CharityWatch has issued Astraea Lesbian Foundation for Justice (Astraea Foundation) a “?” rating for its fiscal year ended 06/30/2024 due to our specific concerns related to its independent auditors’ “Schedule of Findings and Questioned Costs for the Year Ended June 30, 2024.” This Schedule relates to the Foundation’s receipt of federal government awards. The charity’s auditors found “Material weakness(es)” and “Significant deficiencies” in the Foundation’s “Internal control over financial reporting” of its financial statements.
The Foundation reports receiving approximately $3.6 million in government grants in fiscal 2024, according to its IRS Form 990 tax filing (Part VIII, line 1e). The $3.6 million comprises approximately 21% of the Foundation’s reported total cash revenue of $17,515,698 for the fiscal year. The Foundation’s auditors raised concerns about the organization’s accounting for and reporting of federal grants in fiscal 2024, in addition to other items, as further detailed below.
Scope of Reporting
According to the “Other Reporting Required by Government Auditing Standards” section of the Foundation’s Independent Auditors’ Report, dated June 30, 2024, issued in connection with the Foundation’s financial statements for the year ended June 30, 2024:
“In accordance with Government Auditing Standards, we have also issued our report dated April 2, 2025, on our consideration of the Astraea’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is solely to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of Astraea’s internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering Astraea’s internal control over financial reporting and compliance.”
Section I, Summary of Auditor’s Results, Financial Statements, of the “Schedule of Findings and Questioned Costs for the Year Ended June 30, 2024” related to the independent auditors’ reporting concerning the Foundation’s receipt of federal government awards replies “Unmodified” in response to the following: “Type of auditor’s report issued on whether the financial statements audited were prepared in accordance with GAAP on the accrual basis of accounting.” An “unmodified” opinion means that in the opinion of the auditors, the organization’s financial statements are presented fairly, in all material respects, in accordance with generally accepted accounting principles. However, such an opinion does not guarantee that an organization’s financial statements are free from error.
Material Weakness(es) & Significant Deficiencies
The auditors report that during the federal awards audit process they identified “Material weakness(es)” and “Significant deficiencies” in the Foundation’s “Internal control over financial reporting” of its financial statements. A material weakness is one or more control deficiencies that create a reasonable possibility of material misstatement in an organization’s financial statements. This does not necessarily mean that a material misstatement has occurred, but rather that the organization’s internal controls might not be good enough to detect or prevent a material misstatement from occurring. A significant deficiency is a single weakness or combination of weaknesses in an organization’s internal controls sufficient to merit scrutiny of those responsible for administering its financial reporting. Section I, Summary of Auditor’s Results, Federal Awards, of the “Schedule of Findings and Questioned Costs for the Year Ended June 30, 2024” related to the independent auditors’ reporting concerning the Foundation’s receipt of federal government awards replies “No” in response to the question: “Auditee qualified as a low-risk auditee?”
Section II, Financial Statement Findings, states “In prior years, Astraea experienced high staff turnover, which led to incomplete and inconsistent financial records. As a result, the current finance team is still working to reconcile and clean up prior-year financial data, causing delays in preparing the audit-related schedules, support and responses.”
As a result, “Several adjustments were proposed by management during the audit. Additionally, any internal financial statements produced by management during the year (and as of fiscal year-end) were not properly stated in related [relation] to the financial statements take[n] as a whole (and therefore could not be relied upon).”
For the “Recommendation” regarding the material weaknesses in the Foundation’s Schedule of Expenditures of Federal Awards, the auditors state: “We strongly recommend that all asset and liability account reconciliations be performed on a monthly or quarterly (at a minimum) basis. We also recommend detailed reviews/approvals of all supporting schedules (and related financial statements) be performed and contemporaneously documented in the accounting records; any discrepancies or other issues should be resolved in a timely manner. In order to ensure accuracy of financial data reported externally, we also recommend that Astraea ensure its internal records be reconciled with financial reports submitted to the U.S. Government and other donors. Lastly, we recommend that a documented review and approval process with respect to monthly or quarterly reconciliations be retained in a physical or electronic fashion in Astraea’s accounting records.”
Astraea’s Response
The “View of Responsible Officials” that follows the Recommendation states: “The Finance and Executive teams are aware of the irregular reconciliations and significant reclassifications during the year under audit resulting from significant staff turnover and restructuring with changes in leadership and new hires. Though the Finance and Executive teams were also aware that the lack of processes and adequate structures prior to FY2022 would continue to impact our financial management structures in subsequent years, fresh reviewing and corrections to our financial information started in FY2022 after the hire of the Assistant Controller, continued through FY2023 with the engagement of outside, independent consultants and culminated at the end of FY2024 with the hiring of a new VP-Finance. The anticipated completion date of June 30, 2023 represents the final date of FY2023, the last annual audit that was delayed. The FY2024 audit has now been completed timely and the organization leadership does not expect to see this finding upon completion of our FY25 audit.”
Federal Awards & Questioned Costs
In addition to the above Significant Deficiency related to Inadequate Financial Reporting/Delay in Audit Process (Financial Statement Finding), the auditors also identified several Material Weaknesses related to Federal Award Findings and Questioned Costs. See below for the “Cause” related to these Material Weaknesses:
The above information represents only a sampling of the independent auditors’ findings and the responses of the Foundation’s management. A complete copy of the Foundation’s audited financial statements for the year ended June 30, 2024 is available on ProPublica’s Nonprofit Explorer website.
During a financial audit, auditors conduct various forms of sampling, which involves checking a portion of an organization’s financial transactions to ensure that they are accurately recognized and recorded, that sufficient documentation exists to substantiate them, and that proper internal controls are being maintained by an organization’s management. Samples are planned, selected, and evaluated for the purpose of providing an organization’s auditors with statistically representative data adequate for inferring the overall accuracy of the reporting. An audit does not entail the auditors checking 100% of an organization’s financial transactions to confirm the accuracy of the total of the reporting. For this reason, errors may exist in an organization’s financial reporting that go undetected by its auditors.
Subsequent Events
According to the Astraea Lesbian Foundation for Justice audit of June 30, 2024 (Note 13, Subsequent Events):
“…Beginning in January 2025, Astraea received stop-work orders applicable to its United States Government funded programs. This directive was issued as a result of the Presidential Executive Order entitled ‘Reevaluating and Realigning United States Foreign Aid’ which was issued on January 20, 2025 and mandates a 90-day pause in United States foreign development assistance for assessment of programmatic efficiencies and consistency with United States foreign policy. Astraea is currently assessing the financial and operational impact of this event. Though management does not anticipate any immediate effects on other programs or funding sources, there is inherent uncertainty regarding the long-term implications of the foreign aid freeze. These financial statements do not reflect any adjustments related to this subsequent event.”
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