EXECUTIVE SUMMARY:
The objectives of our audit were to: (1) determine whether the National Empowerment Center, Inc, (NEC) has established policies and procedures in accordance with financial management standards in Title 45 Code of Federal Regulations (CFR), Part 74, and, (2) address specific concerns of whether: (a) NEC has in place adequate staff to ensure the segregation of various accounting functions, (b) it is reasonable for NEC to have the same policies relative to health and life insurance benefits for part-time employees as for those employees working full-time, (c) NEC's policies for paid time off are reasonable, and (d) costs allocated, including space rental costs, to the National Consumer Technical Assistance Project were reasonable, allowable and allocable in accordance with the cost principles contained in Title 45 CFR, Part 74.
We found that NEC does have Board of Director's By-laws; accounting and employee manuals; and a fire resistant safe to store valuable documents; and NEC has in place adequate staff to ensure the segregation of various accounting functions.
However, we have concerns with the design and operation of the NEC Board of Directors and NEC's internal control structure with respect to its financial system in the areas of policies and procedures on: accounting for and reporting on use of Federal funds; cash receipts; personnel, procurement and travel management. We found that NEC's (1) fringe benefit policies are generally reasonable, except for health and dental insurance benefit policies for part-time employees hired before July 1, 1997, and (2) costs allocated to the National Consumer Technical Assistance Project were generally reasonable, allowable and allocable, except for the reasonableness of the bookkeeper's salary. The Board of Directors has agreed to take corrective action on each of the issues raised in this report.