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Audit of Baton Rouge nonprofit group finds a few issues

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(The Center Square) − An audit of a nonprofit group that receives taxpayer funds and lost its tax-exempt status found an incident for a counterfeit check drawn on the organization’s funds.

A recent audit of Family Road of Greater Baton Rouge was conducted by the Albany-based accounting firm Hebert Johnson & Associates Inc. under contract from the Louisiana Legislative Auditor’s Office.

The nonprofit organization provides a place to help meet the needs of families through collaboration and coordination of community resources and receives an annual grant from the U.S. Department of Health and Human Services.

This Healthy Start grant through the Health Resources and Services Administration is intended to reduce the high rate of infant mortality and minimize the racial disparity that exists in the project’s service area. The grants are also intended to improve access to quality maternal and child health services.

In mid-October 2023, Family Road discovered a counterfeit check for $15,175 had been processed against its operating account. The fraud was detected on October 16 through the organization’s routine online account monitoring.

Family Road immediately contacted the bank and filed a police report. The bank reimbursed the full amount the next day, leaving the organization with no financial loss.

While Family Road’s internal controls successfully caught the fraud, auditors recommended enhancing these controls and reporting any future incidents to the Legislative Auditor’s Office and the local district attorney.

The organization responded, affirming it would follow these procedures if necessary and continue its diligent financial monitoring.

“This was a one-time instance that was caught by Family Road,” the organization said in its response. “We have controls in place to prevent fraud from happening. We check the bank account daily.”

The audit also revealed that Family Road’s tax-exempt status had been revoked due to delays in filing tax returns for fiscal years 2019 through 2022.

According to Family Road, the delays arose out of complications during the COVID-19 pandemic, when Family Road changed its fiscal year and personal hardships faced by the organization’s accountant.

Family Road received $1.2 million from taxpayers. Overall, Family Road spent $1.62 million in 2023, with program services accounting for 83% of total expenses.

An additional $265,131 was allocated for management and general expenses, covering operational costs necessary to keep the organization running effectively. A small amount, $1,759, was spent on fundraising efforts.

In its response, the organization’s board of directors has committed to reviewing tax returns annually to prevent future issues and remains fully operational.