Audit 319773

Federal Agency: U.S. Department of Health and Human Services Federal Program Name: ACL Centers for Independent Living Assistance Listing Number: 93.432 Federal Award Identification Number and Year: 2004WAILC3 - 2021 2006WAILC3 - 2021 2104WAILCL - 2022 2106WAILCL - 2022 Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Period: 2004WAILC3 - 4/1/2020-9/30/22 2006WAILC3 - 4/1/20-9/30/22 2104WAILCL - 9/30/21-9/29/23 2106WAILCL - 9/30/21-9/29/23 Type of Finding: Subrecipient Monitoring/Procurement • Material Weakness in Internal Control over Compliance • Material Noncompliance (Modified Opinion) Criteria or specific requirement: Per 2 CFR Part 200.331, a pass-through entity must make case-by-case determinations whether each agreement it makes for the disbursement of Federal program funds casts the party receiving the funds in the role of a subrecipient or a subcontractor. If a subrecipient has been identified, per 2 CFR Part 200, Subpart F, pass through entities must notify subrecipients that they are receiving Federal funds as a subrecipient and must therefore comply with federal statutes, regulations, and the terms and conditions of the award. Additionally, pass through entities must keep documentation of monitoring the subaward. The pass through entity must have a control process in place to ensure it is in compliance with federal requirements related to subrecipient monitoring. If a subcontractor has been identified (and payment is above the micro-purchase threshold), per 2 CFR Part 200, Subpart D, the entity must have and use documented procurement procedures such as drafting a procurement policy, obtaining qualified bids, performing cost analyses and justifying reason for final selection. Condition: While there existed sophisticated procedures for reviewing, approving and monitoring applicants, they did not meet all of the Federal requirements for either that of subrecipients or subcontractors. Questioned costs: $62,857 In known questioned costs. Context: Upon receipt of the Federal ACL CARES ACT grants, the instructions were to use and disseminate the funds within the community for the purposes of supporting individuals with disabilities who were impacted by COVID and creating professional relationships in further support of individuals with disabilities. DEC was not aware of the Federal Uniform Guidance guidelines requiring DEC to make the determination of whether the vendors meet the characteristics of a subrecipient or a subcontractor and therefore did not follow the required procedures. This is an isolated instance due to the specific nature of the CARES ACT funds as DEC is not able to engage in these activities with other Federal grants. Cause: DEC did not designate these vendors as either subrecipients or subcontractors and therefore did not follow the Federal Uniform Guidance guidelines. Effect: Pass through entities, subcontractors and/or subrecipients could be out of compliance and misusing Federal funds. Repeat Finding: No Recommendation: CLA recommends DEC review the Uniform Guidance in relation to subrecipients and subcontractors, and for each vendor under contract, make a clear determination of which type of contract they fall under. Contracts should be drafted in conformity with either subrecipients or subcontractors (as directed by the Uniform Guidance). Views of responsible officials: There is no disagreement with the audit finding.

Federal Agency: U.S. Department of Health and Human Services Federal Program Name: ACL Centers for Independent Living Assistance Listing Number: 93.432 Federal Award Identification Number and Year: 2004WAILC3 - 2021 2006WAILC3 - 2021 2104WAILCL - 2022 2106WAILCL - 2022 Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Period: 2004WAILC3 - 4/1/2020-9/30/22 2006WAILC3 - 4/1/20-9/30/22 2104WAILCL - 9/30/21-9/29/23 2106WAILCL - 9/30/21-9/29/23 Type of Finding: Cash Management • Material Weakness in Internal Control over Compliance Criteria or specific requirement: Per 2 CFR 200.302(b)(3) the nonfederal entity must keep "records that identify adequately the source and application of funds for federally-funded activities" and must maintain effective controls over these procedures. Condition: No accompanying invoices to support drawdown requests. Questioned costs: None Context: While there existed evidence of supporting invoices for Federal expenditures (with the exception of one item for $52 - see finding 2022-006), these were not compiled into an auditable list showing justification for the drawdown amounts. Auditors reviewed the profit and loss schedule for the year and were not able to identify a clear pattern between expenditures and drawdowns. Cause: Lack of procedures requiring supporting documentation. Effect: Reimbursement requests could be made for unallowed expenditures. Repeat Finding: No Recommendation: Implement process to ensure documentation is kept identifying which expenditures are included in reimbursement request. There should be a secondary individual (ED and contract accountant) involved in the process to ensure accuracy - documentation of the two-person preparation and review process should be documented. Implement procedures to document review of subrecipient payment requests and minimize time elapsed between requests and payments. Views of responsible officials: There is no disagreement with the audit finding.

Federal Agency: U.S. Department of Health and Human Services Federal Program Name: ACL Centers for Independent Living Assistance Listing Number: 93.432 Federal Award Identification Number and Year: 2004WAILC3 - 2021 2006WAILC3 - 2021 2104WAILCL - 2022 2106WAILCL – 2022 Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Period: 2004WAILC3 - 4/1/2020-9/30/22 2006WAILC3 - 4/1/20-9/30/22 2104WAILCL - 9/30/21-9/29/23 2106WAILCL - 9/30/21-9/29/23 Type of Finding: Allowable Activities and Allowable Costs - General Disbursements • Significant Deficiency in Internal Control over Compliance Criteria or specific requirement: Per 2 CFR 200.303, non-Federal entities 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. Condition: Documentation not maintained to support one cash disbursement. Questioned costs: None Context: 1/40 of the general disbursements tested lacked indication of approval. Deemed to be an isolated incident as the particular vendor in question provides physical receipts to DEC, which is an unusual and infrequent method. Limited transactions with said vendor. Cause: Vendor purchases are in-person and physical receipt is obtained. This is unusual for common vendors used and leads to more opportunity for documentation loss. Effect: Reimbursement requests could be made for unallowed expenditures. Repeat Finding: No Recommendation: Review document retention process to ensure all costs that are charged to a Federal program are adequately reviewed and documentation of that process is maintained. If documentation is not available, costs should not be charged to the Federal program. Views of responsible officials: There is no disagreement with the audit finding.

Federal Agency: U.S. Department of Health and Human Services Federal Program Name: ACL Centers for Independent Living Assistance Listing Number: 93.432 Federal Award Identification Number and Year: 2004WAILC3 - 2021 2006WAILC3 - 2021 2104WAILCL - 2022 2106WAILCL - 2022" Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Period: 2004WAILC3 - 4/1/2020-9/30/22 2006WAILC3 - 4/1/20-9/30/22 2104WAILCL - 9/30/21-9/29/23 2106WAILCL - 9/30/21-9/29/23" Type of Finding: Allowable Activities and Allowable Costs - Payroll Disbursements • Material Weakness in Internal Control over Compliance Criteria or specific requirement: Per 2 CFR 200.303, non-Federal entities 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.” Condition: Payroll allocation review is performed annually by ED, which is not timely enough to accurately reflect employee's time worked. Additionally, the allocation performed had logical errors, including one employees time missing from the allocation calculation, and using an inappropriate allocation basis. Questioned costs: None Context: All employees included in selection deemed to work positions that are allowable to the program, however the client allocation process unreliable for all sections tested (25). Cause: Allocations to program based on one employee's memory (ED) for full-year organizational operations. Allocations not reviewed for accuracy by other individual. Effect: Currently, all assigned work activities employees engage in are theoretically allowable under the program, however if an employee were to work projects that are not allowable under the Federal award, reimbursement requests could be made for unallowable costs. Repeat Finding: No Recommendation: 1) Have employees enter time by time period and ensure time codes reflect type of activities worked that tie to Federal program allocations. 2) Have ED review employee timesheets each pay period. 3) Review allocations by program each pay period. 4) Have second individual (contract accountant) review allocations to ensure accuracy and completeness. Views of responsible officials: There is no disagreement with the audit finding.

Federal Agency: U.S. Department of Health and Human Services Federal Program Name: ACL Centers for Independent Living Assistance Listing Number: 93.432 Federal Award Identification Number and Year: 2004WAILC3 - 2021 2006WAILC3 - 2021 2104WAILCL - 2022 2106WAILCL - 2022 Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Period: 2004WAILC3 - 4/1/2020-9/30/22 2006WAILC3 - 4/1/20-9/30/22 2104WAILCL - 9/30/21-9/29/23 2106WAILCL - 9/30/21-9/29/23 Type of Finding: Subrecipient Monitoring/Procurement • Material Weakness in Internal Control over Compliance • Material Noncompliance (Modified Opinion) Criteria or specific requirement: Per 2 CFR Part 200.331, a pass-through entity must make case-by-case determinations whether each agreement it makes for the disbursement of Federal program funds casts the party receiving the funds in the role of a subrecipient or a subcontractor. If a subrecipient has been identified, per 2 CFR Part 200, Subpart F, pass through entities must notify subrecipients that they are receiving Federal funds as a subrecipient and must therefore comply with federal statutes, regulations, and the terms and conditions of the award. Additionally, pass through entities must keep documentation of monitoring the subaward. The pass through entity must have a control process in place to ensure it is in compliance with federal requirements related to subrecipient monitoring. If a subcontractor has been identified (and payment is above the micro-purchase threshold), per 2 CFR Part 200, Subpart D, the entity must have and use documented procurement procedures such as drafting a procurement policy, obtaining qualified bids, performing cost analyses and justifying reason for final selection. Condition: While there existed sophisticated procedures for reviewing, approving and monitoring applicants, they did not meet all of the Federal requirements for either that of subrecipients or subcontractors. Questioned costs: $62,857 In known questioned costs. Context: Upon receipt of the Federal ACL CARES ACT grants, the instructions were to use and disseminate the funds within the community for the purposes of supporting individuals with disabilities who were impacted by COVID and creating professional relationships in further support of individuals with disabilities. DEC was not aware of the Federal Uniform Guidance guidelines requiring DEC to make the determination of whether the vendors meet the characteristics of a subrecipient or a subcontractor and therefore did not follow the required procedures. This is an isolated instance due to the specific nature of the CARES ACT funds as DEC is not able to engage in these activities with other Federal grants. Cause: DEC did not designate these vendors as either subrecipients or subcontractors and therefore did not follow the Federal Uniform Guidance guidelines. Effect: Pass through entities, subcontractors and/or subrecipients could be out of compliance and misusing Federal funds. Repeat Finding: No Recommendation: CLA recommends DEC review the Uniform Guidance in relation to subrecipients and subcontractors, and for each vendor under contract, make a clear determination of which type of contract they fall under. Contracts should be drafted in conformity with either subrecipients or subcontractors (as directed by the Uniform Guidance). Views of responsible officials: There is no disagreement with the audit finding.

Federal Agency: U.S. Department of Health and Human Services Federal Program Name: ACL Centers for Independent Living Assistance Listing Number: 93.432 Federal Award Identification Number and Year: 2004WAILC3 - 2021 2006WAILC3 - 2021 2104WAILCL - 2022 2106WAILCL - 2022 Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Period: 2004WAILC3 - 4/1/2020-9/30/22 2006WAILC3 - 4/1/20-9/30/22 2104WAILCL - 9/30/21-9/29/23 2106WAILCL - 9/30/21-9/29/23 Type of Finding: Cash Management • Material Weakness in Internal Control over Compliance Criteria or specific requirement: Per 2 CFR 200.302(b)(3) the nonfederal entity must keep "records that identify adequately the source and application of funds for federally-funded activities" and must maintain effective controls over these procedures. Condition: No accompanying invoices to support drawdown requests. Questioned costs: None Context: While there existed evidence of supporting invoices for Federal expenditures (with the exception of one item for $52 - see finding 2022-006), these were not compiled into an auditable list showing justification for the drawdown amounts. Auditors reviewed the profit and loss schedule for the year and were not able to identify a clear pattern between expenditures and drawdowns. Cause: Lack of procedures requiring supporting documentation. Effect: Reimbursement requests could be made for unallowed expenditures. Repeat Finding: No Recommendation: Implement process to ensure documentation is kept identifying which expenditures are included in reimbursement request. There should be a secondary individual (ED and contract accountant) involved in the process to ensure accuracy - documentation of the two-person preparation and review process should be documented. Implement procedures to document review of subrecipient payment requests and minimize time elapsed between requests and payments. Views of responsible officials: There is no disagreement with the audit finding.

Federal Agency: U.S. Department of Health and Human Services Federal Program Name: ACL Centers for Independent Living Assistance Listing Number: 93.432 Federal Award Identification Number and Year: 2004WAILC3 - 2021 2006WAILC3 - 2021 2104WAILCL - 2022 2106WAILCL – 2022 Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Period: 2004WAILC3 - 4/1/2020-9/30/22 2006WAILC3 - 4/1/20-9/30/22 2104WAILCL - 9/30/21-9/29/23 2106WAILCL - 9/30/21-9/29/23 Type of Finding: Allowable Activities and Allowable Costs - General Disbursements • Significant Deficiency in Internal Control over Compliance Criteria or specific requirement: Per 2 CFR 200.303, non-Federal entities 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. Condition: Documentation not maintained to support one cash disbursement. Questioned costs: None Context: 1/40 of the general disbursements tested lacked indication of approval. Deemed to be an isolated incident as the particular vendor in question provides physical receipts to DEC, which is an unusual and infrequent method. Limited transactions with said vendor. Cause: Vendor purchases are in-person and physical receipt is obtained. This is unusual for common vendors used and leads to more opportunity for documentation loss. Effect: Reimbursement requests could be made for unallowed expenditures. Repeat Finding: No Recommendation: Review document retention process to ensure all costs that are charged to a Federal program are adequately reviewed and documentation of that process is maintained. If documentation is not available, costs should not be charged to the Federal program. Views of responsible officials: There is no disagreement with the audit finding.

Federal Agency: U.S. Department of Health and Human Services Federal Program Name: ACL Centers for Independent Living Assistance Listing Number: 93.432 Federal Award Identification Number and Year: 2004WAILC3 - 2021 2006WAILC3 - 2021 2104WAILCL - 2022 2106WAILCL - 2022" Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Period: 2004WAILC3 - 4/1/2020-9/30/22 2006WAILC3 - 4/1/20-9/30/22 2104WAILCL - 9/30/21-9/29/23 2106WAILCL - 9/30/21-9/29/23" Type of Finding: Allowable Activities and Allowable Costs - Payroll Disbursements • Material Weakness in Internal Control over Compliance Criteria or specific requirement: Per 2 CFR 200.303, non-Federal entities 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.” Condition: Payroll allocation review is performed annually by ED, which is not timely enough to accurately reflect employee's time worked. Additionally, the allocation performed had logical errors, including one employees time missing from the allocation calculation, and using an inappropriate allocation basis. Questioned costs: None Context: All employees included in selection deemed to work positions that are allowable to the program, however the client allocation process unreliable for all sections tested (25). Cause: Allocations to program based on one employee's memory (ED) for full-year organizational operations. Allocations not reviewed for accuracy by other individual. Effect: Currently, all assigned work activities employees engage in are theoretically allowable under the program, however if an employee were to work projects that are not allowable under the Federal award, reimbursement requests could be made for unallowable costs. Repeat Finding: No Recommendation: 1) Have employees enter time by time period and ensure time codes reflect type of activities worked that tie to Federal program allocations. 2) Have ED review employee timesheets each pay period. 3) Review allocations by program each pay period. 4) Have second individual (contract accountant) review allocations to ensure accuracy and completeness. Views of responsible officials: There is no disagreement with the audit finding.

Federal Agency: U.S. Department of Health and Human Services Federal Program Name: ACL Centers for Independent Living Assistance Listing Number: 93.432 Federal Award Identification Number and Year: 2004WAILC3 - 2021 2006WAILC3 - 2021 2104WAILCL - 2022 2106WAILCL - 2022 Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Period: 2004WAILC3 - 4/1/2020-9/30/22 2006WAILC3 - 4/1/20-9/30/22 2104WAILCL - 9/30/21-9/29/23 2106WAILCL - 9/30/21-9/29/23 Type of Finding: Subrecipient Monitoring/Procurement • Material Weakness in Internal Control over Compliance • Material Noncompliance (Modified Opinion) Criteria or specific requirement: Per 2 CFR Part 200.331, a pass-through entity must make case-by-case determinations whether each agreement it makes for the disbursement of Federal program funds casts the party receiving the funds in the role of a subrecipient or a subcontractor. If a subrecipient has been identified, per 2 CFR Part 200, Subpart F, pass through entities must notify subrecipients that they are receiving Federal funds as a subrecipient and must therefore comply with federal statutes, regulations, and the terms and conditions of the award. Additionally, pass through entities must keep documentation of monitoring the subaward. The pass through entity must have a control process in place to ensure it is in compliance with federal requirements related to subrecipient monitoring. If a subcontractor has been identified (and payment is above the micro-purchase threshold), per 2 CFR Part 200, Subpart D, the entity must have and use documented procurement procedures such as drafting a procurement policy, obtaining qualified bids, performing cost analyses and justifying reason for final selection. Condition: While there existed sophisticated procedures for reviewing, approving and monitoring applicants, they did not meet all of the Federal requirements for either that of subrecipients or subcontractors. Questioned costs: $62,857 In known questioned costs. Context: Upon receipt of the Federal ACL CARES ACT grants, the instructions were to use and disseminate the funds within the community for the purposes of supporting individuals with disabilities who were impacted by COVID and creating professional relationships in further support of individuals with disabilities. DEC was not aware of the Federal Uniform Guidance guidelines requiring DEC to make the determination of whether the vendors meet the characteristics of a subrecipient or a subcontractor and therefore did not follow the required procedures. This is an isolated instance due to the specific nature of the CARES ACT funds as DEC is not able to engage in these activities with other Federal grants. Cause: DEC did not designate these vendors as either subrecipients or subcontractors and therefore did not follow the Federal Uniform Guidance guidelines. Effect: Pass through entities, subcontractors and/or subrecipients could be out of compliance and misusing Federal funds. Repeat Finding: No Recommendation: CLA recommends DEC review the Uniform Guidance in relation to subrecipients and subcontractors, and for each vendor under contract, make a clear determination of which type of contract they fall under. Contracts should be drafted in conformity with either subrecipients or subcontractors (as directed by the Uniform Guidance). Views of responsible officials: There is no disagreement with the audit finding.

Federal Agency: U.S. Department of Health and Human Services Federal Program Name: ACL Centers for Independent Living Assistance Listing Number: 93.432 Federal Award Identification Number and Year: 2004WAILC3 - 2021 2006WAILC3 - 2021 2104WAILCL - 2022 2106WAILCL - 2022 Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Period: 2004WAILC3 - 4/1/2020-9/30/22 2006WAILC3 - 4/1/20-9/30/22 2104WAILCL - 9/30/21-9/29/23 2106WAILCL - 9/30/21-9/29/23 Type of Finding: Cash Management • Material Weakness in Internal Control over Compliance Criteria or specific requirement: Per 2 CFR 200.302(b)(3) the nonfederal entity must keep "records that identify adequately the source and application of funds for federally-funded activities" and must maintain effective controls over these procedures. Condition: No accompanying invoices to support drawdown requests. Questioned costs: None Context: While there existed evidence of supporting invoices for Federal expenditures (with the exception of one item for $52 - see finding 2022-006), these were not compiled into an auditable list showing justification for the drawdown amounts. Auditors reviewed the profit and loss schedule for the year and were not able to identify a clear pattern between expenditures and drawdowns. Cause: Lack of procedures requiring supporting documentation. Effect: Reimbursement requests could be made for unallowed expenditures. Repeat Finding: No Recommendation: Implement process to ensure documentation is kept identifying which expenditures are included in reimbursement request. There should be a secondary individual (ED and contract accountant) involved in the process to ensure accuracy - documentation of the two-person preparation and review process should be documented. Implement procedures to document review of subrecipient payment requests and minimize time elapsed between requests and payments. Views of responsible officials: There is no disagreement with the audit finding.

Federal Agency: U.S. Department of Health and Human Services Federal Program Name: ACL Centers for Independent Living Assistance Listing Number: 93.432 Federal Award Identification Number and Year: 2004WAILC3 - 2021 2006WAILC3 - 2021 2104WAILCL - 2022 2106WAILCL – 2022 Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Period: 2004WAILC3 - 4/1/2020-9/30/22 2006WAILC3 - 4/1/20-9/30/22 2104WAILCL - 9/30/21-9/29/23 2106WAILCL - 9/30/21-9/29/23 Type of Finding: Allowable Activities and Allowable Costs - General Disbursements • Significant Deficiency in Internal Control over Compliance Criteria or specific requirement: Per 2 CFR 200.303, non-Federal entities 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. Condition: Documentation not maintained to support one cash disbursement. Questioned costs: None Context: 1/40 of the general disbursements tested lacked indication of approval. Deemed to be an isolated incident as the particular vendor in question provides physical receipts to DEC, which is an unusual and infrequent method. Limited transactions with said vendor. Cause: Vendor purchases are in-person and physical receipt is obtained. This is unusual for common vendors used and leads to more opportunity for documentation loss. Effect: Reimbursement requests could be made for unallowed expenditures. Repeat Finding: No Recommendation: Review document retention process to ensure all costs that are charged to a Federal program are adequately reviewed and documentation of that process is maintained. If documentation is not available, costs should not be charged to the Federal program. Views of responsible officials: There is no disagreement with the audit finding.

Federal Agency: U.S. Department of Health and Human Services Federal Program Name: ACL Centers for Independent Living Assistance Listing Number: 93.432 Federal Award Identification Number and Year: 2004WAILC3 - 2021 2006WAILC3 - 2021 2104WAILCL - 2022 2106WAILCL - 2022" Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Period: 2004WAILC3 - 4/1/2020-9/30/22 2006WAILC3 - 4/1/20-9/30/22 2104WAILCL - 9/30/21-9/29/23 2106WAILCL - 9/30/21-9/29/23" Type of Finding: Allowable Activities and Allowable Costs - Payroll Disbursements • Material Weakness in Internal Control over Compliance Criteria or specific requirement: Per 2 CFR 200.303, non-Federal entities 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.” Condition: Payroll allocation review is performed annually by ED, which is not timely enough to accurately reflect employee's time worked. Additionally, the allocation performed had logical errors, including one employees time missing from the allocation calculation, and using an inappropriate allocation basis. Questioned costs: None Context: All employees included in selection deemed to work positions that are allowable to the program, however the client allocation process unreliable for all sections tested (25). Cause: Allocations to program based on one employee's memory (ED) for full-year organizational operations. Allocations not reviewed for accuracy by other individual. Effect: Currently, all assigned work activities employees engage in are theoretically allowable under the program, however if an employee were to work projects that are not allowable under the Federal award, reimbursement requests could be made for unallowable costs. Repeat Finding: No Recommendation: 1) Have employees enter time by time period and ensure time codes reflect type of activities worked that tie to Federal program allocations. 2) Have ED review employee timesheets each pay period. 3) Review allocations by program each pay period. 4) Have second individual (contract accountant) review allocations to ensure accuracy and completeness. Views of responsible officials: There is no disagreement with the audit finding.

Federal Agency: U.S. Department of Health and Human Services Federal Program Name: ACL Centers for Independent Living Assistance Listing Number: 93.432 Federal Award Identification Number and Year: 2004WAILC3 - 2021 2006WAILC3 - 2021 2104WAILCL - 2022 2106WAILCL - 2022 Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Period: 2004WAILC3 - 4/1/2020-9/30/22 2006WAILC3 - 4/1/20-9/30/22 2104WAILCL - 9/30/21-9/29/23 2106WAILCL - 9/30/21-9/29/23 Type of Finding: Subrecipient Monitoring/Procurement • Material Weakness in Internal Control over Compliance • Material Noncompliance (Modified Opinion) Criteria or specific requirement: Per 2 CFR Part 200.331, a pass-through entity must make case-by-case determinations whether each agreement it makes for the disbursement of Federal program funds casts the party receiving the funds in the role of a subrecipient or a subcontractor. If a subrecipient has been identified, per 2 CFR Part 200, Subpart F, pass through entities must notify subrecipients that they are receiving Federal funds as a subrecipient and must therefore comply with federal statutes, regulations, and the terms and conditions of the award. Additionally, pass through entities must keep documentation of monitoring the subaward. The pass through entity must have a control process in place to ensure it is in compliance with federal requirements related to subrecipient monitoring. If a subcontractor has been identified (and payment is above the micro-purchase threshold), per 2 CFR Part 200, Subpart D, the entity must have and use documented procurement procedures such as drafting a procurement policy, obtaining qualified bids, performing cost analyses and justifying reason for final selection. Condition: While there existed sophisticated procedures for reviewing, approving and monitoring applicants, they did not meet all of the Federal requirements for either that of subrecipients or subcontractors. Questioned costs: $62,857 In known questioned costs. Context: Upon receipt of the Federal ACL CARES ACT grants, the instructions were to use and disseminate the funds within the community for the purposes of supporting individuals with disabilities who were impacted by COVID and creating professional relationships in further support of individuals with disabilities. DEC was not aware of the Federal Uniform Guidance guidelines requiring DEC to make the determination of whether the vendors meet the characteristics of a subrecipient or a subcontractor and therefore did not follow the required procedures. This is an isolated instance due to the specific nature of the CARES ACT funds as DEC is not able to engage in these activities with other Federal grants. Cause: DEC did not designate these vendors as either subrecipients or subcontractors and therefore did not follow the Federal Uniform Guidance guidelines. Effect: Pass through entities, subcontractors and/or subrecipients could be out of compliance and misusing Federal funds. Repeat Finding: No Recommendation: CLA recommends DEC review the Uniform Guidance in relation to subrecipients and subcontractors, and for each vendor under contract, make a clear determination of which type of contract they fall under. Contracts should be drafted in conformity with either subrecipients or subcontractors (as directed by the Uniform Guidance). Views of responsible officials: There is no disagreement with the audit finding.

Federal Agency: U.S. Department of Health and Human Services Federal Program Name: ACL Centers for Independent Living Assistance Listing Number: 93.432 Federal Award Identification Number and Year: 2004WAILC3 - 2021 2006WAILC3 - 2021 2104WAILCL - 2022 2106WAILCL - 2022 Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Period: 2004WAILC3 - 4/1/2020-9/30/22 2006WAILC3 - 4/1/20-9/30/22 2104WAILCL - 9/30/21-9/29/23 2106WAILCL - 9/30/21-9/29/23 Type of Finding: Cash Management • Material Weakness in Internal Control over Compliance Criteria or specific requirement: Per 2 CFR 200.302(b)(3) the nonfederal entity must keep "records that identify adequately the source and application of funds for federally-funded activities" and must maintain effective controls over these procedures. Condition: No accompanying invoices to support drawdown requests. Questioned costs: None Context: While there existed evidence of supporting invoices for Federal expenditures (with the exception of one item for $52 - see finding 2022-006), these were not compiled into an auditable list showing justification for the drawdown amounts. Auditors reviewed the profit and loss schedule for the year and were not able to identify a clear pattern between expenditures and drawdowns. Cause: Lack of procedures requiring supporting documentation. Effect: Reimbursement requests could be made for unallowed expenditures. Repeat Finding: No Recommendation: Implement process to ensure documentation is kept identifying which expenditures are included in reimbursement request. There should be a secondary individual (ED and contract accountant) involved in the process to ensure accuracy - documentation of the two-person preparation and review process should be documented. Implement procedures to document review of subrecipient payment requests and minimize time elapsed between requests and payments. Views of responsible officials: There is no disagreement with the audit finding.

Federal Agency: U.S. Department of Health and Human Services Federal Program Name: ACL Centers for Independent Living Assistance Listing Number: 93.432 Federal Award Identification Number and Year: 2004WAILC3 - 2021 2006WAILC3 - 2021 2104WAILCL - 2022 2106WAILCL – 2022 Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Period: 2004WAILC3 - 4/1/2020-9/30/22 2006WAILC3 - 4/1/20-9/30/22 2104WAILCL - 9/30/21-9/29/23 2106WAILCL - 9/30/21-9/29/23 Type of Finding: Allowable Activities and Allowable Costs - General Disbursements • Significant Deficiency in Internal Control over Compliance Criteria or specific requirement: Per 2 CFR 200.303, non-Federal entities 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. Condition: Documentation not maintained to support one cash disbursement. Questioned costs: None Context: 1/40 of the general disbursements tested lacked indication of approval. Deemed to be an isolated incident as the particular vendor in question provides physical receipts to DEC, which is an unusual and infrequent method. Limited transactions with said vendor. Cause: Vendor purchases are in-person and physical receipt is obtained. This is unusual for common vendors used and leads to more opportunity for documentation loss. Effect: Reimbursement requests could be made for unallowed expenditures. Repeat Finding: No Recommendation: Review document retention process to ensure all costs that are charged to a Federal program are adequately reviewed and documentation of that process is maintained. If documentation is not available, costs should not be charged to the Federal program. Views of responsible officials: There is no disagreement with the audit finding.

Federal Agency: U.S. Department of Health and Human Services Federal Program Name: ACL Centers for Independent Living Assistance Listing Number: 93.432 Federal Award Identification Number and Year: 2004WAILC3 - 2021 2006WAILC3 - 2021 2104WAILCL - 2022 2106WAILCL - 2022" Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Period: 2004WAILC3 - 4/1/2020-9/30/22 2006WAILC3 - 4/1/20-9/30/22 2104WAILCL - 9/30/21-9/29/23 2106WAILCL - 9/30/21-9/29/23" Type of Finding: Allowable Activities and Allowable Costs - Payroll Disbursements • Material Weakness in Internal Control over Compliance Criteria or specific requirement: Per 2 CFR 200.303, non-Federal entities 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.” Condition: Payroll allocation review is performed annually by ED, which is not timely enough to accurately reflect employee's time worked. Additionally, the allocation performed had logical errors, including one employees time missing from the allocation calculation, and using an inappropriate allocation basis. Questioned costs: None Context: All employees included in selection deemed to work positions that are allowable to the program, however the client allocation process unreliable for all sections tested (25). Cause: Allocations to program based on one employee's memory (ED) for full-year organizational operations. Allocations not reviewed for accuracy by other individual. Effect: Currently, all assigned work activities employees engage in are theoretically allowable under the program, however if an employee were to work projects that are not allowable under the Federal award, reimbursement requests could be made for unallowable costs. Repeat Finding: No Recommendation: 1) Have employees enter time by time period and ensure time codes reflect type of activities worked that tie to Federal program allocations. 2) Have ED review employee timesheets each pay period. 3) Review allocations by program each pay period. 4) Have second individual (contract accountant) review allocations to ensure accuracy and completeness. Views of responsible officials: There is no disagreement with the audit finding.

Federal Agency: U.S. Department of Health and Human Services Federal Program Name: ACL Centers for Independent Living Assistance Listing Number: 93.432 Federal Award Identification Number and Year: 2004WAILC3 - 2021 2006WAILC3 - 2021 2104WAILCL - 2022 2106WAILCL - 2022 Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Period: 2004WAILC3 - 4/1/2020-9/30/22 2006WAILC3 - 4/1/20-9/30/22 2104WAILCL - 9/30/21-9/29/23 2106WAILCL - 9/30/21-9/29/23 Type of Finding: Subrecipient Monitoring/Procurement • Material Weakness in Internal Control over Compliance • Material Noncompliance (Modified Opinion) Criteria or specific requirement: Per 2 CFR Part 200.331, a pass-through entity must make case-by-case determinations whether each agreement it makes for the disbursement of Federal program funds casts the party receiving the funds in the role of a subrecipient or a subcontractor. If a subrecipient has been identified, per 2 CFR Part 200, Subpart F, pass through entities must notify subrecipients that they are receiving Federal funds as a subrecipient and must therefore comply with federal statutes, regulations, and the terms and conditions of the award. Additionally, pass through entities must keep documentation of monitoring the subaward. The pass through entity must have a control process in place to ensure it is in compliance with federal requirements related to subrecipient monitoring. If a subcontractor has been identified (and payment is above the micro-purchase threshold), per 2 CFR Part 200, Subpart D, the entity must have and use documented procurement procedures such as drafting a procurement policy, obtaining qualified bids, performing cost analyses and justifying reason for final selection. Condition: While there existed sophisticated procedures for reviewing, approving and monitoring applicants, they did not meet all of the Federal requirements for either that of subrecipients or subcontractors. Questioned costs: $62,857 In known questioned costs. Context: Upon receipt of the Federal ACL CARES ACT grants, the instructions were to use and disseminate the funds within the community for the purposes of supporting individuals with disabilities who were impacted by COVID and creating professional relationships in further support of individuals with disabilities. DEC was not aware of the Federal Uniform Guidance guidelines requiring DEC to make the determination of whether the vendors meet the characteristics of a subrecipient or a subcontractor and therefore did not follow the required procedures. This is an isolated instance due to the specific nature of the CARES ACT funds as DEC is not able to engage in these activities with other Federal grants. Cause: DEC did not designate these vendors as either subrecipients or subcontractors and therefore did not follow the Federal Uniform Guidance guidelines. Effect: Pass through entities, subcontractors and/or subrecipients could be out of compliance and misusing Federal funds. Repeat Finding: No Recommendation: CLA recommends DEC review the Uniform Guidance in relation to subrecipients and subcontractors, and for each vendor under contract, make a clear determination of which type of contract they fall under. Contracts should be drafted in conformity with either subrecipients or subcontractors (as directed by the Uniform Guidance). Views of responsible officials: There is no disagreement with the audit finding.

Federal Agency: U.S. Department of Health and Human Services Federal Program Name: ACL Centers for Independent Living Assistance Listing Number: 93.432 Federal Award Identification Number and Year: 2004WAILC3 - 2021 2006WAILC3 - 2021 2104WAILCL - 2022 2106WAILCL - 2022 Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Period: 2004WAILC3 - 4/1/2020-9/30/22 2006WAILC3 - 4/1/20-9/30/22 2104WAILCL - 9/30/21-9/29/23 2106WAILCL - 9/30/21-9/29/23 Type of Finding: Cash Management • Material Weakness in Internal Control over Compliance Criteria or specific requirement: Per 2 CFR 200.302(b)(3) the nonfederal entity must keep "records that identify adequately the source and application of funds for federally-funded activities" and must maintain effective controls over these procedures. Condition: No accompanying invoices to support drawdown requests. Questioned costs: None Context: While there existed evidence of supporting invoices for Federal expenditures (with the exception of one item for $52 - see finding 2022-006), these were not compiled into an auditable list showing justification for the drawdown amounts. Auditors reviewed the profit and loss schedule for the year and were not able to identify a clear pattern between expenditures and drawdowns. Cause: Lack of procedures requiring supporting documentation. Effect: Reimbursement requests could be made for unallowed expenditures. Repeat Finding: No Recommendation: Implement process to ensure documentation is kept identifying which expenditures are included in reimbursement request. There should be a secondary individual (ED and contract accountant) involved in the process to ensure accuracy - documentation of the two-person preparation and review process should be documented. Implement procedures to document review of subrecipient payment requests and minimize time elapsed between requests and payments. Views of responsible officials: There is no disagreement with the audit finding.

Federal Agency: U.S. Department of Health and Human Services Federal Program Name: ACL Centers for Independent Living Assistance Listing Number: 93.432 Federal Award Identification Number and Year: 2004WAILC3 - 2021 2006WAILC3 - 2021 2104WAILCL - 2022 2106WAILCL – 2022 Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Period: 2004WAILC3 - 4/1/2020-9/30/22 2006WAILC3 - 4/1/20-9/30/22 2104WAILCL - 9/30/21-9/29/23 2106WAILCL - 9/30/21-9/29/23 Type of Finding: Allowable Activities and Allowable Costs - General Disbursements • Significant Deficiency in Internal Control over Compliance Criteria or specific requirement: Per 2 CFR 200.303, non-Federal entities 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. Condition: Documentation not maintained to support one cash disbursement. Questioned costs: None Context: 1/40 of the general disbursements tested lacked indication of approval. Deemed to be an isolated incident as the particular vendor in question provides physical receipts to DEC, which is an unusual and infrequent method. Limited transactions with said vendor. Cause: Vendor purchases are in-person and physical receipt is obtained. This is unusual for common vendors used and leads to more opportunity for documentation loss. Effect: Reimbursement requests could be made for unallowed expenditures. Repeat Finding: No Recommendation: Review document retention process to ensure all costs that are charged to a Federal program are adequately reviewed and documentation of that process is maintained. If documentation is not available, costs should not be charged to the Federal program. Views of responsible officials: There is no disagreement with the audit finding.

Federal Agency: U.S. Department of Health and Human Services Federal Program Name: ACL Centers for Independent Living Assistance Listing Number: 93.432 Federal Award Identification Number and Year: 2004WAILC3 - 2021 2006WAILC3 - 2021 2104WAILCL - 2022 2106WAILCL - 2022" Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Period: 2004WAILC3 - 4/1/2020-9/30/22 2006WAILC3 - 4/1/20-9/30/22 2104WAILCL - 9/30/21-9/29/23 2106WAILCL - 9/30/21-9/29/23" Type of Finding: Allowable Activities and Allowable Costs - Payroll Disbursements • Material Weakness in Internal Control over Compliance Criteria or specific requirement: Per 2 CFR 200.303, non-Federal entities 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.” Condition: Payroll allocation review is performed annually by ED, which is not timely enough to accurately reflect employee's time worked. Additionally, the allocation performed had logical errors, including one employees time missing from the allocation calculation, and using an inappropriate allocation basis. Questioned costs: None Context: All employees included in selection deemed to work positions that are allowable to the program, however the client allocation process unreliable for all sections tested (25). Cause: Allocations to program based on one employee's memory (ED) for full-year organizational operations. Allocations not reviewed for accuracy by other individual. Effect: Currently, all assigned work activities employees engage in are theoretically allowable under the program, however if an employee were to work projects that are not allowable under the Federal award, reimbursement requests could be made for unallowable costs. Repeat Finding: No Recommendation: 1) Have employees enter time by time period and ensure time codes reflect type of activities worked that tie to Federal program allocations. 2) Have ED review employee timesheets each pay period. 3) Review allocations by program each pay period. 4) Have second individual (contract accountant) review allocations to ensure accuracy and completeness. Views of responsible officials: There is no disagreement with the audit finding.

Federal Agency: U.S. Department of Health and Human Services Federal Program Name: ACL Centers for Independent Living Assistance Listing Number: 93.432 Federal Award Identification Number and Year: 2004WAILC3 - 2021 2006WAILC3 - 2021 2104WAILCL - 2022 2106WAILCL - 2022 Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Period: 2004WAILC3 - 4/1/2020-9/30/22 2006WAILC3 - 4/1/20-9/30/22 2104WAILCL - 9/30/21-9/29/23 2106WAILCL - 9/30/21-9/29/23 Type of Finding: Subrecipient Monitoring/Procurement • Material Weakness in Internal Control over Compliance • Material Noncompliance (Modified Opinion) Criteria or specific requirement: Per 2 CFR Part 200.331, a pass-through entity must make case-by-case determinations whether each agreement it makes for the disbursement of Federal program funds casts the party receiving the funds in the role of a subrecipient or a subcontractor. If a subrecipient has been identified, per 2 CFR Part 200, Subpart F, pass through entities must notify subrecipients that they are receiving Federal funds as a subrecipient and must therefore comply with federal statutes, regulations, and the terms and conditions of the award. Additionally, pass through entities must keep documentation of monitoring the subaward. The pass through entity must have a control process in place to ensure it is in compliance with federal requirements related to subrecipient monitoring. If a subcontractor has been identified (and payment is above the micro-purchase threshold), per 2 CFR Part 200, Subpart D, the entity must have and use documented procurement procedures such as drafting a procurement policy, obtaining qualified bids, performing cost analyses and justifying reason for final selection. Condition: While there existed sophisticated procedures for reviewing, approving and monitoring applicants, they did not meet all of the Federal requirements for either that of subrecipients or subcontractors. Questioned costs: $62,857 In known questioned costs. Context: Upon receipt of the Federal ACL CARES ACT grants, the instructions were to use and disseminate the funds within the community for the purposes of supporting individuals with disabilities who were impacted by COVID and creating professional relationships in further support of individuals with disabilities. DEC was not aware of the Federal Uniform Guidance guidelines requiring DEC to make the determination of whether the vendors meet the characteristics of a subrecipient or a subcontractor and therefore did not follow the required procedures. This is an isolated instance due to the specific nature of the CARES ACT funds as DEC is not able to engage in these activities with other Federal grants. Cause: DEC did not designate these vendors as either subrecipients or subcontractors and therefore did not follow the Federal Uniform Guidance guidelines. Effect: Pass through entities, subcontractors and/or subrecipients could be out of compliance and misusing Federal funds. Repeat Finding: No Recommendation: CLA recommends DEC review the Uniform Guidance in relation to subrecipients and subcontractors, and for each vendor under contract, make a clear determination of which type of contract they fall under. Contracts should be drafted in conformity with either subrecipients or subcontractors (as directed by the Uniform Guidance). Views of responsible officials: There is no disagreement with the audit finding.

Federal Agency: U.S. Department of Health and Human Services Federal Program Name: ACL Centers for Independent Living Assistance Listing Number: 93.432 Federal Award Identification Number and Year: 2004WAILC3 - 2021 2006WAILC3 - 2021 2104WAILCL - 2022 2106WAILCL - 2022 Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Period: 2004WAILC3 - 4/1/2020-9/30/22 2006WAILC3 - 4/1/20-9/30/22 2104WAILCL - 9/30/21-9/29/23 2106WAILCL - 9/30/21-9/29/23 Type of Finding: Cash Management • Material Weakness in Internal Control over Compliance Criteria or specific requirement: Per 2 CFR 200.302(b)(3) the nonfederal entity must keep "records that identify adequately the source and application of funds for federally-funded activities" and must maintain effective controls over these procedures. Condition: No accompanying invoices to support drawdown requests. Questioned costs: None Context: While there existed evidence of supporting invoices for Federal expenditures (with the exception of one item for $52 - see finding 2022-006), these were not compiled into an auditable list showing justification for the drawdown amounts. Auditors reviewed the profit and loss schedule for the year and were not able to identify a clear pattern between expenditures and drawdowns. Cause: Lack of procedures requiring supporting documentation. Effect: Reimbursement requests could be made for unallowed expenditures. Repeat Finding: No Recommendation: Implement process to ensure documentation is kept identifying which expenditures are included in reimbursement request. There should be a secondary individual (ED and contract accountant) involved in the process to ensure accuracy - documentation of the two-person preparation and review process should be documented. Implement procedures to document review of subrecipient payment requests and minimize time elapsed between requests and payments. Views of responsible officials: There is no disagreement with the audit finding.

Federal Agency: U.S. Department of Health and Human Services Federal Program Name: ACL Centers for Independent Living Assistance Listing Number: 93.432 Federal Award Identification Number and Year: 2004WAILC3 - 2021 2006WAILC3 - 2021 2104WAILCL - 2022 2106WAILCL – 2022 Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Period: 2004WAILC3 - 4/1/2020-9/30/22 2006WAILC3 - 4/1/20-9/30/22 2104WAILCL - 9/30/21-9/29/23 2106WAILCL - 9/30/21-9/29/23 Type of Finding: Allowable Activities and Allowable Costs - General Disbursements • Significant Deficiency in Internal Control over Compliance Criteria or specific requirement: Per 2 CFR 200.303, non-Federal entities 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. Condition: Documentation not maintained to support one cash disbursement. Questioned costs: None Context: 1/40 of the general disbursements tested lacked indication of approval. Deemed to be an isolated incident as the particular vendor in question provides physical receipts to DEC, which is an unusual and infrequent method. Limited transactions with said vendor. Cause: Vendor purchases are in-person and physical receipt is obtained. This is unusual for common vendors used and leads to more opportunity for documentation loss. Effect: Reimbursement requests could be made for unallowed expenditures. Repeat Finding: No Recommendation: Review document retention process to ensure all costs that are charged to a Federal program are adequately reviewed and documentation of that process is maintained. If documentation is not available, costs should not be charged to the Federal program. Views of responsible officials: There is no disagreement with the audit finding.

Federal Agency: U.S. Department of Health and Human Services Federal Program Name: ACL Centers for Independent Living Assistance Listing Number: 93.432 Federal Award Identification Number and Year: 2004WAILC3 - 2021 2006WAILC3 - 2021 2104WAILCL - 2022 2106WAILCL - 2022" Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Period: 2004WAILC3 - 4/1/2020-9/30/22 2006WAILC3 - 4/1/20-9/30/22 2104WAILCL - 9/30/21-9/29/23 2106WAILCL - 9/30/21-9/29/23" Type of Finding: Allowable Activities and Allowable Costs - Payroll Disbursements • Material Weakness in Internal Control over Compliance Criteria or specific requirement: Per 2 CFR 200.303, non-Federal entities 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.” Condition: Payroll allocation review is performed annually by ED, which is not timely enough to accurately reflect employee's time worked. Additionally, the allocation performed had logical errors, including one employees time missing from the allocation calculation, and using an inappropriate allocation basis. Questioned costs: None Context: All employees included in selection deemed to work positions that are allowable to the program, however the client allocation process unreliable for all sections tested (25). Cause: Allocations to program based on one employee's memory (ED) for full-year organizational operations. Allocations not reviewed for accuracy by other individual. Effect: Currently, all assigned work activities employees engage in are theoretically allowable under the program, however if an employee were to work projects that are not allowable under the Federal award, reimbursement requests could be made for unallowable costs. Repeat Finding: No Recommendation: 1) Have employees enter time by time period and ensure time codes reflect type of activities worked that tie to Federal program allocations. 2) Have ED review employee timesheets each pay period. 3) Review allocations by program each pay period. 4) Have second individual (contract accountant) review allocations to ensure accuracy and completeness. Views of responsible officials: There is no disagreement with the audit finding.

Federal Agency: U.S. Department of Health and Human Services Federal Program Name: ACL Centers for Independent Living Assistance Listing Number: 93.432 Federal Award Identification Number and Year: 2004WAILC3 - 2021 2006WAILC3 - 2021 2104WAILCL - 2022 2106WAILCL - 2022 Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Period: 2004WAILC3 - 4/1/2020-9/30/22 2006WAILC3 - 4/1/20-9/30/22 2104WAILCL - 9/30/21-9/29/23 2106WAILCL - 9/30/21-9/29/23 Type of Finding: Subrecipient Monitoring/Procurement • Material Weakness in Internal Control over Compliance • Material Noncompliance (Modified Opinion) Criteria or specific requirement: Per 2 CFR Part 200.331, a pass-through entity must make case-by-case determinations whether each agreement it makes for the disbursement of Federal program funds casts the party receiving the funds in the role of a subrecipient or a subcontractor. If a subrecipient has been identified, per 2 CFR Part 200, Subpart F, pass through entities must notify subrecipients that they are receiving Federal funds as a subrecipient and must therefore comply with federal statutes, regulations, and the terms and conditions of the award. Additionally, pass through entities must keep documentation of monitoring the subaward. The pass through entity must have a control process in place to ensure it is in compliance with federal requirements related to subrecipient monitoring. If a subcontractor has been identified (and payment is above the micro-purchase threshold), per 2 CFR Part 200, Subpart D, the entity must have and use documented procurement procedures such as drafting a procurement policy, obtaining qualified bids, performing cost analyses and justifying reason for final selection. Condition: While there existed sophisticated procedures for reviewing, approving and monitoring applicants, they did not meet all of the Federal requirements for either that of subrecipients or subcontractors. Questioned costs: $62,857 In known questioned costs. Context: Upon receipt of the Federal ACL CARES ACT grants, the instructions were to use and disseminate the funds within the community for the purposes of supporting individuals with disabilities who were impacted by COVID and creating professional relationships in further support of individuals with disabilities. DEC was not aware of the Federal Uniform Guidance guidelines requiring DEC to make the determination of whether the vendors meet the characteristics of a subrecipient or a subcontractor and therefore did not follow the required procedures. This is an isolated instance due to the specific nature of the CARES ACT funds as DEC is not able to engage in these activities with other Federal grants. Cause: DEC did not designate these vendors as either subrecipients or subcontractors and therefore did not follow the Federal Uniform Guidance guidelines. Effect: Pass through entities, subcontractors and/or subrecipients could be out of compliance and misusing Federal funds. Repeat Finding: No Recommendation: CLA recommends DEC review the Uniform Guidance in relation to subrecipients and subcontractors, and for each vendor under contract, make a clear determination of which type of contract they fall under. Contracts should be drafted in conformity with either subrecipients or subcontractors (as directed by the Uniform Guidance). Views of responsible officials: There is no disagreement with the audit finding.

Federal Agency: U.S. Department of Health and Human Services Federal Program Name: ACL Centers for Independent Living Assistance Listing Number: 93.432 Federal Award Identification Number and Year: 2004WAILC3 - 2021 2006WAILC3 - 2021 2104WAILCL - 2022 2106WAILCL - 2022 Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Period: 2004WAILC3 - 4/1/2020-9/30/22 2006WAILC3 - 4/1/20-9/30/22 2104WAILCL - 9/30/21-9/29/23 2106WAILCL - 9/30/21-9/29/23 Type of Finding: Cash Management • Material Weakness in Internal Control over Compliance Criteria or specific requirement: Per 2 CFR 200.302(b)(3) the nonfederal entity must keep "records that identify adequately the source and application of funds for federally-funded activities" and must maintain effective controls over these procedures. Condition: No accompanying invoices to support drawdown requests. Questioned costs: None Context: While there existed evidence of supporting invoices for Federal expenditures (with the exception of one item for $52 - see finding 2022-006), these were not compiled into an auditable list showing justification for the drawdown amounts. Auditors reviewed the profit and loss schedule for the year and were not able to identify a clear pattern between expenditures and drawdowns. Cause: Lack of procedures requiring supporting documentation. Effect: Reimbursement requests could be made for unallowed expenditures. Repeat Finding: No Recommendation: Implement process to ensure documentation is kept identifying which expenditures are included in reimbursement request. There should be a secondary individual (ED and contract accountant) involved in the process to ensure accuracy - documentation of the two-person preparation and review process should be documented. Implement procedures to document review of subrecipient payment requests and minimize time elapsed between requests and payments. Views of responsible officials: There is no disagreement with the audit finding.

Federal Agency: U.S. Department of Health and Human Services Federal Program Name: ACL Centers for Independent Living Assistance Listing Number: 93.432 Federal Award Identification Number and Year: 2004WAILC3 - 2021 2006WAILC3 - 2021 2104WAILCL - 2022 2106WAILCL – 2022 Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Period: 2004WAILC3 - 4/1/2020-9/30/22 2006WAILC3 - 4/1/20-9/30/22 2104WAILCL - 9/30/21-9/29/23 2106WAILCL - 9/30/21-9/29/23 Type of Finding: Allowable Activities and Allowable Costs - General Disbursements • Significant Deficiency in Internal Control over Compliance Criteria or specific requirement: Per 2 CFR 200.303, non-Federal entities 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. Condition: Documentation not maintained to support one cash disbursement. Questioned costs: None Context: 1/40 of the general disbursements tested lacked indication of approval. Deemed to be an isolated incident as the particular vendor in question provides physical receipts to DEC, which is an unusual and infrequent method. Limited transactions with said vendor. Cause: Vendor purchases are in-person and physical receipt is obtained. This is unusual for common vendors used and leads to more opportunity for documentation loss. Effect: Reimbursement requests could be made for unallowed expenditures. Repeat Finding: No Recommendation: Review document retention process to ensure all costs that are charged to a Federal program are adequately reviewed and documentation of that process is maintained. If documentation is not available, costs should not be charged to the Federal program. Views of responsible officials: There is no disagreement with the audit finding.

Federal Agency: U.S. Department of Health and Human Services Federal Program Name: ACL Centers for Independent Living Assistance Listing Number: 93.432 Federal Award Identification Number and Year: 2004WAILC3 - 2021 2006WAILC3 - 2021 2104WAILCL - 2022 2106WAILCL - 2022" Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Period: 2004WAILC3 - 4/1/2020-9/30/22 2006WAILC3 - 4/1/20-9/30/22 2104WAILCL - 9/30/21-9/29/23 2106WAILCL - 9/30/21-9/29/23" Type of Finding: Allowable Activities and Allowable Costs - Payroll Disbursements • Material Weakness in Internal Control over Compliance Criteria or specific requirement: Per 2 CFR 200.303, non-Federal entities 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.” Condition: Payroll allocation review is performed annually by ED, which is not timely enough to accurately reflect employee's time worked. Additionally, the allocation performed had logical errors, including one employees time missing from the allocation calculation, and using an inappropriate allocation basis. Questioned costs: None Context: All employees included in selection deemed to work positions that are allowable to the program, however the client allocation process unreliable for all sections tested (25). Cause: Allocations to program based on one employee's memory (ED) for full-year organizational operations. Allocations not reviewed for accuracy by other individual. Effect: Currently, all assigned work activities employees engage in are theoretically allowable under the program, however if an employee were to work projects that are not allowable under the Federal award, reimbursement requests could be made for unallowable costs. Repeat Finding: No Recommendation: 1) Have employees enter time by time period and ensure time codes reflect type of activities worked that tie to Federal program allocations. 2) Have ED review employee timesheets each pay period. 3) Review allocations by program each pay period. 4) Have second individual (contract accountant) review allocations to ensure accuracy and completeness. Views of responsible officials: There is no disagreement with the audit finding.

Federal Agency: U.S. Department of Health and Human Services Federal Program Name: ACL Centers for Independent Living Assistance Listing Number: 93.432 Federal Award Identification Number and Year: 2004WAILC3 - 2021 2006WAILC3 - 2021 2104WAILCL - 2022 2106WAILCL - 2022 Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Period: 2004WAILC3 - 4/1/2020-9/30/22 2006WAILC3 - 4/1/20-9/30/22 2104WAILCL - 9/30/21-9/29/23 2106WAILCL - 9/30/21-9/29/23 Type of Finding: Subrecipient Monitoring/Procurement • Material Weakness in Internal Control over Compliance • Material Noncompliance (Modified Opinion) Criteria or specific requirement: Per 2 CFR Part 200.331, a pass-through entity must make case-by-case determinations whether each agreement it makes for the disbursement of Federal program funds casts the party receiving the funds in the role of a subrecipient or a subcontractor. If a subrecipient has been identified, per 2 CFR Part 200, Subpart F, pass through entities must notify subrecipients that they are receiving Federal funds as a subrecipient and must therefore comply with federal statutes, regulations, and the terms and conditions of the award. Additionally, pass through entities must keep documentation of monitoring the subaward. The pass through entity must have a control process in place to ensure it is in compliance with federal requirements related to subrecipient monitoring. If a subcontractor has been identified (and payment is above the micro-purchase threshold), per 2 CFR Part 200, Subpart D, the entity must have and use documented procurement procedures such as drafting a procurement policy, obtaining qualified bids, performing cost analyses and justifying reason for final selection. Condition: While there existed sophisticated procedures for reviewing, approving and monitoring applicants, they did not meet all of the Federal requirements for either that of subrecipients or subcontractors. Questioned costs: $62,857 In known questioned costs. Context: Upon receipt of the Federal ACL CARES ACT grants, the instructions were to use and disseminate the funds within the community for the purposes of supporting individuals with disabilities who were impacted by COVID and creating professional relationships in further support of individuals with disabilities. DEC was not aware of the Federal Uniform Guidance guidelines requiring DEC to make the determination of whether the vendors meet the characteristics of a subrecipient or a subcontractor and therefore did not follow the required procedures. This is an isolated instance due to the specific nature of the CARES ACT funds as DEC is not able to engage in these activities with other Federal grants. Cause: DEC did not designate these vendors as either subrecipients or subcontractors and therefore did not follow the Federal Uniform Guidance guidelines. Effect: Pass through entities, subcontractors and/or subrecipients could be out of compliance and misusing Federal funds. Repeat Finding: No Recommendation: CLA recommends DEC review the Uniform Guidance in relation to subrecipients and subcontractors, and for each vendor under contract, make a clear determination of which type of contract they fall under. Contracts should be drafted in conformity with either subrecipients or subcontractors (as directed by the Uniform Guidance). Views of responsible officials: There is no disagreement with the audit finding.

Federal Agency: U.S. Department of Health and Human Services Federal Program Name: ACL Centers for Independent Living Assistance Listing Number: 93.432 Federal Award Identification Number and Year: 2004WAILC3 - 2021 2006WAILC3 - 2021 2104WAILCL - 2022 2106WAILCL - 2022 Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Period: 2004WAILC3 - 4/1/2020-9/30/22 2006WAILC3 - 4/1/20-9/30/22 2104WAILCL - 9/30/21-9/29/23 2106WAILCL - 9/30/21-9/29/23 Type of Finding: Cash Management • Material Weakness in Internal Control over Compliance Criteria or specific requirement: Per 2 CFR 200.302(b)(3) the nonfederal entity must keep "records that identify adequately the source and application of funds for federally-funded activities" and must maintain effective controls over these procedures. Condition: No accompanying invoices to support drawdown requests. Questioned costs: None Context: While there existed evidence of supporting invoices for Federal expenditures (with the exception of one item for $52 - see finding 2022-006), these were not compiled into an auditable list showing justification for the drawdown amounts. Auditors reviewed the profit and loss schedule for the year and were not able to identify a clear pattern between expenditures and drawdowns. Cause: Lack of procedures requiring supporting documentation. Effect: Reimbursement requests could be made for unallowed expenditures. Repeat Finding: No Recommendation: Implement process to ensure documentation is kept identifying which expenditures are included in reimbursement request. There should be a secondary individual (ED and contract accountant) involved in the process to ensure accuracy - documentation of the two-person preparation and review process should be documented. Implement procedures to document review of subrecipient payment requests and minimize time elapsed between requests and payments. Views of responsible officials: There is no disagreement with the audit finding.

Federal Agency: U.S. Department of Health and Human Services Federal Program Name: ACL Centers for Independent Living Assistance Listing Number: 93.432 Federal Award Identification Number and Year: 2004WAILC3 - 2021 2006WAILC3 - 2021 2104WAILCL - 2022 2106WAILCL – 2022 Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Period: 2004WAILC3 - 4/1/2020-9/30/22 2006WAILC3 - 4/1/20-9/30/22 2104WAILCL - 9/30/21-9/29/23 2106WAILCL - 9/30/21-9/29/23 Type of Finding: Allowable Activities and Allowable Costs - General Disbursements • Significant Deficiency in Internal Control over Compliance Criteria or specific requirement: Per 2 CFR 200.303, non-Federal entities 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. Condition: Documentation not maintained to support one cash disbursement. Questioned costs: None Context: 1/40 of the general disbursements tested lacked indication of approval. Deemed to be an isolated incident as the particular vendor in question provides physical receipts to DEC, which is an unusual and infrequent method. Limited transactions with said vendor. Cause: Vendor purchases are in-person and physical receipt is obtained. This is unusual for common vendors used and leads to more opportunity for documentation loss. Effect: Reimbursement requests could be made for unallowed expenditures. Repeat Finding: No Recommendation: Review document retention process to ensure all costs that are charged to a Federal program are adequately reviewed and documentation of that process is maintained. If documentation is not available, costs should not be charged to the Federal program. Views of responsible officials: There is no disagreement with the audit finding.

Federal Agency: U.S. Department of Health and Human Services Federal Program Name: ACL Centers for Independent Living Assistance Listing Number: 93.432 Federal Award Identification Number and Year: 2004WAILC3 - 2021 2006WAILC3 - 2021 2104WAILCL - 2022 2106WAILCL - 2022" Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Period: 2004WAILC3 - 4/1/2020-9/30/22 2006WAILC3 - 4/1/20-9/30/22 2104WAILCL - 9/30/21-9/29/23 2106WAILCL - 9/30/21-9/29/23" Type of Finding: Allowable Activities and Allowable Costs - Payroll Disbursements • Material Weakness in Internal Control over Compliance Criteria or specific requirement: Per 2 CFR 200.303, non-Federal entities 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.” Condition: Payroll allocation review is performed annually by ED, which is not timely enough to accurately reflect employee's time worked. Additionally, the allocation performed had logical errors, including one employees time missing from the allocation calculation, and using an inappropriate allocation basis. Questioned costs: None Context: All employees included in selection deemed to work positions that are allowable to the program, however the client allocation process unreliable for all sections tested (25). Cause: Allocations to program based on one employee's memory (ED) for full-year organizational operations. Allocations not reviewed for accuracy by other individual. Effect: Currently, all assigned work activities employees engage in are theoretically allowable under the program, however if an employee were to work projects that are not allowable under the Federal award, reimbursement requests could be made for unallowable costs. Repeat Finding: No Recommendation: 1) Have employees enter time by time period and ensure time codes reflect type of activities worked that tie to Federal program allocations. 2) Have ED review employee timesheets each pay period. 3) Review allocations by program each pay period. 4) Have second individual (contract accountant) review allocations to ensure accuracy and completeness. Views of responsible officials: There is no disagreement with the audit finding.