITEM 4 – REVIEW AND ASSESS PAID BONUSES We reviewed bonuses/incentive pay for the time periods of July 1, 2015, through January 31, 2018. There were three sets of bonuses paid. NCNMEDD paid bonuses/incentive pay of $19,500 on April 29, 2016, to 22 employees. NCNMEDD paid bonuses/incentive pay of $22,900 on May 26, 2017, to 25 employees. NCNMEDD paid $15,000 on July 27, 2017, to 26 employees. The Executive Director did not receive any payments in any year. There was no documented incentive plan at the beginning of any period of our review. The payment of bonuses occurring two or three months before year-end reflects a process whereby towards the end of the year, the organization could determine the final availability of administrative funds after determining all possible unit claims to providers. NCNMEDD would then allocate remaining funds to identified staff in the judgment of the Executive Director with advice from other members of management. The payment of the $15,000 bonus amount on July 27, 2017, was after year-end and the circumstances surrounding that payment amount represented a second payment of bonuses as approved by management. We reviewed incentive pay award memos distributed to employees for those that received incentive pay. We also received written representation from the Executive Director that detailed how the incentive pay was determined. The memos congratulate employees and communicate that their job performance was noted and contributed to NCNMEDD’s overall results during the year. The memo indicated that not all employees received an incentive pay amount. The character of the memo was to incentivize and retain employees who have performed well in the judgment of the Executive Director with advisement from his staff. Since the bonuses were the last disbursement decision for the years 2016 and 2017 and are made from expected residual funds, they reflect the practice of NCNMEDD to consume 100% of the grants each year. Reversions were not considered The contract with ALTSD has a provision that NCNMEDD should spend at least one quarter of their award through the first quarters of the year, to stimulate early disbursement of funds to eligible individuals. Our analysis of the incentive pay is that there is business purpose to the disbursements and that they were distributed in a broad manner to employees and not to top management. There is no apparent indication of fraud, waste or abuse. However, per our review of the Uniform Guidance, the incentive payments are not allowed for the following reasons. (1) There must be an incentive pay plan in place at the beginning of the year that details the performance criteria on which the possible payment of incentive bonuses amounts will be made. There is no such plan in place. 2 CFR 200.430 (f). (2) A basic principle of federal award administration is that the federal government wants to pay its fair share of items including fringe benefits, for instance, but only pay what is the customary practice for the awardee organization in its normal operations. In this case, incentive bonuses were not paid to employees from other grants, so in effect the federal government bore the entire cost of incentive pay for the years 2016 and 2017.


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(3) Incentive pay disbursements do not qualify as reimbursable costs incurred in normal operations. In lieu of an incentive plan in place, the payments would be unallowable. See Finding 2018-006. RELATED PARTY TRANSACTIONS We reviewed transactions tested to identify any work entered with companies that may be associated with the Board or management. No such items were noted. CHAS PROGRAM For 2016 and 2017, NCNMEDD offered a CHAS card to eligible applicants. Two hundred dollars is available on the card to pay certain defined expenses. The funding of the program is part of the State matching money and is budgeted in advance each year. For the most recent year, 500 cards were distributed for a total distribution amount of $100,000. The CHAS program was operating for years before the year ending June 30, 2017. An instruction letter is distributed with the card directing the recipient to limit payments to certain expense types – food, utilities and medical. Per interview of staff, there was a dedicated staff person assigned to this program who was able to review transactions online from the records of the issuing credit union. We did a telephone interview with the former assigned staff person who indicated that there were documented procedures for seniors to apply to the program but not for monitoring expenditures made under the program. However, the former staff person indicated that she routinely communicated with eligible participants. And due to the extreme need of recipients for food, utilities and medical, she felt that there was little chance of the cards being used in a noncompliant manner. The prior and current staff thought that there had not been any identification of inappropriate use of the cards at any time but that the possibility of such noncompliant activity was low. Early in the program a staff person was terminated by NCNMEDD because of an inappropriate use of the card. We were not able to test the information provided by the former staff person. The CHAS card is equivalent to a loaded charge card and can be used for noncompliant purposes. Based on our interviews with current and prior staff, we considered the procedures for monitoring the program expenditures not sufficient due to lack of documentation. See Finding 2018-011.


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POLICIES AND PROCEDURES In accordance with our charge to review the reimbursement requests and direct and indirect costs charged to the six U.S. Federal Awards from the Department of Health and Human Services, we reviewed the policies and procedures of NCNMEDD in place for the administration of federal awards. In accordance with 2 CFR 200.306(b)(7), any State personal award amounts used for matching or maintenance of efforts (both are requirements of Title III programs) must be expended in a manner consistent with the rest of the federal awards. That means that, if it is treated as part of the allowable grant costs, it must be used in accordance with the requirements that apply to the federal share. NCNMEDD has two recent policy and procedures manuals relevant to the period of our review. The standards and policy manual adopted December 14, 2015, is broad and is significantly directed to the policies and procedures that apply to service providers. That manual reflects the tone of the Older Americans Act and references the Single Audit Act practices as contained in Circulars A-133, A-87 and A-102 and A-110 which have been superseded unless there are continuing compliance requirements under a grant that originated before December 26, 2014. A second manual was revised and adopted July 21, 2017, and has included policy information about cost allocations, travel policies, records retention and cash receipts and bank information. Further, this manual adopts a conflicts of interest policy for NCNMEDD. Other accounting procedures included in the July 2017 manual by topic include check approvals, check signatures, and accounts receivable. There does not seem to be information brought forward concerning policies and requirements for service providers in the newer policy manual. The organization operated without any policies in connection with the Uniform Guidance for a period from the adoption of the Uniform Guidance (December 26, 2014) until July 21, 2017. Our review indicated that the organization did not have a written policy concerning cash management as required by the Uniform Guidance cited above. Cash management is a significant compliance attribute for the Title III programs authorized by the Older Americans Act that affects all stakeholders including pass-through entities, subrecipients and service providers. Our review indicated that the organization did have an allocation of cost policy as of July 21,2017, that is general and references the Uniform Guidance briefly. The allocation of costs and recording of revenue on federal awards is the most significant transaction cycle for NCNMEDD. The process of monthly and year-end accounting and reconciliation followed by NCNMEDD is currently undocumented. We did not see a closing policy for monthly reporting and financial reports. The emphasis on monthly reconciliations may help to minimize the year-end adjustments. The internal reporting section of the July 2017 policy and procedures manual requires that financial reporting be made monthly. We did not see the distribution of these reports in monthly executive committee meetings as documented in the minutes. Further, a financial perspective is not available to the Board at most meetings. See Finding 2018-004. Please refer to Finding 2018-003 in relation to our review of policies and procedures as required by the Uniform Guidance and sound accounting policy.


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SUMMARY OF NONCOMPLIANT ITEMS A summary of unallowable items, unsupported through adequate documentation items, incentive pay and waste items as discussed in Finding 2018-009 is as follows: A = Unallowable: Use of funds violates the Uniform Guidance and State Procurement Code requirements.B = Unsupported: Supporting documentation does not provide a business purpose or other required information for the transaction

required for an expense to be allowable.C = Incentive bonus pay - see Finding 2018-006D = Fees, penalties, and/or fines - deemed waste

Date Description/Items Amount Payment Type

2/18/2016 Flowers $ 60 Credit Card A7/11/2016 Life Tribute - Flowers 120 Credit Card A9/20/2016 Flowers for a staff family's funeral 177 Credit Card A9/23/2016 Paladin Community Development Software 8,831 G/L Detail A1/25/2017 Santa Fe Capital Grill Staff Dinner with Alcohol 459 Credit Card A2/28/2017 Main Event 1,212 Credit Card A3/25/2017 Nambe 80 Credit Card A5/24/2017 Paladin - Panoramic SaaS Annual Subscription 6/30/2017-6/29/2018 10,092 G/L Account A6/21/2017 Flowers 146 Credit Card A9/20/2017 Nambe 109 Credit Card A

10/26/2017 AAA - Donation to the Hunger Summit 109 G/L Detail A12/6/2017 Eloisa Restaurant Santa Fe 1,199 Credit Card A

12/22/2017 Eloisa Restaurant Santa Fe 1,279 Credit Card A3/30/2017 Main Event 278 Credit Card A3/30/2017 Tucanos Grill 630 Credit Card A

24,781

9/11/2015 NADO OMB 2 CFR 200 Webinars 124 G/L Detail A, B11/3/2015 Courtyard by Marriott Santa Fe 5,262 Credit Card A, B4/20/2016 Courtyard by Marriott Santa Fe 3,960 Credit Card A, B5/5/2016 Courtyard by Marriott Santa Fe 1,334 Credit Card A, B

10/10/2016 NADO Membership renewal 9/1/16-12/31/16 882 G/L Detail A, B

10/13/2016 NADO Membership renewal 9/1/16-12/31/16 882 G/L Detail A, B11/16/2016 NADO Annual Membership Dues 2,640 G/L Detail A, B1/14/2017 Courtyard by Marriott Santa Fe 1,954 Credit Card A, B3/24/2017 NADO 2017 Main Registration 125 G/L Detail A, B4/19/2017 Marriott - Lodging 1,177 Credit Card A, B4/19/2017 Staff Retreat - Andaluz Banquet Services/Lodging 7,921 Credit Card A, B5/1/2017 Hotel Santa Fe 1,827 Credit Card A, B

8/15/2017 Isleta Hotel Albuquerque 507 Credit Card A, B9/13/2017 Marriott Anchorage Alaska 1,152 Credit Card A, B

11/30/2017 NADO 2017 Training Conference 110 G/L Detail A, B29,857

4/29/2016 Incentive Pay 19,500 Checks A, C5/26/2017 Incentive Pay 22,900 Checks A, C7/21/2017 Incentive Pay 15,000 Checks A, C

57,400

Various Unemployment Insurance Penalty and Fees 3,304 ACH Payments D10/27/2017 IRS Fee for Reapplying for 501c(3) NM Cares 275 Credit Card D

Various Credit Card Late Fees 506 Credit Card DVarious Credit Card Interest 2,272 Credit Card D

6,357

Total unallowed, unsupported, and waste items $ 118,395


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We thank management and the accounting staff of NCNMEDD and the management of ALTSD who provided required information in a consistent manner for this audit. We are available to answer questions or provide information to ensure a complete and objective report and to maximize the value of the report.

Atkinson & Co. Ltd. Albuquerque, New Mexico July 24, 2018


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FINDINGS FINDING 2018-001 LACK OF SEGREGATION OF DUTIES (Material Weakness) CRITERIA The Uniform Guidance requires the establishment of effective internal controls over the administration of federal awards. See 2 CFR 200.303. A fundamental principle in internal control is a proper segregation of duties whereby a single individual cannot undertake an irregular transaction because incompatible duties are kept separate. The Model Accounting Practices for the State of New Mexico requires the establishment and maintenance of sound internal controls over the operations of the Governmental entity – MAP 0.9.1.1-2. CONDITION NCNMEDD utilizes dual signature electronic checks for its disbursements made by check. The electronic check signing capacity is in the custody of the Finance Director (FD). A listing of planned disbursements is given to the Executive Director for approval in advance of disbursement and the Board receives a copy of disbursements made. The FD reconciles the bank and is one of two individuals who prepare adjusting journal entries (AJEs). The Account Specialist may also post AJEs and may also reconcile the bank. AJEs are entered in the ledger and documented as posted by either the FD or the Account Specialist. Both the FD and the Account Specialist sign off on adjustments made. The Executive Director signs off on bank reconciliations when complete. The bank reconciliations have been performed late at certain times during the period of our review. It is unclear the character of review made on AJEs or the bank reconciliations when documents are signed off. There is a weakness in controls in that the Finance Director (or Account Specialist) could write themselves a check, and not include it in the list of disbursements for approval and review. Further, such amounts may not be identified in the monthly bank reconciliation process due to the preparation by the FD. The custody of the electronic signature plate by accounting is equivalent to having signed checks available. Our review of check expenditures did not reveal any individual checks that we felt represented fraudulent or irregular transactions. EFFECTS NCNMEDD’s internal control structure contains an identified control risk whereby an irregular or fraudulent transaction could be created and entered into the records of NCNMEDD and not be timely detected. An irregular or fraudulent transaction would have an impact on the reputation of the NCNMEDD and would harm its standing with federal oversight agencies and pass-through entities and may impact its ability to perform federal administrative services.


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FINDING 2018-001 LACK OF SEGREGATION OF DUTIES (Material Weakness) – CONTINUED CAUSE NCNMEDD has implemented reporting to the Executive Director and to the Board that details all disbursements from the operating account. A list is made that is approved by the Executive Director and is reviewed by the Board. This practice was implemented with the stated purpose to provide a strong control over the disbursement function. The lack of control over the signature plate makes the current practice vulnerable to a deliberate malfeasance. RECOMMENDATION We recommend that the signature plate be controlled by individuals outside of the accounting department and issued to the accounting department for check runs only. Other internal controls may be considered. We recommend that the review procedures performed over the signing off AJEs and bank reconciliations be documented and adopted as policy in an accounting policy manual to supplement the current policy. VIEWS OF RESPONSIBLE OFFICIALS NCNMEDD will revise the signature process where the NCNMEDD Board Treasurer will have the electronic signature present on the printed check after his review and approval and the NCNMEDD Executive Director will manually sign the check after his review and approval. The NCNMEDD Executive Director’s electronic signature will be removed from the MIP accounting system. The effective date of this change and implementation of this procedure will be on July 2, 2018.

A policy regarding the review of Adjusting Journal Entries and Bank Reconciliations will be drafted and presented to the Board of Directors for consideration by October 1, 2018.


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FINDING 2018-002 ADJUSTMENTS SUPPORT (Significant Deficiency) CRITERIA Adjusting entries to an organization’s ledger accounts represent changes in amounts that are not transaction based in most cases. As such, these entries may be harder to analyze and verify. Sound accounting practices require the approval, support and documentation of adjusting entries so that they can be reviewed initially and then verified later if needed. Cost transfers between federally funded accounts or with federal funds accounts and nonfederal accounts are made through adjusting entries. These entries are necessary but represent potential risk to a federal program because:

1. Amounts were not accurately recorded in the initial transaction. 2. Amounts could be moved from one fund or program to another inappropriately based on

grant requirements. 3. Amounts could be moved from one fund or program to another inappropriately to cure cost

overruns. 4. Payroll transfers can be recorded in the general ledger but not corrected in the payroll

system. 5. Transfers can be made later than 90 days from the original transaction casting doubt on

the late adjustment. 6. Documentation of persons authorized to initiate and approve costs transfer may be

inadequate.

Strong support for all such entries is necessary. Explanations such as “correcting error” would not be satisfactory in most cases. Federal audit guides issued by federal agencies have identified cost transfers as being suspect in the situations identified in items 1-6 above. Per federal rules the unit of account is the reimbursed expenditure. Expenditures may be deemed unallowable for reimbursement if they conflict with statute, unreasonable in amount, inconsistently treated but most commonly are not adequately supported. The importance of documentation for federal awards is a high standard. CONDITION Adjusting entries, primarily reclass entries are made by NCNMEDD personnel on a monthly and annual basis as part of their administration to Title III Federal Awards. These types of entries cannot be avoided but should be minimized. The entries are made to adjust or reallocate expenditures to the correct funds and corresponding ledger accounts to properly and accurately report federal expenditures. For cash flow purposes, transfers have been made between federal and state funds under certain circumstances, principally when federal funds have been delayed or there exists an uncertain funding status.


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FINDING 2018-002 ADJUSTMENTS SUPPORT (Significant Deficiency) – CONTINUED Our review indicated that certain adjustments made to the accounts were inadequately documented to support the transfer in certain cases. Documented support that is currently attached to adjusting journal entries consists of short explanations and copies of system printouts and in some cases copies of invoices or other items. Entries are stamped “posted” when entered into the records by either the Finance Director or the Account Specialist. Explanations for entries in some cases were noted as “correction of an error” which might be viewed as inadequate in the event of federal review. The review of AJEs was documented by signoff of both the Finance Director and the Account Specialist but the character of the review leading to a sign off was unclear. Out of 33 entries closely reviewed, we found nine that were not sufficiently documented or did not have documented approval. Per discussions with NCNMEDD and review of other circumstances of the entries, we concluded that the entries were appropriate. EFFECTS The documented entries to Fund 501 in relation to Title III Federal Awards could be questioned in the event of federal review or annual audit or other compliance review. In the event of error in reporting as occurred for the fiscal year ending of June 30, 2017, remediation to the satisfaction of pass-through entities and oversight agencies would be more difficult after the fact. Disallowance of federal expenditures would have an immediate cash flow impact and the return of federal funds must come from nonfederal sources. The determination of significant disallowed expenditures may affect the overall risk assessment of NCNMEDD by federal oversight agencies. CAUSE The federal programs at NCNMEDD are funded significantly from six federal awards and operate through all New Mexico Counties except for Bernalillo County. Total funding federal awards combined with State Personal Service award funding has ranged from approximately $17,000,000 to $21,000,000 in the past three years. As such, the programs are complex, and large dollar transfers take place among many entities, all of which require detailed information support. NCNMEDD’s policy is to support AJEs made to records and have included explanations and support in its records but the support requirements are not currently defined and, in some cases, may not be detailed enough or did not have a documented approval to satisfy a federal review. RECOMMENDATION We recommend that the support documentation required for adjustments made to the general ledger and specially for those made to federal programs be increased and formalized through specific policy.


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FINDING 2018-002 ADJUSTMENTS SUPPORT (Significant Deficiency) – CONTINUED VIEWS OF RESPONSIBLE OFFICIALS NCNMEDD will develop a posting sheet that will require approval from the Executive Director and/or Finance Director prior to posting of Journal Entries. This process will require source documents to be attached to the Journal Entry posting sheet that would support the JE. The procedure will be developed and implemented by August 31, 2018.


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FINDING 2018-003 REQUIRED POLICIES AND PROCEDURES (Significant Deficiency) CRITERIA Award Criteria for the Title III programs and the Uniform Guidance requires certain written policies and procedures be in place as part of the administration of federal awards. The Uniform Guidance requires written policies in connection with federal funds administration as follows:

1. Written procedures should be in place for determining the allowability of costs in accordance with Subpart E – Cost Principles in accordance with the terms and conditions of the federal award. See 2 CFR 200.302 b (7).

2. Written procedures should be in place to implement the requirements of 2 CFR 200.305,

Payments: payment methods must minimize the time elapsing between the transfer of funds from the United States Treasury or pass-through entity or issuance of checks, warrants or payments by other means. See 2 CFR 200.302 b (6).

3. The Uniform Guidance represents sweeping changes in the federal rules over federal

awards which in turn will affect documented policies and procedures. Certain transaction cycles and function should be supported with documented policies and procedures as part of the Uniform Guidance as follows:

1. Procurement 2. Financial 3. Property and Management 4. Personnel 5. Travel

Current trends in internal control encourage the use of a whistleblower policy especially at the federal level. A whistleblower policy must be implemented correctly but provides an alternate communication channel for rank and file employees and service providers that doesn’t go through the chain of command. As such, communications about concerns and issues can reach to Board or other responsible officials directly. CONDITION NCNMEDD has two recent policy and procedures manuals relevant to the period of our consulting engagement. The standards and policy manual adopted December 2015 is broad and is significantly directed to the policies and procedures that apply to service providers. That manual reflects the tone of the Older Americans Act and references the Single Audit Act practices as contained in Circulars A-133, A-87 and A-102 and A-110 which have been superseded unless there are continuing compliance requirements under a grant that originated before December 26, 2014.


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FINDING 2018-003 REQUIRED POLICIES AND PROCEDURES (Significant Deficiency) – CONTINUED A second manual was revised and adopted on July 21, 2017, and has included policy information about cost allocations, travel policies, records retention and cash receipts and bank information. Furthermore, this manual adopts a conflicts of interest policy for NCNMEDD. Other accounting procedures are included in the July 2017 manual by topic for check approvals, check signatures, and accounts receivable. There did not seem to be information brought forward concerning policies and requirements for service providers in the newer policy manual. The Organization operated without any policies in connection with the Uniform Guidance for a period from the adoption of the Uniform Guidance (December 26, 2014) until July 21, 2017. Our procedures indicated that the organization did not have a written policy concerning cash Management as required by the Uniform Guidance cited above. Cash management is a significant compliance attribute for the Title III programs authorized by the Older Americans Act that affects all stakeholders including pass-through entities, subrecipients and service providers. Our procedures also indicated that the organization did have an allocation of cost policy as of July 21, 2017, that is general and references the Uniform Guidance briefly. During our work, we reviewed costs allocations made at the end of each year to determine the proper costs charged to federal awards. That process includes but was not limited to the review of reconciliation procedures, sources of information, active ledger accounts that track award activity, individuals performing each task, role of program managers and required timing. The allocation of costs and recording of revenue on federal awards is the most significant transaction cycle for NCNMEDD. The process of monthly and year-end accounting and reconciliation is currently undocumented. The organization does not have a closing policy for monthly reporting and the issuance of financial reports. The emphasis on monthly reconciliations may help to minimize the year-end adjustments. The internal reporting section of the July 2017 policy and procedures manual requires that financial reporting be made monthly. We did not see the distribution of these reports in monthly executive committee meetings as documented in the minutes. EFFECTS Policies and procedures can help minimize risk, they have the effects of providing direction to staff, they provide clarity in requirements and expectations. Policies and procedures further provide an excellent cross training and tool in the event of turnover, and effective policies and procedures demonstrate a strong intent to comply with federal oversight agencies and pass-through entities. The absence of relevant and required policies and procedures in the respective activity can affect the ability of the organization to correctly administer federal awards and adversely affects the control environment. For the cash management, the organization is non-compliant in relation to the required written policies to be in effect for federal awards administration. For cost allocation, the current policy is not specific to the monthly procedures and reconciliations that are required.


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FINDING 2018-003 REQUIRED POLICIES AND PROCEDURES (Significant Deficiency) – CONTINUED CAUSE The organization has significant policies and procedures in place but the policies do not meet every criterion required by the Uniform Guidance. Best accounting practices of the profession suggest additional detail be included in the most important transaction cycles of the organization including monthly closing procedures. RECOMMENDATION We recommend that the organization draft specific cash flow policies that are required under the Uniform Guidance and document its methods of cost allocation as policy that reconciles actual cost ledgers to SA-1 or financial reports. VIEWS OF RESPONSIBLE OFFICIALS The Policy and Procedures Manual will be amended to address the monthly closing and reporting as well as cash flow and presented to the Board of Directors for consideration by October 1, 2018.


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FINDING 2018-004 INFORMATION AVAILABLE TO THE BOARD (Other Non-Compliance) CRITERIA The Uniform Guidance identifies the COSO framework of internal control as a best practice and recommends it as a reference system of internal control. The Federal “Green Book” internal control framework closely follows the COSO framework and can be adopted as a system of internal control for nonfederal entities receiving federal awards. This information from the Uniform Guidance reinforces the absolute requirement that an NFE have an effective system of internal control in connection with the administration of federal awards. See 2 CFR 200.303(a). The COSO Internal control framework and the “Green Book” includes the governing board as a key oversight mechanism in the system of controls. The Board oversight concerns include adequate resources, risk assessment, competency of staff and accuracy of financial reporting. CONDITION The Executive Committee of NCNMEDD meets monthly and the full Board meets every other month. During the meetings the Committee and Board receive reports from the Executive Director in relation to budget matters, operation matters, and significant events and issues. Per our review, the Finance Director attended three out of 31 meetings of governing committees or the full Board in what appears to be in response to specific reporting issues such as REDI net questions. We noted meeting minutes did not include customary discussions of or distributions of financial reports or formal budget to actual reports by program that were discussed and captured in the minutes or agenda. EFFECTS This structure of committee and board meetings and the lack of allocated time for the Finance Director reports and his perspective may affect the ability of the oversight Board to exert its fiduciary responsibilities including analysis of financial conditions and risks facing the organization. The internal control structure is not as strong as it could be in this area. CAUSE It has been the government’s practice to conduct its meetings according to established practices which have seemed sufficient to this point. The Board receives full reports from the Executive Director. The financial information that may be available to the Board from the Finance Director may not have been an area of focus for the Board. RECOMMENDATION We recommend that the Finance Director attend additional Executive Committee meetings and Board meetings and provide appropriate financial reports and information as agreed to by the Board and management.


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FINDING 2018-004 INFORMATION AVAILABLE TO THE BOARD (Other Non-Compliance) – CONTINUED VIEWS OF RESPONSIBLE OFFICIALS Monthly financial reports are included at all regularly scheduled Executive Committee meetings in the Executive Director Report item of the agenda. These reports are prepared by the Finance Director and submitted to the Executive Director prior to the meeting. The Finance Director or other financial staff brief the Executive Director regarding any specific comments or notes regarding the reports. The Executive Director briefs the Committee on any comments or notes related to the reports as well as addresses any questions the Committee members may pose. The New Mexico Open Meetings Act states that: “The board, commission or other policymaking body shall keep written minutes of all its meetings. The minutes shall include at a minimum the date, time and place of the meeting, the names of members in attendance and those absent, the substance of the proposals considered and a record of any decisions and votes taken that show how each member voted.” Per the Act, detailed minutes of all items discussed are not required, therefore the minutes will not necessarily record discussions of the financial reports. The Financial Director will attend Executive Committee meetings and Board of Director meetings to discuss the financial management of NCNMEDD, as requested by the Executive Committee. ACCOUNTANT REPLY NCNMEDD informs us in their View of Responsible Officials immediately above that financial reports, prepared by the Finance Director are presented to the Board and Executive committee with key points highlighted at every meeting. If correct, we believe this is positive but did not see any indication or evidence of this in minutes we examined. Our finding was classified as another Control Deficiency (Other Noncompliance), which is a lesser classification than a Significant Deficiency not to report noncompliance but to stress the opportunity to provide an additional perspective to the Board in relation to finances. We continue to recommend that the Finance Director attend additional future meetings in addition to those requested. We recommend that the minutes which currently do meet minimum requirements contain expanded information to document any financial presentation and discussion that took place.


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FINDING 2018-005 INCORRECT CERTIFIED REPORTS (Material Weakness) CRITERIA One of the 12 attributes for federal grant administration is reporting. Various reports need to be submitted depending on grant requirements including Federal Form SF-425 for the Title III programs. The SF-425 reports track cash expenditures and draws current period and year to date. Federal reports are certified.

The signature block on SF-425 states “By signing this report, I certify to the best of my knowledge and belief that the report is true, complete, and accurate and the expenditures, disbursements and cash receipts are for the purposes and objectives set forth in the terms and conditions of the federal award I am aware that any false, fictitious or fraudulent information or the omission of any material fact may subject me to criminal civil or administrative penalties for fraud, false statements, false claims or otherwise” US Code Title 18 section 1001 and Title 31, Sections 3729-3730 and 3801-3812.

Accurate SF-425s allow the oversight agency to monitor the specific programs and the agency to track its results on a quarterly basis. Like individual tax return filings, the reports are certified with provision for penalties for false reporting. In support of the reporting function is the accounting system for federal awards that correctly records federal expenditures by program that reconciles to reports made to the pass-through entity. CONDITION Until the year beginning July 1, 2017, it was the practice of NCNMEDD to bill 1/12 of its administrative budget for Title III administrative activities each month subject to budget modifications that may apply. This 1/12 amount is added to direct costs coming from service providers and reported on the SA-1 by NCNMEDD staff. The submitted SA-1 reports provide the basis for ALTSD to file its SF-425s with the Department of Health and Human Services. However, our review of the contract for the year ending June 30, 2017, indicates that “reimbursement shall be made on a monthly basis upon receipt of monthly expenditures and reports furnished by the contractor.” This contract provision does not provide for progress billings based on budgeted amounts. During the year ending June 30, 2017, budget modifications were made. After the first BAR was made at October 2016 providing additional funds to the program, the budget amount used for billing was miscalculated for the administrative category and the administrative budget was reported as higher than it was. Consequently, $336,000 was overdrawn for administrative purposes. The program director of NCNMEDD signed the SA-1 reports after her review and


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FINDING 2018-005 INCORRECT CERTIFIED REPORTS (Material Weakness) – CONTINUED continued to sign monthly SA-1 reports as accurate for those submitted after October 2016. The submitted reports are also reviewed and accepted by ALTSD as the basis for filing the SF-425s. The error was not corrected until June 2017 and at that time reported amounts were transferred from administration to programs. ALTSD management reports that the error was not reported to them but was found after year-end during a field visit. Overdrawn amounts for administration were offset by underdrawn amounts for service providers and programs as a result of year-end reconciliations. EFFECTS The billing for the year was not in accordance with contract provisions. The budgetary reports as currently filed reported a year-end overdraw of $336,000 offset by an underdraw on programs of the same amount. The erroneous reporting remains an open item at the time of this report; possibly necessitating either the amending of reports or possible refund to the federal government. For the year ending June 30, 2017, a review of these matters for this audit shows an amount of $29,953 that should be reverted to ALTSD. This amount may not have been identified without the additional reviews. CAUSE The billing method utilized under the contract was not in accordance with contract provisions. The reporting error was human error that was not caught by review procedures. The review procedures in this case proved ineffective for most of FY 2017. The reconciliation of budgetary amounts to actual ledger expenditures may not have been considered during monthly reporting. A method of accepting the correctness of actual expenditures by program monthly was not clear. RECOMMENDATION We recommend that the methods of reconciling budgetary data and actual expenditures for monthly reporting purposes be documented. A checklist of necessary procedures to be performed each month leading to the filing of the SA-1s may prove useful for both the preparer and the individual approving the reports. The monthly reconciliation of federal expenditures from support records to the general ledger and finally reporting to the pass-through entity will facilitate accurate reporting and minimize year-end reconciliations. We recommend that $29,953 be repaid to ALTSD pending further determination of corrections to federal reports. VIEWS OF RESPONSIBLE OFFICIALS NCNMEDD staff will be accessible to support and collaborate with ALTSD staff to ensure federal and state expenditures are reconciled between both parties in reporting accurate budgetary information. NCNMEDD will exercise due diligence when preparing the MAR for each monthly DPS reimbursements for all PSA’s for FY 2019.


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FINDING 2018-006 INCENTIVE PAY (Material Noncompliance) CRITERIA Incentive compensation to employees based on cost reduction, or efficient performance, safety awards, etc. is allowable to the extent that the overall compensation is determined to be reasonable and such costs are paid or accrued pursuant to an agreement entered into in good faith between the NFE and the employees before the services are rendered or pursuant to an established plan followed by the nonfederal entity so consistently as to imply in effect an agreement to make such payment. See 2 CFR 200.430 (f). A principle of federal award administration is that the federal government wants to be treated in a consistent manner as other funding sources or parties to the organization. If incentive pay/bonuses are paid from Title III funds, then incentive pay, or bonuses should be paid from other grants. The incentive pay/bonuses should not be borne by the Title III programs alone. In lieu of an established up-front plan, the incentive payments did not qualify as reimbursed costs that arose from the normal activities of personnel. CONDITION NCNMEDD paid bonuses/incentive pay of $19,500 on April 29, 2016, to 22 employees. NCNMEDD paid bonuses/incentive pay of $22,900 on May 26, 2017, to 25 employees. NCNMEDD paid $15,000 on July 27, 2017, to 26 employees. The Executive Director did not receive any payments in any year. There was no documented incentive plan at the beginning of any period of our review. The payment of bonuses occurring approximately two months before year end reflects a process whereby towards the end of the year, when the organization can determine the final availability of administrative funds and after determining all possible unit claims to providers, as a final step NCNMEDD will allocate incentive pay/bonuses to identified staff that in the judgement of the Executive Director with advisement from his management team have met the goals and objectives of NCNMEDD. The incentive bonuses payouts represent a management practice of paying out 100% of federal awards each year. EFFECTS $57,400 was paid out from April 29, 2016, through July 27, 2017, that are unallowable and as such are questioned costs under the Uniform Guidance rules. The federal government could ask for the return of these funds if this practice was reported under prior single audits performed. CAUSE NCNMEDD budgets and administers 100% of federal awards each year. Any residual funds are used for purposes of rewarding and retention of employees. The objectives and criteria of the incentive/bonus plan are not unreasonable from a commercial business perspective but do not consider the requirements of the Uniform Guidance for a governmental agency spending federal funds.


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FINDING 2018-006 INCENTIVE PAY (Material Noncompliance) – CONTINUED RECOMMENDATIONS We recommend that an incentive pay plan be formulated at the beginning of each year that meets the requirements of the Uniform Guidance if the organization wishes to continue the practice of incentive/bonus payments and if approved by ALTSD. Any adopted plan would have to provide for an equitable funding of incentive pay from Title III federal programs and from other grants administered by NCNMEDD. The amount of incentive pay should be separately stated in the budget for approval; $57,400 of incentive pay has been categorized as unallowable for this audit. VIEWS OF RESPONSIBLE OFFICIALS NCNMEDD has implemented incentive pay for over 10 years and this process has been openly communicated with ALTSD staff. The incentive pay for Area Agency on Aging staff was paid out of funds budgeted for personnel costs in the Area Agency on Aging administrative funding budget. All incentive pay was determined based on supervisor evaluations of staff performance and/or extraordinary work associated with the respective grant or award. Staff not assigned to the Area Agency on Aging were paid incentive pay from non-Title III grants based on their work assignments. The incentive pay proposals were presented to the Executive Committee and any adjustments made based on their direction. The incentive pay has been reviewed by at least three different auditors over the past 10 years and this is the first time the process has been questioned. It is our understanding that this process is not unusual for quasi-governmental entities. Per the auditor’s recommendation, beginning with Fiscal Year 2018-2019, an incentive pay plan will be developed in compliance with the requirements of the Uniform Guidance and adopted concurrent with the adoption of the annual budget by the Board of Directors. If budgeted funds are available for incentive pay, the evaluation process will be conducted, and all incentive pay will be presented to the Executive Committee in keeping with past practice.


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FINDING 2018-007 CONTRACT PROVISIONS FOR RISK ASSESSMENT AND ADMINISTRATIVE COSTS (Other Noncompliance)

CRITERIA The Uniform Guidance greatly expanded the requirements for pass-through entities (PTEs) in relation to subawards made by the PTE to a subrecipient. These requirements reflect the understanding that the need for compliance exists at the subrecipient level as frequently a high percentage of the federal award dollars is passed through to the subrecipient. There is a list of requirements for PTEs to include in the content of subawards made to subrecipients based on the Uniform Guidance requirements. The PTE is required to perform a risk assessment of the subrecipient as part of the process leading up to the granting of the award. It should be clear that the award made by the PTE is a subaward and not a contract because there are very different requirements for a subaward versus a contractor in the Uniform Guidance. Risk Assessment Section 2 CFR 200.205 of the Uniform Guidance mandates that the federal awarding agency do a risk assessment on the proposed NFE recipient. The same requirement now applies to PTEs in their relation to subrecipients as found in 2 CFR 200.331 (b). Administrative Costs A key parameter found in the contract operations is the amount of administrative expense that is budgeted and retained by NCNMEDD for its management of Federal Title III programs. Because the provider network is where services reach eligible individuals and because funding flows through NCNMEDD from ALTSD, the expenditures of NCNMEDD are termed “administrative” as used in this report. Administrative costs are composed of direct costs, including personnel, that directly work on the program and indirect costs that benefit the programs, but which also benefit other activities and must be allocated. All these administrative costs are expended at NCNMEDD operations in Santa Fe and Tucumcari. CONDITION Our review of contract documents typically used by the State of New Mexico for the Title III Federal Awards contained attachments that specified in detail the Statement of Work and contained all information required by the Uniform Guidance to be communicated to a subrecipient in the 2017 award contracts. Because the State of New Mexico does business through standard contract documents, it was not clear that the relationship is a subaward. Although not required, we also did not note any discussion or recognition of the amount of administrative costs that would be retained by NCNMEDD for each contract year. Administrative amounts retained by NCNMEDD appeared to be approximately 8-10% of total federal and state awards depending on how calculated. The amounts varied from year to year.


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FINDING 2018-007 CONTRACT PROVISIONS FOR RISK ASSESSMENT AND ADMINISTRATIVE COSTS (Other Noncompliance) – CONTINUED

We did not review any documentation of the formal risk assessment made by ALTSD in its award process to NCNMEDD for the most recent award for the year ending June 30, 2017. EFFECT Certain documentation requirements, primarily the risk assessment, were not met in the periods before July 1, 2017. The variance in the administrative costs year to year could be further defined in the subaward agreement which could provide more control over final expenditures and expectations between the parties. The performance of a risk assessment may have led to the identification of additional award requirements for the most recent award year. CAUSE There is no requirement to specifically make administrative costs a condition in subawards agreements. Instead, only budgets have been relied upon to monitor administrative costs. Risk assessments that are a required part of the subaward process were considered by ALTSD but not documented. RECOMMENDATION We recommend that risk assessments be performed and documented for all subrecipient relationships of ALTSD. The identification of higher risk for a subrecipient should lead to responsive outcomes in the final award. VIEW OF RESPONSIBLE OFFICIALS Through annual assessments the ALTSD Senior Services Bureau has elected to update annual assessment monitoring tools to include the provision of 2 CFR 200.205 to identify and document potential risk posed by the subrecipients as it relates to federal awards. The ALTSD Senior Services Bureau will utilize a risk based approach and consider the 1) financial stability of the proposed subrecipient, 2) quality of management systems and ability to meet management standards, 3) history of performance to include timeliness of compliance with reporting requirements, conformance to the terms and conditions of previous federal awards, and the extent to which any previous award amounts will be expended prior to future awards, 4) reviews of prior year reports and findings of all previous audits, 5) an assessment of the subrecipient’s ability to effectively implement statutory, regulatory and all other pertinent requirements as imposed. Moving forward, ALTSD senior management has elected to initiate a 10% administrative cap rate on state general fund allocations. Beginning in FY19 and moving forward, subrecipient contracts are inclusive of a 10% cap of state funding.


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FINDING 2018-008 INTEREST AND PENALTIES PAID (Other Noncompliance) CRITERIA The administration of federal awards contains prohibitions against waste and abuse of federal money. The payment of amounts that could be avoided would raise an issue of noncompliance. Cost incurred for interest on borrowed capital or the NFE’s own funds however represented are unallowable. See 2 CFR 200.449. In similar manner, penalties are nondeductible. Principle 8 of the United States Government Accountability Office (GAO) Standards for Internal Control in the Federal Government (Green Book) definition of waste: the act of using or expending resources carelessly, extravagantly, or to no purpose. CONDITION Per our review of credit card statements, the organization paid $2,217 of interest calculated on unpaid beginning balances and paid $1,931 of penalties which included late payment fees on credit cards, a penalty paid to the IRS for a reapplication of tax exempt status for New Mexico Cares and an unemployment insurance assessment from the State of New Mexico. NCNMEDD is the fiscal agent for New Mexico Cares. The interest and penalty amounts were not charged against federal awards. EFFECT These amounts represent expenditures that were assessed due to late payments of credit cards under the terms of the cards or noncompliance in requirements for report and tax filings. Amounts were paid that were not budgeted and interest charges were paid that could have been avoided or were paid at a higher rate than might have otherwise been available. CAUSE Large expenditures charged to credit cards were concentrated in a few months and it appears the beginning balance could not be paid off in one payment. Payment deadlines may have inadvertently been missed. Certain compliance aspects for fiscal agency responsibilities and with unemployment insurance taxes paid had to be remedied based on communications from federal and state agencies. RECOMMENDATION We recommend that outlook calendars be established for credit card payments and Form 990 tax filings. Credit card charges should be preapproved. The Organization should reaffirm and monitor its policy in connection with credit card procedures and controls adopted July 21, 2017.


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FINDING 2018-008 INTEREST AND PENALTIES PAID (Other Noncompliance) – CONTINUED VIEWS OF RESPONSIBLE OFFICIALS NCNMEDD will carefully monitor expenditures and payment deadlines to make certain late fees and penalties are avoided. Timeliness of accounts payable process will be monitored to ensure all invoices are reviewed, approved, and submitted for payment to AP by management staff in a reasonable time frame. If any instances of late fees and penalties are assessed to NCNMEDD from a vendor due to late payment, NCNMEDD will use unrestricted funds from the General Operating account (excluding state & federal funds) to pay for the expense. Further late fees and penalties incurred by NCNMEDD will be investigated to determine the cause and will be resolved immediately. This will be effective beginning with Fiscal Year 2018-2019.


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FINDING 2019-009 EXPENSE DOCUMENTATION AND PURPOSE (Material Weakness) CRITERIA

1. A primary internal control principle is to have transactions approved (second set of eyes) by an appropriate individual designated for review and normally not connected to the original transaction. This independent review can be effective in assuring correct expenditure of resources.

2. Documentation standards for disallowance of a federal expenditure are found in the Uniform Guidance whereby an expenditure can be disallowed by a federal oversight official if the documentation supporting the transaction is not present or doesn’t include enough detail to determine the reasonableness of the transaction or the amount involved, individuals participating, purpose of expenditure, expended amounts, dates, consistency of treatment and necessity of travel in relation to federal awards.

3. NCNMEDD as a governmental entity follows the State Procurement Code but did not have a formal policy over procurement until July 21, 2017, when it adopted the State Procurement Code. (See Policies and Procedures Manual July 21, 2017, P. 76). Section 13-1-169 NMSA 1978 specifies that requests for procurement shall contain a statement of need and shall document the general characteristics of the procurement. NCNMEDD did not have a policy over credit card use until July 21, 2017, when it adopted such a policy (See Policies and Procedures Manual July 21, 2017, pages 63-64.) The policy is detailed and requires advance approval, proper documentation of transactions including persons involved, business purpose, place, time and cost in accordance with identical requirements of Internal Revenue Service regulations.

CONDITION Our engagement included the review of transactions (checks, ACH transactions) drawn from the period of July 1, 2015, through January 31, 2018. We additionally reviewed organization credit card statements for these same periods for three cards. The scopes for this review are given in this report. Based on this review we noted the following. Before July 2017, credit card statements were approved for payment by the Executive Director. This review is noted as a signature on credit card statements. Our review showed that credit cards were inconsistently approved based on the presence or absence of the documented signature for those credit cards statements not utilized by the Executive Director. Less than half of the credit cards statements for cards not utilized by the Executive Director contained documented approval. One credit card for the use of the Executive Director was generally used for larger purchases such as travel, conferences, computer equipment, licensed internet activity and public events. There was no documented approval of the credit card activity by a second authorized individual. Normally a Board member would review the statements or alternatively, a full accounting of the statement activity to the Board can be part of monthly procedures.


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FINDING 2019-009 EXPENSE DOCUMENTATION AND PURPOSE (Material Weakness) – CONTINUED For transactions tested we noted the following:

1. For checks and credit card transactions tested, support documentation was considered inadequate for the items reported in the schedule on page 17.

2. A holiday luncheon was undertaken at a cost of $2,478 for 31 people. Entertainment costs are not considered allowable under the Uniform Guidance without advance permission of the oversight agency and in accordance with organization policy.

3. Gift cards in the amount of $100 on were given to two people. Six additional gift cards of $100 were given as part of a Hunger Summit event. Flowers were sent on six occasions. These are unallowable costs under federal rules and State Procurement Code.

4. Alcohol was served at a staff dinner. The cost of dinner and alcohol was $458, and the cost of the dinner and alcohol was coded to unrestricted funds. We did not observe any other alcohol expenditures except for this item. The cost of alcohol is prohibited under the State Procurement Code.

5. The Executive Director is a member of National Association of Development Officers (NADO). A percentage of professional activities including trainings, meetings and travel were charged to the federal grants but were not sufficiently documented.

6. Credit card travel, trainings, room and board, meals, in town events, staff events, staff meals, board retreats, advisory committee meetings, the annual Hunger Summit and miscellaneous charges totaled approximately $144,509 over the period of our review whereby the business purpose was not evident from the documentation for some transactions, there were missing receipts a percentage of the time, and in some cases, the individual(s) involved were not identified or the necessity of travel was not recorded. There was usually a hotel invoice or airline itinerary on file for out of town travel. The purpose could be determined from an analysis of available documents in some cases. In other cases, we could not determine the business purpose of the travel. Certain transactions were deemed allowable and properly supported. $46,659 was coded to fund 601 (nonfederal) and the remainder of $97,849 was coded to (501) federal programs. Please refer to the Schedule on page 17 which details classification of noncompliant items as unallowable, unsupported, and waste.

7. We noted expenditures for staff retreats and events including overnight travel to Albuquerque. We note that trainings including Board trainings are permitted under the Older Americans Act. Depending on the agenda for training events, a portion of the cost may have not been allowable if it pertained to activities and topics other than Title III federal programs.


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FINDING 2019-009 EXPENSE DOCUMENTATION AND PURPOSE (Material Weakness) – CONTINUED

8. We could not readily determine the nature of trainings taken by staff in all cases. It is unclear if sufficient trainings took place in relation to the new Uniform Guidance 2 CFR 200 for staff in a position to administer, account for and approve transactions under the new rules.

EFFECTS For specific items such as flowers, gift cards, and entertainment, unallowable costs were not identified and were charged to federal grants. For large ticket items such as travel, trainings and retreats charged to federal grants, the documentation was not sufficient in every case to meet all the standards of the Uniform Guidance. The large ticket items were for the most part, not approved by a responsible official. There was no policy for credit card purchases before July 2017 and the State Procurement Code requirements for documentation were not considered for non-compliant items. CAUSE One card is utilized for staff use during the month. All staff may not be fully informed about unallowable costs for federal grants. Credit card statements and transactions are approved by the Executive Director and the documented approval did not take place a significant amount of the time before July 21, 2017. There are certain categories of unallowable costs that were charged by NCNMEDD to federal grants in error. Documentation standards were not clear or were not followed for the items reported as noncompliant elsewhere in this report. RECOMMENDATIONS We concur with the policy adopted by NCNMEDD in July 2017 which should provide additional controls over credit card purchases. The policy calls for advance approvals of card purchases, and these approvals should be documented. Support should be retained for any unallowable items charged to cards and then remedied, paid back or transferred to unrestricted funds. Reinforcement of the credit card policy should be made annually. The Executive Director’s credit card detail should be reported to the Board consistently for approval. Categories of unallowable costs and documentation standards should be reviewed and reaffirmed by all NCNMEDD staff that are in a position to review, account for, and approve federal and state expenditures under federal programs. VIEWS OF RESPONSIBLE OFFICIALS NCNMEDD will process invoices to make sure the expenses are allowable using state and federal guidelines. NCNMEDD will review and revise procurement policies and make the appropriate revisions to the policy and update procedures by October 1, 2018. Any expenditures that do not meet the state and federal guidelines will be expensed out from the unrestricted funds (excluding state and federal funds) from the General Operating Account held by NCMEDD with the review and approval of the Executive Director.


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FINDING 2018-010 BANK RECONCILIATIONS PREPARATION AND APPROVALS (Material Weakness)

CRITERIA Bank reconciliations are an established control procedure designed to be an integral part of closing a month’s activities. They should be performed during the month following the bank activity to identify bank items that need to be recorded, identify other items that need to be investigated and to analyze differences between bank records and accounting records. The bank reconciliation should be reviewed and approved by a person qualified to provide an effective oversight function. Errors or irregularities arising from bank reconciliations could result from inadequate or late review. CONDITION Per our review of bank reconciliations for the activity of six bank accounts utilized during the period from July 1, 2015 to January 31, 2018, we determined that various bank reconciliations were behind in preparation, the longest being 152 days for certain periods in 2016 for certain accounts. The general trend was for improvement in the timing of preparation of bank reconciliations into 2018. We tested various outstanding items from bank reconciliations that were submitted to the CFO for support and explanation. All items submitted were considered reasonably explained. Bank reconciliations are now approved by the Executive Director and the review is documented. We noted approvals of bank reconciliations from early 2107 and forward. EFFECT Late bank reconciliations represent a serious control deficiency because in the reconciliation process, errors and important items are identified and bank information previously unknown to the entity is recorded. A significant lag in time for preparation of bank reconciliations is a “red flag” that increases the risk of non-discovery of possible fraudulent transactions. CAUSE NCNMEDD was behind in their reconciliation process in 2016 and had experienced turnover in their accounting operations during that period. The REDInet joint powers agreement required resources in addition to normal operations until the agreement was closed in 2015. RECOMMENDATION We recommend that the organization continue to keep current and to document approvals of bank reconciliations including the accounting for all numbered check documents which is a policy set forth in their manual dated July 21, 2017. We recommend that actions necessary for an effective review of the bank statement be detailed out and consistently followed and documented.


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FINDING 2018-010 BANK RECONCILIATIONS PREPARATION AND APPROVALS (Material Weakness) – CONTINUED

VIEWS OF RESPONSIBLE OFFICIALS NCNMEDD will continue to follow established guidelines in the bank reconciliation procedure and approval process.


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FINDING 2018-011 CHAS REVIEW (Material Weakness) CRITERIA Effective internal control as required by the Uniform Guidance and the Model Accounting Policies of the State of New Mexico includes the protection and safeguarding of assets from theft or from inappropriate and noncompliant usage of funds. Federal and state awards are provided for specific purposes to achieve certain aims of the respective programs. Controls over compliance are an important safeguard to achieve program objectives. There is inherent risk that a CHAS could be used inappropriately because it is equivalent to currency. It may be freely negotiated with vendors like a loaded cash card. CONDITION For fiscal 2016 and 2017, NCNMEDD offered a CHAS card to eligible applicants. $200 is available on the card to pay certain defined expenses principally utilities, food and medical. The funding of the program is part of the State matching money and is budgeted in advance each year. For the most recent year, 500 cards were distributed for a total distribution amount of $100,000. The CHAS program was operating for years before the year ending June 30, 2017. An instruction letter was distributed with the card directing the recipient to limit payments to certain expense types. A staff person who had previously administered the program was no longer at NCNMEDD. We were able to interview this previous staff person who oversaw the CHAS program and who performed certain contract services for NCNMEDD. Per interview, it was represented that the former staff person had access to online activity with the credit union that issued all the CHAS cards and could monitor expenditure activity. She also indicated that there was also frequent communication between eligible seniors and herself. Due to the apparent extreme need of recipients for the resources, it was felt that there was little risk that the cards would be used for noncompliant purposes. We reviewed application documents for the program in 2017 but any records about after the fact monitoring were not maintained. NCNMEDD thought that the risk of noncompliance was low. Both the former staff person and current staff said to the best of their knowledge that there had not been any significant return of funds in recent years under the CHAS awards arising from the identification of inappropriate use of the cards. EFFECT The inappropriate spending of the CHAS award would be an instance of noncompliance with the rules under which the card was issued and would violate the intent of the state appropriation and the intent and purposes of the Older Americans Act. There is no data in relation to non-compliant expenditures by recipients of the cards. Noncompliant disbursements may exist to an unknown degree. CAUSE There is inherent risk in the award due to its equivalency to cash. The purpose of the program and the availability of resources for expenditures that are consistently needed may lower the inherent risk. Monitoring of the cards after issuance was apparently informal and not documented. Turnover of staff has impacted the program at the current time.


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FINDING 2018-011 CHAS REVIEW (Material Weakness) – CONTINUED RECOMMENDATION We recommend that if the program is continued a monitoring control be put in place and documented to oversee possible noncompliance expenditures. VIEWS OF RESPONSIBLE OFFICIALS The CHAS program has been a successful program directly assisting seniors throughout New Mexico for several years. The program has evolved over time with a focus on addressing food insecurity among low-income seniors in rural areas. Three or four years ago we moved to a cash card system with a local financial institution because of the ability to access card activity via the internet. This functionality allowed staff to be able to identify any discrepancies in purchases. Since moving to that system as a matter of practice staff have conducted random sample reviews of purchases by participants to insure compliance. One year, due to suspicion of possible fraud, NCNMEDD conducted a full review of all recipients and found only one instance of abuse and those funds were recouped. If the ALTSD will fund this program in the future, NCNMEDD will develop and adopt monitoring policies and procedures prior to distribution of any funds.


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FINDING 2018-012 TIMELINESS OF PAYMENTS FOR PASS-THROUGH ENTITY AND SUBRECIPIENT (Material Weakness) CRITERIA A bedrock principle of federal cash management, one of the 12 compliance attributes for federal award administration is as follows:

For Non-Federal Entities (NFEs) other than states, payment methods must minimize the time elapsing between the transfer of funds from the US Treasury or the pass-through entity (PTE) and the disbursement by the NFE whether the payment is made by electronic funds, transfer or issuance or redemption of checks warrants or payment by other means. 2 CFR 200.305 (b)

The federal government wants its awards to go directly and quickly to programs and not sit on the sidelines. Both ALTSD and NCNMEDD have documents to complete and procedures to fulfill to facilitate final approvals of cash transfers from ALTSD to NCNMEDD and from NCNMEDD to service providers. CONDITION Title III Awards combined with Personal Services grants from state appropriations are budgeted and awarded on an annual basis by ALTSD. The amounts are now disbursed on a reimbursement basis. Pro rata monthly budget award amounts were distributed before the current year. NCNMEDD then has the task of awarding the service providers (subrecipients) their amounts for units submitted through the SAM system. We charted the disbursement times of ALTSD and the response times of NCNMEDD to the subrecipients. The results are given in table 1 and table 2 on page 13. Measuring from the 5th business day of the month until the invoice date and then from the invoice date until receipt of funds by NCNMEDD from DFA (billing cycle), there were instances of the billing cycle exceeding 28 days. We further obtained a list of responsible officials who oversee provider operations, sometimes for a County and sometimes for several centers within a County. We contacted six responsible officials representing 26 service providers to inquire about their experience. The responses we got were that there are delays in receiving payments and the period of delay has gotten worse in late 2017 and early 2018. ALTSD has received telephone calls from service providers in the fall of 2017 and spring of 2018 voicing their concern for the timing of their receipt of payments due them. EFFECTS From July 1, 2017, forward, for certain payments, the system of cash receipts and related transfers appears to not be operating according to the best expectations of all stakeholders and not in accordance with the intent of the Uniform Guidance noted above for recent periods. The objectives of the Older Americans Act funding may be compromised and service providers and individuals may experience hardship due to late payments.


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FINDING 2018-012 TIMELINESS OF PAYMENTS FOR PASS-THROUGH ENTITY AND SUBRECIPIENT (Material Weakness) – CONTINUED CAUSE NCNMEDD points out that some service providers did not submit adequate SAMS data at times or experienced turnover in their assigned in-house staff which would lengthen the response time for these service providers. NCNMEDD said that the length of time that ALTSD would take to approve the SA-1s submitted by NCNMEDD stretched out in the fall of 2017 and into 2018. Errors and revisions needed in order to submit correct reports would require an additional submission procedure. Cash flow is also mentioned as a significant factor for NCNMEDD during this time because the organization received cash on a reimbursement basis from their billings where previously they received 1/12 of the annual award each month. Beyond these mitigating factors there may be other factors affecting the timing of payments that were not determined from the consulting engagement. The factors mentioned here were not tested in the consulting engagement. RECOMMENDATIONS We recommend the following be considered:

1. Cash flow payments be adjusted where federal award amounts and terms and financial conditions of the State of New Mexico permit the accelerated payments of initial funds under the grant. NCNMEDD must have sound financial and cash flow systems to qualify for advance or pro rata payments. ALTSD as the PTE would have to be satisfied as to the performance of NCNMEDD in these areas.

2. We recommend face to face approval meetings between ALTSD and NCNMEDD concerning approvals of the monthly SA-1 filings to minimize the iterations that occur for correction of errors or for clarity of the filings. A single meeting that addresses all concerns might facilitate a quicker approval process. The communication process may be improved through such meetings. NCNMEDD should take all necessary efforts to file correct initial reports.

3. We recommend that NCNMEDD establish a metric for payment timing that when measured should help to decrease recent payment response times to pay service providers. A reasonable metric can be established in the award document or reported to the PTE periodically.

4. Additional constraints should be identified and analyzed in relation to the cash management system for the federal and state awards.


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FINDING 2018-012 TIMELINESS OF PAYMENTS FOR PASS-THROUGH ENTITY AND SUBRECIPIENT (Material Weakness) – CONTINUED VIEWS OF RESPONSIBLE OFFICIALS NCNMEDD agrees with recommendation #1 regarding federal funds and reiterates its request to ALTSD to support incorporating language in the state appropriations bill to allow advance drawdown of state funds as has been the past practice for many years. NCNMEDD agrees with recommendation #2 and reiterates its request for this practice to be implemented with ALTSD, preferably concurrent with the MAR submittal for the June reimbursement. Regarding recommendation #3, NCNMEDD staff will continue to work diligently to process provider payments when funds are received from the New Mexico Department of Finance and Administration. Since July of 2016 NCNMEDD has distributed all funds to subrecipients on average 3 days after receiving the funds from DFA. (See the attached spreadsheet: SA-1 Submissions in Working Days, page 47.) The financial institution currently used by NCNMEDD has a standard two business day ACH transit policy before funds are deposited in the subrecipient’s bank account. The two-business day ACH policy will be communicated to the subrecipients, so they are aware of the rule and have a timeline for when funds would be received in their respective bank accounts. The MAR process will be an area of high concentrated awareness by NCNMEDD staff to ensure all reports and information are collected from the subrecipients to ensure no delays are hindering the subrecipient’s reimbursement requests to ALTSD. Currently, NCNMEDD has an established policy on timeframes when information is due to NCNMEDD from subrecipients and when the MAR is due to ALTSD. NCNMEDD will strictly adhere to the established procedure and policy to encourage timely payments to subrecipients in all PSA’s. ACCOUNTANTS’ NOTE ALTSD disagreed with the reason for delay given in the spreadsheet on page 47 for the April request which reads, “Delayed due to providers’ contract amendments due to Federal Allocations from the Department.”


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FY 2016-2017 AmountNCNMEDD Submission Due Date

(10 Working Days)Submission Date Funds Received by NCNMEDD ACH Processed to Providers

Due Date Variance

Submission Vs. DFA Transfer

Funds from DFA to

Providers

Initial Cash Request 356,849.00 Friday, July 15, 2016 Tuesday, July 5, 2016 Monday, August 1, 2016 Friday, August 5, 2016 -10 13 4

July Request 1,636,032.00 Friday, August 12, 2016 Friday, August 19, 2016 Thursday, September 8, 2016 Wednesday, September 14, 2016 Resubmission 5 18 4

August Request 1,733,833.00 Thursday, September 15, 2016 Friday, September 23, 2016 Wednesday, September 28, 2016 Wednesday, October 5, 2016 Resubmission 6 9 5

September Request 1,990,889.00 Friday, October 14, 2016 Friday, October 14, 2016 Friday, October 21, 2016 Monday, October 31, 2016 0 5 6

October Request 2,000,142.35 Tuesday, November 15, 2016 Tuesday, November 15, 2016 Monday, November 21, 2016 Friday, December 2, 2016 Resubmission to add cents 0 4 7

November Request 1,913,201.37 Wednesday, December 14, 2016 Tuesday, December 13, 2016 Tuesday, January 3, 2017 Thursday, January 5, 2017 -1 16 2

December Request 294,985.77 Tuesday, January 17, 2017 Thursday, January 19, 2017 Monday, January 30, 2017 Wednesday, February 1, 2017 2 11 2

January Request #1 692,295.01 Tuesday, February 14, 2017 Wednesday, February 8, 2017 Tuesday, February 21, 2017 Friday, February 24, 2017 45% state cap paid back to providers -6 11 3

January Request #2 2,054,279.63 Wednesday, February 15, 2017 Wednesday, February 15, 2017 Friday, February 24, 2017 Wednesday, March 1, 2017 0 9 3

February Request 1,533,421.30 Tuesday, March 14, 2017 Tuesday, March 14, 2017 Wednesday, March 29, 2017 Friday, March 31, 2017 0 12 2

March Request 1,506,493.28 Friday, April 14, 2017 Friday, April 14, 2017 Thursday, May 4, 2017 Wednesday, May 10, 2017 0 14 4

April Request1,704,025.16 Friday, May 12, 2017 Wednesday, May 17, 2017 Tuesday, May 30, 2017 Friday, June 2, 2017

Delayed due to providers' contract amendments due to Federal Allocations from the Department

3 12 3

May Request 1,355,755.23 Wednesday, June 14, 2017 Friday, June 16, 2017 Thursday, June 29, 2017 Wednesday, July 5, 2017 2 9 3

June Request 1,553,951.83 Wednesday, July 5, 2017 Monday, July 3, 2017 Thursday, July 13, 2017 Wednesday, July 19, 2017 -2 8 4

July Request 1,532,134.00 Monday, August 14, 2017 Thursday, August 17, 2017 Friday, September 8, 2017 Tuesday, September 12, 2017 Resubmission 3 19 2

August Request 1,780,900.78 Friday, September 15, 2017 Monday, September 18, 2017 Wednesday, September 27, 2017 Monday, October 2, 2017 1 7 3

September Request 2,007,170.32 Monday, October 16, 2017 Monday, October 23, 2017 Wednesday, November 8, 2017 Friday, November 10, 2017 Resubmissions 7 17 2

October Request #1 1,656,725.25 Wednesday, November 15, 2017 Wednesday, November 15, 2017 Friday, November 24, 2017 Friday, December 1, 2017 0 7 4

October Request #2377,345.56 Wednesday, November 29, 2017 Wednesday, November 29, 2017 Tuesday, December 5, 2017 Friday, December 8, 2017

To pay October's late submittals from providers - per Acting Cabinet Secretary

0 4 3

November Request1,701,374.59 Thursday, December 14, 2017 Wednesday, January 3, 2018 Monday, January 8, 2018 Wednesday, January 10, 2018

Resubmissions due to ALTSD issue with reversing entries - Notified by ALTSD after 5pm on Friday 12/22/17

12 17 2

December Request 1,803,801.24 Monday, January 15, 2018 Tuesday, January 16, 2018 Monday, February 5, 2018 Monday, February 5, 2018 1 14 0

January Request 1,836,714.47 Wednesday, February 14, 2018 Wednesday, February 14, 2018 Thursday, March 8, 2018 Friday, March 9, 2018 0 16 1

Note : Subrecipients are required to submit all information for reimbursement to NCNMEDD within 7 working days after the end of the month.

SA-1 Submissions in Working DaysFor Years 16-17 and 17-18


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FINDING 2018-013 UNEMPLOYMENT INSURANCE ASSESSMENT (Control Deficiency) CRITERIA Effective internal controls over payroll includes procedures to prevent, detect and correct withholdings in relation to unemployment and other payroll taxes. The Uniform Guidance has placed increased emphasis on the internal controls over the payroll transaction cycle. Outsourced service providers are common in the payroll area and such a provider was utilized by NCNMEDD. The controls of the service provider are relevant to NCNMEDD in that data processed and summarized by the service provider is entered into the records of the organization. There are procedures to gain assurance of operating effectiveness of the controls of the service provider including inquiry of the availability of any external CPA assessments over internal controls of the provider. A common and effective control is to review payroll data sent for processing in advance for accuracy and completeness and then again after the processed payroll is received back from the provider. CONDITION NCNMEDD incurred a large assessment from the Department of Workforce Solutions. The amount of the assessment was $9,546 and penalty and interest of $958. The assessment and penalty were due to unemployment insurance withholding was not at the correct rate. NCNMEDD is dependent on their payroll provider for correct withholding for this item. However, sound internal controls require that NCNMEDD reviews information received from the service provider for accuracy and completeness. The assessment amount indicates that it covers at least an annual period of reporting because unemployment insurance paid by the employer is one of the lower tax rates among payroll taxes assessed. Payroll was incorrectly processed for a period for unemployment insurance withholdings and was not discovered until an assessment was received. NCNMEDD is responsible for all accounting activity even if outsourced to external payroll professionals. EFFECT The entity was not compliant with unemployment tax requirements for a period and unemployment tax due was underpaid by the amounts noted above. The amount charged to federal awards and to unrestricted funds for personnel costs including the unemployment taxes was too low by the amount of the delinquent tax. CAUSE The processing of payroll by outside service providers is a common practice and can provide additional specialized controls and reduce workload to an organization. The controls at the service provider in this case were not effective for unemployment insurance and the review of payroll was not effective. A period is usually required to closely monitor payroll services until everything is set up correctly.


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FINDING 2018-013 UNEMPLOYMENT INSURANCE ASSESSMENT (Control Deficiency) – CONTINUED RECOMMENDATION We recommend that payroll data be reviewed before and after submission to the payroll service to the extent considered necessary. Extra review should be undertaken for initial periods of service until everything is set up correctly. VIEWS OF RESPONSIBLE OFFICIALS NCNMEDD has transitioned away from our previous payroll contractor which was responsible for that condition. We will continue to monitor and ensure all payroll related taxes are up-to-date and that no lapses of unreconciled taxes occur.


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Effective

Date

Document

Number Transaction Description

Title B - NM AAA GL Reports

Title III B -ALTSD Reports Variance

Title III C-1 - NM AAA GL Reports

Title III C-1 -ALTSD Reports Variance

Title III C-2 - NM AAA GL Reports

Title III C-2 -ALTSD Reports Variance

8/1/2016 100171G Title III July 2016 Advance Funds 48,532.00$ 48,532.00$ -$ 137,666.00$ 137,666.00$ -$ 49,495.00$ 49,495.00$ -$ 9/8/2016 100200G-2 Title III - July 2016 - Correct Posting 91,861.00$ 91,861.00$ -$ 171,728.00$ 171,728.00$ -$ 90,553.00$ 90,553.00$ -$

9/28/2016 100199G-2Title III - August 2016 - Correct Posting 25,623.00$ 25,623.00$ -$ (45.00)$ (45.00)$ 24,467.00$ 24,467.00$ -$

10/21/2016 100212G Title III - September 2016 102,642.00$ 102,642.00$ -$ 182,763.00$ 182,763.00$ -$ 85,666.00$ 89,143.00$ 3,477.00$ 11/21/2016 100214G Title III - October 2016 87,106.15$ 87,106.15$ -$ 143,021.48$ 143,021.48$ -$ 21,352.32$ 21,352.32$ -$ 1/3/2017 100220G Title III/NSIP November 2016 216,961.25$ 216,961.25$ -$ 482,056.67$ 482,056.67$ -$ -$ -$ -$ 1/30/2017 100222G Title III/NSIP December 2016 35,138.22$ 35,138.22$ -$ 52,717.27$ 52,717.27$ -$ -$ -$ 2/24/2017 100240G Title III January 2017 #1 37,668.08$ 37,668.08$ -$ 42,797.79$ 42,797.79$ -$ 89,421.46$ 89,421.46$ -$ 3/29/2017 100259G February 2017 Title III 21,444.62$ 21,444.62$ -$ -$ -$ -$ 24,635.40$ 24,635.40$ -$ 5/4/2017 100284G March 2017 Title III/NSIP Drawdown 2,237.35$ 2,237.35$ -$ -$ -$ -$ -$ -$ -$ 5/30/2017 100283G April 2017 Title III Drawdown 2,927.92$ 2,927.92$ -$ -$ -$ -$ -$ -$ -$ 6/29/2017 100291G May 2017 Title III Drawdown 91,194.90$ 91,194.90$ -$ 444,976.54$ 444,976.54$ -$ -$ -$ -$

6/30/2017 001Correct AAA State and Federal Fund allocations between AAA Grants 11,376.44$ -$ (11,376.44)$ 233,603.00$ -$ (233,603.00)$ 19,710.84$ -$ (19,710.84)$

6/30/2017 001Reverse JV 15-1940 - Entry was done in reverse 399,658.48$ 399,658.48$ -$ 265,480.25$ 265,480.25$ -$ 393,927.90$ 393,927.90$ -$

1,174,371.41$ 1,162,994.97$ (11,376.44)$ 2,156,810.00$ 1,923,162.00$ (233,648.00)$ 799,228.92$ 782,995.08$ (16,233.84)$


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Effective

Date

Document


Title III D - NM AAA GL Reports

Title III D-ALTSD Reports Variance

Title III E - NM AAA GL Reports

Title III E-ALTSD Reports Variance

8/1/2016 100171G Title III July 2016 Advance Funds -$ -$ -$ 21,156.00$ 21,156.00$ -$ 9/8/2016 100200G-2 Title III - July 2016 - Correct Posting 3,883.00$ 3,883.00$ -$ 39,569.00$ 39,569.00$ -$

9/28/2016 100199G-2Title III - August 2016 - Correct Posting 4,134.00$ 4,134.00$ -$ 22,660.00$ 22,660.00$ -$

10/21/2016 100212G Title III - September 2016 8,724.00$ 8,724.00$ -$ 34,654.00$ 50,301.00$ 15,647.00$ 11/21/2016 100214G Title III - October 2016 2,452.94$ 2,452.94$ -$ 3,259.63$ 3,259.63$ -$ 1/3/2017 100220G Title III/NSIP November 2016 8,708.33$ 8,708.33$ -$ 717.42$ 717.42$ -$ 1/30/2017 100222G Title III/NSIP December 2016 8,057.51$ 7,957.51$ (100.00)$ 3,080.75$ 3,080.75$ -$ 2/24/2017 100240G Title III January 2017 #1 -$ -$ -$ 34,815.21$ 34,815.21$ -$ 3/29/2017 100259G February 2017 Title III -$ 300.00$ 300.00$ -$ 5/4/2017 100284G March 2017 Title III/NSIP Drawdown -$ -$ -$ -$ 5/30/2017 100283G April 2017 Title III Drawdown 4,578.22$ 4,578.22$ -$ -$ -$ -$ 6/29/2017 100291G May 2017 Title III Drawdown 6,392.55$ 6,392.55$ -$ 2,294.45$ 2,294.45$ -$

6/30/2017 001Correct AAA State and Federal Fund allocations between AAA Grants -$ -$ -$ 6,016.72$ -$ (6,016.72)$

6/30/2017 001Reverse JV 15-1940 - Entry was done in reverse 34,890.45$ 34,890.45$ -$ 250,419.00$ 250,419.00$ -$

81,821.00$ 81,721.00$ (100.00)$ 418,942.18$ 428,572.46$ 9,630.28$ (29,952.30)$ Due To State51,868.70$


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Effective

Date

Document


NM AAA - Title III Admin GL - Debit

NM AAA - Title III Admin GL - Credit

ALTSD Reports -IIIB Admin

ALTSD Reports -IIIC-1 Admin

ALTSD Reports -IIIC-2 Admin

ALTSD Reports -IIIE Admin

ALTSD Reports - III Admin Total

Variance - Title III Admin

Total Title III Variances

8/1/2016 100171G Title III July 2016 Advance Funds -$ 100,000.00$ 25,000.00$ 25,000.00$ 25,000.00$ 25,000.00$ 100,000.00$ -$ -$ 9/8/2016 100200G-2 Title III - July 2016 - Correct Posting -$ 47,778.00$ 11,368.00$ 20,229.00$ 9,879.00$ 6,302.00$ 47,778.00$ -$ -$

9/28/2016 100199G-2Title III - August 2016 - Correct Posting -$ 488.00$ 89.00$ 45.00$ 396.00$ 3.00$ 533.00$ 45.00$ -$

10/21/2016 100212G Title III - September 2016 -$ 31,597.00$ 11,368.00$ 20,229.00$ (3,477.00)$ (15,647.00)$ 12,473.00$ (19,124.00)$ -$ 11/21/2016 100214G Title III - October 2016 -$ 31,597.00$ 11,368.00$ 20,229.00$ -$ -$ 31,597.00$ -$ -$ 1/3/2017 100220G Title III/NSIP November 2016 -$ 31,597.08$ 11,368.08$ 20,229.00$ -$ -$ 31,597.08$ -$ -$ 1/30/2017 100222G Title III/NSIP December 2016 27,648.92$ 523.92$ 27,125.00$ -$ -$ 27,648.92$ -$ (100.00)$ 2/24/2017 100240G Title III January 2017 #1 -$ 275,141.18$ 45,312.68$ 154,808.00$ 46,816.00$ 28,204.50$ 275,141.18$ -$ -$ 3/29/2017 100259G February 2017 Title III -$ 68,746.66$ 15,199.67$ 39,699.25$ 9,802.00$ 4,045.74$ 68,746.66$ -$ -$ 5/4/2017 100284G March 2017 Title III/NSIP Drawdown -$ 64,700.92$ 15,199.67$ 39,699.25$ 9,802.00$ -$ 64,700.92$ -$ -$ 5/30/2017 100283G April 2017 Title III Drawdown -$ 54,898.92$ 15,199.67$ 39,699.25$ -$ -$ 54,898.92$ -$ -$ 6/29/2017 100291G May 2017 Title III Drawdown -$ 65,341.60$ 15,199.67$ 39,699.25$ 9,802.01$ 640.67$ 65,341.60$ -$ -$

6/30/2017 001Correct AAA State and Federal Fund allocations between AAA Grants 270,707.00$ -$ -$ -$ -$ -$ -$ 270,707.00$ 0.00$

6/30/2017 001Reverse JV 15-1940 - Entry was done in reverse -$ 44,503.72$ 5,199.67$ 29,700.00$ 9,604.05$ -$ 44,503.72$ -$ -$

270,707.00$ 844,039.00$ 182,396.03$ 476,391.00$ 117,624.06$ 48,548.91$ 824,960.00$ (19,079.00)$ (100.00)$ 573,332.00$

Variance of Under Reporting 100.00$ Due to State - Title III D Funds 29,952.30$

-$

30,052.30$

state of new mexico office of the state auditor · wayne a. johnson state auditor state of new...

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