Audit 11397

Finding Number: 2021-SA1 Material Weakness – Internal Control over Compliance Federal Award: No. 64.024 VA Homeless Providers Grant and Per Diem Program Federal Agency: U.S. Veterans Administration Pass-Through Entity: Not applicable Criteria or Specific Requirement: U.S. Code of Federal Regulations, Title 2, Part 200, section 510(b) Schedule of Expenditures of Federal Awards requires recipients of federal awards to prepare a schedule of expenditures of federal awards (SEFA) for the period covered by the entity’s financial statements to accurately reflect federal awards expended for individual federal programs. Condition: During the year ended June 30, 2021, program income expended was not identified and inappropriately excluded from the SEFA. In addition, the underlying detail of expenditures did not tie without exception to the SEFA amounts and multiple adjustments to the SEFA were made. Cause: The error was primarily due to factors beyond the control of current management, including poorly designed policies and procedures, poor recordkeeping and a lack of understanding of the requirements for the reporting of federal expenditures on the SEFA. Effect or Potential Effect: Improper internal controls and reconciliations of the federal expenditures poses a risk for inaccuracies in SEFA reporting. Additionally, since the Organization’s SEFA serves as the basis in determining the audit scope, including the identification of major programs required to be audited in a given fiscal year, inaccuracies in the SEFA pose a risk of improper identification of major programs. Questioned Costs: Related questioned costs are unknown. Context: During the year under audit, the issues represent a systemic problem, beyond the control of current management. Recommendation: The Organization should establish a more thorough internal review process to ensure the figures reported on the SEFA properly represent expenditures incurred in the Organization’s accounting software and is reconciled timely to the general ledger. The Organization should also take measures to train department personnel on the requirements for SEFA reporting to help ensure that the preparation of the SEFA report is accurate and ties to the general ledger. View of Responsible Officials: In response to finding number 2021-SA1, management agrees with the finding and will design, implement, and maintain internal controls that ensure the figures reported on the SEFA properly represent expenditures incurred in the Organization’s accounting software; and that the reported figures are reconciled timely to the general ledger. Further, management will take measures to train personnel in SEFA reporting requirements to help ensure that the preparation of the SEFA report is accurate and ties to the general ledger.

Finding Number: 2021-SA2 Material Weakness – Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Cash Management, Period of Performance, Program Income, Reporting, Special Tests – Compliance and Control Finding -Internal Control over Compliance Federal Award: No. 64.024 VA Homeless Providers Grant and Per Diem Program Federal Agency: U.S. Veterans Administration Pass-Through Entity: Not applicable Criteria or Specific Requirement: 2 CFR section 200.303a states the non-Federal must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statues, regulations, and the terms and conditions of the federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: The Organization did not maintain effective internal controls over compliance over direct and material compliance areas, except for Eligibility. Internal controls over compliance of eligibility were appropriately designed and implemented and operated effectively. Cause: Factors beyond the control of current management, including poorly designed policies and procedures and lack of understanding of Federal award requirements and training, as key members of the accounting department left the Organization before appropriately transferring knowledge and records related to the Federal awards. Internal controls over compliance of eligibility were found to be appropriately designed and implemented and operated effectively during the June 30, 2021 fiscal year. Effect or Potential Effect: Potential for noncompliance of direct and material audit requirements. Questioned Costs: Related questioned costs are unknown. Context: During the year under audit, the issues represent a systemic problem, beyond the control of current management. Recommendation: Organization should implement appropriate internal controls over compliance for all direct and material compliance areas, other than eligibility. View of Responsible Officials: In response to finding number 2021-SA2, management agrees with the finding and will design, implement, and maintain internal controls over all direct and material compliance areas (other than eligibility). Additionally, management will ensure that the Organization’s internal controls comply with the Comptroller General of the United States’s “Standards for Internal Control in the Federal Government” or COSO’s “Internal Control Integrated Framework”.

Finding Number: 2021-SA3 Material Weakness – Activities Allowed or Unallowed and Allowable Costs/Cost Principles and Period of Performance Compliance and Control Finding Federal Award: No. 64.024 VA Homeless Providers Grant and Per Diem Program Federal Agency: U.S. Veterans Administration Pass-Through Entity: Not applicable Criteria or Specific Requirement: CFR section 200.403, Factors affecting allowability of costs, states costs must: conform to limitations or exclusions, be accorded consistent treatment, a cost may not be assigned to a Federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the Federal award as an indirect cost and be adequately documented. 2 CFR section 200.405, Allowable costs, states this standard is met if the cost is incurred specifically for the Federal award. 2 CFR section 200.430(i) Standards for Documentation of Personnel Expenses state charges to Federal awards for salaries must be based on records that accurately reflect the work performed and these records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated, support the distribution of the employee’s salary or wages among specific activities or cost objectives if the employee works on more than one Federal award a Federal award and non-Federal award and charges for the salaries and wages of nonexempt employees… must be supported by records indicating the total number of hours worked each day. Condition: The Organization did not maintain an effective control environment to ensure costs incurred for expenditures charged to the program were in accordance with contract requirements and applicable cost principles. Records do not provide reasonable assurance that the charges are accurate, allowable, and properly allocated. Records do not appear to support the distribution of the employee’s salary or wages among specific activities or cost objectives if the employee works on more than one Federal award or a Federal award and non-federal activity. Charges for non-exempt employees are not supported by records indicating the total number of hours worked each day. Expenditure details included costs that were allocated to the Federal award but may not have been incurred specifically for the Federal award. These costs included unsupported journal entries and uncategorized expenditures. Additionally, due to lack of budgets for the fiscal year, it was not determinable if costs conformed to limitations or exclusions set forth in the Federal award. Costs were not adequately documented, and it is unknown if costs were accorded consistent treatment. Cause: Factors beyond the control of current management, including poor recordkeeping, have caused financial records to be inadequate for audit purposes, as key members of the accounting department left the Organization before appropriately transferring knowledge and records related to the Federal awards. Effect or Potential Effect: Potential for unallowable activities, unallowable costs, and costs outside of the period of performance and additional questioned costs. Questioned Costs: Related questioned costs related to payroll expenditures are unknown. Questioned costs related to non-payroll expenditures are unknown. Context: During the year under audit, the issues represent a systemic problem, beyond the control of current management. Recommendation: Policies and procedures should be designed and implemented to ensure expenditures are reviewed for allowability before being charged to federal awards. Policies and procedures should be designed and implemented to ensure costs are reviewed for allowability before being charged to federal awards. Management should perform budget to actual analysis on a periodic basis to ensure that costs are not exceeding limitations. View of Responsible Officials: In response to finding number 2021-SA3, management agrees with the finding and will design, implement, and maintain policies and procedures that ensure expenditures are reviewed for allowability before being charged to Federal awards. Management will also design, implement, and maintain policies and procedures that ensure costs are reviewed for allowability before being charged to Federal awards. Further, management will perform budget-to-actual analysis on a periodic basis to ensure costs do not exceed limitations.

Finding Number: 2021-SA4 Material Weakness – Reporting – Compliance and Control Finding Federal Award: No. 64.024 VA Homeless Providers Grant and Per Diem Program Federal Agency: U.S. Veterans Administration Pass-Through Entity: Not applicable Criteria or Specific Requirement: The Organization is required to prepare and submit timely, accurate, and complete SF-425 Reports and Performance Reports. Condition: The Organization could not provide evidence of reports submitted during the year. Cause: Factors beyond the control of current management, including poor recordkeeping, have caused reports to be unavailable, as key members of the accounting department left the Organization before appropriately transferring knowledge and records related to the Federal awards. Effect or Potential Effect: Potential for noncompliance due to potential for untimely, inaccurate, incomplete reports or reports that were not submitted altogether. Questioned Costs: Related questioned costs are unknown. Context: During the year under audit, the issues represent a systemic problem, beyond the control of current management. Recommendation: Policies and procedures over federal grant reporting should be designed and implemented to ensure reports are filed on time and are accurate and complete. View of Responsible Officials: In response to finding number 2021-SA4, management agrees with the finding and will design, implement, and maintain policies and procedures that ensure Federal grant reporting is complete, accurate, and timely.

Finding Number: 2021-SA5 Material Weakness – Program Income – Compliance and Control Finding Federal Award: No. 64.024 VA Homeless Providers Grant and Per Diem Program Federal Agency: U.S. Veterans Administration Pass-Through Entity: Not applicable Criteria or Specific Requirement: 2 CFR section 200.307, Program Income, states that ordinary program income must be deducted from total allowable costs to determine the net allowable costs. Program income must be used for current costs unless the Federal awarding agency authorizes otherwise. Program income that the non-Federal entity did not anticipate at the time of the Federal award must be used to reduce the Federal award and non-Federal entity contributions rather than increase the funds committed to the project. 38 CFR 61.82 Participant fees for supportive housing states that participant fees may be used for costs of operating the supportive housing or to assist supportive housing residents’ move to permanent housing and must have a therapeutic benefit. Condition: It does not appear that program income was tracked and expended for use of operating supportive housing or assisting housing residents. Cause: Factors beyond the control of current management, including poorly designed policies and procedures, as key members of the accounting department left the Organization before appropriately transferring knowledge and records related to the Federal awards. Effect or Potential Effect: Potential noncompliance related to requesting additional reimbursement before program income was spent. Additionally, as noted in Finding 2021-SA1 program income expended was not appropriately included on the SEFA. Questioned Costs: Related questioned costs are unknown. Context: During the year under audit, the issues represent a systemic problem, beyond the control of current management. Recommendation: Policies and procedures should be designed and implemented to ensure program income is tracked and expended appropriately. View of Responsible Officials: In response to finding number 2021-SA5, management agrees with the finding and will design, implement, and maintain policies and procedures that ensure program income is tracked and expended appropriately.

Finding Number: 2021-SA6 Material Weakness – Special Tests – Compliance and Control Finding Federal Award: No. 64.024 VA Homeless Providers Grant and Per Diem Program Federal Agency: U.S. Veterans Administration Pass-Through Entity: Not applicable Criteria or Specific Requirement: 38 CFR Part 61 section 61.80(c) states recipients must include a summary of quarterly assessments in their administrative files. Condition: It is unknown if such records were appropriately maintained. Cause: Factors beyond the control of current management, including poorly designed policies and procedures, as key members of the accounting department left the Organization before appropriately transferring knowledge and records related to the Federal awards. Effect or Potential Effect: Potential for noncompliance related to Federal awards. Questioned Costs: Related questioned costs are unknown. Context: During the year under audit, the issues represent a systemic problem, beyond the control of current management. Recommendation: Policies and procedures should be designed and implemented to ensure compliance requirements of Federal awards are followed. View of Responsible Officials: In response to finding number 2021-SA6, management agrees with the finding and will design, implement, and maintain policies and procedures that ensure compliance with Federal awards.

Finding Number: 2021-SA7 Material Weakness Data Collection Form Federal Award: No. 64.024 VA Homeless Providers Grant and Per Diem Program Federal Agency: U.S. Veterans Administration Pass-Through Entity: Not applicable Criteria or Specific Requirement: Single audit submissions, including the data collection form, are required to be filed within nine months after fiscal year-end. Condition: The single audit submission was not completed and not filed within nine months of year-end. Cause: Factors beyond the control of current management, including poorly designed policies and procedures to ensure audit was completed timely, as key members of the accounting department left the Organization before appropriately transferring knowledge and records related to the Federal awards. Effect or Potential Effect: Noncompliance with Uniform Guidance. Questioned Costs: None. Context: During the year under audit, the issues represent a systemic problem, beyond the control of current management. Recommendation: Policies and procedures should be designed and implemented to ensure compliance with Uniform Guidance is met. View of Responsible Officials: In response to finding number 2021-SA7, management agrees with the finding and will design, implement, and maintain policies and procedures that ensure compliance with Uniform Guidance.

Finding Number: 2021-SA1 Material Weakness – Internal Control over Compliance Federal Award: No. 64.024 VA Homeless Providers Grant and Per Diem Program Federal Agency: U.S. Veterans Administration Pass-Through Entity: Not applicable Criteria or Specific Requirement: U.S. Code of Federal Regulations, Title 2, Part 200, section 510(b) Schedule of Expenditures of Federal Awards requires recipients of federal awards to prepare a schedule of expenditures of federal awards (SEFA) for the period covered by the entity’s financial statements to accurately reflect federal awards expended for individual federal programs. Condition: During the year ended June 30, 2021, program income expended was not identified and inappropriately excluded from the SEFA. In addition, the underlying detail of expenditures did not tie without exception to the SEFA amounts and multiple adjustments to the SEFA were made. Cause: The error was primarily due to factors beyond the control of current management, including poorly designed policies and procedures, poor recordkeeping and a lack of understanding of the requirements for the reporting of federal expenditures on the SEFA. Effect or Potential Effect: Improper internal controls and reconciliations of the federal expenditures poses a risk for inaccuracies in SEFA reporting. Additionally, since the Organization’s SEFA serves as the basis in determining the audit scope, including the identification of major programs required to be audited in a given fiscal year, inaccuracies in the SEFA pose a risk of improper identification of major programs. Questioned Costs: Related questioned costs are unknown. Context: During the year under audit, the issues represent a systemic problem, beyond the control of current management. Recommendation: The Organization should establish a more thorough internal review process to ensure the figures reported on the SEFA properly represent expenditures incurred in the Organization’s accounting software and is reconciled timely to the general ledger. The Organization should also take measures to train department personnel on the requirements for SEFA reporting to help ensure that the preparation of the SEFA report is accurate and ties to the general ledger. View of Responsible Officials: In response to finding number 2021-SA1, management agrees with the finding and will design, implement, and maintain internal controls that ensure the figures reported on the SEFA properly represent expenditures incurred in the Organization’s accounting software; and that the reported figures are reconciled timely to the general ledger. Further, management will take measures to train personnel in SEFA reporting requirements to help ensure that the preparation of the SEFA report is accurate and ties to the general ledger.

Finding Number: 2021-SA2 Material Weakness – Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Cash Management, Period of Performance, Program Income, Reporting, Special Tests – Compliance and Control Finding -Internal Control over Compliance Federal Award: No. 64.024 VA Homeless Providers Grant and Per Diem Program Federal Agency: U.S. Veterans Administration Pass-Through Entity: Not applicable Criteria or Specific Requirement: 2 CFR section 200.303a states the non-Federal must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statues, regulations, and the terms and conditions of the federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: The Organization did not maintain effective internal controls over compliance over direct and material compliance areas, except for Eligibility. Internal controls over compliance of eligibility were appropriately designed and implemented and operated effectively. Cause: Factors beyond the control of current management, including poorly designed policies and procedures and lack of understanding of Federal award requirements and training, as key members of the accounting department left the Organization before appropriately transferring knowledge and records related to the Federal awards. Internal controls over compliance of eligibility were found to be appropriately designed and implemented and operated effectively during the June 30, 2021 fiscal year. Effect or Potential Effect: Potential for noncompliance of direct and material audit requirements. Questioned Costs: Related questioned costs are unknown. Context: During the year under audit, the issues represent a systemic problem, beyond the control of current management. Recommendation: Organization should implement appropriate internal controls over compliance for all direct and material compliance areas, other than eligibility. View of Responsible Officials: In response to finding number 2021-SA2, management agrees with the finding and will design, implement, and maintain internal controls over all direct and material compliance areas (other than eligibility). Additionally, management will ensure that the Organization’s internal controls comply with the Comptroller General of the United States’s “Standards for Internal Control in the Federal Government” or COSO’s “Internal Control Integrated Framework”.

Finding Number: 2021-SA3 Material Weakness – Activities Allowed or Unallowed and Allowable Costs/Cost Principles and Period of Performance Compliance and Control Finding Federal Award: No. 64.024 VA Homeless Providers Grant and Per Diem Program Federal Agency: U.S. Veterans Administration Pass-Through Entity: Not applicable Criteria or Specific Requirement: CFR section 200.403, Factors affecting allowability of costs, states costs must: conform to limitations or exclusions, be accorded consistent treatment, a cost may not be assigned to a Federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the Federal award as an indirect cost and be adequately documented. 2 CFR section 200.405, Allowable costs, states this standard is met if the cost is incurred specifically for the Federal award. 2 CFR section 200.430(i) Standards for Documentation of Personnel Expenses state charges to Federal awards for salaries must be based on records that accurately reflect the work performed and these records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated, support the distribution of the employee’s salary or wages among specific activities or cost objectives if the employee works on more than one Federal award a Federal award and non-Federal award and charges for the salaries and wages of nonexempt employees… must be supported by records indicating the total number of hours worked each day. Condition: The Organization did not maintain an effective control environment to ensure costs incurred for expenditures charged to the program were in accordance with contract requirements and applicable cost principles. Records do not provide reasonable assurance that the charges are accurate, allowable, and properly allocated. Records do not appear to support the distribution of the employee’s salary or wages among specific activities or cost objectives if the employee works on more than one Federal award or a Federal award and non-federal activity. Charges for non-exempt employees are not supported by records indicating the total number of hours worked each day. Expenditure details included costs that were allocated to the Federal award but may not have been incurred specifically for the Federal award. These costs included unsupported journal entries and uncategorized expenditures. Additionally, due to lack of budgets for the fiscal year, it was not determinable if costs conformed to limitations or exclusions set forth in the Federal award. Costs were not adequately documented, and it is unknown if costs were accorded consistent treatment. Cause: Factors beyond the control of current management, including poor recordkeeping, have caused financial records to be inadequate for audit purposes, as key members of the accounting department left the Organization before appropriately transferring knowledge and records related to the Federal awards. Effect or Potential Effect: Potential for unallowable activities, unallowable costs, and costs outside of the period of performance and additional questioned costs. Questioned Costs: Related questioned costs related to payroll expenditures are unknown. Questioned costs related to non-payroll expenditures are unknown. Context: During the year under audit, the issues represent a systemic problem, beyond the control of current management. Recommendation: Policies and procedures should be designed and implemented to ensure expenditures are reviewed for allowability before being charged to federal awards. Policies and procedures should be designed and implemented to ensure costs are reviewed for allowability before being charged to federal awards. Management should perform budget to actual analysis on a periodic basis to ensure that costs are not exceeding limitations. View of Responsible Officials: In response to finding number 2021-SA3, management agrees with the finding and will design, implement, and maintain policies and procedures that ensure expenditures are reviewed for allowability before being charged to Federal awards. Management will also design, implement, and maintain policies and procedures that ensure costs are reviewed for allowability before being charged to Federal awards. Further, management will perform budget-to-actual analysis on a periodic basis to ensure costs do not exceed limitations.

Finding Number: 2021-SA4 Material Weakness – Reporting – Compliance and Control Finding Federal Award: No. 64.024 VA Homeless Providers Grant and Per Diem Program Federal Agency: U.S. Veterans Administration Pass-Through Entity: Not applicable Criteria or Specific Requirement: The Organization is required to prepare and submit timely, accurate, and complete SF-425 Reports and Performance Reports. Condition: The Organization could not provide evidence of reports submitted during the year. Cause: Factors beyond the control of current management, including poor recordkeeping, have caused reports to be unavailable, as key members of the accounting department left the Organization before appropriately transferring knowledge and records related to the Federal awards. Effect or Potential Effect: Potential for noncompliance due to potential for untimely, inaccurate, incomplete reports or reports that were not submitted altogether. Questioned Costs: Related questioned costs are unknown. Context: During the year under audit, the issues represent a systemic problem, beyond the control of current management. Recommendation: Policies and procedures over federal grant reporting should be designed and implemented to ensure reports are filed on time and are accurate and complete. View of Responsible Officials: In response to finding number 2021-SA4, management agrees with the finding and will design, implement, and maintain policies and procedures that ensure Federal grant reporting is complete, accurate, and timely.

Finding Number: 2021-SA5 Material Weakness – Program Income – Compliance and Control Finding Federal Award: No. 64.024 VA Homeless Providers Grant and Per Diem Program Federal Agency: U.S. Veterans Administration Pass-Through Entity: Not applicable Criteria or Specific Requirement: 2 CFR section 200.307, Program Income, states that ordinary program income must be deducted from total allowable costs to determine the net allowable costs. Program income must be used for current costs unless the Federal awarding agency authorizes otherwise. Program income that the non-Federal entity did not anticipate at the time of the Federal award must be used to reduce the Federal award and non-Federal entity contributions rather than increase the funds committed to the project. 38 CFR 61.82 Participant fees for supportive housing states that participant fees may be used for costs of operating the supportive housing or to assist supportive housing residents’ move to permanent housing and must have a therapeutic benefit. Condition: It does not appear that program income was tracked and expended for use of operating supportive housing or assisting housing residents. Cause: Factors beyond the control of current management, including poorly designed policies and procedures, as key members of the accounting department left the Organization before appropriately transferring knowledge and records related to the Federal awards. Effect or Potential Effect: Potential noncompliance related to requesting additional reimbursement before program income was spent. Additionally, as noted in Finding 2021-SA1 program income expended was not appropriately included on the SEFA. Questioned Costs: Related questioned costs are unknown. Context: During the year under audit, the issues represent a systemic problem, beyond the control of current management. Recommendation: Policies and procedures should be designed and implemented to ensure program income is tracked and expended appropriately. View of Responsible Officials: In response to finding number 2021-SA5, management agrees with the finding and will design, implement, and maintain policies and procedures that ensure program income is tracked and expended appropriately.

Finding Number: 2021-SA6 Material Weakness – Special Tests – Compliance and Control Finding Federal Award: No. 64.024 VA Homeless Providers Grant and Per Diem Program Federal Agency: U.S. Veterans Administration Pass-Through Entity: Not applicable Criteria or Specific Requirement: 38 CFR Part 61 section 61.80(c) states recipients must include a summary of quarterly assessments in their administrative files. Condition: It is unknown if such records were appropriately maintained. Cause: Factors beyond the control of current management, including poorly designed policies and procedures, as key members of the accounting department left the Organization before appropriately transferring knowledge and records related to the Federal awards. Effect or Potential Effect: Potential for noncompliance related to Federal awards. Questioned Costs: Related questioned costs are unknown. Context: During the year under audit, the issues represent a systemic problem, beyond the control of current management. Recommendation: Policies and procedures should be designed and implemented to ensure compliance requirements of Federal awards are followed. View of Responsible Officials: In response to finding number 2021-SA6, management agrees with the finding and will design, implement, and maintain policies and procedures that ensure compliance with Federal awards.

Finding Number: 2021-SA7 Material Weakness Data Collection Form Federal Award: No. 64.024 VA Homeless Providers Grant and Per Diem Program Federal Agency: U.S. Veterans Administration Pass-Through Entity: Not applicable Criteria or Specific Requirement: Single audit submissions, including the data collection form, are required to be filed within nine months after fiscal year-end. Condition: The single audit submission was not completed and not filed within nine months of year-end. Cause: Factors beyond the control of current management, including poorly designed policies and procedures to ensure audit was completed timely, as key members of the accounting department left the Organization before appropriately transferring knowledge and records related to the Federal awards. Effect or Potential Effect: Noncompliance with Uniform Guidance. Questioned Costs: None. Context: During the year under audit, the issues represent a systemic problem, beyond the control of current management. Recommendation: Policies and procedures should be designed and implemented to ensure compliance with Uniform Guidance is met. View of Responsible Officials: In response to finding number 2021-SA7, management agrees with the finding and will design, implement, and maintain policies and procedures that ensure compliance with Uniform Guidance.

Finding Number: 2021-SA1 Material Weakness – Internal Control over Compliance Federal Award: No. 64.024 VA Homeless Providers Grant and Per Diem Program Federal Agency: U.S. Veterans Administration Pass-Through Entity: Not applicable Criteria or Specific Requirement: U.S. Code of Federal Regulations, Title 2, Part 200, section 510(b) Schedule of Expenditures of Federal Awards requires recipients of federal awards to prepare a schedule of expenditures of federal awards (SEFA) for the period covered by the entity’s financial statements to accurately reflect federal awards expended for individual federal programs. Condition: During the year ended June 30, 2021, program income expended was not identified and inappropriately excluded from the SEFA. In addition, the underlying detail of expenditures did not tie without exception to the SEFA amounts and multiple adjustments to the SEFA were made. Cause: The error was primarily due to factors beyond the control of current management, including poorly designed policies and procedures, poor recordkeeping and a lack of understanding of the requirements for the reporting of federal expenditures on the SEFA. Effect or Potential Effect: Improper internal controls and reconciliations of the federal expenditures poses a risk for inaccuracies in SEFA reporting. Additionally, since the Organization’s SEFA serves as the basis in determining the audit scope, including the identification of major programs required to be audited in a given fiscal year, inaccuracies in the SEFA pose a risk of improper identification of major programs. Questioned Costs: Related questioned costs are unknown. Context: During the year under audit, the issues represent a systemic problem, beyond the control of current management. Recommendation: The Organization should establish a more thorough internal review process to ensure the figures reported on the SEFA properly represent expenditures incurred in the Organization’s accounting software and is reconciled timely to the general ledger. The Organization should also take measures to train department personnel on the requirements for SEFA reporting to help ensure that the preparation of the SEFA report is accurate and ties to the general ledger. View of Responsible Officials: In response to finding number 2021-SA1, management agrees with the finding and will design, implement, and maintain internal controls that ensure the figures reported on the SEFA properly represent expenditures incurred in the Organization’s accounting software; and that the reported figures are reconciled timely to the general ledger. Further, management will take measures to train personnel in SEFA reporting requirements to help ensure that the preparation of the SEFA report is accurate and ties to the general ledger.

Finding Number: 2021-SA2 Material Weakness – Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Cash Management, Period of Performance, Program Income, Reporting, Special Tests – Compliance and Control Finding -Internal Control over Compliance Federal Award: No. 64.024 VA Homeless Providers Grant and Per Diem Program Federal Agency: U.S. Veterans Administration Pass-Through Entity: Not applicable Criteria or Specific Requirement: 2 CFR section 200.303a states the non-Federal must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statues, regulations, and the terms and conditions of the federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: The Organization did not maintain effective internal controls over compliance over direct and material compliance areas, except for Eligibility. Internal controls over compliance of eligibility were appropriately designed and implemented and operated effectively. Cause: Factors beyond the control of current management, including poorly designed policies and procedures and lack of understanding of Federal award requirements and training, as key members of the accounting department left the Organization before appropriately transferring knowledge and records related to the Federal awards. Internal controls over compliance of eligibility were found to be appropriately designed and implemented and operated effectively during the June 30, 2021 fiscal year. Effect or Potential Effect: Potential for noncompliance of direct and material audit requirements. Questioned Costs: Related questioned costs are unknown. Context: During the year under audit, the issues represent a systemic problem, beyond the control of current management. Recommendation: Organization should implement appropriate internal controls over compliance for all direct and material compliance areas, other than eligibility. View of Responsible Officials: In response to finding number 2021-SA2, management agrees with the finding and will design, implement, and maintain internal controls over all direct and material compliance areas (other than eligibility). Additionally, management will ensure that the Organization’s internal controls comply with the Comptroller General of the United States’s “Standards for Internal Control in the Federal Government” or COSO’s “Internal Control Integrated Framework”.

Finding Number: 2021-SA3 Material Weakness – Activities Allowed or Unallowed and Allowable Costs/Cost Principles and Period of Performance Compliance and Control Finding Federal Award: No. 64.024 VA Homeless Providers Grant and Per Diem Program Federal Agency: U.S. Veterans Administration Pass-Through Entity: Not applicable Criteria or Specific Requirement: CFR section 200.403, Factors affecting allowability of costs, states costs must: conform to limitations or exclusions, be accorded consistent treatment, a cost may not be assigned to a Federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the Federal award as an indirect cost and be adequately documented. 2 CFR section 200.405, Allowable costs, states this standard is met if the cost is incurred specifically for the Federal award. 2 CFR section 200.430(i) Standards for Documentation of Personnel Expenses state charges to Federal awards for salaries must be based on records that accurately reflect the work performed and these records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated, support the distribution of the employee’s salary or wages among specific activities or cost objectives if the employee works on more than one Federal award a Federal award and non-Federal award and charges for the salaries and wages of nonexempt employees… must be supported by records indicating the total number of hours worked each day. Condition: The Organization did not maintain an effective control environment to ensure costs incurred for expenditures charged to the program were in accordance with contract requirements and applicable cost principles. Records do not provide reasonable assurance that the charges are accurate, allowable, and properly allocated. Records do not appear to support the distribution of the employee’s salary or wages among specific activities or cost objectives if the employee works on more than one Federal award or a Federal award and non-federal activity. Charges for non-exempt employees are not supported by records indicating the total number of hours worked each day. Expenditure details included costs that were allocated to the Federal award but may not have been incurred specifically for the Federal award. These costs included unsupported journal entries and uncategorized expenditures. Additionally, due to lack of budgets for the fiscal year, it was not determinable if costs conformed to limitations or exclusions set forth in the Federal award. Costs were not adequately documented, and it is unknown if costs were accorded consistent treatment. Cause: Factors beyond the control of current management, including poor recordkeeping, have caused financial records to be inadequate for audit purposes, as key members of the accounting department left the Organization before appropriately transferring knowledge and records related to the Federal awards. Effect or Potential Effect: Potential for unallowable activities, unallowable costs, and costs outside of the period of performance and additional questioned costs. Questioned Costs: Related questioned costs related to payroll expenditures are unknown. Questioned costs related to non-payroll expenditures are unknown. Context: During the year under audit, the issues represent a systemic problem, beyond the control of current management. Recommendation: Policies and procedures should be designed and implemented to ensure expenditures are reviewed for allowability before being charged to federal awards. Policies and procedures should be designed and implemented to ensure costs are reviewed for allowability before being charged to federal awards. Management should perform budget to actual analysis on a periodic basis to ensure that costs are not exceeding limitations. View of Responsible Officials: In response to finding number 2021-SA3, management agrees with the finding and will design, implement, and maintain policies and procedures that ensure expenditures are reviewed for allowability before being charged to Federal awards. Management will also design, implement, and maintain policies and procedures that ensure costs are reviewed for allowability before being charged to Federal awards. Further, management will perform budget-to-actual analysis on a periodic basis to ensure costs do not exceed limitations.

Finding Number: 2021-SA4 Material Weakness – Reporting – Compliance and Control Finding Federal Award: No. 64.024 VA Homeless Providers Grant and Per Diem Program Federal Agency: U.S. Veterans Administration Pass-Through Entity: Not applicable Criteria or Specific Requirement: The Organization is required to prepare and submit timely, accurate, and complete SF-425 Reports and Performance Reports. Condition: The Organization could not provide evidence of reports submitted during the year. Cause: Factors beyond the control of current management, including poor recordkeeping, have caused reports to be unavailable, as key members of the accounting department left the Organization before appropriately transferring knowledge and records related to the Federal awards. Effect or Potential Effect: Potential for noncompliance due to potential for untimely, inaccurate, incomplete reports or reports that were not submitted altogether. Questioned Costs: Related questioned costs are unknown. Context: During the year under audit, the issues represent a systemic problem, beyond the control of current management. Recommendation: Policies and procedures over federal grant reporting should be designed and implemented to ensure reports are filed on time and are accurate and complete. View of Responsible Officials: In response to finding number 2021-SA4, management agrees with the finding and will design, implement, and maintain policies and procedures that ensure Federal grant reporting is complete, accurate, and timely.

Finding Number: 2021-SA5 Material Weakness – Program Income – Compliance and Control Finding Federal Award: No. 64.024 VA Homeless Providers Grant and Per Diem Program Federal Agency: U.S. Veterans Administration Pass-Through Entity: Not applicable Criteria or Specific Requirement: 2 CFR section 200.307, Program Income, states that ordinary program income must be deducted from total allowable costs to determine the net allowable costs. Program income must be used for current costs unless the Federal awarding agency authorizes otherwise. Program income that the non-Federal entity did not anticipate at the time of the Federal award must be used to reduce the Federal award and non-Federal entity contributions rather than increase the funds committed to the project. 38 CFR 61.82 Participant fees for supportive housing states that participant fees may be used for costs of operating the supportive housing or to assist supportive housing residents’ move to permanent housing and must have a therapeutic benefit. Condition: It does not appear that program income was tracked and expended for use of operating supportive housing or assisting housing residents. Cause: Factors beyond the control of current management, including poorly designed policies and procedures, as key members of the accounting department left the Organization before appropriately transferring knowledge and records related to the Federal awards. Effect or Potential Effect: Potential noncompliance related to requesting additional reimbursement before program income was spent. Additionally, as noted in Finding 2021-SA1 program income expended was not appropriately included on the SEFA. Questioned Costs: Related questioned costs are unknown. Context: During the year under audit, the issues represent a systemic problem, beyond the control of current management. Recommendation: Policies and procedures should be designed and implemented to ensure program income is tracked and expended appropriately. View of Responsible Officials: In response to finding number 2021-SA5, management agrees with the finding and will design, implement, and maintain policies and procedures that ensure program income is tracked and expended appropriately.

Finding Number: 2021-SA6 Material Weakness – Special Tests – Compliance and Control Finding Federal Award: No. 64.024 VA Homeless Providers Grant and Per Diem Program Federal Agency: U.S. Veterans Administration Pass-Through Entity: Not applicable Criteria or Specific Requirement: 38 CFR Part 61 section 61.80(c) states recipients must include a summary of quarterly assessments in their administrative files. Condition: It is unknown if such records were appropriately maintained. Cause: Factors beyond the control of current management, including poorly designed policies and procedures, as key members of the accounting department left the Organization before appropriately transferring knowledge and records related to the Federal awards. Effect or Potential Effect: Potential for noncompliance related to Federal awards. Questioned Costs: Related questioned costs are unknown. Context: During the year under audit, the issues represent a systemic problem, beyond the control of current management. Recommendation: Policies and procedures should be designed and implemented to ensure compliance requirements of Federal awards are followed. View of Responsible Officials: In response to finding number 2021-SA6, management agrees with the finding and will design, implement, and maintain policies and procedures that ensure compliance with Federal awards.

Finding Number: 2021-SA7 Material Weakness Data Collection Form Federal Award: No. 64.024 VA Homeless Providers Grant and Per Diem Program Federal Agency: U.S. Veterans Administration Pass-Through Entity: Not applicable Criteria or Specific Requirement: Single audit submissions, including the data collection form, are required to be filed within nine months after fiscal year-end. Condition: The single audit submission was not completed and not filed within nine months of year-end. Cause: Factors beyond the control of current management, including poorly designed policies and procedures to ensure audit was completed timely, as key members of the accounting department left the Organization before appropriately transferring knowledge and records related to the Federal awards. Effect or Potential Effect: Noncompliance with Uniform Guidance. Questioned Costs: None. Context: During the year under audit, the issues represent a systemic problem, beyond the control of current management. Recommendation: Policies and procedures should be designed and implemented to ensure compliance with Uniform Guidance is met. View of Responsible Officials: In response to finding number 2021-SA7, management agrees with the finding and will design, implement, and maintain policies and procedures that ensure compliance with Uniform Guidance.

Finding Number: 2021-SA1 Material Weakness – Internal Control over Compliance Federal Award: No. 64.024 VA Homeless Providers Grant and Per Diem Program Federal Agency: U.S. Veterans Administration Pass-Through Entity: Not applicable Criteria or Specific Requirement: U.S. Code of Federal Regulations, Title 2, Part 200, section 510(b) Schedule of Expenditures of Federal Awards requires recipients of federal awards to prepare a schedule of expenditures of federal awards (SEFA) for the period covered by the entity’s financial statements to accurately reflect federal awards expended for individual federal programs. Condition: During the year ended June 30, 2021, program income expended was not identified and inappropriately excluded from the SEFA. In addition, the underlying detail of expenditures did not tie without exception to the SEFA amounts and multiple adjustments to the SEFA were made. Cause: The error was primarily due to factors beyond the control of current management, including poorly designed policies and procedures, poor recordkeeping and a lack of understanding of the requirements for the reporting of federal expenditures on the SEFA. Effect or Potential Effect: Improper internal controls and reconciliations of the federal expenditures poses a risk for inaccuracies in SEFA reporting. Additionally, since the Organization’s SEFA serves as the basis in determining the audit scope, including the identification of major programs required to be audited in a given fiscal year, inaccuracies in the SEFA pose a risk of improper identification of major programs. Questioned Costs: Related questioned costs are unknown. Context: During the year under audit, the issues represent a systemic problem, beyond the control of current management. Recommendation: The Organization should establish a more thorough internal review process to ensure the figures reported on the SEFA properly represent expenditures incurred in the Organization’s accounting software and is reconciled timely to the general ledger. The Organization should also take measures to train department personnel on the requirements for SEFA reporting to help ensure that the preparation of the SEFA report is accurate and ties to the general ledger. View of Responsible Officials: In response to finding number 2021-SA1, management agrees with the finding and will design, implement, and maintain internal controls that ensure the figures reported on the SEFA properly represent expenditures incurred in the Organization’s accounting software; and that the reported figures are reconciled timely to the general ledger. Further, management will take measures to train personnel in SEFA reporting requirements to help ensure that the preparation of the SEFA report is accurate and ties to the general ledger.

Finding Number: 2021-SA2 Material Weakness – Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Cash Management, Period of Performance, Program Income, Reporting, Special Tests – Compliance and Control Finding -Internal Control over Compliance Federal Award: No. 64.024 VA Homeless Providers Grant and Per Diem Program Federal Agency: U.S. Veterans Administration Pass-Through Entity: Not applicable Criteria or Specific Requirement: 2 CFR section 200.303a states the non-Federal must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statues, regulations, and the terms and conditions of the federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: The Organization did not maintain effective internal controls over compliance over direct and material compliance areas, except for Eligibility. Internal controls over compliance of eligibility were appropriately designed and implemented and operated effectively. Cause: Factors beyond the control of current management, including poorly designed policies and procedures and lack of understanding of Federal award requirements and training, as key members of the accounting department left the Organization before appropriately transferring knowledge and records related to the Federal awards. Internal controls over compliance of eligibility were found to be appropriately designed and implemented and operated effectively during the June 30, 2021 fiscal year. Effect or Potential Effect: Potential for noncompliance of direct and material audit requirements. Questioned Costs: Related questioned costs are unknown. Context: During the year under audit, the issues represent a systemic problem, beyond the control of current management. Recommendation: Organization should implement appropriate internal controls over compliance for all direct and material compliance areas, other than eligibility. View of Responsible Officials: In response to finding number 2021-SA2, management agrees with the finding and will design, implement, and maintain internal controls over all direct and material compliance areas (other than eligibility). Additionally, management will ensure that the Organization’s internal controls comply with the Comptroller General of the United States’s “Standards for Internal Control in the Federal Government” or COSO’s “Internal Control Integrated Framework”.

Finding Number: 2021-SA3 Material Weakness – Activities Allowed or Unallowed and Allowable Costs/Cost Principles and Period of Performance Compliance and Control Finding Federal Award: No. 64.024 VA Homeless Providers Grant and Per Diem Program Federal Agency: U.S. Veterans Administration Pass-Through Entity: Not applicable Criteria or Specific Requirement: CFR section 200.403, Factors affecting allowability of costs, states costs must: conform to limitations or exclusions, be accorded consistent treatment, a cost may not be assigned to a Federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the Federal award as an indirect cost and be adequately documented. 2 CFR section 200.405, Allowable costs, states this standard is met if the cost is incurred specifically for the Federal award. 2 CFR section 200.430(i) Standards for Documentation of Personnel Expenses state charges to Federal awards for salaries must be based on records that accurately reflect the work performed and these records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated, support the distribution of the employee’s salary or wages among specific activities or cost objectives if the employee works on more than one Federal award a Federal award and non-Federal award and charges for the salaries and wages of nonexempt employees… must be supported by records indicating the total number of hours worked each day. Condition: The Organization did not maintain an effective control environment to ensure costs incurred for expenditures charged to the program were in accordance with contract requirements and applicable cost principles. Records do not provide reasonable assurance that the charges are accurate, allowable, and properly allocated. Records do not appear to support the distribution of the employee’s salary or wages among specific activities or cost objectives if the employee works on more than one Federal award or a Federal award and non-federal activity. Charges for non-exempt employees are not supported by records indicating the total number of hours worked each day. Expenditure details included costs that were allocated to the Federal award but may not have been incurred specifically for the Federal award. These costs included unsupported journal entries and uncategorized expenditures. Additionally, due to lack of budgets for the fiscal year, it was not determinable if costs conformed to limitations or exclusions set forth in the Federal award. Costs were not adequately documented, and it is unknown if costs were accorded consistent treatment. Cause: Factors beyond the control of current management, including poor recordkeeping, have caused financial records to be inadequate for audit purposes, as key members of the accounting department left the Organization before appropriately transferring knowledge and records related to the Federal awards. Effect or Potential Effect: Potential for unallowable activities, unallowable costs, and costs outside of the period of performance and additional questioned costs. Questioned Costs: Related questioned costs related to payroll expenditures are unknown. Questioned costs related to non-payroll expenditures are unknown. Context: During the year under audit, the issues represent a systemic problem, beyond the control of current management. Recommendation: Policies and procedures should be designed and implemented to ensure expenditures are reviewed for allowability before being charged to federal awards. Policies and procedures should be designed and implemented to ensure costs are reviewed for allowability before being charged to federal awards. Management should perform budget to actual analysis on a periodic basis to ensure that costs are not exceeding limitations. View of Responsible Officials: In response to finding number 2021-SA3, management agrees with the finding and will design, implement, and maintain policies and procedures that ensure expenditures are reviewed for allowability before being charged to Federal awards. Management will also design, implement, and maintain policies and procedures that ensure costs are reviewed for allowability before being charged to Federal awards. Further, management will perform budget-to-actual analysis on a periodic basis to ensure costs do not exceed limitations.

Finding Number: 2021-SA4 Material Weakness – Reporting – Compliance and Control Finding Federal Award: No. 64.024 VA Homeless Providers Grant and Per Diem Program Federal Agency: U.S. Veterans Administration Pass-Through Entity: Not applicable Criteria or Specific Requirement: The Organization is required to prepare and submit timely, accurate, and complete SF-425 Reports and Performance Reports. Condition: The Organization could not provide evidence of reports submitted during the year. Cause: Factors beyond the control of current management, including poor recordkeeping, have caused reports to be unavailable, as key members of the accounting department left the Organization before appropriately transferring knowledge and records related to the Federal awards. Effect or Potential Effect: Potential for noncompliance due to potential for untimely, inaccurate, incomplete reports or reports that were not submitted altogether. Questioned Costs: Related questioned costs are unknown. Context: During the year under audit, the issues represent a systemic problem, beyond the control of current management. Recommendation: Policies and procedures over federal grant reporting should be designed and implemented to ensure reports are filed on time and are accurate and complete. View of Responsible Officials: In response to finding number 2021-SA4, management agrees with the finding and will design, implement, and maintain policies and procedures that ensure Federal grant reporting is complete, accurate, and timely.

Finding Number: 2021-SA5 Material Weakness – Program Income – Compliance and Control Finding Federal Award: No. 64.024 VA Homeless Providers Grant and Per Diem Program Federal Agency: U.S. Veterans Administration Pass-Through Entity: Not applicable Criteria or Specific Requirement: 2 CFR section 200.307, Program Income, states that ordinary program income must be deducted from total allowable costs to determine the net allowable costs. Program income must be used for current costs unless the Federal awarding agency authorizes otherwise. Program income that the non-Federal entity did not anticipate at the time of the Federal award must be used to reduce the Federal award and non-Federal entity contributions rather than increase the funds committed to the project. 38 CFR 61.82 Participant fees for supportive housing states that participant fees may be used for costs of operating the supportive housing or to assist supportive housing residents’ move to permanent housing and must have a therapeutic benefit. Condition: It does not appear that program income was tracked and expended for use of operating supportive housing or assisting housing residents. Cause: Factors beyond the control of current management, including poorly designed policies and procedures, as key members of the accounting department left the Organization before appropriately transferring knowledge and records related to the Federal awards. Effect or Potential Effect: Potential noncompliance related to requesting additional reimbursement before program income was spent. Additionally, as noted in Finding 2021-SA1 program income expended was not appropriately included on the SEFA. Questioned Costs: Related questioned costs are unknown. Context: During the year under audit, the issues represent a systemic problem, beyond the control of current management. Recommendation: Policies and procedures should be designed and implemented to ensure program income is tracked and expended appropriately. View of Responsible Officials: In response to finding number 2021-SA5, management agrees with the finding and will design, implement, and maintain policies and procedures that ensure program income is tracked and expended appropriately.

Finding Number: 2021-SA6 Material Weakness – Special Tests – Compliance and Control Finding Federal Award: No. 64.024 VA Homeless Providers Grant and Per Diem Program Federal Agency: U.S. Veterans Administration Pass-Through Entity: Not applicable Criteria or Specific Requirement: 38 CFR Part 61 section 61.80(c) states recipients must include a summary of quarterly assessments in their administrative files. Condition: It is unknown if such records were appropriately maintained. Cause: Factors beyond the control of current management, including poorly designed policies and procedures, as key members of the accounting department left the Organization before appropriately transferring knowledge and records related to the Federal awards. Effect or Potential Effect: Potential for noncompliance related to Federal awards. Questioned Costs: Related questioned costs are unknown. Context: During the year under audit, the issues represent a systemic problem, beyond the control of current management. Recommendation: Policies and procedures should be designed and implemented to ensure compliance requirements of Federal awards are followed. View of Responsible Officials: In response to finding number 2021-SA6, management agrees with the finding and will design, implement, and maintain policies and procedures that ensure compliance with Federal awards.

Finding Number: 2021-SA7 Material Weakness Data Collection Form Federal Award: No. 64.024 VA Homeless Providers Grant and Per Diem Program Federal Agency: U.S. Veterans Administration Pass-Through Entity: Not applicable Criteria or Specific Requirement: Single audit submissions, including the data collection form, are required to be filed within nine months after fiscal year-end. Condition: The single audit submission was not completed and not filed within nine months of year-end. Cause: Factors beyond the control of current management, including poorly designed policies and procedures to ensure audit was completed timely, as key members of the accounting department left the Organization before appropriately transferring knowledge and records related to the Federal awards. Effect or Potential Effect: Noncompliance with Uniform Guidance. Questioned Costs: None. Context: During the year under audit, the issues represent a systemic problem, beyond the control of current management. Recommendation: Policies and procedures should be designed and implemented to ensure compliance with Uniform Guidance is met. View of Responsible Officials: In response to finding number 2021-SA7, management agrees with the finding and will design, implement, and maintain policies and procedures that ensure compliance with Uniform Guidance.

Finding Number: 2021-SA1 Material Weakness – Internal Control over Compliance Federal Award: No. 64.024 VA Homeless Providers Grant and Per Diem Program Federal Agency: U.S. Veterans Administration Pass-Through Entity: Not applicable Criteria or Specific Requirement: U.S. Code of Federal Regulations, Title 2, Part 200, section 510(b) Schedule of Expenditures of Federal Awards requires recipients of federal awards to prepare a schedule of expenditures of federal awards (SEFA) for the period covered by the entity’s financial statements to accurately reflect federal awards expended for individual federal programs. Condition: During the year ended June 30, 2021, program income expended was not identified and inappropriately excluded from the SEFA. In addition, the underlying detail of expenditures did not tie without exception to the SEFA amounts and multiple adjustments to the SEFA were made. Cause: The error was primarily due to factors beyond the control of current management, including poorly designed policies and procedures, poor recordkeeping and a lack of understanding of the requirements for the reporting of federal expenditures on the SEFA. Effect or Potential Effect: Improper internal controls and reconciliations of the federal expenditures poses a risk for inaccuracies in SEFA reporting. Additionally, since the Organization’s SEFA serves as the basis in determining the audit scope, including the identification of major programs required to be audited in a given fiscal year, inaccuracies in the SEFA pose a risk of improper identification of major programs. Questioned Costs: Related questioned costs are unknown. Context: During the year under audit, the issues represent a systemic problem, beyond the control of current management. Recommendation: The Organization should establish a more thorough internal review process to ensure the figures reported on the SEFA properly represent expenditures incurred in the Organization’s accounting software and is reconciled timely to the general ledger. The Organization should also take measures to train department personnel on the requirements for SEFA reporting to help ensure that the preparation of the SEFA report is accurate and ties to the general ledger. View of Responsible Officials: In response to finding number 2021-SA1, management agrees with the finding and will design, implement, and maintain internal controls that ensure the figures reported on the SEFA properly represent expenditures incurred in the Organization’s accounting software; and that the reported figures are reconciled timely to the general ledger. Further, management will take measures to train personnel in SEFA reporting requirements to help ensure that the preparation of the SEFA report is accurate and ties to the general ledger.

Finding Number: 2021-SA2 Material Weakness – Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Cash Management, Period of Performance, Program Income, Reporting, Special Tests – Compliance and Control Finding -Internal Control over Compliance Federal Award: No. 64.024 VA Homeless Providers Grant and Per Diem Program Federal Agency: U.S. Veterans Administration Pass-Through Entity: Not applicable Criteria or Specific Requirement: 2 CFR section 200.303a states the non-Federal must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statues, regulations, and the terms and conditions of the federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: The Organization did not maintain effective internal controls over compliance over direct and material compliance areas, except for Eligibility. Internal controls over compliance of eligibility were appropriately designed and implemented and operated effectively. Cause: Factors beyond the control of current management, including poorly designed policies and procedures and lack of understanding of Federal award requirements and training, as key members of the accounting department left the Organization before appropriately transferring knowledge and records related to the Federal awards. Internal controls over compliance of eligibility were found to be appropriately designed and implemented and operated effectively during the June 30, 2021 fiscal year. Effect or Potential Effect: Potential for noncompliance of direct and material audit requirements. Questioned Costs: Related questioned costs are unknown. Context: During the year under audit, the issues represent a systemic problem, beyond the control of current management. Recommendation: Organization should implement appropriate internal controls over compliance for all direct and material compliance areas, other than eligibility. View of Responsible Officials: In response to finding number 2021-SA2, management agrees with the finding and will design, implement, and maintain internal controls over all direct and material compliance areas (other than eligibility). Additionally, management will ensure that the Organization’s internal controls comply with the Comptroller General of the United States’s “Standards for Internal Control in the Federal Government” or COSO’s “Internal Control Integrated Framework”.

Finding Number: 2021-SA3 Material Weakness – Activities Allowed or Unallowed and Allowable Costs/Cost Principles and Period of Performance Compliance and Control Finding Federal Award: No. 64.024 VA Homeless Providers Grant and Per Diem Program Federal Agency: U.S. Veterans Administration Pass-Through Entity: Not applicable Criteria or Specific Requirement: CFR section 200.403, Factors affecting allowability of costs, states costs must: conform to limitations or exclusions, be accorded consistent treatment, a cost may not be assigned to a Federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the Federal award as an indirect cost and be adequately documented. 2 CFR section 200.405, Allowable costs, states this standard is met if the cost is incurred specifically for the Federal award. 2 CFR section 200.430(i) Standards for Documentation of Personnel Expenses state charges to Federal awards for salaries must be based on records that accurately reflect the work performed and these records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated, support the distribution of the employee’s salary or wages among specific activities or cost objectives if the employee works on more than one Federal award a Federal award and non-Federal award and charges for the salaries and wages of nonexempt employees… must be supported by records indicating the total number of hours worked each day. Condition: The Organization did not maintain an effective control environment to ensure costs incurred for expenditures charged to the program were in accordance with contract requirements and applicable cost principles. Records do not provide reasonable assurance that the charges are accurate, allowable, and properly allocated. Records do not appear to support the distribution of the employee’s salary or wages among specific activities or cost objectives if the employee works on more than one Federal award or a Federal award and non-federal activity. Charges for non-exempt employees are not supported by records indicating the total number of hours worked each day. Expenditure details included costs that were allocated to the Federal award but may not have been incurred specifically for the Federal award. These costs included unsupported journal entries and uncategorized expenditures. Additionally, due to lack of budgets for the fiscal year, it was not determinable if costs conformed to limitations or exclusions set forth in the Federal award. Costs were not adequately documented, and it is unknown if costs were accorded consistent treatment. Cause: Factors beyond the control of current management, including poor recordkeeping, have caused financial records to be inadequate for audit purposes, as key members of the accounting department left the Organization before appropriately transferring knowledge and records related to the Federal awards. Effect or Potential Effect: Potential for unallowable activities, unallowable costs, and costs outside of the period of performance and additional questioned costs. Questioned Costs: Related questioned costs related to payroll expenditures are unknown. Questioned costs related to non-payroll expenditures are unknown. Context: During the year under audit, the issues represent a systemic problem, beyond the control of current management. Recommendation: Policies and procedures should be designed and implemented to ensure expenditures are reviewed for allowability before being charged to federal awards. Policies and procedures should be designed and implemented to ensure costs are reviewed for allowability before being charged to federal awards. Management should perform budget to actual analysis on a periodic basis to ensure that costs are not exceeding limitations. View of Responsible Officials: In response to finding number 2021-SA3, management agrees with the finding and will design, implement, and maintain policies and procedures that ensure expenditures are reviewed for allowability before being charged to Federal awards. Management will also design, implement, and maintain policies and procedures that ensure costs are reviewed for allowability before being charged to Federal awards. Further, management will perform budget-to-actual analysis on a periodic basis to ensure costs do not exceed limitations.

Finding Number: 2021-SA4 Material Weakness – Reporting – Compliance and Control Finding Federal Award: No. 64.024 VA Homeless Providers Grant and Per Diem Program Federal Agency: U.S. Veterans Administration Pass-Through Entity: Not applicable Criteria or Specific Requirement: The Organization is required to prepare and submit timely, accurate, and complete SF-425 Reports and Performance Reports. Condition: The Organization could not provide evidence of reports submitted during the year. Cause: Factors beyond the control of current management, including poor recordkeeping, have caused reports to be unavailable, as key members of the accounting department left the Organization before appropriately transferring knowledge and records related to the Federal awards. Effect or Potential Effect: Potential for noncompliance due to potential for untimely, inaccurate, incomplete reports or reports that were not submitted altogether. Questioned Costs: Related questioned costs are unknown. Context: During the year under audit, the issues represent a systemic problem, beyond the control of current management. Recommendation: Policies and procedures over federal grant reporting should be designed and implemented to ensure reports are filed on time and are accurate and complete. View of Responsible Officials: In response to finding number 2021-SA4, management agrees with the finding and will design, implement, and maintain policies and procedures that ensure Federal grant reporting is complete, accurate, and timely.

Finding Number: 2021-SA5 Material Weakness – Program Income – Compliance and Control Finding Federal Award: No. 64.024 VA Homeless Providers Grant and Per Diem Program Federal Agency: U.S. Veterans Administration Pass-Through Entity: Not applicable Criteria or Specific Requirement: 2 CFR section 200.307, Program Income, states that ordinary program income must be deducted from total allowable costs to determine the net allowable costs. Program income must be used for current costs unless the Federal awarding agency authorizes otherwise. Program income that the non-Federal entity did not anticipate at the time of the Federal award must be used to reduce the Federal award and non-Federal entity contributions rather than increase the funds committed to the project. 38 CFR 61.82 Participant fees for supportive housing states that participant fees may be used for costs of operating the supportive housing or to assist supportive housing residents’ move to permanent housing and must have a therapeutic benefit. Condition: It does not appear that program income was tracked and expended for use of operating supportive housing or assisting housing residents. Cause: Factors beyond the control of current management, including poorly designed policies and procedures, as key members of the accounting department left the Organization before appropriately transferring knowledge and records related to the Federal awards. Effect or Potential Effect: Potential noncompliance related to requesting additional reimbursement before program income was spent. Additionally, as noted in Finding 2021-SA1 program income expended was not appropriately included on the SEFA. Questioned Costs: Related questioned costs are unknown. Context: During the year under audit, the issues represent a systemic problem, beyond the control of current management. Recommendation: Policies and procedures should be designed and implemented to ensure program income is tracked and expended appropriately. View of Responsible Officials: In response to finding number 2021-SA5, management agrees with the finding and will design, implement, and maintain policies and procedures that ensure program income is tracked and expended appropriately.

Finding Number: 2021-SA6 Material Weakness – Special Tests – Compliance and Control Finding Federal Award: No. 64.024 VA Homeless Providers Grant and Per Diem Program Federal Agency: U.S. Veterans Administration Pass-Through Entity: Not applicable Criteria or Specific Requirement: 38 CFR Part 61 section 61.80(c) states recipients must include a summary of quarterly assessments in their administrative files. Condition: It is unknown if such records were appropriately maintained. Cause: Factors beyond the control of current management, including poorly designed policies and procedures, as key members of the accounting department left the Organization before appropriately transferring knowledge and records related to the Federal awards. Effect or Potential Effect: Potential for noncompliance related to Federal awards. Questioned Costs: Related questioned costs are unknown. Context: During the year under audit, the issues represent a systemic problem, beyond the control of current management. Recommendation: Policies and procedures should be designed and implemented to ensure compliance requirements of Federal awards are followed. View of Responsible Officials: In response to finding number 2021-SA6, management agrees with the finding and will design, implement, and maintain policies and procedures that ensure compliance with Federal awards.

Finding Number: 2021-SA7 Material Weakness Data Collection Form Federal Award: No. 64.024 VA Homeless Providers Grant and Per Diem Program Federal Agency: U.S. Veterans Administration Pass-Through Entity: Not applicable Criteria or Specific Requirement: Single audit submissions, including the data collection form, are required to be filed within nine months after fiscal year-end. Condition: The single audit submission was not completed and not filed within nine months of year-end. Cause: Factors beyond the control of current management, including poorly designed policies and procedures to ensure audit was completed timely, as key members of the accounting department left the Organization before appropriately transferring knowledge and records related to the Federal awards. Effect or Potential Effect: Noncompliance with Uniform Guidance. Questioned Costs: None. Context: During the year under audit, the issues represent a systemic problem, beyond the control of current management. Recommendation: Policies and procedures should be designed and implemented to ensure compliance with Uniform Guidance is met. View of Responsible Officials: In response to finding number 2021-SA7, management agrees with the finding and will design, implement, and maintain policies and procedures that ensure compliance with Uniform Guidance.

Finding Number: 2021-SA1 Material Weakness – Internal Control over Compliance Federal Award: No. 64.024 VA Homeless Providers Grant and Per Diem Program Federal Agency: U.S. Veterans Administration Pass-Through Entity: Not applicable Criteria or Specific Requirement: U.S. Code of Federal Regulations, Title 2, Part 200, section 510(b) Schedule of Expenditures of Federal Awards requires recipients of federal awards to prepare a schedule of expenditures of federal awards (SEFA) for the period covered by the entity’s financial statements to accurately reflect federal awards expended for individual federal programs. Condition: During the year ended June 30, 2021, program income expended was not identified and inappropriately excluded from the SEFA. In addition, the underlying detail of expenditures did not tie without exception to the SEFA amounts and multiple adjustments to the SEFA were made. Cause: The error was primarily due to factors beyond the control of current management, including poorly designed policies and procedures, poor recordkeeping and a lack of understanding of the requirements for the reporting of federal expenditures on the SEFA. Effect or Potential Effect: Improper internal controls and reconciliations of the federal expenditures poses a risk for inaccuracies in SEFA reporting. Additionally, since the Organization’s SEFA serves as the basis in determining the audit scope, including the identification of major programs required to be audited in a given fiscal year, inaccuracies in the SEFA pose a risk of improper identification of major programs. Questioned Costs: Related questioned costs are unknown. Context: During the year under audit, the issues represent a systemic problem, beyond the control of current management. Recommendation: The Organization should establish a more thorough internal review process to ensure the figures reported on the SEFA properly represent expenditures incurred in the Organization’s accounting software and is reconciled timely to the general ledger. The Organization should also take measures to train department personnel on the requirements for SEFA reporting to help ensure that the preparation of the SEFA report is accurate and ties to the general ledger. View of Responsible Officials: In response to finding number 2021-SA1, management agrees with the finding and will design, implement, and maintain internal controls that ensure the figures reported on the SEFA properly represent expenditures incurred in the Organization’s accounting software; and that the reported figures are reconciled timely to the general ledger. Further, management will take measures to train personnel in SEFA reporting requirements to help ensure that the preparation of the SEFA report is accurate and ties to the general ledger.

Finding Number: 2021-SA2 Material Weakness – Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Cash Management, Period of Performance, Program Income, Reporting, Special Tests – Compliance and Control Finding -Internal Control over Compliance Federal Award: No. 64.024 VA Homeless Providers Grant and Per Diem Program Federal Agency: U.S. Veterans Administration Pass-Through Entity: Not applicable Criteria or Specific Requirement: 2 CFR section 200.303a states the non-Federal must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statues, regulations, and the terms and conditions of the federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: The Organization did not maintain effective internal controls over compliance over direct and material compliance areas, except for Eligibility. Internal controls over compliance of eligibility were appropriately designed and implemented and operated effectively. Cause: Factors beyond the control of current management, including poorly designed policies and procedures and lack of understanding of Federal award requirements and training, as key members of the accounting department left the Organization before appropriately transferring knowledge and records related to the Federal awards. Internal controls over compliance of eligibility were found to be appropriately designed and implemented and operated effectively during the June 30, 2021 fiscal year. Effect or Potential Effect: Potential for noncompliance of direct and material audit requirements. Questioned Costs: Related questioned costs are unknown. Context: During the year under audit, the issues represent a systemic problem, beyond the control of current management. Recommendation: Organization should implement appropriate internal controls over compliance for all direct and material compliance areas, other than eligibility. View of Responsible Officials: In response to finding number 2021-SA2, management agrees with the finding and will design, implement, and maintain internal controls over all direct and material compliance areas (other than eligibility). Additionally, management will ensure that the Organization’s internal controls comply with the Comptroller General of the United States’s “Standards for Internal Control in the Federal Government” or COSO’s “Internal Control Integrated Framework”.

Finding Number: 2021-SA3 Material Weakness – Activities Allowed or Unallowed and Allowable Costs/Cost Principles and Period of Performance Compliance and Control Finding Federal Award: No. 64.024 VA Homeless Providers Grant and Per Diem Program Federal Agency: U.S. Veterans Administration Pass-Through Entity: Not applicable Criteria or Specific Requirement: CFR section 200.403, Factors affecting allowability of costs, states costs must: conform to limitations or exclusions, be accorded consistent treatment, a cost may not be assigned to a Federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the Federal award as an indirect cost and be adequately documented. 2 CFR section 200.405, Allowable costs, states this standard is met if the cost is incurred specifically for the Federal award. 2 CFR section 200.430(i) Standards for Documentation of Personnel Expenses state charges to Federal awards for salaries must be based on records that accurately reflect the work performed and these records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated, support the distribution of the employee’s salary or wages among specific activities or cost objectives if the employee works on more than one Federal award a Federal award and non-Federal award and charges for the salaries and wages of nonexempt employees… must be supported by records indicating the total number of hours worked each day. Condition: The Organization did not maintain an effective control environment to ensure costs incurred for expenditures charged to the program were in accordance with contract requirements and applicable cost principles. Records do not provide reasonable assurance that the charges are accurate, allowable, and properly allocated. Records do not appear to support the distribution of the employee’s salary or wages among specific activities or cost objectives if the employee works on more than one Federal award or a Federal award and non-federal activity. Charges for non-exempt employees are not supported by records indicating the total number of hours worked each day. Expenditure details included costs that were allocated to the Federal award but may not have been incurred specifically for the Federal award. These costs included unsupported journal entries and uncategorized expenditures. Additionally, due to lack of budgets for the fiscal year, it was not determinable if costs conformed to limitations or exclusions set forth in the Federal award. Costs were not adequately documented, and it is unknown if costs were accorded consistent treatment. Cause: Factors beyond the control of current management, including poor recordkeeping, have caused financial records to be inadequate for audit purposes, as key members of the accounting department left the Organization before appropriately transferring knowledge and records related to the Federal awards. Effect or Potential Effect: Potential for unallowable activities, unallowable costs, and costs outside of the period of performance and additional questioned costs. Questioned Costs: Related questioned costs related to payroll expenditures are unknown. Questioned costs related to non-payroll expenditures are unknown. Context: During the year under audit, the issues represent a systemic problem, beyond the control of current management. Recommendation: Policies and procedures should be designed and implemented to ensure expenditures are reviewed for allowability before being charged to federal awards. Policies and procedures should be designed and implemented to ensure costs are reviewed for allowability before being charged to federal awards. Management should perform budget to actual analysis on a periodic basis to ensure that costs are not exceeding limitations. View of Responsible Officials: In response to finding number 2021-SA3, management agrees with the finding and will design, implement, and maintain policies and procedures that ensure expenditures are reviewed for allowability before being charged to Federal awards. Management will also design, implement, and maintain policies and procedures that ensure costs are reviewed for allowability before being charged to Federal awards. Further, management will perform budget-to-actual analysis on a periodic basis to ensure costs do not exceed limitations.

Finding Number: 2021-SA4 Material Weakness – Reporting – Compliance and Control Finding Federal Award: No. 64.024 VA Homeless Providers Grant and Per Diem Program Federal Agency: U.S. Veterans Administration Pass-Through Entity: Not applicable Criteria or Specific Requirement: The Organization is required to prepare and submit timely, accurate, and complete SF-425 Reports and Performance Reports. Condition: The Organization could not provide evidence of reports submitted during the year. Cause: Factors beyond the control of current management, including poor recordkeeping, have caused reports to be unavailable, as key members of the accounting department left the Organization before appropriately transferring knowledge and records related to the Federal awards. Effect or Potential Effect: Potential for noncompliance due to potential for untimely, inaccurate, incomplete reports or reports that were not submitted altogether. Questioned Costs: Related questioned costs are unknown. Context: During the year under audit, the issues represent a systemic problem, beyond the control of current management. Recommendation: Policies and procedures over federal grant reporting should be designed and implemented to ensure reports are filed on time and are accurate and complete. View of Responsible Officials: In response to finding number 2021-SA4, management agrees with the finding and will design, implement, and maintain policies and procedures that ensure Federal grant reporting is complete, accurate, and timely.

Finding Number: 2021-SA5 Material Weakness – Program Income – Compliance and Control Finding Federal Award: No. 64.024 VA Homeless Providers Grant and Per Diem Program Federal Agency: U.S. Veterans Administration Pass-Through Entity: Not applicable Criteria or Specific Requirement: 2 CFR section 200.307, Program Income, states that ordinary program income must be deducted from total allowable costs to determine the net allowable costs. Program income must be used for current costs unless the Federal awarding agency authorizes otherwise. Program income that the non-Federal entity did not anticipate at the time of the Federal award must be used to reduce the Federal award and non-Federal entity contributions rather than increase the funds committed to the project. 38 CFR 61.82 Participant fees for supportive housing states that participant fees may be used for costs of operating the supportive housing or to assist supportive housing residents’ move to permanent housing and must have a therapeutic benefit. Condition: It does not appear that program income was tracked and expended for use of operating supportive housing or assisting housing residents. Cause: Factors beyond the control of current management, including poorly designed policies and procedures, as key members of the accounting department left the Organization before appropriately transferring knowledge and records related to the Federal awards. Effect or Potential Effect: Potential noncompliance related to requesting additional reimbursement before program income was spent. Additionally, as noted in Finding 2021-SA1 program income expended was not appropriately included on the SEFA. Questioned Costs: Related questioned costs are unknown. Context: During the year under audit, the issues represent a systemic problem, beyond the control of current management. Recommendation: Policies and procedures should be designed and implemented to ensure program income is tracked and expended appropriately. View of Responsible Officials: In response to finding number 2021-SA5, management agrees with the finding and will design, implement, and maintain policies and procedures that ensure program income is tracked and expended appropriately.

Finding Number: 2021-SA6 Material Weakness – Special Tests – Compliance and Control Finding Federal Award: No. 64.024 VA Homeless Providers Grant and Per Diem Program Federal Agency: U.S. Veterans Administration Pass-Through Entity: Not applicable Criteria or Specific Requirement: 38 CFR Part 61 section 61.80(c) states recipients must include a summary of quarterly assessments in their administrative files. Condition: It is unknown if such records were appropriately maintained. Cause: Factors beyond the control of current management, including poorly designed policies and procedures, as key members of the accounting department left the Organization before appropriately transferring knowledge and records related to the Federal awards. Effect or Potential Effect: Potential for noncompliance related to Federal awards. Questioned Costs: Related questioned costs are unknown. Context: During the year under audit, the issues represent a systemic problem, beyond the control of current management. Recommendation: Policies and procedures should be designed and implemented to ensure compliance requirements of Federal awards are followed. View of Responsible Officials: In response to finding number 2021-SA6, management agrees with the finding and will design, implement, and maintain policies and procedures that ensure compliance with Federal awards.

Finding Number: 2021-SA7 Material Weakness Data Collection Form Federal Award: No. 64.024 VA Homeless Providers Grant and Per Diem Program Federal Agency: U.S. Veterans Administration Pass-Through Entity: Not applicable Criteria or Specific Requirement: Single audit submissions, including the data collection form, are required to be filed within nine months after fiscal year-end. Condition: The single audit submission was not completed and not filed within nine months of year-end. Cause: Factors beyond the control of current management, including poorly designed policies and procedures to ensure audit was completed timely, as key members of the accounting department left the Organization before appropriately transferring knowledge and records related to the Federal awards. Effect or Potential Effect: Noncompliance with Uniform Guidance. Questioned Costs: None. Context: During the year under audit, the issues represent a systemic problem, beyond the control of current management. Recommendation: Policies and procedures should be designed and implemented to ensure compliance with Uniform Guidance is met. View of Responsible Officials: In response to finding number 2021-SA7, management agrees with the finding and will design, implement, and maintain policies and procedures that ensure compliance with Uniform Guidance.

Finding Number: 2021-SA1 Material Weakness – Internal Control over Compliance Federal Award: No. 64.024 VA Homeless Providers Grant and Per Diem Program Federal Agency: U.S. Veterans Administration Pass-Through Entity: Not applicable Criteria or Specific Requirement: U.S. Code of Federal Regulations, Title 2, Part 200, section 510(b) Schedule of Expenditures of Federal Awards requires recipients of federal awards to prepare a schedule of expenditures of federal awards (SEFA) for the period covered by the entity’s financial statements to accurately reflect federal awards expended for individual federal programs. Condition: During the year ended June 30, 2021, program income expended was not identified and inappropriately excluded from the SEFA. In addition, the underlying detail of expenditures did not tie without exception to the SEFA amounts and multiple adjustments to the SEFA were made. Cause: The error was primarily due to factors beyond the control of current management, including poorly designed policies and procedures, poor recordkeeping and a lack of understanding of the requirements for the reporting of federal expenditures on the SEFA. Effect or Potential Effect: Improper internal controls and reconciliations of the federal expenditures poses a risk for inaccuracies in SEFA reporting. Additionally, since the Organization’s SEFA serves as the basis in determining the audit scope, including the identification of major programs required to be audited in a given fiscal year, inaccuracies in the SEFA pose a risk of improper identification of major programs. Questioned Costs: Related questioned costs are unknown. Context: During the year under audit, the issues represent a systemic problem, beyond the control of current management. Recommendation: The Organization should establish a more thorough internal review process to ensure the figures reported on the SEFA properly represent expenditures incurred in the Organization’s accounting software and is reconciled timely to the general ledger. The Organization should also take measures to train department personnel on the requirements for SEFA reporting to help ensure that the preparation of the SEFA report is accurate and ties to the general ledger. View of Responsible Officials: In response to finding number 2021-SA1, management agrees with the finding and will design, implement, and maintain internal controls that ensure the figures reported on the SEFA properly represent expenditures incurred in the Organization’s accounting software; and that the reported figures are reconciled timely to the general ledger. Further, management will take measures to train personnel in SEFA reporting requirements to help ensure that the preparation of the SEFA report is accurate and ties to the general ledger.

Finding Number: 2021-SA2 Material Weakness – Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Cash Management, Period of Performance, Program Income, Reporting, Special Tests – Compliance and Control Finding -Internal Control over Compliance Federal Award: No. 64.024 VA Homeless Providers Grant and Per Diem Program Federal Agency: U.S. Veterans Administration Pass-Through Entity: Not applicable Criteria or Specific Requirement: 2 CFR section 200.303a states the non-Federal must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statues, regulations, and the terms and conditions of the federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: The Organization did not maintain effective internal controls over compliance over direct and material compliance areas, except for Eligibility. Internal controls over compliance of eligibility were appropriately designed and implemented and operated effectively. Cause: Factors beyond the control of current management, including poorly designed policies and procedures and lack of understanding of Federal award requirements and training, as key members of the accounting department left the Organization before appropriately transferring knowledge and records related to the Federal awards. Internal controls over compliance of eligibility were found to be appropriately designed and implemented and operated effectively during the June 30, 2021 fiscal year. Effect or Potential Effect: Potential for noncompliance of direct and material audit requirements. Questioned Costs: Related questioned costs are unknown. Context: During the year under audit, the issues represent a systemic problem, beyond the control of current management. Recommendation: Organization should implement appropriate internal controls over compliance for all direct and material compliance areas, other than eligibility. View of Responsible Officials: In response to finding number 2021-SA2, management agrees with the finding and will design, implement, and maintain internal controls over all direct and material compliance areas (other than eligibility). Additionally, management will ensure that the Organization’s internal controls comply with the Comptroller General of the United States’s “Standards for Internal Control in the Federal Government” or COSO’s “Internal Control Integrated Framework”.

Finding Number: 2021-SA3 Material Weakness – Activities Allowed or Unallowed and Allowable Costs/Cost Principles and Period of Performance Compliance and Control Finding Federal Award: No. 64.024 VA Homeless Providers Grant and Per Diem Program Federal Agency: U.S. Veterans Administration Pass-Through Entity: Not applicable Criteria or Specific Requirement: CFR section 200.403, Factors affecting allowability of costs, states costs must: conform to limitations or exclusions, be accorded consistent treatment, a cost may not be assigned to a Federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the Federal award as an indirect cost and be adequately documented. 2 CFR section 200.405, Allowable costs, states this standard is met if the cost is incurred specifically for the Federal award. 2 CFR section 200.430(i) Standards for Documentation of Personnel Expenses state charges to Federal awards for salaries must be based on records that accurately reflect the work performed and these records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated, support the distribution of the employee’s salary or wages among specific activities or cost objectives if the employee works on more than one Federal award a Federal award and non-Federal award and charges for the salaries and wages of nonexempt employees… must be supported by records indicating the total number of hours worked each day. Condition: The Organization did not maintain an effective control environment to ensure costs incurred for expenditures charged to the program were in accordance with contract requirements and applicable cost principles. Records do not provide reasonable assurance that the charges are accurate, allowable, and properly allocated. Records do not appear to support the distribution of the employee’s salary or wages among specific activities or cost objectives if the employee works on more than one Federal award or a Federal award and non-federal activity. Charges for non-exempt employees are not supported by records indicating the total number of hours worked each day. Expenditure details included costs that were allocated to the Federal award but may not have been incurred specifically for the Federal award. These costs included unsupported journal entries and uncategorized expenditures. Additionally, due to lack of budgets for the fiscal year, it was not determinable if costs conformed to limitations or exclusions set forth in the Federal award. Costs were not adequately documented, and it is unknown if costs were accorded consistent treatment. Cause: Factors beyond the control of current management, including poor recordkeeping, have caused financial records to be inadequate for audit purposes, as key members of the accounting department left the Organization before appropriately transferring knowledge and records related to the Federal awards. Effect or Potential Effect: Potential for unallowable activities, unallowable costs, and costs outside of the period of performance and additional questioned costs. Questioned Costs: Related questioned costs related to payroll expenditures are unknown. Questioned costs related to non-payroll expenditures are unknown. Context: During the year under audit, the issues represent a systemic problem, beyond the control of current management. Recommendation: Policies and procedures should be designed and implemented to ensure expenditures are reviewed for allowability before being charged to federal awards. Policies and procedures should be designed and implemented to ensure costs are reviewed for allowability before being charged to federal awards. Management should perform budget to actual analysis on a periodic basis to ensure that costs are not exceeding limitations. View of Responsible Officials: In response to finding number 2021-SA3, management agrees with the finding and will design, implement, and maintain policies and procedures that ensure expenditures are reviewed for allowability before being charged to Federal awards. Management will also design, implement, and maintain policies and procedures that ensure costs are reviewed for allowability before being charged to Federal awards. Further, management will perform budget-to-actual analysis on a periodic basis to ensure costs do not exceed limitations.

Finding Number: 2021-SA4 Material Weakness – Reporting – Compliance and Control Finding Federal Award: No. 64.024 VA Homeless Providers Grant and Per Diem Program Federal Agency: U.S. Veterans Administration Pass-Through Entity: Not applicable Criteria or Specific Requirement: The Organization is required to prepare and submit timely, accurate, and complete SF-425 Reports and Performance Reports. Condition: The Organization could not provide evidence of reports submitted during the year. Cause: Factors beyond the control of current management, including poor recordkeeping, have caused reports to be unavailable, as key members of the accounting department left the Organization before appropriately transferring knowledge and records related to the Federal awards. Effect or Potential Effect: Potential for noncompliance due to potential for untimely, inaccurate, incomplete reports or reports that were not submitted altogether. Questioned Costs: Related questioned costs are unknown. Context: During the year under audit, the issues represent a systemic problem, beyond the control of current management. Recommendation: Policies and procedures over federal grant reporting should be designed and implemented to ensure reports are filed on time and are accurate and complete. View of Responsible Officials: In response to finding number 2021-SA4, management agrees with the finding and will design, implement, and maintain policies and procedures that ensure Federal grant reporting is complete, accurate, and timely.

Finding Number: 2021-SA5 Material Weakness – Program Income – Compliance and Control Finding Federal Award: No. 64.024 VA Homeless Providers Grant and Per Diem Program Federal Agency: U.S. Veterans Administration Pass-Through Entity: Not applicable Criteria or Specific Requirement: 2 CFR section 200.307, Program Income, states that ordinary program income must be deducted from total allowable costs to determine the net allowable costs. Program income must be used for current costs unless the Federal awarding agency authorizes otherwise. Program income that the non-Federal entity did not anticipate at the time of the Federal award must be used to reduce the Federal award and non-Federal entity contributions rather than increase the funds committed to the project. 38 CFR 61.82 Participant fees for supportive housing states that participant fees may be used for costs of operating the supportive housing or to assist supportive housing residents’ move to permanent housing and must have a therapeutic benefit. Condition: It does not appear that program income was tracked and expended for use of operating supportive housing or assisting housing residents. Cause: Factors beyond the control of current management, including poorly designed policies and procedures, as key members of the accounting department left the Organization before appropriately transferring knowledge and records related to the Federal awards. Effect or Potential Effect: Potential noncompliance related to requesting additional reimbursement before program income was spent. Additionally, as noted in Finding 2021-SA1 program income expended was not appropriately included on the SEFA. Questioned Costs: Related questioned costs are unknown. Context: During the year under audit, the issues represent a systemic problem, beyond the control of current management. Recommendation: Policies and procedures should be designed and implemented to ensure program income is tracked and expended appropriately. View of Responsible Officials: In response to finding number 2021-SA5, management agrees with the finding and will design, implement, and maintain policies and procedures that ensure program income is tracked and expended appropriately.

Finding Number: 2021-SA6 Material Weakness – Special Tests – Compliance and Control Finding Federal Award: No. 64.024 VA Homeless Providers Grant and Per Diem Program Federal Agency: U.S. Veterans Administration Pass-Through Entity: Not applicable Criteria or Specific Requirement: 38 CFR Part 61 section 61.80(c) states recipients must include a summary of quarterly assessments in their administrative files. Condition: It is unknown if such records were appropriately maintained. Cause: Factors beyond the control of current management, including poorly designed policies and procedures, as key members of the accounting department left the Organization before appropriately transferring knowledge and records related to the Federal awards. Effect or Potential Effect: Potential for noncompliance related to Federal awards. Questioned Costs: Related questioned costs are unknown. Context: During the year under audit, the issues represent a systemic problem, beyond the control of current management. Recommendation: Policies and procedures should be designed and implemented to ensure compliance requirements of Federal awards are followed. View of Responsible Officials: In response to finding number 2021-SA6, management agrees with the finding and will design, implement, and maintain policies and procedures that ensure compliance with Federal awards.

Finding Number: 2021-SA7 Material Weakness Data Collection Form Federal Award: No. 64.024 VA Homeless Providers Grant and Per Diem Program Federal Agency: U.S. Veterans Administration Pass-Through Entity: Not applicable Criteria or Specific Requirement: Single audit submissions, including the data collection form, are required to be filed within nine months after fiscal year-end. Condition: The single audit submission was not completed and not filed within nine months of year-end. Cause: Factors beyond the control of current management, including poorly designed policies and procedures to ensure audit was completed timely, as key members of the accounting department left the Organization before appropriately transferring knowledge and records related to the Federal awards. Effect or Potential Effect: Noncompliance with Uniform Guidance. Questioned Costs: None. Context: During the year under audit, the issues represent a systemic problem, beyond the control of current management. Recommendation: Policies and procedures should be designed and implemented to ensure compliance with Uniform Guidance is met. View of Responsible Officials: In response to finding number 2021-SA7, management agrees with the finding and will design, implement, and maintain policies and procedures that ensure compliance with Uniform Guidance.

Finding Number: 2021-SA1 Material Weakness – Internal Control over Compliance Federal Award: No. 64.024 VA Homeless Providers Grant and Per Diem Program Federal Agency: U.S. Veterans Administration Pass-Through Entity: Not applicable Criteria or Specific Requirement: U.S. Code of Federal Regulations, Title 2, Part 200, section 510(b) Schedule of Expenditures of Federal Awards requires recipients of federal awards to prepare a schedule of expenditures of federal awards (SEFA) for the period covered by the entity’s financial statements to accurately reflect federal awards expended for individual federal programs. Condition: During the year ended June 30, 2021, program income expended was not identified and inappropriately excluded from the SEFA. In addition, the underlying detail of expenditures did not tie without exception to the SEFA amounts and multiple adjustments to the SEFA were made. Cause: The error was primarily due to factors beyond the control of current management, including poorly designed policies and procedures, poor recordkeeping and a lack of understanding of the requirements for the reporting of federal expenditures on the SEFA. Effect or Potential Effect: Improper internal controls and reconciliations of the federal expenditures poses a risk for inaccuracies in SEFA reporting. Additionally, since the Organization’s SEFA serves as the basis in determining the audit scope, including the identification of major programs required to be audited in a given fiscal year, inaccuracies in the SEFA pose a risk of improper identification of major programs. Questioned Costs: Related questioned costs are unknown. Context: During the year under audit, the issues represent a systemic problem, beyond the control of current management. Recommendation: The Organization should establish a more thorough internal review process to ensure the figures reported on the SEFA properly represent expenditures incurred in the Organization’s accounting software and is reconciled timely to the general ledger. The Organization should also take measures to train department personnel on the requirements for SEFA reporting to help ensure that the preparation of the SEFA report is accurate and ties to the general ledger. View of Responsible Officials: In response to finding number 2021-SA1, management agrees with the finding and will design, implement, and maintain internal controls that ensure the figures reported on the SEFA properly represent expenditures incurred in the Organization’s accounting software; and that the reported figures are reconciled timely to the general ledger. Further, management will take measures to train personnel in SEFA reporting requirements to help ensure that the preparation of the SEFA report is accurate and ties to the general ledger.

Finding Number: 2021-SA2 Material Weakness – Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Cash Management, Period of Performance, Program Income, Reporting, Special Tests – Compliance and Control Finding -Internal Control over Compliance Federal Award: No. 64.024 VA Homeless Providers Grant and Per Diem Program Federal Agency: U.S. Veterans Administration Pass-Through Entity: Not applicable Criteria or Specific Requirement: 2 CFR section 200.303a states the non-Federal must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statues, regulations, and the terms and conditions of the federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: The Organization did not maintain effective internal controls over compliance over direct and material compliance areas, except for Eligibility. Internal controls over compliance of eligibility were appropriately designed and implemented and operated effectively. Cause: Factors beyond the control of current management, including poorly designed policies and procedures and lack of understanding of Federal award requirements and training, as key members of the accounting department left the Organization before appropriately transferring knowledge and records related to the Federal awards. Internal controls over compliance of eligibility were found to be appropriately designed and implemented and operated effectively during the June 30, 2021 fiscal year. Effect or Potential Effect: Potential for noncompliance of direct and material audit requirements. Questioned Costs: Related questioned costs are unknown. Context: During the year under audit, the issues represent a systemic problem, beyond the control of current management. Recommendation: Organization should implement appropriate internal controls over compliance for all direct and material compliance areas, other than eligibility. View of Responsible Officials: In response to finding number 2021-SA2, management agrees with the finding and will design, implement, and maintain internal controls over all direct and material compliance areas (other than eligibility). Additionally, management will ensure that the Organization’s internal controls comply with the Comptroller General of the United States’s “Standards for Internal Control in the Federal Government” or COSO’s “Internal Control Integrated Framework”.

Finding Number: 2021-SA3 Material Weakness – Activities Allowed or Unallowed and Allowable Costs/Cost Principles and Period of Performance Compliance and Control Finding Federal Award: No. 64.024 VA Homeless Providers Grant and Per Diem Program Federal Agency: U.S. Veterans Administration Pass-Through Entity: Not applicable Criteria or Specific Requirement: CFR section 200.403, Factors affecting allowability of costs, states costs must: conform to limitations or exclusions, be accorded consistent treatment, a cost may not be assigned to a Federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the Federal award as an indirect cost and be adequately documented. 2 CFR section 200.405, Allowable costs, states this standard is met if the cost is incurred specifically for the Federal award. 2 CFR section 200.430(i) Standards for Documentation of Personnel Expenses state charges to Federal awards for salaries must be based on records that accurately reflect the work performed and these records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated, support the distribution of the employee’s salary or wages among specific activities or cost objectives if the employee works on more than one Federal award a Federal award and non-Federal award and charges for the salaries and wages of nonexempt employees… must be supported by records indicating the total number of hours worked each day. Condition: The Organization did not maintain an effective control environment to ensure costs incurred for expenditures charged to the program were in accordance with contract requirements and applicable cost principles. Records do not provide reasonable assurance that the charges are accurate, allowable, and properly allocated. Records do not appear to support the distribution of the employee’s salary or wages among specific activities or cost objectives if the employee works on more than one Federal award or a Federal award and non-federal activity. Charges for non-exempt employees are not supported by records indicating the total number of hours worked each day. Expenditure details included costs that were allocated to the Federal award but may not have been incurred specifically for the Federal award. These costs included unsupported journal entries and uncategorized expenditures. Additionally, due to lack of budgets for the fiscal year, it was not determinable if costs conformed to limitations or exclusions set forth in the Federal award. Costs were not adequately documented, and it is unknown if costs were accorded consistent treatment. Cause: Factors beyond the control of current management, including poor recordkeeping, have caused financial records to be inadequate for audit purposes, as key members of the accounting department left the Organization before appropriately transferring knowledge and records related to the Federal awards. Effect or Potential Effect: Potential for unallowable activities, unallowable costs, and costs outside of the period of performance and additional questioned costs. Questioned Costs: Related questioned costs related to payroll expenditures are unknown. Questioned costs related to non-payroll expenditures are unknown. Context: During the year under audit, the issues represent a systemic problem, beyond the control of current management. Recommendation: Policies and procedures should be designed and implemented to ensure expenditures are reviewed for allowability before being charged to federal awards. Policies and procedures should be designed and implemented to ensure costs are reviewed for allowability before being charged to federal awards. Management should perform budget to actual analysis on a periodic basis to ensure that costs are not exceeding limitations. View of Responsible Officials: In response to finding number 2021-SA3, management agrees with the finding and will design, implement, and maintain policies and procedures that ensure expenditures are reviewed for allowability before being charged to Federal awards. Management will also design, implement, and maintain policies and procedures that ensure costs are reviewed for allowability before being charged to Federal awards. Further, management will perform budget-to-actual analysis on a periodic basis to ensure costs do not exceed limitations.

Finding Number: 2021-SA4 Material Weakness – Reporting – Compliance and Control Finding Federal Award: No. 64.024 VA Homeless Providers Grant and Per Diem Program Federal Agency: U.S. Veterans Administration Pass-Through Entity: Not applicable Criteria or Specific Requirement: The Organization is required to prepare and submit timely, accurate, and complete SF-425 Reports and Performance Reports. Condition: The Organization could not provide evidence of reports submitted during the year. Cause: Factors beyond the control of current management, including poor recordkeeping, have caused reports to be unavailable, as key members of the accounting department left the Organization before appropriately transferring knowledge and records related to the Federal awards. Effect or Potential Effect: Potential for noncompliance due to potential for untimely, inaccurate, incomplete reports or reports that were not submitted altogether. Questioned Costs: Related questioned costs are unknown. Context: During the year under audit, the issues represent a systemic problem, beyond the control of current management. Recommendation: Policies and procedures over federal grant reporting should be designed and implemented to ensure reports are filed on time and are accurate and complete. View of Responsible Officials: In response to finding number 2021-SA4, management agrees with the finding and will design, implement, and maintain policies and procedures that ensure Federal grant reporting is complete, accurate, and timely.

Finding Number: 2021-SA5 Material Weakness – Program Income – Compliance and Control Finding Federal Award: No. 64.024 VA Homeless Providers Grant and Per Diem Program Federal Agency: U.S. Veterans Administration Pass-Through Entity: Not applicable Criteria or Specific Requirement: 2 CFR section 200.307, Program Income, states that ordinary program income must be deducted from total allowable costs to determine the net allowable costs. Program income must be used for current costs unless the Federal awarding agency authorizes otherwise. Program income that the non-Federal entity did not anticipate at the time of the Federal award must be used to reduce the Federal award and non-Federal entity contributions rather than increase the funds committed to the project. 38 CFR 61.82 Participant fees for supportive housing states that participant fees may be used for costs of operating the supportive housing or to assist supportive housing residents’ move to permanent housing and must have a therapeutic benefit. Condition: It does not appear that program income was tracked and expended for use of operating supportive housing or assisting housing residents. Cause: Factors beyond the control of current management, including poorly designed policies and procedures, as key members of the accounting department left the Organization before appropriately transferring knowledge and records related to the Federal awards. Effect or Potential Effect: Potential noncompliance related to requesting additional reimbursement before program income was spent. Additionally, as noted in Finding 2021-SA1 program income expended was not appropriately included on the SEFA. Questioned Costs: Related questioned costs are unknown. Context: During the year under audit, the issues represent a systemic problem, beyond the control of current management. Recommendation: Policies and procedures should be designed and implemented to ensure program income is tracked and expended appropriately. View of Responsible Officials: In response to finding number 2021-SA5, management agrees with the finding and will design, implement, and maintain policies and procedures that ensure program income is tracked and expended appropriately.

Finding Number: 2021-SA6 Material Weakness – Special Tests – Compliance and Control Finding Federal Award: No. 64.024 VA Homeless Providers Grant and Per Diem Program Federal Agency: U.S. Veterans Administration Pass-Through Entity: Not applicable Criteria or Specific Requirement: 38 CFR Part 61 section 61.80(c) states recipients must include a summary of quarterly assessments in their administrative files. Condition: It is unknown if such records were appropriately maintained. Cause: Factors beyond the control of current management, including poorly designed policies and procedures, as key members of the accounting department left the Organization before appropriately transferring knowledge and records related to the Federal awards. Effect or Potential Effect: Potential for noncompliance related to Federal awards. Questioned Costs: Related questioned costs are unknown. Context: During the year under audit, the issues represent a systemic problem, beyond the control of current management. Recommendation: Policies and procedures should be designed and implemented to ensure compliance requirements of Federal awards are followed. View of Responsible Officials: In response to finding number 2021-SA6, management agrees with the finding and will design, implement, and maintain policies and procedures that ensure compliance with Federal awards.

Finding Number: 2021-SA7 Material Weakness Data Collection Form Federal Award: No. 64.024 VA Homeless Providers Grant and Per Diem Program Federal Agency: U.S. Veterans Administration Pass-Through Entity: Not applicable Criteria or Specific Requirement: Single audit submissions, including the data collection form, are required to be filed within nine months after fiscal year-end. Condition: The single audit submission was not completed and not filed within nine months of year-end. Cause: Factors beyond the control of current management, including poorly designed policies and procedures to ensure audit was completed timely, as key members of the accounting department left the Organization before appropriately transferring knowledge and records related to the Federal awards. Effect or Potential Effect: Noncompliance with Uniform Guidance. Questioned Costs: None. Context: During the year under audit, the issues represent a systemic problem, beyond the control of current management. Recommendation: Policies and procedures should be designed and implemented to ensure compliance with Uniform Guidance is met. View of Responsible Officials: In response to finding number 2021-SA7, management agrees with the finding and will design, implement, and maintain policies and procedures that ensure compliance with Uniform Guidance.

Finding Number: 2021-SA1 Material Weakness – Internal Control over Compliance Federal Award: No. 64.024 VA Homeless Providers Grant and Per Diem Program Federal Agency: U.S. Veterans Administration Pass-Through Entity: Not applicable Criteria or Specific Requirement: U.S. Code of Federal Regulations, Title 2, Part 200, section 510(b) Schedule of Expenditures of Federal Awards requires recipients of federal awards to prepare a schedule of expenditures of federal awards (SEFA) for the period covered by the entity’s financial statements to accurately reflect federal awards expended for individual federal programs. Condition: During the year ended June 30, 2021, program income expended was not identified and inappropriately excluded from the SEFA. In addition, the underlying detail of expenditures did not tie without exception to the SEFA amounts and multiple adjustments to the SEFA were made. Cause: The error was primarily due to factors beyond the control of current management, including poorly designed policies and procedures, poor recordkeeping and a lack of understanding of the requirements for the reporting of federal expenditures on the SEFA. Effect or Potential Effect: Improper internal controls and reconciliations of the federal expenditures poses a risk for inaccuracies in SEFA reporting. Additionally, since the Organization’s SEFA serves as the basis in determining the audit scope, including the identification of major programs required to be audited in a given fiscal year, inaccuracies in the SEFA pose a risk of improper identification of major programs. Questioned Costs: Related questioned costs are unknown. Context: During the year under audit, the issues represent a systemic problem, beyond the control of current management. Recommendation: The Organization should establish a more thorough internal review process to ensure the figures reported on the SEFA properly represent expenditures incurred in the Organization’s accounting software and is reconciled timely to the general ledger. The Organization should also take measures to train department personnel on the requirements for SEFA reporting to help ensure that the preparation of the SEFA report is accurate and ties to the general ledger. View of Responsible Officials: In response to finding number 2021-SA1, management agrees with the finding and will design, implement, and maintain internal controls that ensure the figures reported on the SEFA properly represent expenditures incurred in the Organization’s accounting software; and that the reported figures are reconciled timely to the general ledger. Further, management will take measures to train personnel in SEFA reporting requirements to help ensure that the preparation of the SEFA report is accurate and ties to the general ledger.

Finding Number: 2021-SA2 Material Weakness – Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Cash Management, Period of Performance, Program Income, Reporting, Special Tests – Compliance and Control Finding -Internal Control over Compliance Federal Award: No. 64.024 VA Homeless Providers Grant and Per Diem Program Federal Agency: U.S. Veterans Administration Pass-Through Entity: Not applicable Criteria or Specific Requirement: 2 CFR section 200.303a states the non-Federal must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statues, regulations, and the terms and conditions of the federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: The Organization did not maintain effective internal controls over compliance over direct and material compliance areas, except for Eligibility. Internal controls over compliance of eligibility were appropriately designed and implemented and operated effectively. Cause: Factors beyond the control of current management, including poorly designed policies and procedures and lack of understanding of Federal award requirements and training, as key members of the accounting department left the Organization before appropriately transferring knowledge and records related to the Federal awards. Internal controls over compliance of eligibility were found to be appropriately designed and implemented and operated effectively during the June 30, 2021 fiscal year. Effect or Potential Effect: Potential for noncompliance of direct and material audit requirements. Questioned Costs: Related questioned costs are unknown. Context: During the year under audit, the issues represent a systemic problem, beyond the control of current management. Recommendation: Organization should implement appropriate internal controls over compliance for all direct and material compliance areas, other than eligibility. View of Responsible Officials: In response to finding number 2021-SA2, management agrees with the finding and will design, implement, and maintain internal controls over all direct and material compliance areas (other than eligibility). Additionally, management will ensure that the Organization’s internal controls comply with the Comptroller General of the United States’s “Standards for Internal Control in the Federal Government” or COSO’s “Internal Control Integrated Framework”.

Finding Number: 2021-SA3 Material Weakness – Activities Allowed or Unallowed and Allowable Costs/Cost Principles and Period of Performance Compliance and Control Finding Federal Award: No. 64.024 VA Homeless Providers Grant and Per Diem Program Federal Agency: U.S. Veterans Administration Pass-Through Entity: Not applicable Criteria or Specific Requirement: CFR section 200.403, Factors affecting allowability of costs, states costs must: conform to limitations or exclusions, be accorded consistent treatment, a cost may not be assigned to a Federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the Federal award as an indirect cost and be adequately documented. 2 CFR section 200.405, Allowable costs, states this standard is met if the cost is incurred specifically for the Federal award. 2 CFR section 200.430(i) Standards for Documentation of Personnel Expenses state charges to Federal awards for salaries must be based on records that accurately reflect the work performed and these records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated, support the distribution of the employee’s salary or wages among specific activities or cost objectives if the employee works on more than one Federal award a Federal award and non-Federal award and charges for the salaries and wages of nonexempt employees… must be supported by records indicating the total number of hours worked each day. Condition: The Organization did not maintain an effective control environment to ensure costs incurred for expenditures charged to the program were in accordance with contract requirements and applicable cost principles. Records do not provide reasonable assurance that the charges are accurate, allowable, and properly allocated. Records do not appear to support the distribution of the employee’s salary or wages among specific activities or cost objectives if the employee works on more than one Federal award or a Federal award and non-federal activity. Charges for non-exempt employees are not supported by records indicating the total number of hours worked each day. Expenditure details included costs that were allocated to the Federal award but may not have been incurred specifically for the Federal award. These costs included unsupported journal entries and uncategorized expenditures. Additionally, due to lack of budgets for the fiscal year, it was not determinable if costs conformed to limitations or exclusions set forth in the Federal award. Costs were not adequately documented, and it is unknown if costs were accorded consistent treatment. Cause: Factors beyond the control of current management, including poor recordkeeping, have caused financial records to be inadequate for audit purposes, as key members of the accounting department left the Organization before appropriately transferring knowledge and records related to the Federal awards. Effect or Potential Effect: Potential for unallowable activities, unallowable costs, and costs outside of the period of performance and additional questioned costs. Questioned Costs: Related questioned costs related to payroll expenditures are unknown. Questioned costs related to non-payroll expenditures are unknown. Context: During the year under audit, the issues represent a systemic problem, beyond the control of current management. Recommendation: Policies and procedures should be designed and implemented to ensure expenditures are reviewed for allowability before being charged to federal awards. Policies and procedures should be designed and implemented to ensure costs are reviewed for allowability before being charged to federal awards. Management should perform budget to actual analysis on a periodic basis to ensure that costs are not exceeding limitations. View of Responsible Officials: In response to finding number 2021-SA3, management agrees with the finding and will design, implement, and maintain policies and procedures that ensure expenditures are reviewed for allowability before being charged to Federal awards. Management will also design, implement, and maintain policies and procedures that ensure costs are reviewed for allowability before being charged to Federal awards. Further, management will perform budget-to-actual analysis on a periodic basis to ensure costs do not exceed limitations.

Finding Number: 2021-SA4 Material Weakness – Reporting – Compliance and Control Finding Federal Award: No. 64.024 VA Homeless Providers Grant and Per Diem Program Federal Agency: U.S. Veterans Administration Pass-Through Entity: Not applicable Criteria or Specific Requirement: The Organization is required to prepare and submit timely, accurate, and complete SF-425 Reports and Performance Reports. Condition: The Organization could not provide evidence of reports submitted during the year. Cause: Factors beyond the control of current management, including poor recordkeeping, have caused reports to be unavailable, as key members of the accounting department left the Organization before appropriately transferring knowledge and records related to the Federal awards. Effect or Potential Effect: Potential for noncompliance due to potential for untimely, inaccurate, incomplete reports or reports that were not submitted altogether. Questioned Costs: Related questioned costs are unknown. Context: During the year under audit, the issues represent a systemic problem, beyond the control of current management. Recommendation: Policies and procedures over federal grant reporting should be designed and implemented to ensure reports are filed on time and are accurate and complete. View of Responsible Officials: In response to finding number 2021-SA4, management agrees with the finding and will design, implement, and maintain policies and procedures that ensure Federal grant reporting is complete, accurate, and timely.

Finding Number: 2021-SA5 Material Weakness – Program Income – Compliance and Control Finding Federal Award: No. 64.024 VA Homeless Providers Grant and Per Diem Program Federal Agency: U.S. Veterans Administration Pass-Through Entity: Not applicable Criteria or Specific Requirement: 2 CFR section 200.307, Program Income, states that ordinary program income must be deducted from total allowable costs to determine the net allowable costs. Program income must be used for current costs unless the Federal awarding agency authorizes otherwise. Program income that the non-Federal entity did not anticipate at the time of the Federal award must be used to reduce the Federal award and non-Federal entity contributions rather than increase the funds committed to the project. 38 CFR 61.82 Participant fees for supportive housing states that participant fees may be used for costs of operating the supportive housing or to assist supportive housing residents’ move to permanent housing and must have a therapeutic benefit. Condition: It does not appear that program income was tracked and expended for use of operating supportive housing or assisting housing residents. Cause: Factors beyond the control of current management, including poorly designed policies and procedures, as key members of the accounting department left the Organization before appropriately transferring knowledge and records related to the Federal awards. Effect or Potential Effect: Potential noncompliance related to requesting additional reimbursement before program income was spent. Additionally, as noted in Finding 2021-SA1 program income expended was not appropriately included on the SEFA. Questioned Costs: Related questioned costs are unknown. Context: During the year under audit, the issues represent a systemic problem, beyond the control of current management. Recommendation: Policies and procedures should be designed and implemented to ensure program income is tracked and expended appropriately. View of Responsible Officials: In response to finding number 2021-SA5, management agrees with the finding and will design, implement, and maintain policies and procedures that ensure program income is tracked and expended appropriately.

Finding Number: 2021-SA6 Material Weakness – Special Tests – Compliance and Control Finding Federal Award: No. 64.024 VA Homeless Providers Grant and Per Diem Program Federal Agency: U.S. Veterans Administration Pass-Through Entity: Not applicable Criteria or Specific Requirement: 38 CFR Part 61 section 61.80(c) states recipients must include a summary of quarterly assessments in their administrative files. Condition: It is unknown if such records were appropriately maintained. Cause: Factors beyond the control of current management, including poorly designed policies and procedures, as key members of the accounting department left the Organization before appropriately transferring knowledge and records related to the Federal awards. Effect or Potential Effect: Potential for noncompliance related to Federal awards. Questioned Costs: Related questioned costs are unknown. Context: During the year under audit, the issues represent a systemic problem, beyond the control of current management. Recommendation: Policies and procedures should be designed and implemented to ensure compliance requirements of Federal awards are followed. View of Responsible Officials: In response to finding number 2021-SA6, management agrees with the finding and will design, implement, and maintain policies and procedures that ensure compliance with Federal awards.

Finding Number: 2021-SA7 Material Weakness Data Collection Form Federal Award: No. 64.024 VA Homeless Providers Grant and Per Diem Program Federal Agency: U.S. Veterans Administration Pass-Through Entity: Not applicable Criteria or Specific Requirement: Single audit submissions, including the data collection form, are required to be filed within nine months after fiscal year-end. Condition: The single audit submission was not completed and not filed within nine months of year-end. Cause: Factors beyond the control of current management, including poorly designed policies and procedures to ensure audit was completed timely, as key members of the accounting department left the Organization before appropriately transferring knowledge and records related to the Federal awards. Effect or Potential Effect: Noncompliance with Uniform Guidance. Questioned Costs: None. Context: During the year under audit, the issues represent a systemic problem, beyond the control of current management. Recommendation: Policies and procedures should be designed and implemented to ensure compliance with Uniform Guidance is met. View of Responsible Officials: In response to finding number 2021-SA7, management agrees with the finding and will design, implement, and maintain policies and procedures that ensure compliance with Uniform Guidance.

Finding Number: 2021-SA1 Material Weakness – Internal Control over Compliance Federal Award: No. 64.024 VA Homeless Providers Grant and Per Diem Program Federal Agency: U.S. Veterans Administration Pass-Through Entity: Not applicable Criteria or Specific Requirement: U.S. Code of Federal Regulations, Title 2, Part 200, section 510(b) Schedule of Expenditures of Federal Awards requires recipients of federal awards to prepare a schedule of expenditures of federal awards (SEFA) for the period covered by the entity’s financial statements to accurately reflect federal awards expended for individual federal programs. Condition: During the year ended June 30, 2021, program income expended was not identified and inappropriately excluded from the SEFA. In addition, the underlying detail of expenditures did not tie without exception to the SEFA amounts and multiple adjustments to the SEFA were made. Cause: The error was primarily due to factors beyond the control of current management, including poorly designed policies and procedures, poor recordkeeping and a lack of understanding of the requirements for the reporting of federal expenditures on the SEFA. Effect or Potential Effect: Improper internal controls and reconciliations of the federal expenditures poses a risk for inaccuracies in SEFA reporting. Additionally, since the Organization’s SEFA serves as the basis in determining the audit scope, including the identification of major programs required to be audited in a given fiscal year, inaccuracies in the SEFA pose a risk of improper identification of major programs. Questioned Costs: Related questioned costs are unknown. Context: During the year under audit, the issues represent a systemic problem, beyond the control of current management. Recommendation: The Organization should establish a more thorough internal review process to ensure the figures reported on the SEFA properly represent expenditures incurred in the Organization’s accounting software and is reconciled timely to the general ledger. The Organization should also take measures to train department personnel on the requirements for SEFA reporting to help ensure that the preparation of the SEFA report is accurate and ties to the general ledger. View of Responsible Officials: In response to finding number 2021-SA1, management agrees with the finding and will design, implement, and maintain internal controls that ensure the figures reported on the SEFA properly represent expenditures incurred in the Organization’s accounting software; and that the reported figures are reconciled timely to the general ledger. Further, management will take measures to train personnel in SEFA reporting requirements to help ensure that the preparation of the SEFA report is accurate and ties to the general ledger.

Finding Number: 2021-SA2 Material Weakness – Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Cash Management, Period of Performance, Program Income, Reporting, Special Tests – Compliance and Control Finding -Internal Control over Compliance Federal Award: No. 64.024 VA Homeless Providers Grant and Per Diem Program Federal Agency: U.S. Veterans Administration Pass-Through Entity: Not applicable Criteria or Specific Requirement: 2 CFR section 200.303a states the non-Federal must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statues, regulations, and the terms and conditions of the federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: The Organization did not maintain effective internal controls over compliance over direct and material compliance areas, except for Eligibility. Internal controls over compliance of eligibility were appropriately designed and implemented and operated effectively. Cause: Factors beyond the control of current management, including poorly designed policies and procedures and lack of understanding of Federal award requirements and training, as key members of the accounting department left the Organization before appropriately transferring knowledge and records related to the Federal awards. Internal controls over compliance of eligibility were found to be appropriately designed and implemented and operated effectively during the June 30, 2021 fiscal year. Effect or Potential Effect: Potential for noncompliance of direct and material audit requirements. Questioned Costs: Related questioned costs are unknown. Context: During the year under audit, the issues represent a systemic problem, beyond the control of current management. Recommendation: Organization should implement appropriate internal controls over compliance for all direct and material compliance areas, other than eligibility. View of Responsible Officials: In response to finding number 2021-SA2, management agrees with the finding and will design, implement, and maintain internal controls over all direct and material compliance areas (other than eligibility). Additionally, management will ensure that the Organization’s internal controls comply with the Comptroller General of the United States’s “Standards for Internal Control in the Federal Government” or COSO’s “Internal Control Integrated Framework”.

Finding Number: 2021-SA3 Material Weakness – Activities Allowed or Unallowed and Allowable Costs/Cost Principles and Period of Performance Compliance and Control Finding Federal Award: No. 64.024 VA Homeless Providers Grant and Per Diem Program Federal Agency: U.S. Veterans Administration Pass-Through Entity: Not applicable Criteria or Specific Requirement: CFR section 200.403, Factors affecting allowability of costs, states costs must: conform to limitations or exclusions, be accorded consistent treatment, a cost may not be assigned to a Federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the Federal award as an indirect cost and be adequately documented. 2 CFR section 200.405, Allowable costs, states this standard is met if the cost is incurred specifically for the Federal award. 2 CFR section 200.430(i) Standards for Documentation of Personnel Expenses state charges to Federal awards for salaries must be based on records that accurately reflect the work performed and these records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated, support the distribution of the employee’s salary or wages among specific activities or cost objectives if the employee works on more than one Federal award a Federal award and non-Federal award and charges for the salaries and wages of nonexempt employees… must be supported by records indicating the total number of hours worked each day. Condition: The Organization did not maintain an effective control environment to ensure costs incurred for expenditures charged to the program were in accordance with contract requirements and applicable cost principles. Records do not provide reasonable assurance that the charges are accurate, allowable, and properly allocated. Records do not appear to support the distribution of the employee’s salary or wages among specific activities or cost objectives if the employee works on more than one Federal award or a Federal award and non-federal activity. Charges for non-exempt employees are not supported by records indicating the total number of hours worked each day. Expenditure details included costs that were allocated to the Federal award but may not have been incurred specifically for the Federal award. These costs included unsupported journal entries and uncategorized expenditures. Additionally, due to lack of budgets for the fiscal year, it was not determinable if costs conformed to limitations or exclusions set forth in the Federal award. Costs were not adequately documented, and it is unknown if costs were accorded consistent treatment. Cause: Factors beyond the control of current management, including poor recordkeeping, have caused financial records to be inadequate for audit purposes, as key members of the accounting department left the Organization before appropriately transferring knowledge and records related to the Federal awards. Effect or Potential Effect: Potential for unallowable activities, unallowable costs, and costs outside of the period of performance and additional questioned costs. Questioned Costs: Related questioned costs related to payroll expenditures are unknown. Questioned costs related to non-payroll expenditures are unknown. Context: During the year under audit, the issues represent a systemic problem, beyond the control of current management. Recommendation: Policies and procedures should be designed and implemented to ensure expenditures are reviewed for allowability before being charged to federal awards. Policies and procedures should be designed and implemented to ensure costs are reviewed for allowability before being charged to federal awards. Management should perform budget to actual analysis on a periodic basis to ensure that costs are not exceeding limitations. View of Responsible Officials: In response to finding number 2021-SA3, management agrees with the finding and will design, implement, and maintain policies and procedures that ensure expenditures are reviewed for allowability before being charged to Federal awards. Management will also design, implement, and maintain policies and procedures that ensure costs are reviewed for allowability before being charged to Federal awards. Further, management will perform budget-to-actual analysis on a periodic basis to ensure costs do not exceed limitations.

Finding Number: 2021-SA4 Material Weakness – Reporting – Compliance and Control Finding Federal Award: No. 64.024 VA Homeless Providers Grant and Per Diem Program Federal Agency: U.S. Veterans Administration Pass-Through Entity: Not applicable Criteria or Specific Requirement: The Organization is required to prepare and submit timely, accurate, and complete SF-425 Reports and Performance Reports. Condition: The Organization could not provide evidence of reports submitted during the year. Cause: Factors beyond the control of current management, including poor recordkeeping, have caused reports to be unavailable, as key members of the accounting department left the Organization before appropriately transferring knowledge and records related to the Federal awards. Effect or Potential Effect: Potential for noncompliance due to potential for untimely, inaccurate, incomplete reports or reports that were not submitted altogether. Questioned Costs: Related questioned costs are unknown. Context: During the year under audit, the issues represent a systemic problem, beyond the control of current management. Recommendation: Policies and procedures over federal grant reporting should be designed and implemented to ensure reports are filed on time and are accurate and complete. View of Responsible Officials: In response to finding number 2021-SA4, management agrees with the finding and will design, implement, and maintain policies and procedures that ensure Federal grant reporting is complete, accurate, and timely.

Finding Number: 2021-SA5 Material Weakness – Program Income – Compliance and Control Finding Federal Award: No. 64.024 VA Homeless Providers Grant and Per Diem Program Federal Agency: U.S. Veterans Administration Pass-Through Entity: Not applicable Criteria or Specific Requirement: 2 CFR section 200.307, Program Income, states that ordinary program income must be deducted from total allowable costs to determine the net allowable costs. Program income must be used for current costs unless the Federal awarding agency authorizes otherwise. Program income that the non-Federal entity did not anticipate at the time of the Federal award must be used to reduce the Federal award and non-Federal entity contributions rather than increase the funds committed to the project. 38 CFR 61.82 Participant fees for supportive housing states that participant fees may be used for costs of operating the supportive housing or to assist supportive housing residents’ move to permanent housing and must have a therapeutic benefit. Condition: It does not appear that program income was tracked and expended for use of operating supportive housing or assisting housing residents. Cause: Factors beyond the control of current management, including poorly designed policies and procedures, as key members of the accounting department left the Organization before appropriately transferring knowledge and records related to the Federal awards. Effect or Potential Effect: Potential noncompliance related to requesting additional reimbursement before program income was spent. Additionally, as noted in Finding 2021-SA1 program income expended was not appropriately included on the SEFA. Questioned Costs: Related questioned costs are unknown. Context: During the year under audit, the issues represent a systemic problem, beyond the control of current management. Recommendation: Policies and procedures should be designed and implemented to ensure program income is tracked and expended appropriately. View of Responsible Officials: In response to finding number 2021-SA5, management agrees with the finding and will design, implement, and maintain policies and procedures that ensure program income is tracked and expended appropriately.

Finding Number: 2021-SA6 Material Weakness – Special Tests – Compliance and Control Finding Federal Award: No. 64.024 VA Homeless Providers Grant and Per Diem Program Federal Agency: U.S. Veterans Administration Pass-Through Entity: Not applicable Criteria or Specific Requirement: 38 CFR Part 61 section 61.80(c) states recipients must include a summary of quarterly assessments in their administrative files. Condition: It is unknown if such records were appropriately maintained. Cause: Factors beyond the control of current management, including poorly designed policies and procedures, as key members of the accounting department left the Organization before appropriately transferring knowledge and records related to the Federal awards. Effect or Potential Effect: Potential for noncompliance related to Federal awards. Questioned Costs: Related questioned costs are unknown. Context: During the year under audit, the issues represent a systemic problem, beyond the control of current management. Recommendation: Policies and procedures should be designed and implemented to ensure compliance requirements of Federal awards are followed. View of Responsible Officials: In response to finding number 2021-SA6, management agrees with the finding and will design, implement, and maintain policies and procedures that ensure compliance with Federal awards.

Finding Number: 2021-SA7 Material Weakness Data Collection Form Federal Award: No. 64.024 VA Homeless Providers Grant and Per Diem Program Federal Agency: U.S. Veterans Administration Pass-Through Entity: Not applicable Criteria or Specific Requirement: Single audit submissions, including the data collection form, are required to be filed within nine months after fiscal year-end. Condition: The single audit submission was not completed and not filed within nine months of year-end. Cause: Factors beyond the control of current management, including poorly designed policies and procedures to ensure audit was completed timely, as key members of the accounting department left the Organization before appropriately transferring knowledge and records related to the Federal awards. Effect or Potential Effect: Noncompliance with Uniform Guidance. Questioned Costs: None. Context: During the year under audit, the issues represent a systemic problem, beyond the control of current management. Recommendation: Policies and procedures should be designed and implemented to ensure compliance with Uniform Guidance is met. View of Responsible Officials: In response to finding number 2021-SA7, management agrees with the finding and will design, implement, and maintain policies and procedures that ensure compliance with Uniform Guidance.

Finding Number: 2021-SA1 Material Weakness – Internal Control over Compliance Federal Award: No. 64.024 VA Homeless Providers Grant and Per Diem Program Federal Agency: U.S. Veterans Administration Pass-Through Entity: Not applicable Criteria or Specific Requirement: U.S. Code of Federal Regulations, Title 2, Part 200, section 510(b) Schedule of Expenditures of Federal Awards requires recipients of federal awards to prepare a schedule of expenditures of federal awards (SEFA) for the period covered by the entity’s financial statements to accurately reflect federal awards expended for individual federal programs. Condition: During the year ended June 30, 2021, program income expended was not identified and inappropriately excluded from the SEFA. In addition, the underlying detail of expenditures did not tie without exception to the SEFA amounts and multiple adjustments to the SEFA were made. Cause: The error was primarily due to factors beyond the control of current management, including poorly designed policies and procedures, poor recordkeeping and a lack of understanding of the requirements for the reporting of federal expenditures on the SEFA. Effect or Potential Effect: Improper internal controls and reconciliations of the federal expenditures poses a risk for inaccuracies in SEFA reporting. Additionally, since the Organization’s SEFA serves as the basis in determining the audit scope, including the identification of major programs required to be audited in a given fiscal year, inaccuracies in the SEFA pose a risk of improper identification of major programs. Questioned Costs: Related questioned costs are unknown. Context: During the year under audit, the issues represent a systemic problem, beyond the control of current management. Recommendation: The Organization should establish a more thorough internal review process to ensure the figures reported on the SEFA properly represent expenditures incurred in the Organization’s accounting software and is reconciled timely to the general ledger. The Organization should also take measures to train department personnel on the requirements for SEFA reporting to help ensure that the preparation of the SEFA report is accurate and ties to the general ledger. View of Responsible Officials: In response to finding number 2021-SA1, management agrees with the finding and will design, implement, and maintain internal controls that ensure the figures reported on the SEFA properly represent expenditures incurred in the Organization’s accounting software; and that the reported figures are reconciled timely to the general ledger. Further, management will take measures to train personnel in SEFA reporting requirements to help ensure that the preparation of the SEFA report is accurate and ties to the general ledger.

Finding Number: 2021-SA2 Material Weakness – Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Cash Management, Period of Performance, Program Income, Reporting, Special Tests – Compliance and Control Finding -Internal Control over Compliance Federal Award: No. 64.024 VA Homeless Providers Grant and Per Diem Program Federal Agency: U.S. Veterans Administration Pass-Through Entity: Not applicable Criteria or Specific Requirement: 2 CFR section 200.303a states the non-Federal must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statues, regulations, and the terms and conditions of the federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: The Organization did not maintain effective internal controls over compliance over direct and material compliance areas, except for Eligibility. Internal controls over compliance of eligibility were appropriately designed and implemented and operated effectively. Cause: Factors beyond the control of current management, including poorly designed policies and procedures and lack of understanding of Federal award requirements and training, as key members of the accounting department left the Organization before appropriately transferring knowledge and records related to the Federal awards. Internal controls over compliance of eligibility were found to be appropriately designed and implemented and operated effectively during the June 30, 2021 fiscal year. Effect or Potential Effect: Potential for noncompliance of direct and material audit requirements. Questioned Costs: Related questioned costs are unknown. Context: During the year under audit, the issues represent a systemic problem, beyond the control of current management. Recommendation: Organization should implement appropriate internal controls over compliance for all direct and material compliance areas, other than eligibility. View of Responsible Officials: In response to finding number 2021-SA2, management agrees with the finding and will design, implement, and maintain internal controls over all direct and material compliance areas (other than eligibility). Additionally, management will ensure that the Organization’s internal controls comply with the Comptroller General of the United States’s “Standards for Internal Control in the Federal Government” or COSO’s “Internal Control Integrated Framework”.

Finding Number: 2021-SA3 Material Weakness – Activities Allowed or Unallowed and Allowable Costs/Cost Principles and Period of Performance Compliance and Control Finding Federal Award: No. 64.024 VA Homeless Providers Grant and Per Diem Program Federal Agency: U.S. Veterans Administration Pass-Through Entity: Not applicable Criteria or Specific Requirement: CFR section 200.403, Factors affecting allowability of costs, states costs must: conform to limitations or exclusions, be accorded consistent treatment, a cost may not be assigned to a Federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the Federal award as an indirect cost and be adequately documented. 2 CFR section 200.405, Allowable costs, states this standard is met if the cost is incurred specifically for the Federal award. 2 CFR section 200.430(i) Standards for Documentation of Personnel Expenses state charges to Federal awards for salaries must be based on records that accurately reflect the work performed and these records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated, support the distribution of the employee’s salary or wages among specific activities or cost objectives if the employee works on more than one Federal award a Federal award and non-Federal award and charges for the salaries and wages of nonexempt employees… must be supported by records indicating the total number of hours worked each day. Condition: The Organization did not maintain an effective control environment to ensure costs incurred for expenditures charged to the program were in accordance with contract requirements and applicable cost principles. Records do not provide reasonable assurance that the charges are accurate, allowable, and properly allocated. Records do not appear to support the distribution of the employee’s salary or wages among specific activities or cost objectives if the employee works on more than one Federal award or a Federal award and non-federal activity. Charges for non-exempt employees are not supported by records indicating the total number of hours worked each day. Expenditure details included costs that were allocated to the Federal award but may not have been incurred specifically for the Federal award. These costs included unsupported journal entries and uncategorized expenditures. Additionally, due to lack of budgets for the fiscal year, it was not determinable if costs conformed to limitations or exclusions set forth in the Federal award. Costs were not adequately documented, and it is unknown if costs were accorded consistent treatment. Cause: Factors beyond the control of current management, including poor recordkeeping, have caused financial records to be inadequate for audit purposes, as key members of the accounting department left the Organization before appropriately transferring knowledge and records related to the Federal awards. Effect or Potential Effect: Potential for unallowable activities, unallowable costs, and costs outside of the period of performance and additional questioned costs. Questioned Costs: Related questioned costs related to payroll expenditures are unknown. Questioned costs related to non-payroll expenditures are unknown. Context: During the year under audit, the issues represent a systemic problem, beyond the control of current management. Recommendation: Policies and procedures should be designed and implemented to ensure expenditures are reviewed for allowability before being charged to federal awards. Policies and procedures should be designed and implemented to ensure costs are reviewed for allowability before being charged to federal awards. Management should perform budget to actual analysis on a periodic basis to ensure that costs are not exceeding limitations. View of Responsible Officials: In response to finding number 2021-SA3, management agrees with the finding and will design, implement, and maintain policies and procedures that ensure expenditures are reviewed for allowability before being charged to Federal awards. Management will also design, implement, and maintain policies and procedures that ensure costs are reviewed for allowability before being charged to Federal awards. Further, management will perform budget-to-actual analysis on a periodic basis to ensure costs do not exceed limitations.

Finding Number: 2021-SA4 Material Weakness – Reporting – Compliance and Control Finding Federal Award: No. 64.024 VA Homeless Providers Grant and Per Diem Program Federal Agency: U.S. Veterans Administration Pass-Through Entity: Not applicable Criteria or Specific Requirement: The Organization is required to prepare and submit timely, accurate, and complete SF-425 Reports and Performance Reports. Condition: The Organization could not provide evidence of reports submitted during the year. Cause: Factors beyond the control of current management, including poor recordkeeping, have caused reports to be unavailable, as key members of the accounting department left the Organization before appropriately transferring knowledge and records related to the Federal awards. Effect or Potential Effect: Potential for noncompliance due to potential for untimely, inaccurate, incomplete reports or reports that were not submitted altogether. Questioned Costs: Related questioned costs are unknown. Context: During the year under audit, the issues represent a systemic problem, beyond the control of current management. Recommendation: Policies and procedures over federal grant reporting should be designed and implemented to ensure reports are filed on time and are accurate and complete. View of Responsible Officials: In response to finding number 2021-SA4, management agrees with the finding and will design, implement, and maintain policies and procedures that ensure Federal grant reporting is complete, accurate, and timely.

Finding Number: 2021-SA5 Material Weakness – Program Income – Compliance and Control Finding Federal Award: No. 64.024 VA Homeless Providers Grant and Per Diem Program Federal Agency: U.S. Veterans Administration Pass-Through Entity: Not applicable Criteria or Specific Requirement: 2 CFR section 200.307, Program Income, states that ordinary program income must be deducted from total allowable costs to determine the net allowable costs. Program income must be used for current costs unless the Federal awarding agency authorizes otherwise. Program income that the non-Federal entity did not anticipate at the time of the Federal award must be used to reduce the Federal award and non-Federal entity contributions rather than increase the funds committed to the project. 38 CFR 61.82 Participant fees for supportive housing states that participant fees may be used for costs of operating the supportive housing or to assist supportive housing residents’ move to permanent housing and must have a therapeutic benefit. Condition: It does not appear that program income was tracked and expended for use of operating supportive housing or assisting housing residents. Cause: Factors beyond the control of current management, including poorly designed policies and procedures, as key members of the accounting department left the Organization before appropriately transferring knowledge and records related to the Federal awards. Effect or Potential Effect: Potential noncompliance related to requesting additional reimbursement before program income was spent. Additionally, as noted in Finding 2021-SA1 program income expended was not appropriately included on the SEFA. Questioned Costs: Related questioned costs are unknown. Context: During the year under audit, the issues represent a systemic problem, beyond the control of current management. Recommendation: Policies and procedures should be designed and implemented to ensure program income is tracked and expended appropriately. View of Responsible Officials: In response to finding number 2021-SA5, management agrees with the finding and will design, implement, and maintain policies and procedures that ensure program income is tracked and expended appropriately.

Finding Number: 2021-SA6 Material Weakness – Special Tests – Compliance and Control Finding Federal Award: No. 64.024 VA Homeless Providers Grant and Per Diem Program Federal Agency: U.S. Veterans Administration Pass-Through Entity: Not applicable Criteria or Specific Requirement: 38 CFR Part 61 section 61.80(c) states recipients must include a summary of quarterly assessments in their administrative files. Condition: It is unknown if such records were appropriately maintained. Cause: Factors beyond the control of current management, including poorly designed policies and procedures, as key members of the accounting department left the Organization before appropriately transferring knowledge and records related to the Federal awards. Effect or Potential Effect: Potential for noncompliance related to Federal awards. Questioned Costs: Related questioned costs are unknown. Context: During the year under audit, the issues represent a systemic problem, beyond the control of current management. Recommendation: Policies and procedures should be designed and implemented to ensure compliance requirements of Federal awards are followed. View of Responsible Officials: In response to finding number 2021-SA6, management agrees with the finding and will design, implement, and maintain policies and procedures that ensure compliance with Federal awards.

Finding Number: 2021-SA7 Material Weakness Data Collection Form Federal Award: No. 64.024 VA Homeless Providers Grant and Per Diem Program Federal Agency: U.S. Veterans Administration Pass-Through Entity: Not applicable Criteria or Specific Requirement: Single audit submissions, including the data collection form, are required to be filed within nine months after fiscal year-end. Condition: The single audit submission was not completed and not filed within nine months of year-end. Cause: Factors beyond the control of current management, including poorly designed policies and procedures to ensure audit was completed timely, as key members of the accounting department left the Organization before appropriately transferring knowledge and records related to the Federal awards. Effect or Potential Effect: Noncompliance with Uniform Guidance. Questioned Costs: None. Context: During the year under audit, the issues represent a systemic problem, beyond the control of current management. Recommendation: Policies and procedures should be designed and implemented to ensure compliance with Uniform Guidance is met. View of Responsible Officials: In response to finding number 2021-SA7, management agrees with the finding and will design, implement, and maintain policies and procedures that ensure compliance with Uniform Guidance.

Finding Number: 2021-SA1 Material Weakness – Internal Control over Compliance Federal Award: No. 64.024 VA Homeless Providers Grant and Per Diem Program Federal Agency: U.S. Veterans Administration Pass-Through Entity: Not applicable Criteria or Specific Requirement: U.S. Code of Federal Regulations, Title 2, Part 200, section 510(b) Schedule of Expenditures of Federal Awards requires recipients of federal awards to prepare a schedule of expenditures of federal awards (SEFA) for the period covered by the entity’s financial statements to accurately reflect federal awards expended for individual federal programs. Condition: During the year ended June 30, 2021, program income expended was not identified and inappropriately excluded from the SEFA. In addition, the underlying detail of expenditures did not tie without exception to the SEFA amounts and multiple adjustments to the SEFA were made. Cause: The error was primarily due to factors beyond the control of current management, including poorly designed policies and procedures, poor recordkeeping and a lack of understanding of the requirements for the reporting of federal expenditures on the SEFA. Effect or Potential Effect: Improper internal controls and reconciliations of the federal expenditures poses a risk for inaccuracies in SEFA reporting. Additionally, since the Organization’s SEFA serves as the basis in determining the audit scope, including the identification of major programs required to be audited in a given fiscal year, inaccuracies in the SEFA pose a risk of improper identification of major programs. Questioned Costs: Related questioned costs are unknown. Context: During the year under audit, the issues represent a systemic problem, beyond the control of current management. Recommendation: The Organization should establish a more thorough internal review process to ensure the figures reported on the SEFA properly represent expenditures incurred in the Organization’s accounting software and is reconciled timely to the general ledger. The Organization should also take measures to train department personnel on the requirements for SEFA reporting to help ensure that the preparation of the SEFA report is accurate and ties to the general ledger. View of Responsible Officials: In response to finding number 2021-SA1, management agrees with the finding and will design, implement, and maintain internal controls that ensure the figures reported on the SEFA properly represent expenditures incurred in the Organization’s accounting software; and that the reported figures are reconciled timely to the general ledger. Further, management will take measures to train personnel in SEFA reporting requirements to help ensure that the preparation of the SEFA report is accurate and ties to the general ledger.

Finding Number: 2021-SA2 Material Weakness – Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Cash Management, Period of Performance, Program Income, Reporting, Special Tests – Compliance and Control Finding -Internal Control over Compliance Federal Award: No. 64.024 VA Homeless Providers Grant and Per Diem Program Federal Agency: U.S. Veterans Administration Pass-Through Entity: Not applicable Criteria or Specific Requirement: 2 CFR section 200.303a states the non-Federal must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statues, regulations, and the terms and conditions of the federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: The Organization did not maintain effective internal controls over compliance over direct and material compliance areas, except for Eligibility. Internal controls over compliance of eligibility were appropriately designed and implemented and operated effectively. Cause: Factors beyond the control of current management, including poorly designed policies and procedures and lack of understanding of Federal award requirements and training, as key members of the accounting department left the Organization before appropriately transferring knowledge and records related to the Federal awards. Internal controls over compliance of eligibility were found to be appropriately designed and implemented and operated effectively during the June 30, 2021 fiscal year. Effect or Potential Effect: Potential for noncompliance of direct and material audit requirements. Questioned Costs: Related questioned costs are unknown. Context: During the year under audit, the issues represent a systemic problem, beyond the control of current management. Recommendation: Organization should implement appropriate internal controls over compliance for all direct and material compliance areas, other than eligibility. View of Responsible Officials: In response to finding number 2021-SA2, management agrees with the finding and will design, implement, and maintain internal controls over all direct and material compliance areas (other than eligibility). Additionally, management will ensure that the Organization’s internal controls comply with the Comptroller General of the United States’s “Standards for Internal Control in the Federal Government” or COSO’s “Internal Control Integrated Framework”.

Finding Number: 2021-SA3 Material Weakness – Activities Allowed or Unallowed and Allowable Costs/Cost Principles and Period of Performance Compliance and Control Finding Federal Award: No. 64.024 VA Homeless Providers Grant and Per Diem Program Federal Agency: U.S. Veterans Administration Pass-Through Entity: Not applicable Criteria or Specific Requirement: CFR section 200.403, Factors affecting allowability of costs, states costs must: conform to limitations or exclusions, be accorded consistent treatment, a cost may not be assigned to a Federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the Federal award as an indirect cost and be adequately documented. 2 CFR section 200.405, Allowable costs, states this standard is met if the cost is incurred specifically for the Federal award. 2 CFR section 200.430(i) Standards for Documentation of Personnel Expenses state charges to Federal awards for salaries must be based on records that accurately reflect the work performed and these records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated, support the distribution of the employee’s salary or wages among specific activities or cost objectives if the employee works on more than one Federal award a Federal award and non-Federal award and charges for the salaries and wages of nonexempt employees… must be supported by records indicating the total number of hours worked each day. Condition: The Organization did not maintain an effective control environment to ensure costs incurred for expenditures charged to the program were in accordance with contract requirements and applicable cost principles. Records do not provide reasonable assurance that the charges are accurate, allowable, and properly allocated. Records do not appear to support the distribution of the employee’s salary or wages among specific activities or cost objectives if the employee works on more than one Federal award or a Federal award and non-federal activity. Charges for non-exempt employees are not supported by records indicating the total number of hours worked each day. Expenditure details included costs that were allocated to the Federal award but may not have been incurred specifically for the Federal award. These costs included unsupported journal entries and uncategorized expenditures. Additionally, due to lack of budgets for the fiscal year, it was not determinable if costs conformed to limitations or exclusions set forth in the Federal award. Costs were not adequately documented, and it is unknown if costs were accorded consistent treatment. Cause: Factors beyond the control of current management, including poor recordkeeping, have caused financial records to be inadequate for audit purposes, as key members of the accounting department left the Organization before appropriately transferring knowledge and records related to the Federal awards. Effect or Potential Effect: Potential for unallowable activities, unallowable costs, and costs outside of the period of performance and additional questioned costs. Questioned Costs: Related questioned costs related to payroll expenditures are unknown. Questioned costs related to non-payroll expenditures are unknown. Context: During the year under audit, the issues represent a systemic problem, beyond the control of current management. Recommendation: Policies and procedures should be designed and implemented to ensure expenditures are reviewed for allowability before being charged to federal awards. Policies and procedures should be designed and implemented to ensure costs are reviewed for allowability before being charged to federal awards. Management should perform budget to actual analysis on a periodic basis to ensure that costs are not exceeding limitations. View of Responsible Officials: In response to finding number 2021-SA3, management agrees with the finding and will design, implement, and maintain policies and procedures that ensure expenditures are reviewed for allowability before being charged to Federal awards. Management will also design, implement, and maintain policies and procedures that ensure costs are reviewed for allowability before being charged to Federal awards. Further, management will perform budget-to-actual analysis on a periodic basis to ensure costs do not exceed limitations.

Finding Number: 2021-SA4 Material Weakness – Reporting – Compliance and Control Finding Federal Award: No. 64.024 VA Homeless Providers Grant and Per Diem Program Federal Agency: U.S. Veterans Administration Pass-Through Entity: Not applicable Criteria or Specific Requirement: The Organization is required to prepare and submit timely, accurate, and complete SF-425 Reports and Performance Reports. Condition: The Organization could not provide evidence of reports submitted during the year. Cause: Factors beyond the control of current management, including poor recordkeeping, have caused reports to be unavailable, as key members of the accounting department left the Organization before appropriately transferring knowledge and records related to the Federal awards. Effect or Potential Effect: Potential for noncompliance due to potential for untimely, inaccurate, incomplete reports or reports that were not submitted altogether. Questioned Costs: Related questioned costs are unknown. Context: During the year under audit, the issues represent a systemic problem, beyond the control of current management. Recommendation: Policies and procedures over federal grant reporting should be designed and implemented to ensure reports are filed on time and are accurate and complete. View of Responsible Officials: In response to finding number 2021-SA4, management agrees with the finding and will design, implement, and maintain policies and procedures that ensure Federal grant reporting is complete, accurate, and timely.

Finding Number: 2021-SA5 Material Weakness – Program Income – Compliance and Control Finding Federal Award: No. 64.024 VA Homeless Providers Grant and Per Diem Program Federal Agency: U.S. Veterans Administration Pass-Through Entity: Not applicable Criteria or Specific Requirement: 2 CFR section 200.307, Program Income, states that ordinary program income must be deducted from total allowable costs to determine the net allowable costs. Program income must be used for current costs unless the Federal awarding agency authorizes otherwise. Program income that the non-Federal entity did not anticipate at the time of the Federal award must be used to reduce the Federal award and non-Federal entity contributions rather than increase the funds committed to the project. 38 CFR 61.82 Participant fees for supportive housing states that participant fees may be used for costs of operating the supportive housing or to assist supportive housing residents’ move to permanent housing and must have a therapeutic benefit. Condition: It does not appear that program income was tracked and expended for use of operating supportive housing or assisting housing residents. Cause: Factors beyond the control of current management, including poorly designed policies and procedures, as key members of the accounting department left the Organization before appropriately transferring knowledge and records related to the Federal awards. Effect or Potential Effect: Potential noncompliance related to requesting additional reimbursement before program income was spent. Additionally, as noted in Finding 2021-SA1 program income expended was not appropriately included on the SEFA. Questioned Costs: Related questioned costs are unknown. Context: During the year under audit, the issues represent a systemic problem, beyond the control of current management. Recommendation: Policies and procedures should be designed and implemented to ensure program income is tracked and expended appropriately. View of Responsible Officials: In response to finding number 2021-SA5, management agrees with the finding and will design, implement, and maintain policies and procedures that ensure program income is tracked and expended appropriately.

Finding Number: 2021-SA6 Material Weakness – Special Tests – Compliance and Control Finding Federal Award: No. 64.024 VA Homeless Providers Grant and Per Diem Program Federal Agency: U.S. Veterans Administration Pass-Through Entity: Not applicable Criteria or Specific Requirement: 38 CFR Part 61 section 61.80(c) states recipients must include a summary of quarterly assessments in their administrative files. Condition: It is unknown if such records were appropriately maintained. Cause: Factors beyond the control of current management, including poorly designed policies and procedures, as key members of the accounting department left the Organization before appropriately transferring knowledge and records related to the Federal awards. Effect or Potential Effect: Potential for noncompliance related to Federal awards. Questioned Costs: Related questioned costs are unknown. Context: During the year under audit, the issues represent a systemic problem, beyond the control of current management. Recommendation: Policies and procedures should be designed and implemented to ensure compliance requirements of Federal awards are followed. View of Responsible Officials: In response to finding number 2021-SA6, management agrees with the finding and will design, implement, and maintain policies and procedures that ensure compliance with Federal awards.

Finding Number: 2021-SA7 Material Weakness Data Collection Form Federal Award: No. 64.024 VA Homeless Providers Grant and Per Diem Program Federal Agency: U.S. Veterans Administration Pass-Through Entity: Not applicable Criteria or Specific Requirement: Single audit submissions, including the data collection form, are required to be filed within nine months after fiscal year-end. Condition: The single audit submission was not completed and not filed within nine months of year-end. Cause: Factors beyond the control of current management, including poorly designed policies and procedures to ensure audit was completed timely, as key members of the accounting department left the Organization before appropriately transferring knowledge and records related to the Federal awards. Effect or Potential Effect: Noncompliance with Uniform Guidance. Questioned Costs: None. Context: During the year under audit, the issues represent a systemic problem, beyond the control of current management. Recommendation: Policies and procedures should be designed and implemented to ensure compliance with Uniform Guidance is met. View of Responsible Officials: In response to finding number 2021-SA7, management agrees with the finding and will design, implement, and maintain policies and procedures that ensure compliance with Uniform Guidance.