Audit 320262

Federal Agencies: Department of Housing and Urban Development Federal Assistance Listing Numbers: 14.267 Program: Continuum of Care Award/Pass-Through Entity Identifying Numbers: 202212-01122 Criteria: Where a funding period is specified, a recipient may charge to the grant only allowable costs resulting from obligations incurred during the funding period and any pre-award costs authorized by the federal awarding agency. Unless the federal awarding agency authorizes an extension, a recipient shall liquidate all obligations incurred under the award no later than 90 calendar days after the funding period or the date of completion as specified in the terms and conditions of the award or in agency implementing instructions. Condition: LifeWire allocated expenditures that were incurred prior to the start of the funding period. During our testing of costs, we noted that one of the 60 samples selected for testing was incurred prior to the start of the applicable funding period and was not approved in accordance with §200.308. Cause: LifeWire did not have policies and procedures in place to ensure that costs were only charged as incurred during the appropriate funding period. Effect or Potential Effect: Without adequate controls in place to ensure costs are allowable and reimbursable, including controls over review of the date of incurrence, LifeWire could incorrectly charge expenditures to the federal programs. Questioned Costs: Below reporting threshold. Context: This is a condition identified per review of LifeWire’s compliance with specified requirements not using a statistically valid sample. Expenses in the first month of the grant period in 2023 were $63,132, with total expenses in 2023 of $358,191. Identification as a Repeat Finding: Not a repeat finding. Recommendation: We recommend that only costs incurred during the appropriate funding period be charged, and that this be appropriately documented and reviewed. Views of Responsible Officials: Management agrees with the finding that policies and procedures were not properly in place to ensure costs were only charged as incurred during the funding period. Management modified its policies and procedures to obtain detailed clarification for period-end items from the contract manager ensuring properly included for reimbursement.

Federal Agencies: Department of Housing and Urban Development Federal Assistance Listing Numbers: 14.267 Program: Continuum of Care Program Award/Pass-Through Entity Identifying Numbers: 202212-01122, 202212-01115, DA-202212-01187, 202210-00966, DA-202212-01319 Criteria: The Uniform Guidance in 2 CFR §200.303 requires that non-federal entities receiving federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with federal statues, regulations, and the terms and conditions of the federal award. Per 24 CFR §578.49(b)(1), “Where grants are used to pay for rent for all or a part of a structure or structures, the rent paid must be reasonable in relation to rents being charged in the area for comparable space. In addition, the rent may not exceed rents currently being charged by the same owner for comparable unassisted space.” Per 24 CFR §§578.49(b)(2) and 578.51(g), “When grants are used to pay rent for individual housing units, the rent paid must be reasonable in relation to rents being charged for comparable units, taking into account the location, size, type, quality, amenities, facilities, and management services. In addition, the rents may not exceed rents currently being charged for comparable units, and the rent paid may not exceed HUD-determined fair market rents.” “HUD will only provide rental assistance for a unit if the rent is reasonable. The recipient or subrecipient must determine whether the rent charged for the unit receiving rental assistance is reasonable in relation to rents being charged for comparable unassisted units, taking into account the location, size, type, quality, amenities, facilities, and management and maintenance of each unit. Reasonable rent must not exceed rents currently being charged by the same owner for comparable unassisted units.” Condition: For 14 out of 19 clients tested, a comparable unit analysis was not completed for updated Housing and Urban Development (HUD) Fair Market Rates (FMR) or lease modifications prior to move in. Cause: LifeWire did not appropriately retain or produce documentation that rent reasonableness was checked prior to move-in or at changes to lease terms in accordance with its policies. Effect or Potential Effect: Insufficient retention or creation of rent reasonableness forms and supporting documentation resulted in rent reasonableness controls not operating effectively to appropriately identify rental amounts for LifeWire’s clients in need of rental assistance. LifeWire could incorrectly charge expenditures to the federal program as a result. Known Questioned Costs: $74,715 Likely Questioned Costs: $344,707 Context: This is a condition identified per review of LifeWire’s compliance with specified requirements not using a statistically valid sample. Total costs subject to rent reasonableness were $516,407. Identification as a Repeat Finding: Not a repeat finding. Recommendation: We recommend that LifeWire enforce existing policies and procedures and implement additional policies and procedures for maintaining and monitoring rental reasonableness documentation to ensure compliance with HUD-determined FMR requirements. Views of Responsible Officials: Management agrees with the finding that documentation was not appropriately retained or produced regarding rent reasonableness. Management has modified its policies and procedures to ensure completion of rent reasonableness to ensure compliance.

Federal Agencies: Department of Housing and Urban Development Federal Assistance Listing Numbers: 14.267 Program: Continuum of Care Program Award/Pass-Through Entity Identifying Numbers: 202212-01122, 202212-01115, DA-202212-01187, 202210-00966, DA-202212-01319 Criteria: The Uniform Guidance in 2 CFR §200.303 requires that non-federal entities receiving federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with federal statues, regulations, and the terms and conditions of the federal award. Per 24 CFR §578.49(b)(1), “Where grants are used to pay for rent for all or a part of a structure or structures, the rent paid must be reasonable in relation to rents being charged in the area for comparable space. In addition, the rent may not exceed rents currently being charged by the same owner for comparable unassisted space.” Per 24 CFR §§578.49(b)(2) and 578.51(g), “When grants are used to pay rent for individual housing units, the rent paid must be reasonable in relation to rents being charged for comparable units, taking into account the location, size, type, quality, amenities, facilities, and management services. In addition, the rents may not exceed rents currently being charged for comparable units, and the rent paid may not exceed HUD-determined fair market rents.” “HUD will only provide rental assistance for a unit if the rent is reasonable. The recipient or subrecipient must determine whether the rent charged for the unit receiving rental assistance is reasonable in relation to rents being charged for comparable unassisted units, taking into account the location, size, type, quality, amenities, facilities, and management and maintenance of each unit. Reasonable rent must not exceed rents currently being charged by the same owner for comparable unassisted units.” Condition: For 14 out of 19 clients tested, a comparable unit analysis was not completed for updated Housing and Urban Development (HUD) Fair Market Rates (FMR) or lease modifications prior to move in. Cause: LifeWire did not appropriately retain or produce documentation that rent reasonableness was checked prior to move-in or at changes to lease terms in accordance with its policies. Effect or Potential Effect: Insufficient retention or creation of rent reasonableness forms and supporting documentation resulted in rent reasonableness controls not operating effectively to appropriately identify rental amounts for LifeWire’s clients in need of rental assistance. LifeWire could incorrectly charge expenditures to the federal program as a result. Known Questioned Costs: $74,715 Likely Questioned Costs: $344,707 Context: This is a condition identified per review of LifeWire’s compliance with specified requirements not using a statistically valid sample. Total costs subject to rent reasonableness were $516,407. Identification as a Repeat Finding: Not a repeat finding. Recommendation: We recommend that LifeWire enforce existing policies and procedures and implement additional policies and procedures for maintaining and monitoring rental reasonableness documentation to ensure compliance with HUD-determined FMR requirements. Views of Responsible Officials: Management agrees with the finding that documentation was not appropriately retained or produced regarding rent reasonableness. Management has modified its policies and procedures to ensure completion of rent reasonableness to ensure compliance.

Federal Agencies: Department of Housing and Urban Development Federal Assistance Listing Numbers: 14.267 Program: Continuum of Care Program Award/Pass-Through Entity Identifying Numbers: 202212-01122, 202212-01115, DA-202212-01187, 202210-00966, DA-202212-01319 Criteria: The Uniform Guidance in 2 CFR §200.303 requires that non-federal entities receiving federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with federal statues, regulations, and the terms and conditions of the federal award. Per 24 CFR §578.49(b)(1), “Where grants are used to pay for rent for all or a part of a structure or structures, the rent paid must be reasonable in relation to rents being charged in the area for comparable space. In addition, the rent may not exceed rents currently being charged by the same owner for comparable unassisted space.” Per 24 CFR §§578.49(b)(2) and 578.51(g), “When grants are used to pay rent for individual housing units, the rent paid must be reasonable in relation to rents being charged for comparable units, taking into account the location, size, type, quality, amenities, facilities, and management services. In addition, the rents may not exceed rents currently being charged for comparable units, and the rent paid may not exceed HUD-determined fair market rents.” “HUD will only provide rental assistance for a unit if the rent is reasonable. The recipient or subrecipient must determine whether the rent charged for the unit receiving rental assistance is reasonable in relation to rents being charged for comparable unassisted units, taking into account the location, size, type, quality, amenities, facilities, and management and maintenance of each unit. Reasonable rent must not exceed rents currently being charged by the same owner for comparable unassisted units.” Condition: For 14 out of 19 clients tested, a comparable unit analysis was not completed for updated Housing and Urban Development (HUD) Fair Market Rates (FMR) or lease modifications prior to move in. Cause: LifeWire did not appropriately retain or produce documentation that rent reasonableness was checked prior to move-in or at changes to lease terms in accordance with its policies. Effect or Potential Effect: Insufficient retention or creation of rent reasonableness forms and supporting documentation resulted in rent reasonableness controls not operating effectively to appropriately identify rental amounts for LifeWire’s clients in need of rental assistance. LifeWire could incorrectly charge expenditures to the federal program as a result. Known Questioned Costs: $74,715 Likely Questioned Costs: $344,707 Context: This is a condition identified per review of LifeWire’s compliance with specified requirements not using a statistically valid sample. Total costs subject to rent reasonableness were $516,407. Identification as a Repeat Finding: Not a repeat finding. Recommendation: We recommend that LifeWire enforce existing policies and procedures and implement additional policies and procedures for maintaining and monitoring rental reasonableness documentation to ensure compliance with HUD-determined FMR requirements. Views of Responsible Officials: Management agrees with the finding that documentation was not appropriately retained or produced regarding rent reasonableness. Management has modified its policies and procedures to ensure completion of rent reasonableness to ensure compliance.

Federal Agencies: Department of Housing and Urban Development Federal Assistance Listing Numbers: 14.267 Program: Continuum of Care Program Award/Pass-Through Entity Identifying Numbers: 202212-01122, 202212-01115, DA-202212-01187, 202210-00966, DA-202212-01319 Criteria: The Uniform Guidance in 2 CFR §200.303 requires that non-federal entities receiving federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with federal statues, regulations, and the terms and conditions of the federal award. Per 24 CFR §578.49(b)(1), “Where grants are used to pay for rent for all or a part of a structure or structures, the rent paid must be reasonable in relation to rents being charged in the area for comparable space. In addition, the rent may not exceed rents currently being charged by the same owner for comparable unassisted space.” Per 24 CFR §§578.49(b)(2) and 578.51(g), “When grants are used to pay rent for individual housing units, the rent paid must be reasonable in relation to rents being charged for comparable units, taking into account the location, size, type, quality, amenities, facilities, and management services. In addition, the rents may not exceed rents currently being charged for comparable units, and the rent paid may not exceed HUD-determined fair market rents.” “HUD will only provide rental assistance for a unit if the rent is reasonable. The recipient or subrecipient must determine whether the rent charged for the unit receiving rental assistance is reasonable in relation to rents being charged for comparable unassisted units, taking into account the location, size, type, quality, amenities, facilities, and management and maintenance of each unit. Reasonable rent must not exceed rents currently being charged by the same owner for comparable unassisted units.” Condition: For 14 out of 19 clients tested, a comparable unit analysis was not completed for updated Housing and Urban Development (HUD) Fair Market Rates (FMR) or lease modifications prior to move in. Cause: LifeWire did not appropriately retain or produce documentation that rent reasonableness was checked prior to move-in or at changes to lease terms in accordance with its policies. Effect or Potential Effect: Insufficient retention or creation of rent reasonableness forms and supporting documentation resulted in rent reasonableness controls not operating effectively to appropriately identify rental amounts for LifeWire’s clients in need of rental assistance. LifeWire could incorrectly charge expenditures to the federal program as a result. Known Questioned Costs: $74,715 Likely Questioned Costs: $344,707 Context: This is a condition identified per review of LifeWire’s compliance with specified requirements not using a statistically valid sample. Total costs subject to rent reasonableness were $516,407. Identification as a Repeat Finding: Not a repeat finding. Recommendation: We recommend that LifeWire enforce existing policies and procedures and implement additional policies and procedures for maintaining and monitoring rental reasonableness documentation to ensure compliance with HUD-determined FMR requirements. Views of Responsible Officials: Management agrees with the finding that documentation was not appropriately retained or produced regarding rent reasonableness. Management has modified its policies and procedures to ensure completion of rent reasonableness to ensure compliance.

Federal Agencies: Department of Housing and Urban Development Federal Assistance Listing Numbers: 14.267 Program: Continuum of Care Program Award/Pass-Through Entity Identifying Numbers: 202212-01122, 202212-01115, DA-202212-01187, 202210-00966, DA-202212-01319 Criteria: The Uniform Guidance in 2 CFR §200.303 requires that non-federal entities receiving federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with federal statues, regulations, and the terms and conditions of the federal award. Per 24 CFR §578.49(b)(1), “Where grants are used to pay for rent for all or a part of a structure or structures, the rent paid must be reasonable in relation to rents being charged in the area for comparable space. In addition, the rent may not exceed rents currently being charged by the same owner for comparable unassisted space.” Per 24 CFR §§578.49(b)(2) and 578.51(g), “When grants are used to pay rent for individual housing units, the rent paid must be reasonable in relation to rents being charged for comparable units, taking into account the location, size, type, quality, amenities, facilities, and management services. In addition, the rents may not exceed rents currently being charged for comparable units, and the rent paid may not exceed HUD-determined fair market rents.” “HUD will only provide rental assistance for a unit if the rent is reasonable. The recipient or subrecipient must determine whether the rent charged for the unit receiving rental assistance is reasonable in relation to rents being charged for comparable unassisted units, taking into account the location, size, type, quality, amenities, facilities, and management and maintenance of each unit. Reasonable rent must not exceed rents currently being charged by the same owner for comparable unassisted units.” Condition: For 14 out of 19 clients tested, a comparable unit analysis was not completed for updated Housing and Urban Development (HUD) Fair Market Rates (FMR) or lease modifications prior to move in. Cause: LifeWire did not appropriately retain or produce documentation that rent reasonableness was checked prior to move-in or at changes to lease terms in accordance with its policies. Effect or Potential Effect: Insufficient retention or creation of rent reasonableness forms and supporting documentation resulted in rent reasonableness controls not operating effectively to appropriately identify rental amounts for LifeWire’s clients in need of rental assistance. LifeWire could incorrectly charge expenditures to the federal program as a result. Known Questioned Costs: $74,715 Likely Questioned Costs: $344,707 Context: This is a condition identified per review of LifeWire’s compliance with specified requirements not using a statistically valid sample. Total costs subject to rent reasonableness were $516,407. Identification as a Repeat Finding: Not a repeat finding. Recommendation: We recommend that LifeWire enforce existing policies and procedures and implement additional policies and procedures for maintaining and monitoring rental reasonableness documentation to ensure compliance with HUD-determined FMR requirements. Views of Responsible Officials: Management agrees with the finding that documentation was not appropriately retained or produced regarding rent reasonableness. Management has modified its policies and procedures to ensure completion of rent reasonableness to ensure compliance.

Federal Agencies: Department of Housing and Urban Development Federal Assistance Listing Numbers: 14.251 Program: Economic Development Initiative, Community Project Funding, and Miscellaneous Grants Award/Pass-Through Entity Identifying Numbers: B-22-CP-WA-0956 Criteria: Recipients of federal awards must establish verifiable controls over reports that are prepared and submitted. Condition: For all four performance and financial reports submitted in relation to 2023 activity (two performance, and two financial), appropriate documentation was not available to evidence review of the reports prior to submission. Cause: While LifeWire has a policy in place that requires approval of reports prior to submission, proper documentation to support the policy was not available. Effect or Potential Effect: Reports could be submitted that are inaccurate or incomplete. Questioned Costs: None. Context: There were two performance reports submitted and two financial reports submitted. All four reports were tested. This is a condition identified per review of LifeWire’s compliance with specified requirements not using a statistically valid sample. Identification as a Repeat Finding: Not a repeat finding. Recommendation: We recommend that LifeWire implement controls to ensure proper documentation of review and approval of reports. Views of Responsible Officials: Management agrees with the finding that review and approval of reports was not maintained during the period under audit. Management has modified policies and procedures to maintain support for the control process.

Federal Agencies: Department of Housing and Urban Development Federal Assistance Listing Numbers: 14.267 Program: Continuum of Care Program Award/Pass-Through Entity Identifying Numbers: 202212-01122, 202212-01115, DA-202212-01187, 202210-00966, DA-202212-01319 Criteria: Recipients of federal awards must establish verifiable controls over matching calculations that are prepared and submitted. Condition: For all five Continuum of Care grants, appropriate documentation was not available to evidence review of the matching calculations prior to submission. Cause: While LifeWire has a policy in place that requires approval of matching calculations prior to submission, proper documentation to support the policy was not available. Effect or Potential Effect: Matching calculations could be submitted that are inaccurate or incomplete. Questioned Costs: None. Context: There were five active Continuum of Care grants in 2023. This is a condition identified per review of LifeWire’s compliance with specified requirements not using a statistically valid sample. Identification as a Repeat Finding: Not a repeat finding. Recommendation: We recommend that LifeWire implement controls to ensure proper documentation of matching calculations and approval prior to submission. Views of Responsible Officials: Management agrees with the finding that review and approval of matching support was not maintained during the period under audit. Management has modified policies and procedures to maintain support for the control process.

Federal Agencies: Department of Housing and Urban Development Federal Assistance Listing Numbers: 14.267 Program: Continuum of Care Program Award/Pass-Through Entity Identifying Numbers: 202212-01122, 202212-01115, DA-202212-01187, 202210-00966, DA-202212-01319 Criteria: Recipients of federal awards must establish verifiable controls over matching calculations that are prepared and submitted. Condition: For all five Continuum of Care grants, appropriate documentation was not available to evidence review of the matching calculations prior to submission. Cause: While LifeWire has a policy in place that requires approval of matching calculations prior to submission, proper documentation to support the policy was not available. Effect or Potential Effect: Matching calculations could be submitted that are inaccurate or incomplete. Questioned Costs: None. Context: There were five active Continuum of Care grants in 2023. This is a condition identified per review of LifeWire’s compliance with specified requirements not using a statistically valid sample. Identification as a Repeat Finding: Not a repeat finding. Recommendation: We recommend that LifeWire implement controls to ensure proper documentation of matching calculations and approval prior to submission. Views of Responsible Officials: Management agrees with the finding that review and approval of matching support was not maintained during the period under audit. Management has modified policies and procedures to maintain support for the control process.

Federal Agencies: Department of Housing and Urban Development Federal Assistance Listing Numbers: 14.267 Program: Continuum of Care Program Award/Pass-Through Entity Identifying Numbers: 202212-01122, 202212-01115, DA-202212-01187, 202210-00966, DA-202212-01319 Criteria: Recipients of federal awards must establish verifiable controls over matching calculations that are prepared and submitted. Condition: For all five Continuum of Care grants, appropriate documentation was not available to evidence review of the matching calculations prior to submission. Cause: While LifeWire has a policy in place that requires approval of matching calculations prior to submission, proper documentation to support the policy was not available. Effect or Potential Effect: Matching calculations could be submitted that are inaccurate or incomplete. Questioned Costs: None. Context: There were five active Continuum of Care grants in 2023. This is a condition identified per review of LifeWire’s compliance with specified requirements not using a statistically valid sample. Identification as a Repeat Finding: Not a repeat finding. Recommendation: We recommend that LifeWire implement controls to ensure proper documentation of matching calculations and approval prior to submission. Views of Responsible Officials: Management agrees with the finding that review and approval of matching support was not maintained during the period under audit. Management has modified policies and procedures to maintain support for the control process.

Federal Agencies: Department of Housing and Urban Development Federal Assistance Listing Numbers: 14.267 Program: Continuum of Care Program Award/Pass-Through Entity Identifying Numbers: 202212-01122, 202212-01115, DA-202212-01187, 202210-00966, DA-202212-01319 Criteria: Recipients of federal awards must establish verifiable controls over matching calculations that are prepared and submitted. Condition: For all five Continuum of Care grants, appropriate documentation was not available to evidence review of the matching calculations prior to submission. Cause: While LifeWire has a policy in place that requires approval of matching calculations prior to submission, proper documentation to support the policy was not available. Effect or Potential Effect: Matching calculations could be submitted that are inaccurate or incomplete. Questioned Costs: None. Context: There were five active Continuum of Care grants in 2023. This is a condition identified per review of LifeWire’s compliance with specified requirements not using a statistically valid sample. Identification as a Repeat Finding: Not a repeat finding. Recommendation: We recommend that LifeWire implement controls to ensure proper documentation of matching calculations and approval prior to submission. Views of Responsible Officials: Management agrees with the finding that review and approval of matching support was not maintained during the period under audit. Management has modified policies and procedures to maintain support for the control process.

Federal Agencies: Department of Housing and Urban Development Federal Assistance Listing Numbers: 14.267 Program: Continuum of Care Program Award/Pass-Through Entity Identifying Numbers: 202212-01122, 202212-01115, DA-202212-01187, 202210-00966, DA-202212-01319 Criteria: Recipients of federal awards must establish verifiable controls over matching calculations that are prepared and submitted. Condition: For all five Continuum of Care grants, appropriate documentation was not available to evidence review of the matching calculations prior to submission. Cause: While LifeWire has a policy in place that requires approval of matching calculations prior to submission, proper documentation to support the policy was not available. Effect or Potential Effect: Matching calculations could be submitted that are inaccurate or incomplete. Questioned Costs: None. Context: There were five active Continuum of Care grants in 2023. This is a condition identified per review of LifeWire’s compliance with specified requirements not using a statistically valid sample. Identification as a Repeat Finding: Not a repeat finding. Recommendation: We recommend that LifeWire implement controls to ensure proper documentation of matching calculations and approval prior to submission. Views of Responsible Officials: Management agrees with the finding that review and approval of matching support was not maintained during the period under audit. Management has modified policies and procedures to maintain support for the control process.

Federal Agencies: Department of Housing and Urban Development Federal Assistance Listing Numbers: 14.267 Program: Continuum of Care Program Award/Pass-Through Entity Identifying Numbers: 202212-01122, 202212-01115, DA-202212-01187, 202210-00966, DA-202212-01319 Criteria: The Uniform Guidance in 2 CFR §200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. Per 2 CFR §200.430 Compensation- Personal Services: “Standards for Documentation of Personnel Expenses (1) Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (ii) Be incorporated into the official records of the non-Federal entity; (iii) Reasonably reflect the total activity for which the employee is compensated by the non- Federal entity, not exceeding 100% of compensated activities; (iv) Encompass federally-assisted and all other activities compensated by the non-Federal entity on an integrated basis, but may include the use of subsidiary records as defined in the non- Federal entity’s written policy; (v) Comply with the established accounting policies and practices of the non-Federal entity; and (vi) [Reserved] (vii) 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; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. (viii) Budget estimates (i.e., estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that: (A) The system for establishing the estimates produces reasonable approximations of the activity actually performed; (B) Significant changes in the corresponding work activity (as defined by the non-Federal entity’s written policies) are identified and entered into the records in a timely manner. Short-term (such as one or two months) fluctuation between workload categories need not be considered as long as the distribution of salaries and wages is reasonable over the longer term; and (C) The non-Federal entity’s system of internal controls includes processes to review after-the-fact interim charges made to a Federal award based on budget estimates. All necessary adjustment must be made such that the final amount charged to the Federal award is accurate, allowable, and properly allocated.” Condition: We noted that LifeWire allocated administrative payroll expenditures to Continuum of Care during 2023 based on budget allocation rates. There were no procedures in place to determine if a true-up was necessary from allocated costs. 27 timesheets were tested during the audit, of which five were charged based on budgets for the grant. Cause: LifeWire did not have policies and procedures in place to review and reconcile the estimated amounts of payroll expenditures charged to Continuum of Care to the actual expenditures incurred. Effect or Potential Effect: Without adequate controls in place to ensure costs based on budgeted allocations are reasonable and reconcile to the actual time spent on the program, LifeWire could incorrectly charge expenditures to the federal program, or not request appropriate reimbursement LifeWire is entitle to under the terms of the grant. Questioned Costs: Below reporting threshold. Context: This is a condition identified per review of LifeWire’s compliance with specified requirements not using a statistically valid sample. Payroll costs for administrative staff selected for testing totaled $1,185. Total payroll costs for the Continuum of Care grants in 2023 were $294,002. Any payroll costs not adequately supported by time and effort reports are considered questioned costs. Identification as a Repeat Finding: Not a repeat finding. Recommendation: We recommend that LifeWire implement policies and procedures to review for any necessary budget to actual adjustments, and we recommend that sufficient documentation be maintained to support any adjustments made as required by 2 CFR §200.430. Views of Responsible Officials: Management agrees with the finding. Management has modified policies and procedures to ensure staff time allocated to the grant is properly reviewed and approved.

Federal Agencies: Department of Housing and Urban Development Federal Assistance Listing Numbers: 14.267 Program: Continuum of Care Program Award/Pass-Through Entity Identifying Numbers: 202212-01122, 202212-01115, DA-202212-01187, 202210-00966, DA-202212-01319 Criteria: The Uniform Guidance in 2 CFR §200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. Per 2 CFR §200.430 Compensation- Personal Services: “Standards for Documentation of Personnel Expenses (1) Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (ii) Be incorporated into the official records of the non-Federal entity; (iii) Reasonably reflect the total activity for which the employee is compensated by the non- Federal entity, not exceeding 100% of compensated activities; (iv) Encompass federally-assisted and all other activities compensated by the non-Federal entity on an integrated basis, but may include the use of subsidiary records as defined in the non- Federal entity’s written policy; (v) Comply with the established accounting policies and practices of the non-Federal entity; and (vi) [Reserved] (vii) 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; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. (viii) Budget estimates (i.e., estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that: (A) The system for establishing the estimates produces reasonable approximations of the activity actually performed; (B) Significant changes in the corresponding work activity (as defined by the non-Federal entity’s written policies) are identified and entered into the records in a timely manner. Short-term (such as one or two months) fluctuation between workload categories need not be considered as long as the distribution of salaries and wages is reasonable over the longer term; and (C) The non-Federal entity’s system of internal controls includes processes to review after-the-fact interim charges made to a Federal award based on budget estimates. All necessary adjustment must be made such that the final amount charged to the Federal award is accurate, allowable, and properly allocated.” Condition: We noted that LifeWire allocated administrative payroll expenditures to Continuum of Care during 2023 based on budget allocation rates. There were no procedures in place to determine if a true-up was necessary from allocated costs. 27 timesheets were tested during the audit, of which five were charged based on budgets for the grant. Cause: LifeWire did not have policies and procedures in place to review and reconcile the estimated amounts of payroll expenditures charged to Continuum of Care to the actual expenditures incurred. Effect or Potential Effect: Without adequate controls in place to ensure costs based on budgeted allocations are reasonable and reconcile to the actual time spent on the program, LifeWire could incorrectly charge expenditures to the federal program, or not request appropriate reimbursement LifeWire is entitle to under the terms of the grant. Questioned Costs: Below reporting threshold. Context: This is a condition identified per review of LifeWire’s compliance with specified requirements not using a statistically valid sample. Payroll costs for administrative staff selected for testing totaled $1,185. Total payroll costs for the Continuum of Care grants in 2023 were $294,002. Any payroll costs not adequately supported by time and effort reports are considered questioned costs. Identification as a Repeat Finding: Not a repeat finding. Recommendation: We recommend that LifeWire implement policies and procedures to review for any necessary budget to actual adjustments, and we recommend that sufficient documentation be maintained to support any adjustments made as required by 2 CFR §200.430. Views of Responsible Officials: Management agrees with the finding. Management has modified policies and procedures to ensure staff time allocated to the grant is properly reviewed and approved.

Federal Agencies: Department of Housing and Urban Development Federal Assistance Listing Numbers: 14.267 Program: Continuum of Care Program Award/Pass-Through Entity Identifying Numbers: 202212-01122, 202212-01115, DA-202212-01187, 202210-00966, DA-202212-01319 Criteria: The Uniform Guidance in 2 CFR §200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. Per 2 CFR §200.430 Compensation- Personal Services: “Standards for Documentation of Personnel Expenses (1) Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (ii) Be incorporated into the official records of the non-Federal entity; (iii) Reasonably reflect the total activity for which the employee is compensated by the non- Federal entity, not exceeding 100% of compensated activities; (iv) Encompass federally-assisted and all other activities compensated by the non-Federal entity on an integrated basis, but may include the use of subsidiary records as defined in the non- Federal entity’s written policy; (v) Comply with the established accounting policies and practices of the non-Federal entity; and (vi) [Reserved] (vii) 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; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. (viii) Budget estimates (i.e., estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that: (A) The system for establishing the estimates produces reasonable approximations of the activity actually performed; (B) Significant changes in the corresponding work activity (as defined by the non-Federal entity’s written policies) are identified and entered into the records in a timely manner. Short-term (such as one or two months) fluctuation between workload categories need not be considered as long as the distribution of salaries and wages is reasonable over the longer term; and (C) The non-Federal entity’s system of internal controls includes processes to review after-the-fact interim charges made to a Federal award based on budget estimates. All necessary adjustment must be made such that the final amount charged to the Federal award is accurate, allowable, and properly allocated.” Condition: We noted that LifeWire allocated administrative payroll expenditures to Continuum of Care during 2023 based on budget allocation rates. There were no procedures in place to determine if a true-up was necessary from allocated costs. 27 timesheets were tested during the audit, of which five were charged based on budgets for the grant. Cause: LifeWire did not have policies and procedures in place to review and reconcile the estimated amounts of payroll expenditures charged to Continuum of Care to the actual expenditures incurred. Effect or Potential Effect: Without adequate controls in place to ensure costs based on budgeted allocations are reasonable and reconcile to the actual time spent on the program, LifeWire could incorrectly charge expenditures to the federal program, or not request appropriate reimbursement LifeWire is entitle to under the terms of the grant. Questioned Costs: Below reporting threshold. Context: This is a condition identified per review of LifeWire’s compliance with specified requirements not using a statistically valid sample. Payroll costs for administrative staff selected for testing totaled $1,185. Total payroll costs for the Continuum of Care grants in 2023 were $294,002. Any payroll costs not adequately supported by time and effort reports are considered questioned costs. Identification as a Repeat Finding: Not a repeat finding. Recommendation: We recommend that LifeWire implement policies and procedures to review for any necessary budget to actual adjustments, and we recommend that sufficient documentation be maintained to support any adjustments made as required by 2 CFR §200.430. Views of Responsible Officials: Management agrees with the finding. Management has modified policies and procedures to ensure staff time allocated to the grant is properly reviewed and approved.

Federal Agencies: Department of Housing and Urban Development Federal Assistance Listing Numbers: 14.267 Program: Continuum of Care Program Award/Pass-Through Entity Identifying Numbers: 202212-01122, 202212-01115, DA-202212-01187, 202210-00966, DA-202212-01319 Criteria: The Uniform Guidance in 2 CFR §200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. Per 2 CFR §200.430 Compensation- Personal Services: “Standards for Documentation of Personnel Expenses (1) Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (ii) Be incorporated into the official records of the non-Federal entity; (iii) Reasonably reflect the total activity for which the employee is compensated by the non- Federal entity, not exceeding 100% of compensated activities; (iv) Encompass federally-assisted and all other activities compensated by the non-Federal entity on an integrated basis, but may include the use of subsidiary records as defined in the non- Federal entity’s written policy; (v) Comply with the established accounting policies and practices of the non-Federal entity; and (vi) [Reserved] (vii) 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; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. (viii) Budget estimates (i.e., estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that: (A) The system for establishing the estimates produces reasonable approximations of the activity actually performed; (B) Significant changes in the corresponding work activity (as defined by the non-Federal entity’s written policies) are identified and entered into the records in a timely manner. Short-term (such as one or two months) fluctuation between workload categories need not be considered as long as the distribution of salaries and wages is reasonable over the longer term; and (C) The non-Federal entity’s system of internal controls includes processes to review after-the-fact interim charges made to a Federal award based on budget estimates. All necessary adjustment must be made such that the final amount charged to the Federal award is accurate, allowable, and properly allocated.” Condition: We noted that LifeWire allocated administrative payroll expenditures to Continuum of Care during 2023 based on budget allocation rates. There were no procedures in place to determine if a true-up was necessary from allocated costs. 27 timesheets were tested during the audit, of which five were charged based on budgets for the grant. Cause: LifeWire did not have policies and procedures in place to review and reconcile the estimated amounts of payroll expenditures charged to Continuum of Care to the actual expenditures incurred. Effect or Potential Effect: Without adequate controls in place to ensure costs based on budgeted allocations are reasonable and reconcile to the actual time spent on the program, LifeWire could incorrectly charge expenditures to the federal program, or not request appropriate reimbursement LifeWire is entitle to under the terms of the grant. Questioned Costs: Below reporting threshold. Context: This is a condition identified per review of LifeWire’s compliance with specified requirements not using a statistically valid sample. Payroll costs for administrative staff selected for testing totaled $1,185. Total payroll costs for the Continuum of Care grants in 2023 were $294,002. Any payroll costs not adequately supported by time and effort reports are considered questioned costs. Identification as a Repeat Finding: Not a repeat finding. Recommendation: We recommend that LifeWire implement policies and procedures to review for any necessary budget to actual adjustments, and we recommend that sufficient documentation be maintained to support any adjustments made as required by 2 CFR §200.430. Views of Responsible Officials: Management agrees with the finding. Management has modified policies and procedures to ensure staff time allocated to the grant is properly reviewed and approved.

Federal Agencies: Department of Housing and Urban Development Federal Assistance Listing Numbers: 14.267 Program: Continuum of Care Program Award/Pass-Through Entity Identifying Numbers: 202212-01122, 202212-01115, DA-202212-01187, 202210-00966, DA-202212-01319 Criteria: The Uniform Guidance in 2 CFR §200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. Per 2 CFR §200.430 Compensation- Personal Services: “Standards for Documentation of Personnel Expenses (1) Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (ii) Be incorporated into the official records of the non-Federal entity; (iii) Reasonably reflect the total activity for which the employee is compensated by the non- Federal entity, not exceeding 100% of compensated activities; (iv) Encompass federally-assisted and all other activities compensated by the non-Federal entity on an integrated basis, but may include the use of subsidiary records as defined in the non- Federal entity’s written policy; (v) Comply with the established accounting policies and practices of the non-Federal entity; and (vi) [Reserved] (vii) 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; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. (viii) Budget estimates (i.e., estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that: (A) The system for establishing the estimates produces reasonable approximations of the activity actually performed; (B) Significant changes in the corresponding work activity (as defined by the non-Federal entity’s written policies) are identified and entered into the records in a timely manner. Short-term (such as one or two months) fluctuation between workload categories need not be considered as long as the distribution of salaries and wages is reasonable over the longer term; and (C) The non-Federal entity’s system of internal controls includes processes to review after-the-fact interim charges made to a Federal award based on budget estimates. All necessary adjustment must be made such that the final amount charged to the Federal award is accurate, allowable, and properly allocated.” Condition: We noted that LifeWire allocated administrative payroll expenditures to Continuum of Care during 2023 based on budget allocation rates. There were no procedures in place to determine if a true-up was necessary from allocated costs. 27 timesheets were tested during the audit, of which five were charged based on budgets for the grant. Cause: LifeWire did not have policies and procedures in place to review and reconcile the estimated amounts of payroll expenditures charged to Continuum of Care to the actual expenditures incurred. Effect or Potential Effect: Without adequate controls in place to ensure costs based on budgeted allocations are reasonable and reconcile to the actual time spent on the program, LifeWire could incorrectly charge expenditures to the federal program, or not request appropriate reimbursement LifeWire is entitle to under the terms of the grant. Questioned Costs: Below reporting threshold. Context: This is a condition identified per review of LifeWire’s compliance with specified requirements not using a statistically valid sample. Payroll costs for administrative staff selected for testing totaled $1,185. Total payroll costs for the Continuum of Care grants in 2023 were $294,002. Any payroll costs not adequately supported by time and effort reports are considered questioned costs. Identification as a Repeat Finding: Not a repeat finding. Recommendation: We recommend that LifeWire implement policies and procedures to review for any necessary budget to actual adjustments, and we recommend that sufficient documentation be maintained to support any adjustments made as required by 2 CFR §200.430. Views of Responsible Officials: Management agrees with the finding. Management has modified policies and procedures to ensure staff time allocated to the grant is properly reviewed and approved.

Federal Agencies: Department of Housing and Urban Development Federal Assistance Listing Numbers: 14.267 Program: Continuum of Care Award/Pass-Through Entity Identifying Numbers: 202212-01122 Criteria: Where a funding period is specified, a recipient may charge to the grant only allowable costs resulting from obligations incurred during the funding period and any pre-award costs authorized by the federal awarding agency. Unless the federal awarding agency authorizes an extension, a recipient shall liquidate all obligations incurred under the award no later than 90 calendar days after the funding period or the date of completion as specified in the terms and conditions of the award or in agency implementing instructions. Condition: LifeWire allocated expenditures that were incurred prior to the start of the funding period. During our testing of costs, we noted that one of the 60 samples selected for testing was incurred prior to the start of the applicable funding period and was not approved in accordance with §200.308. Cause: LifeWire did not have policies and procedures in place to ensure that costs were only charged as incurred during the appropriate funding period. Effect or Potential Effect: Without adequate controls in place to ensure costs are allowable and reimbursable, including controls over review of the date of incurrence, LifeWire could incorrectly charge expenditures to the federal programs. Questioned Costs: Below reporting threshold. Context: This is a condition identified per review of LifeWire’s compliance with specified requirements not using a statistically valid sample. Expenses in the first month of the grant period in 2023 were $63,132, with total expenses in 2023 of $358,191. Identification as a Repeat Finding: Not a repeat finding. Recommendation: We recommend that only costs incurred during the appropriate funding period be charged, and that this be appropriately documented and reviewed. Views of Responsible Officials: Management agrees with the finding that policies and procedures were not properly in place to ensure costs were only charged as incurred during the funding period. Management modified its policies and procedures to obtain detailed clarification for period-end items from the contract manager ensuring properly included for reimbursement.

Federal Agencies: Department of Housing and Urban Development Federal Assistance Listing Numbers: 14.267 Program: Continuum of Care Program Award/Pass-Through Entity Identifying Numbers: 202212-01122, 202212-01115, DA-202212-01187, 202210-00966, DA-202212-01319 Criteria: The Uniform Guidance in 2 CFR §200.303 requires that non-federal entities receiving federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with federal statues, regulations, and the terms and conditions of the federal award. Per 24 CFR §578.49(b)(1), “Where grants are used to pay for rent for all or a part of a structure or structures, the rent paid must be reasonable in relation to rents being charged in the area for comparable space. In addition, the rent may not exceed rents currently being charged by the same owner for comparable unassisted space.” Per 24 CFR §§578.49(b)(2) and 578.51(g), “When grants are used to pay rent for individual housing units, the rent paid must be reasonable in relation to rents being charged for comparable units, taking into account the location, size, type, quality, amenities, facilities, and management services. In addition, the rents may not exceed rents currently being charged for comparable units, and the rent paid may not exceed HUD-determined fair market rents.” “HUD will only provide rental assistance for a unit if the rent is reasonable. The recipient or subrecipient must determine whether the rent charged for the unit receiving rental assistance is reasonable in relation to rents being charged for comparable unassisted units, taking into account the location, size, type, quality, amenities, facilities, and management and maintenance of each unit. Reasonable rent must not exceed rents currently being charged by the same owner for comparable unassisted units.” Condition: For 14 out of 19 clients tested, a comparable unit analysis was not completed for updated Housing and Urban Development (HUD) Fair Market Rates (FMR) or lease modifications prior to move in. Cause: LifeWire did not appropriately retain or produce documentation that rent reasonableness was checked prior to move-in or at changes to lease terms in accordance with its policies. Effect or Potential Effect: Insufficient retention or creation of rent reasonableness forms and supporting documentation resulted in rent reasonableness controls not operating effectively to appropriately identify rental amounts for LifeWire’s clients in need of rental assistance. LifeWire could incorrectly charge expenditures to the federal program as a result. Known Questioned Costs: $74,715 Likely Questioned Costs: $344,707 Context: This is a condition identified per review of LifeWire’s compliance with specified requirements not using a statistically valid sample. Total costs subject to rent reasonableness were $516,407. Identification as a Repeat Finding: Not a repeat finding. Recommendation: We recommend that LifeWire enforce existing policies and procedures and implement additional policies and procedures for maintaining and monitoring rental reasonableness documentation to ensure compliance with HUD-determined FMR requirements. Views of Responsible Officials: Management agrees with the finding that documentation was not appropriately retained or produced regarding rent reasonableness. Management has modified its policies and procedures to ensure completion of rent reasonableness to ensure compliance.

Federal Agencies: Department of Housing and Urban Development Federal Assistance Listing Numbers: 14.267 Program: Continuum of Care Program Award/Pass-Through Entity Identifying Numbers: 202212-01122, 202212-01115, DA-202212-01187, 202210-00966, DA-202212-01319 Criteria: The Uniform Guidance in 2 CFR §200.303 requires that non-federal entities receiving federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with federal statues, regulations, and the terms and conditions of the federal award. Per 24 CFR §578.49(b)(1), “Where grants are used to pay for rent for all or a part of a structure or structures, the rent paid must be reasonable in relation to rents being charged in the area for comparable space. In addition, the rent may not exceed rents currently being charged by the same owner for comparable unassisted space.” Per 24 CFR §§578.49(b)(2) and 578.51(g), “When grants are used to pay rent for individual housing units, the rent paid must be reasonable in relation to rents being charged for comparable units, taking into account the location, size, type, quality, amenities, facilities, and management services. In addition, the rents may not exceed rents currently being charged for comparable units, and the rent paid may not exceed HUD-determined fair market rents.” “HUD will only provide rental assistance for a unit if the rent is reasonable. The recipient or subrecipient must determine whether the rent charged for the unit receiving rental assistance is reasonable in relation to rents being charged for comparable unassisted units, taking into account the location, size, type, quality, amenities, facilities, and management and maintenance of each unit. Reasonable rent must not exceed rents currently being charged by the same owner for comparable unassisted units.” Condition: For 14 out of 19 clients tested, a comparable unit analysis was not completed for updated Housing and Urban Development (HUD) Fair Market Rates (FMR) or lease modifications prior to move in. Cause: LifeWire did not appropriately retain or produce documentation that rent reasonableness was checked prior to move-in or at changes to lease terms in accordance with its policies. Effect or Potential Effect: Insufficient retention or creation of rent reasonableness forms and supporting documentation resulted in rent reasonableness controls not operating effectively to appropriately identify rental amounts for LifeWire’s clients in need of rental assistance. LifeWire could incorrectly charge expenditures to the federal program as a result. Known Questioned Costs: $74,715 Likely Questioned Costs: $344,707 Context: This is a condition identified per review of LifeWire’s compliance with specified requirements not using a statistically valid sample. Total costs subject to rent reasonableness were $516,407. Identification as a Repeat Finding: Not a repeat finding. Recommendation: We recommend that LifeWire enforce existing policies and procedures and implement additional policies and procedures for maintaining and monitoring rental reasonableness documentation to ensure compliance with HUD-determined FMR requirements. Views of Responsible Officials: Management agrees with the finding that documentation was not appropriately retained or produced regarding rent reasonableness. Management has modified its policies and procedures to ensure completion of rent reasonableness to ensure compliance.

Federal Agencies: Department of Housing and Urban Development Federal Assistance Listing Numbers: 14.267 Program: Continuum of Care Program Award/Pass-Through Entity Identifying Numbers: 202212-01122, 202212-01115, DA-202212-01187, 202210-00966, DA-202212-01319 Criteria: The Uniform Guidance in 2 CFR §200.303 requires that non-federal entities receiving federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with federal statues, regulations, and the terms and conditions of the federal award. Per 24 CFR §578.49(b)(1), “Where grants are used to pay for rent for all or a part of a structure or structures, the rent paid must be reasonable in relation to rents being charged in the area for comparable space. In addition, the rent may not exceed rents currently being charged by the same owner for comparable unassisted space.” Per 24 CFR §§578.49(b)(2) and 578.51(g), “When grants are used to pay rent for individual housing units, the rent paid must be reasonable in relation to rents being charged for comparable units, taking into account the location, size, type, quality, amenities, facilities, and management services. In addition, the rents may not exceed rents currently being charged for comparable units, and the rent paid may not exceed HUD-determined fair market rents.” “HUD will only provide rental assistance for a unit if the rent is reasonable. The recipient or subrecipient must determine whether the rent charged for the unit receiving rental assistance is reasonable in relation to rents being charged for comparable unassisted units, taking into account the location, size, type, quality, amenities, facilities, and management and maintenance of each unit. Reasonable rent must not exceed rents currently being charged by the same owner for comparable unassisted units.” Condition: For 14 out of 19 clients tested, a comparable unit analysis was not completed for updated Housing and Urban Development (HUD) Fair Market Rates (FMR) or lease modifications prior to move in. Cause: LifeWire did not appropriately retain or produce documentation that rent reasonableness was checked prior to move-in or at changes to lease terms in accordance with its policies. Effect or Potential Effect: Insufficient retention or creation of rent reasonableness forms and supporting documentation resulted in rent reasonableness controls not operating effectively to appropriately identify rental amounts for LifeWire’s clients in need of rental assistance. LifeWire could incorrectly charge expenditures to the federal program as a result. Known Questioned Costs: $74,715 Likely Questioned Costs: $344,707 Context: This is a condition identified per review of LifeWire’s compliance with specified requirements not using a statistically valid sample. Total costs subject to rent reasonableness were $516,407. Identification as a Repeat Finding: Not a repeat finding. Recommendation: We recommend that LifeWire enforce existing policies and procedures and implement additional policies and procedures for maintaining and monitoring rental reasonableness documentation to ensure compliance with HUD-determined FMR requirements. Views of Responsible Officials: Management agrees with the finding that documentation was not appropriately retained or produced regarding rent reasonableness. Management has modified its policies and procedures to ensure completion of rent reasonableness to ensure compliance.

Federal Agencies: Department of Housing and Urban Development Federal Assistance Listing Numbers: 14.267 Program: Continuum of Care Program Award/Pass-Through Entity Identifying Numbers: 202212-01122, 202212-01115, DA-202212-01187, 202210-00966, DA-202212-01319 Criteria: The Uniform Guidance in 2 CFR §200.303 requires that non-federal entities receiving federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with federal statues, regulations, and the terms and conditions of the federal award. Per 24 CFR §578.49(b)(1), “Where grants are used to pay for rent for all or a part of a structure or structures, the rent paid must be reasonable in relation to rents being charged in the area for comparable space. In addition, the rent may not exceed rents currently being charged by the same owner for comparable unassisted space.” Per 24 CFR §§578.49(b)(2) and 578.51(g), “When grants are used to pay rent for individual housing units, the rent paid must be reasonable in relation to rents being charged for comparable units, taking into account the location, size, type, quality, amenities, facilities, and management services. In addition, the rents may not exceed rents currently being charged for comparable units, and the rent paid may not exceed HUD-determined fair market rents.” “HUD will only provide rental assistance for a unit if the rent is reasonable. The recipient or subrecipient must determine whether the rent charged for the unit receiving rental assistance is reasonable in relation to rents being charged for comparable unassisted units, taking into account the location, size, type, quality, amenities, facilities, and management and maintenance of each unit. Reasonable rent must not exceed rents currently being charged by the same owner for comparable unassisted units.” Condition: For 14 out of 19 clients tested, a comparable unit analysis was not completed for updated Housing and Urban Development (HUD) Fair Market Rates (FMR) or lease modifications prior to move in. Cause: LifeWire did not appropriately retain or produce documentation that rent reasonableness was checked prior to move-in or at changes to lease terms in accordance with its policies. Effect or Potential Effect: Insufficient retention or creation of rent reasonableness forms and supporting documentation resulted in rent reasonableness controls not operating effectively to appropriately identify rental amounts for LifeWire’s clients in need of rental assistance. LifeWire could incorrectly charge expenditures to the federal program as a result. Known Questioned Costs: $74,715 Likely Questioned Costs: $344,707 Context: This is a condition identified per review of LifeWire’s compliance with specified requirements not using a statistically valid sample. Total costs subject to rent reasonableness were $516,407. Identification as a Repeat Finding: Not a repeat finding. Recommendation: We recommend that LifeWire enforce existing policies and procedures and implement additional policies and procedures for maintaining and monitoring rental reasonableness documentation to ensure compliance with HUD-determined FMR requirements. Views of Responsible Officials: Management agrees with the finding that documentation was not appropriately retained or produced regarding rent reasonableness. Management has modified its policies and procedures to ensure completion of rent reasonableness to ensure compliance.

Federal Agencies: Department of Housing and Urban Development Federal Assistance Listing Numbers: 14.267 Program: Continuum of Care Program Award/Pass-Through Entity Identifying Numbers: 202212-01122, 202212-01115, DA-202212-01187, 202210-00966, DA-202212-01319 Criteria: The Uniform Guidance in 2 CFR §200.303 requires that non-federal entities receiving federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with federal statues, regulations, and the terms and conditions of the federal award. Per 24 CFR §578.49(b)(1), “Where grants are used to pay for rent for all or a part of a structure or structures, the rent paid must be reasonable in relation to rents being charged in the area for comparable space. In addition, the rent may not exceed rents currently being charged by the same owner for comparable unassisted space.” Per 24 CFR §§578.49(b)(2) and 578.51(g), “When grants are used to pay rent for individual housing units, the rent paid must be reasonable in relation to rents being charged for comparable units, taking into account the location, size, type, quality, amenities, facilities, and management services. In addition, the rents may not exceed rents currently being charged for comparable units, and the rent paid may not exceed HUD-determined fair market rents.” “HUD will only provide rental assistance for a unit if the rent is reasonable. The recipient or subrecipient must determine whether the rent charged for the unit receiving rental assistance is reasonable in relation to rents being charged for comparable unassisted units, taking into account the location, size, type, quality, amenities, facilities, and management and maintenance of each unit. Reasonable rent must not exceed rents currently being charged by the same owner for comparable unassisted units.” Condition: For 14 out of 19 clients tested, a comparable unit analysis was not completed for updated Housing and Urban Development (HUD) Fair Market Rates (FMR) or lease modifications prior to move in. Cause: LifeWire did not appropriately retain or produce documentation that rent reasonableness was checked prior to move-in or at changes to lease terms in accordance with its policies. Effect or Potential Effect: Insufficient retention or creation of rent reasonableness forms and supporting documentation resulted in rent reasonableness controls not operating effectively to appropriately identify rental amounts for LifeWire’s clients in need of rental assistance. LifeWire could incorrectly charge expenditures to the federal program as a result. Known Questioned Costs: $74,715 Likely Questioned Costs: $344,707 Context: This is a condition identified per review of LifeWire’s compliance with specified requirements not using a statistically valid sample. Total costs subject to rent reasonableness were $516,407. Identification as a Repeat Finding: Not a repeat finding. Recommendation: We recommend that LifeWire enforce existing policies and procedures and implement additional policies and procedures for maintaining and monitoring rental reasonableness documentation to ensure compliance with HUD-determined FMR requirements. Views of Responsible Officials: Management agrees with the finding that documentation was not appropriately retained or produced regarding rent reasonableness. Management has modified its policies and procedures to ensure completion of rent reasonableness to ensure compliance.

Federal Agencies: Department of Housing and Urban Development Federal Assistance Listing Numbers: 14.251 Program: Economic Development Initiative, Community Project Funding, and Miscellaneous Grants Award/Pass-Through Entity Identifying Numbers: B-22-CP-WA-0956 Criteria: Recipients of federal awards must establish verifiable controls over reports that are prepared and submitted. Condition: For all four performance and financial reports submitted in relation to 2023 activity (two performance, and two financial), appropriate documentation was not available to evidence review of the reports prior to submission. Cause: While LifeWire has a policy in place that requires approval of reports prior to submission, proper documentation to support the policy was not available. Effect or Potential Effect: Reports could be submitted that are inaccurate or incomplete. Questioned Costs: None. Context: There were two performance reports submitted and two financial reports submitted. All four reports were tested. This is a condition identified per review of LifeWire’s compliance with specified requirements not using a statistically valid sample. Identification as a Repeat Finding: Not a repeat finding. Recommendation: We recommend that LifeWire implement controls to ensure proper documentation of review and approval of reports. Views of Responsible Officials: Management agrees with the finding that review and approval of reports was not maintained during the period under audit. Management has modified policies and procedures to maintain support for the control process.

Federal Agencies: Department of Housing and Urban Development Federal Assistance Listing Numbers: 14.267 Program: Continuum of Care Program Award/Pass-Through Entity Identifying Numbers: 202212-01122, 202212-01115, DA-202212-01187, 202210-00966, DA-202212-01319 Criteria: Recipients of federal awards must establish verifiable controls over matching calculations that are prepared and submitted. Condition: For all five Continuum of Care grants, appropriate documentation was not available to evidence review of the matching calculations prior to submission. Cause: While LifeWire has a policy in place that requires approval of matching calculations prior to submission, proper documentation to support the policy was not available. Effect or Potential Effect: Matching calculations could be submitted that are inaccurate or incomplete. Questioned Costs: None. Context: There were five active Continuum of Care grants in 2023. This is a condition identified per review of LifeWire’s compliance with specified requirements not using a statistically valid sample. Identification as a Repeat Finding: Not a repeat finding. Recommendation: We recommend that LifeWire implement controls to ensure proper documentation of matching calculations and approval prior to submission. Views of Responsible Officials: Management agrees with the finding that review and approval of matching support was not maintained during the period under audit. Management has modified policies and procedures to maintain support for the control process.

Federal Agencies: Department of Housing and Urban Development Federal Assistance Listing Numbers: 14.267 Program: Continuum of Care Program Award/Pass-Through Entity Identifying Numbers: 202212-01122, 202212-01115, DA-202212-01187, 202210-00966, DA-202212-01319 Criteria: Recipients of federal awards must establish verifiable controls over matching calculations that are prepared and submitted. Condition: For all five Continuum of Care grants, appropriate documentation was not available to evidence review of the matching calculations prior to submission. Cause: While LifeWire has a policy in place that requires approval of matching calculations prior to submission, proper documentation to support the policy was not available. Effect or Potential Effect: Matching calculations could be submitted that are inaccurate or incomplete. Questioned Costs: None. Context: There were five active Continuum of Care grants in 2023. This is a condition identified per review of LifeWire’s compliance with specified requirements not using a statistically valid sample. Identification as a Repeat Finding: Not a repeat finding. Recommendation: We recommend that LifeWire implement controls to ensure proper documentation of matching calculations and approval prior to submission. Views of Responsible Officials: Management agrees with the finding that review and approval of matching support was not maintained during the period under audit. Management has modified policies and procedures to maintain support for the control process.

Federal Agencies: Department of Housing and Urban Development Federal Assistance Listing Numbers: 14.267 Program: Continuum of Care Program Award/Pass-Through Entity Identifying Numbers: 202212-01122, 202212-01115, DA-202212-01187, 202210-00966, DA-202212-01319 Criteria: Recipients of federal awards must establish verifiable controls over matching calculations that are prepared and submitted. Condition: For all five Continuum of Care grants, appropriate documentation was not available to evidence review of the matching calculations prior to submission. Cause: While LifeWire has a policy in place that requires approval of matching calculations prior to submission, proper documentation to support the policy was not available. Effect or Potential Effect: Matching calculations could be submitted that are inaccurate or incomplete. Questioned Costs: None. Context: There were five active Continuum of Care grants in 2023. This is a condition identified per review of LifeWire’s compliance with specified requirements not using a statistically valid sample. Identification as a Repeat Finding: Not a repeat finding. Recommendation: We recommend that LifeWire implement controls to ensure proper documentation of matching calculations and approval prior to submission. Views of Responsible Officials: Management agrees with the finding that review and approval of matching support was not maintained during the period under audit. Management has modified policies and procedures to maintain support for the control process.

Federal Agencies: Department of Housing and Urban Development Federal Assistance Listing Numbers: 14.267 Program: Continuum of Care Program Award/Pass-Through Entity Identifying Numbers: 202212-01122, 202212-01115, DA-202212-01187, 202210-00966, DA-202212-01319 Criteria: Recipients of federal awards must establish verifiable controls over matching calculations that are prepared and submitted. Condition: For all five Continuum of Care grants, appropriate documentation was not available to evidence review of the matching calculations prior to submission. Cause: While LifeWire has a policy in place that requires approval of matching calculations prior to submission, proper documentation to support the policy was not available. Effect or Potential Effect: Matching calculations could be submitted that are inaccurate or incomplete. Questioned Costs: None. Context: There were five active Continuum of Care grants in 2023. This is a condition identified per review of LifeWire’s compliance with specified requirements not using a statistically valid sample. Identification as a Repeat Finding: Not a repeat finding. Recommendation: We recommend that LifeWire implement controls to ensure proper documentation of matching calculations and approval prior to submission. Views of Responsible Officials: Management agrees with the finding that review and approval of matching support was not maintained during the period under audit. Management has modified policies and procedures to maintain support for the control process.

Federal Agencies: Department of Housing and Urban Development Federal Assistance Listing Numbers: 14.267 Program: Continuum of Care Program Award/Pass-Through Entity Identifying Numbers: 202212-01122, 202212-01115, DA-202212-01187, 202210-00966, DA-202212-01319 Criteria: Recipients of federal awards must establish verifiable controls over matching calculations that are prepared and submitted. Condition: For all five Continuum of Care grants, appropriate documentation was not available to evidence review of the matching calculations prior to submission. Cause: While LifeWire has a policy in place that requires approval of matching calculations prior to submission, proper documentation to support the policy was not available. Effect or Potential Effect: Matching calculations could be submitted that are inaccurate or incomplete. Questioned Costs: None. Context: There were five active Continuum of Care grants in 2023. This is a condition identified per review of LifeWire’s compliance with specified requirements not using a statistically valid sample. Identification as a Repeat Finding: Not a repeat finding. Recommendation: We recommend that LifeWire implement controls to ensure proper documentation of matching calculations and approval prior to submission. Views of Responsible Officials: Management agrees with the finding that review and approval of matching support was not maintained during the period under audit. Management has modified policies and procedures to maintain support for the control process.

Federal Agencies: Department of Housing and Urban Development Federal Assistance Listing Numbers: 14.267 Program: Continuum of Care Program Award/Pass-Through Entity Identifying Numbers: 202212-01122, 202212-01115, DA-202212-01187, 202210-00966, DA-202212-01319 Criteria: The Uniform Guidance in 2 CFR §200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. Per 2 CFR §200.430 Compensation- Personal Services: “Standards for Documentation of Personnel Expenses (1) Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (ii) Be incorporated into the official records of the non-Federal entity; (iii) Reasonably reflect the total activity for which the employee is compensated by the non- Federal entity, not exceeding 100% of compensated activities; (iv) Encompass federally-assisted and all other activities compensated by the non-Federal entity on an integrated basis, but may include the use of subsidiary records as defined in the non- Federal entity’s written policy; (v) Comply with the established accounting policies and practices of the non-Federal entity; and (vi) [Reserved] (vii) 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; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. (viii) Budget estimates (i.e., estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that: (A) The system for establishing the estimates produces reasonable approximations of the activity actually performed; (B) Significant changes in the corresponding work activity (as defined by the non-Federal entity’s written policies) are identified and entered into the records in a timely manner. Short-term (such as one or two months) fluctuation between workload categories need not be considered as long as the distribution of salaries and wages is reasonable over the longer term; and (C) The non-Federal entity’s system of internal controls includes processes to review after-the-fact interim charges made to a Federal award based on budget estimates. All necessary adjustment must be made such that the final amount charged to the Federal award is accurate, allowable, and properly allocated.” Condition: We noted that LifeWire allocated administrative payroll expenditures to Continuum of Care during 2023 based on budget allocation rates. There were no procedures in place to determine if a true-up was necessary from allocated costs. 27 timesheets were tested during the audit, of which five were charged based on budgets for the grant. Cause: LifeWire did not have policies and procedures in place to review and reconcile the estimated amounts of payroll expenditures charged to Continuum of Care to the actual expenditures incurred. Effect or Potential Effect: Without adequate controls in place to ensure costs based on budgeted allocations are reasonable and reconcile to the actual time spent on the program, LifeWire could incorrectly charge expenditures to the federal program, or not request appropriate reimbursement LifeWire is entitle to under the terms of the grant. Questioned Costs: Below reporting threshold. Context: This is a condition identified per review of LifeWire’s compliance with specified requirements not using a statistically valid sample. Payroll costs for administrative staff selected for testing totaled $1,185. Total payroll costs for the Continuum of Care grants in 2023 were $294,002. Any payroll costs not adequately supported by time and effort reports are considered questioned costs. Identification as a Repeat Finding: Not a repeat finding. Recommendation: We recommend that LifeWire implement policies and procedures to review for any necessary budget to actual adjustments, and we recommend that sufficient documentation be maintained to support any adjustments made as required by 2 CFR §200.430. Views of Responsible Officials: Management agrees with the finding. Management has modified policies and procedures to ensure staff time allocated to the grant is properly reviewed and approved.

Federal Agencies: Department of Housing and Urban Development Federal Assistance Listing Numbers: 14.267 Program: Continuum of Care Program Award/Pass-Through Entity Identifying Numbers: 202212-01122, 202212-01115, DA-202212-01187, 202210-00966, DA-202212-01319 Criteria: The Uniform Guidance in 2 CFR §200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. Per 2 CFR §200.430 Compensation- Personal Services: “Standards for Documentation of Personnel Expenses (1) Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (ii) Be incorporated into the official records of the non-Federal entity; (iii) Reasonably reflect the total activity for which the employee is compensated by the non- Federal entity, not exceeding 100% of compensated activities; (iv) Encompass federally-assisted and all other activities compensated by the non-Federal entity on an integrated basis, but may include the use of subsidiary records as defined in the non- Federal entity’s written policy; (v) Comply with the established accounting policies and practices of the non-Federal entity; and (vi) [Reserved] (vii) 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; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. (viii) Budget estimates (i.e., estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that: (A) The system for establishing the estimates produces reasonable approximations of the activity actually performed; (B) Significant changes in the corresponding work activity (as defined by the non-Federal entity’s written policies) are identified and entered into the records in a timely manner. Short-term (such as one or two months) fluctuation between workload categories need not be considered as long as the distribution of salaries and wages is reasonable over the longer term; and (C) The non-Federal entity’s system of internal controls includes processes to review after-the-fact interim charges made to a Federal award based on budget estimates. All necessary adjustment must be made such that the final amount charged to the Federal award is accurate, allowable, and properly allocated.” Condition: We noted that LifeWire allocated administrative payroll expenditures to Continuum of Care during 2023 based on budget allocation rates. There were no procedures in place to determine if a true-up was necessary from allocated costs. 27 timesheets were tested during the audit, of which five were charged based on budgets for the grant. Cause: LifeWire did not have policies and procedures in place to review and reconcile the estimated amounts of payroll expenditures charged to Continuum of Care to the actual expenditures incurred. Effect or Potential Effect: Without adequate controls in place to ensure costs based on budgeted allocations are reasonable and reconcile to the actual time spent on the program, LifeWire could incorrectly charge expenditures to the federal program, or not request appropriate reimbursement LifeWire is entitle to under the terms of the grant. Questioned Costs: Below reporting threshold. Context: This is a condition identified per review of LifeWire’s compliance with specified requirements not using a statistically valid sample. Payroll costs for administrative staff selected for testing totaled $1,185. Total payroll costs for the Continuum of Care grants in 2023 were $294,002. Any payroll costs not adequately supported by time and effort reports are considered questioned costs. Identification as a Repeat Finding: Not a repeat finding. Recommendation: We recommend that LifeWire implement policies and procedures to review for any necessary budget to actual adjustments, and we recommend that sufficient documentation be maintained to support any adjustments made as required by 2 CFR §200.430. Views of Responsible Officials: Management agrees with the finding. Management has modified policies and procedures to ensure staff time allocated to the grant is properly reviewed and approved.

Federal Agencies: Department of Housing and Urban Development Federal Assistance Listing Numbers: 14.267 Program: Continuum of Care Program Award/Pass-Through Entity Identifying Numbers: 202212-01122, 202212-01115, DA-202212-01187, 202210-00966, DA-202212-01319 Criteria: The Uniform Guidance in 2 CFR §200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. Per 2 CFR §200.430 Compensation- Personal Services: “Standards for Documentation of Personnel Expenses (1) Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (ii) Be incorporated into the official records of the non-Federal entity; (iii) Reasonably reflect the total activity for which the employee is compensated by the non- Federal entity, not exceeding 100% of compensated activities; (iv) Encompass federally-assisted and all other activities compensated by the non-Federal entity on an integrated basis, but may include the use of subsidiary records as defined in the non- Federal entity’s written policy; (v) Comply with the established accounting policies and practices of the non-Federal entity; and (vi) [Reserved] (vii) 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; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. (viii) Budget estimates (i.e., estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that: (A) The system for establishing the estimates produces reasonable approximations of the activity actually performed; (B) Significant changes in the corresponding work activity (as defined by the non-Federal entity’s written policies) are identified and entered into the records in a timely manner. Short-term (such as one or two months) fluctuation between workload categories need not be considered as long as the distribution of salaries and wages is reasonable over the longer term; and (C) The non-Federal entity’s system of internal controls includes processes to review after-the-fact interim charges made to a Federal award based on budget estimates. All necessary adjustment must be made such that the final amount charged to the Federal award is accurate, allowable, and properly allocated.” Condition: We noted that LifeWire allocated administrative payroll expenditures to Continuum of Care during 2023 based on budget allocation rates. There were no procedures in place to determine if a true-up was necessary from allocated costs. 27 timesheets were tested during the audit, of which five were charged based on budgets for the grant. Cause: LifeWire did not have policies and procedures in place to review and reconcile the estimated amounts of payroll expenditures charged to Continuum of Care to the actual expenditures incurred. Effect or Potential Effect: Without adequate controls in place to ensure costs based on budgeted allocations are reasonable and reconcile to the actual time spent on the program, LifeWire could incorrectly charge expenditures to the federal program, or not request appropriate reimbursement LifeWire is entitle to under the terms of the grant. Questioned Costs: Below reporting threshold. Context: This is a condition identified per review of LifeWire’s compliance with specified requirements not using a statistically valid sample. Payroll costs for administrative staff selected for testing totaled $1,185. Total payroll costs for the Continuum of Care grants in 2023 were $294,002. Any payroll costs not adequately supported by time and effort reports are considered questioned costs. Identification as a Repeat Finding: Not a repeat finding. Recommendation: We recommend that LifeWire implement policies and procedures to review for any necessary budget to actual adjustments, and we recommend that sufficient documentation be maintained to support any adjustments made as required by 2 CFR §200.430. Views of Responsible Officials: Management agrees with the finding. Management has modified policies and procedures to ensure staff time allocated to the grant is properly reviewed and approved.

Federal Agencies: Department of Housing and Urban Development Federal Assistance Listing Numbers: 14.267 Program: Continuum of Care Program Award/Pass-Through Entity Identifying Numbers: 202212-01122, 202212-01115, DA-202212-01187, 202210-00966, DA-202212-01319 Criteria: The Uniform Guidance in 2 CFR §200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. Per 2 CFR §200.430 Compensation- Personal Services: “Standards for Documentation of Personnel Expenses (1) Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (ii) Be incorporated into the official records of the non-Federal entity; (iii) Reasonably reflect the total activity for which the employee is compensated by the non- Federal entity, not exceeding 100% of compensated activities; (iv) Encompass federally-assisted and all other activities compensated by the non-Federal entity on an integrated basis, but may include the use of subsidiary records as defined in the non- Federal entity’s written policy; (v) Comply with the established accounting policies and practices of the non-Federal entity; and (vi) [Reserved] (vii) 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; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. (viii) Budget estimates (i.e., estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that: (A) The system for establishing the estimates produces reasonable approximations of the activity actually performed; (B) Significant changes in the corresponding work activity (as defined by the non-Federal entity’s written policies) are identified and entered into the records in a timely manner. Short-term (such as one or two months) fluctuation between workload categories need not be considered as long as the distribution of salaries and wages is reasonable over the longer term; and (C) The non-Federal entity’s system of internal controls includes processes to review after-the-fact interim charges made to a Federal award based on budget estimates. All necessary adjustment must be made such that the final amount charged to the Federal award is accurate, allowable, and properly allocated.” Condition: We noted that LifeWire allocated administrative payroll expenditures to Continuum of Care during 2023 based on budget allocation rates. There were no procedures in place to determine if a true-up was necessary from allocated costs. 27 timesheets were tested during the audit, of which five were charged based on budgets for the grant. Cause: LifeWire did not have policies and procedures in place to review and reconcile the estimated amounts of payroll expenditures charged to Continuum of Care to the actual expenditures incurred. Effect or Potential Effect: Without adequate controls in place to ensure costs based on budgeted allocations are reasonable and reconcile to the actual time spent on the program, LifeWire could incorrectly charge expenditures to the federal program, or not request appropriate reimbursement LifeWire is entitle to under the terms of the grant. Questioned Costs: Below reporting threshold. Context: This is a condition identified per review of LifeWire’s compliance with specified requirements not using a statistically valid sample. Payroll costs for administrative staff selected for testing totaled $1,185. Total payroll costs for the Continuum of Care grants in 2023 were $294,002. Any payroll costs not adequately supported by time and effort reports are considered questioned costs. Identification as a Repeat Finding: Not a repeat finding. Recommendation: We recommend that LifeWire implement policies and procedures to review for any necessary budget to actual adjustments, and we recommend that sufficient documentation be maintained to support any adjustments made as required by 2 CFR §200.430. Views of Responsible Officials: Management agrees with the finding. Management has modified policies and procedures to ensure staff time allocated to the grant is properly reviewed and approved.

Federal Agencies: Department of Housing and Urban Development Federal Assistance Listing Numbers: 14.267 Program: Continuum of Care Program Award/Pass-Through Entity Identifying Numbers: 202212-01122, 202212-01115, DA-202212-01187, 202210-00966, DA-202212-01319 Criteria: The Uniform Guidance in 2 CFR §200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. Per 2 CFR §200.430 Compensation- Personal Services: “Standards for Documentation of Personnel Expenses (1) Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (ii) Be incorporated into the official records of the non-Federal entity; (iii) Reasonably reflect the total activity for which the employee is compensated by the non- Federal entity, not exceeding 100% of compensated activities; (iv) Encompass federally-assisted and all other activities compensated by the non-Federal entity on an integrated basis, but may include the use of subsidiary records as defined in the non- Federal entity’s written policy; (v) Comply with the established accounting policies and practices of the non-Federal entity; and (vi) [Reserved] (vii) 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; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. (viii) Budget estimates (i.e., estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that: (A) The system for establishing the estimates produces reasonable approximations of the activity actually performed; (B) Significant changes in the corresponding work activity (as defined by the non-Federal entity’s written policies) are identified and entered into the records in a timely manner. Short-term (such as one or two months) fluctuation between workload categories need not be considered as long as the distribution of salaries and wages is reasonable over the longer term; and (C) The non-Federal entity’s system of internal controls includes processes to review after-the-fact interim charges made to a Federal award based on budget estimates. All necessary adjustment must be made such that the final amount charged to the Federal award is accurate, allowable, and properly allocated.” Condition: We noted that LifeWire allocated administrative payroll expenditures to Continuum of Care during 2023 based on budget allocation rates. There were no procedures in place to determine if a true-up was necessary from allocated costs. 27 timesheets were tested during the audit, of which five were charged based on budgets for the grant. Cause: LifeWire did not have policies and procedures in place to review and reconcile the estimated amounts of payroll expenditures charged to Continuum of Care to the actual expenditures incurred. Effect or Potential Effect: Without adequate controls in place to ensure costs based on budgeted allocations are reasonable and reconcile to the actual time spent on the program, LifeWire could incorrectly charge expenditures to the federal program, or not request appropriate reimbursement LifeWire is entitle to under the terms of the grant. Questioned Costs: Below reporting threshold. Context: This is a condition identified per review of LifeWire’s compliance with specified requirements not using a statistically valid sample. Payroll costs for administrative staff selected for testing totaled $1,185. Total payroll costs for the Continuum of Care grants in 2023 were $294,002. Any payroll costs not adequately supported by time and effort reports are considered questioned costs. Identification as a Repeat Finding: Not a repeat finding. Recommendation: We recommend that LifeWire implement policies and procedures to review for any necessary budget to actual adjustments, and we recommend that sufficient documentation be maintained to support any adjustments made as required by 2 CFR §200.430. Views of Responsible Officials: Management agrees with the finding. Management has modified policies and procedures to ensure staff time allocated to the grant is properly reviewed and approved.