It Rocha &Company PC

*Certified Public Accountants and Management Consultants*

**Independent Auditor's Report**

Board Members and Executive Director National Council on Disability

**Report on the Financial Statements**

We have audited the accompanying balance sheet of the National Council on Disability (the Council) as of September 30, 2014, and the related statements of net cost, changes in net position, and budgetary resources for the year then ended. In our audit of the Council for the fiscal year ended September 30, 2014, we found:

· The financial statements are presented fairly in all material respects, in conformity with U.S. generally accepted accounting principles.

· No material weaknesses in internal control over financial reporting.

· Instances of non-compliance that are detailed in the Compliance with Applicable Laws and Regulations section of this report, the following findings were identified:

· The Council does not appear to comply with the Prompt Payment Act. During our audit we noted instances where payments to contractors and vendors were not made within the required 30-day stipulation.

The following sections discuss in more detail (1) these conclusions, (2) our conclusions on Management's Discussion and Analysis (MD&A) and other accompanying information included in the financial statements, (3) management's responsibility and (4) our responsibilities.

**Opinion on the Financial Statements**

In our opinion, the financial statements, including the accompanying notes present fairly, in all material respects, in conformity with U.S. generally accepted accounting principles, the financial position of the National Council on Disability as of September 30, 2014, and its net costs; changes in net position; and budgetary resources for the year then ended.

The financial statements of the National Council on Disability as of September 30, 2013 were audited by other auditors whose report dated February 18, 2014, expressed an unqualified opinion on those statements.

**Consideration of Internal Control**

In planning and performing our audit, we considered the Council's internal control over financial reporting as a basis for designing our auditing procedures and to comply with the Office of Management and Budget (OMB) audit guidance for the purpose of expressing our opinion on the financial statements, but not for the purpose of expressing an opinion on internal control and compliance or on management's assertion on internal control included in MD&A. Accordingly, we do not express an opinion on internal control over financial reporting and compliance or on management's assertion on the effectiveness of the

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entity's internal control over financial reporting, or on management's assertion on the internal control included in the MD&A.

Our consideration of internal control over financial reporting was for the limited purpose described in the preceding paragraph and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies and therefore, material weaknesses or significant deficiencies may exist that were not identified.

A control deficiency exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect misstatements on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. A material weakness is a significant deficiency, or combination of significant deficiencies, that results in a more than remote likelihood that the design or operation of one or more internal controls will not allow management or employees, in the normal course of performing their duties, to promptly detect or prevent errors, fraud, or noncompliance in amounts that would be material to the financial statements.

Our consideration of internal control over financial reporting was for the purpose described in the first paragraph of this section and would not necessarily identify all deficiencies in the Council's internal control that might be material weaknesses or significant deficiencies. However, given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be a material weakness.

We noted other non-reportable matters involving internal control and its operation that we will communicate in a separate management letter to the Council's management.

**Compliance With Applicable Laws and Regulations**

As part of obtaining reasonable assurance about whether the Council's financial statements are free from material misstatement, we also performed tests of its compliance with certain provisions of laws and regulations for fiscal year 2014. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests of compliance disclosed instances of noncompliance or other matters that are required to be reported under Government Auditing Standards.

The details of non-compliance are presented in Exhibit A. **Consistency of Other Information**

The information in the Management's Discussion and Analysis is not a required part of the financial statements, but is supplementary information required by U.S. generally accepted accounting principles. We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods of measurement and presentation of this information. However, we did not audit this information and, accordingly, we express no opinion on it.

The information in the Chairman's Message, Performance Section, and Other Accompanying Information is presented for purposes of additional analysis and is not required as part of the financial statements.

This information has not been subjected to auditing procedures and, accordingly, we express no opinion on it.

**Responsibilities**

**Management's Responsibilities.**Management is responsible for the preparation financial statements; establishing and maintaining effective internal control over financial reporting; and complying with laws, regulations, contracts, and grant agreements applicable to the Foundation.

**Auditors' Responsibilities.**Our responsibility is to express an opinion on the financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in the U.S. Government Auditing Standards, issued by the Comptroller General of the United States; and Office of Management and Budget (OMB) Bulletin No. 14-02, Audit Requirements for Federal Financial Statements. Those standards and OMB Bulletin No. 14-02 require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the agency's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the agency's internal control. Accordingly, we do express on such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

The Council's written response to the deficiencies in internal control, instances of noncompliance or other matters identified in our audit is presented attached to our report, and was not subjected to the auditing procedures applied in the audit of the Council's financial statements and, accordingly, we express no opinion on it.

*Gaithersburg, Maryland January 28, 2015*

**Independent Auditors' Report**

**Introduction to Exhibits on Internal Control and Compliance and Other Matters**

Our report on internal control over financial reporting and compliance and other matters is presented in accordance with Government Auditing Standards, issued by the Comptroller General of the United States. The internal control weaknesses and findings related to compliance with certain laws and regulations, presented herein were identified during our audit of the National Council on Disability's (the Council) financial statements as of, and for the year ended, September 30, 2014. Our findings and the status of prior year findings are presented in the following exhibit:

**Exhibit A:**Instances of non-compliance identified during the audit of the Council.

**Independent Auditors' Report**

**Exhibit A — Instances of Non-Compliance**

**A-1 Non-Compliance with the Prompt Payment Act**

*Conditions:*The Council does not appear to comply with the Prompt Payment Act. During our audit, we noted four instances where payments to vendors were not made within the required time period.

*Criteria:*The Prompt Payment Act and 5 CFR Part 1315 require that payment should be made to vendors within 30 days from the time a proper invoice is received.

*Cause/Effect:*Communication between fmancial managers and third party administrators responsible for processing payments was not sufficient to ensure compliance. Failure to pay vendors in accordance with the Prompt Payment Act results in late payment penalties.

*Recommendations:*We recommend that the Council implement procedures that will ensure that all payments are made within the timeframe prescribed by the Prompt Payment Act.

*Management's Response:*In 2014, prior to the preparation of the audit, the Administrative, Finance, and Operations team (AFO) at NCD had significant staffing issues. The agency utilized a contractor to assist with processing payables on a timely basis. This was intentionally a time-limited contract, as the

Executive Director fully intended to staff up the AFO team with full-time employees as soon as possible. The Council was aware that it was imperative to hire permanent full-time staff with the skills to

implement and maintain that key function of agency operations and to ensure continuity in operations. In July 2014 a Management Analyst Administrative Support Assistant was brought on, followed by an Administrative Support Assistant in August and a Financial Analyst in December of that same year. Upon the onboarding of the Management Analyst the Council implemented procedures that will ensure that all payments are made within the timeframe prescribed by the Prompt Payment Act. All members of the finance operations team are cross-trained to ensure ongoing compliance and continuity of NCD's financial operations.

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