The Primavera Foundation, Inc.

Condition: The SSVF Program Office performed a review to determine whether the Foundation complied with applicable laws, rules, and regulations. During their review, they discovered that shared administrative expenditures allocated to the program had inadequate detail and supporting documentation. Criteria: Payment of SSVF grant funds up to the amount specified in the SSVF grant agreement will be made only for appropriately documented eligible expenses that are allowable, allocable, and reasonable costs of operating a program under the Supportive Services grant. Eligible expenses must be in accordance with the applicable Federal Cost Principles set forth in OMB Circular A-122, Cost Principles for Non-Profit Organizations, codified at 2 Code of Federal Regulations (CFR) Part 235. In addition, grantees must use adequate financial management systems that follow generally accepted accounting principles (GAAP) and provide adequate fiscal control and accounting records, including cost accounting records supported by documentation. Grantees’ financial management systems must comply with the requirements of 38 CFR 49.21. Grantees must also maintain all back up documentation and invoices to support the costs paid with SSVF funds. Cause and effect: The Foundation’s accounting software does not provide a detailed breakout of allocated administrative expenses once the previous month has been closed out. Individual general ledger line items can no longer be viewed; therefore, audit testing cannot be conducted for those amounts. Recommendation: I recommend that the Foundation continue plans to submit a modified administrative cost approach plan and once approved, update the organization’s policies and procedures to include the new processes. In the interim, the finance team should generate and print monthly administrative cost allocation reports to ensure there is a monthly record of the breakout of the administrative costs. Views of Responsible Officials: We have submitted a modified administrative cost approach plan (MACA) to the VA on December 8, 2023, and we are waiting for approval. We are working with our outside CPA firm to update our policies and procedures accounting for the new MACA plan implementation once it is approved. In the interim, we have already begun running detailed reports of allocations each month. We have also adjusted the VA grant to only apply direct cost for any administrative charges until the MACA is approved.