Audit 353459

Finding Number: 2023-001 Cost Allocations – (Material Weakness) Information on Federal Program: U.S. Department of Health and Human Services Federal Assistance Listing Number (ALN) Number: 93.676 ALN Name: Unaccompanied Alien Children Program Contract Period: July 1, 2022 through June 30, 2023 Criteria: In accordance with U.S. GAAP, if costs benefit multiple programs, the costs should be allocated to the programs based on the proportional benefit. Additionally, direct costs are those costs that can be identified specifically or directly assigned to such activities relatively easily with a high degree of accuracy. Condition: During our audit, we noted that payroll and the related personnel costs are not being charged directly or allocated to the correct cost center in the Serenic Navigator accounting system monthly. The finance team performs manual calculations of all allocations in Excel at the end of the fiscal year to update the allocations. Questioned Costs: None noted. Context: This is a condition identified during the audit of Lincoln Hall’s June 30, 2023, financial statements. Effect or Potential Effect: We observed that Lincoln Hall did not have formal cost allocation processes in place to properly allocate certain expenses throughout the year. As a result, these expenses were manually adjusted by the Finance team at year-end. Repeat Finding: This is a repeated finding from prior year. See Finding No. 2022-001 on the Summary Schedule of Prior Audit Findings. Cause: Certain non-personnel costs rely on the accurate allocation of personnel costs, which in turn depends on how employees are set up or assigned in ADP. However, there is no effectively established periodic review or assessment process to ensure the accuracy of these assignments throughout the year. Recommendation: The inability to generate financial statements that incorporate the federal and state agency cost allocations prevents Lincoln Hall from presenting functionally accurate interim financial statements. We recommend that these costs be properly allocated on a monthly basis within Lincoln Hall’s general ledger system. Regularly allocating these costs will enable Lincoln Hall to submit accurate and substantiated interim financial data to its funding sources. Additionally, properly tracking and allocating costs monthly will help prevent significant year-end cost reallocations by function. Views of Responsible Officials: Lincoln Hall agrees with the finding. Lincoln Hall continues to take steps to improve this process. See Lincoln Hall's further response to this finding as described in the accompanying management’s planned corrective actions, Appendix A.

Finding Number: 2023-002 Closing Process – (Material Weakness) Information on Federal Program: U.S. Department of Health and Human Services Federal Assistance Listing Number (ALN) Number: 93.676 ALN Name: Unaccompanied Alien Children Program Contract Period: July 1, 2022 through June 30, 2023 Criteria: The Uniform Guidance §200.303 requires entities to establish and maintain effective internal controls to provide reasonable assurance that entities are in compliance with Federal statutes, regulations, and terms and conditions of the Federal Award. Additionally, these internal controls should align with the guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control-Integrated Framework” issued by the Committee of Sponsoring Organizations (COSO). Condition: During our audit, we noted issues related to the timeliness of the financial statement close process, the quantity of entries to close the books, the reconciliation of the beginning trial balance to the prior year audited trial balance, and a lack of segregation of duties which led to journal entries being prepared, reviewed and posted by the same person in the general ledger system. Questioned Costs: None noted. Context: This is a condition identified during the audit of Lincoln Hall’s June 30, 2023 financial statements. Effect or Potential Effect: The findings identified impact the risks of fraud and management override. Due to the volume of transactions throughout the year there is a reasonable possibility that a material misstatement of the financial statements will not be prevented or detected and corrected on a timely basis. Repeat Finding: This is a new finding in the current year. Cause: The findings noted surrounding controls for the financial statement closing process is mainly due to the turnover at Lincoln Hall. Recommendation: Untimely recording of journal entries along with inadequate segregation of duties, increases the risk of fraud and management override of controls. We recommend that management implement controls to ensure that the preparation, review and posting of journal entries are performed by separate individuals and that journal entries are timely recorded throughout the year. This will allow management to prevent, detect, and correct any misstatements on a timely basis. Views of Responsible Officials: Lincoln Hall agrees with the finding. Lincoln Hall continues to take steps to improve this process. See Lincoln Hall's further response to this finding as described in the accompanying management’s planned corrective actions, Appendix A.

Finding Number: 2023-003 Allowable Costs; Cash Management – (Material Weakness) Information on Federal Program: U.S. Department of Health and Human Services ALN Number: 93.676 ALN Name: Unaccompanied Alien Children Program Contract Period: 07/01/2022 - 6/30/2023 Criteria: In accordance with the Uniform Guidance §200.405, if costs benefit multiple programs, the costs should be allocated to the programs based on the proportional benefit. Per the Uniform Guidance §200.413, direct costs are those costs that can be identified specifically or directly assigned to such activities relatively easily with a high degree of accuracy. Additionally, Uniform Guidance §200.302 states that the non-federal entity’s financial management systems, including records documenting compliance with federal statutes, regulations, and the terms and conditions of the federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions; and the tracking of expenditures to establish that such funds have been used in accordance to the federal statutes, regulations, and the terms and conditions of the federal award. Condition: During our audit, we noted that certain payroll expenses and other than personnel service expenses are not being charged directly or allocated to the correct cost center in the accounting system monthly. Therefore, the amounts being drawn down during any given month may not be fully supported until the year-end when a reallocation of costs by function occurs. Questioned Costs: None noted. Context: This is a condition identified per review of Lincoln Hall’s compliance with allowable costs and cash management. Effect or Potential Effect: We observed that Lincoln Hall did not have formal cost allocation processes in place to properly allocate certain expenses throughout the year. As a result, these expenses were manually adjusted by the Finance team at year-end. As a result, we were unable to obtain sufficient evidence to verify that certain costs were properly allocated to the program throughout the year to properly support drawdowns during any given month. Furthermore, as awards for this program are funded under the cost reimbursement method, this finding also impacts the cash management requirement to properly support any drawdowns that occur throughout the year. Repeat Finding: This is a repeated finding from prior year. See Finding No. 2022-002 on the Summary Schedule of Prior Audit Findings. Cause: There is no effectively established periodic review or assessment process to ensure the accuracy of employee assignments within ADP throughout the year. Recommendation: The lack of proper monthly federal and state cost allocation prevents Lincoln Hall from presenting functionally accurate interim financial statements. We recommend implementing a process to ensure these costs are allocated correctly within Lincoln Hall’s general ledger monthly. Regular cost allocation will enable Lincoln Hall to submit accurate and substantiated interim financial data to its funding sources. Additionally, proper tracking and allocation of costs monthly will help prevent significant year-end cost reallocations by function. Views of Responsible Officials: Lincoln Hall agrees with the finding. Lincoln Hall continues to take steps to improve this process. See Lincoln Hall’s further response to this finding as described in the accompanying management’s planned corrective actions, Appendix A.

Finding Number: 2023-004 Reporting – (Material Weakness) Information on Federal Program: U.S. Department of Health and Human Services ALN Number: 93.676 ALN Name: Unaccompanied Alien Children Program Contract Period: 07/01/2022 - 6/30/2023 Criteria: In accordance with the Uniform Guidance §200.328 and §200.329, providers must submit Federal Financial Report (SF-425) and Program Progress Reports (SF-PPR) as required by the Federal Award, for which the instructions state that quarterly and semi-annual interim reports shall be submitted no later than 30 days after the end of each reporting period, and annual reports shall be submitted no later than 90 days after the end of each reporting period. Furthermore, all fields in the SF-425 form must be filled out appropriately. Additionally, in accordance with the Uniform Guidance §200.512, the Uniform Guidance report needs to be filed with the Federal Audit Clearinghouse within the earlier of 30 days after receipt of the audit report or 9 months after the end of the audit period. Condition: During our audit, we noted that two SF-PPR quarterly reports and the Uniform Guidance report were not submitted on time. Additionally, for one of the SF-425 submitted during the year, we were unable to trace the amounts reported to accounting records and supporting documentation. Questioned Costs: None noted. Context: This is a condition identified per review of Lincoln Hall’s compliance with reporting requirements. Effect or Potential Effect: We were able to observe and conclude that Lincoln Hall did not comply with certain quarterly and annual reporting requirements. Repeat Finding: This is a repeated finding from prior year. See Finding No. 2022-003 on the Summary Schedule of Prior Audit Findings. Cause: Timing and interpretation of the filing requirements were not met due to the turnover at Lincoln Hall. Recommendation: Management should submit reports timely as required by the Federal Award and the Uniform Guidance. Views of Responsible Officials: Lincoln Hall agrees with the finding. Lincoln Hall continues to take steps to improve this process. See Lincoln Hall’s further response to this finding as described in the accompanying management’s planned corrective actions, Appendix A.

Finding Number: 2023-005 Activities Allowed or Unallowed; Allowable Costs/Cost Principles (Material Weakness) Information on Federal Program: U.S. Department of Health and Human Services ALN Number: 93.676 ALN Name: Unaccompanied Alien Children Program Contract Period: 07/01/2022 - 6/30/2023 Criteria: The Uniform Guidance Section §200.403(g) states that for costs to be allowable under federal awards, they must be adequately documented, and there must be sufficient documentation. Condition: During our testing of personnel costs, we noted that management’s method of allocating shared personnel costs is performed after the fiscal year ended, instead of performing timely allocations throughout the fiscal year. Additionally, out of the 60 payroll samples selected for testing, we were unable to obtain adequate documentation to support the approval of two employees’ pay rates. Questioned Costs: Not determinable. Context: This is a condition identified per our compliance testing of personnel costs. Effect or Potential Effect: We were unable to confirm the allowability, validity, and completeness of the expenses on a monthly basis. Repeat Finding: This is a repeated finding from prior year. See Finding No. 2022-004 on the Summary Schedule of Prior Audit Findings. Cause: There is no effectively established periodic review or assessment process to ensure the accuracy of employee assignments within ADP throughout the year. Recommendation: The lack of proper monthly federal and state cost allocation prevents Lincoln Hall from presenting functionally accurate interim financial statements. We recommend implementing a process to ensure these costs are allocated correctly within Lincoln Hall’s general ledger monthly. Regular cost allocation will enable Lincoln Hall to submit accurate and well-supported interim financial data to its funding sources. Additionally, maintaining proper tracking and allocation throughout the year will help prevent the need for significant cost reallocations by function at year-end. We also recommend that management maintain adequate documentation of employee pay rates to ensure the accuracy of personnel costs and the proper authorization of employee salaries. Views of Responsible Official: Lincoln Hall agrees with the finding. Lincoln Hall continues to take steps to improve this process. See Lincoln Hall’s further response to this finding as described in the accompanying management’s planned corrective actions, Appendix A.

Finding Number: 2023-006 Procurement and Suspension and Debarment (Material Weakness) Information on Federal Program: U.S. Department of Health and Human Services ALN Number: 93.676 ALN Name: Unaccompanied Alien Children Program Contract Period: 07/01/2022 - 6/30/2023 Criteria: The Uniform Guidance Section §200.317 states that the same policies and procedures used for procurements with non-federal funds must be followed when conducting procurement transactions under a federal award. Condition: During our audit, we noted that management’s method of allocating shared costs is performed after the fiscal year has ended, instead of performing timely allocations monthly throughout the fiscal year. Due to this allocation approach we were unable to obtain the procurement transactions that pertain only to the federal program during the year for our procurement policy testing population. Therefore, we selected 10 samples from all transactions during the fiscal year based on Lincoln Hall’s procurement policy thresholds. Additionally, out of the 10 vendors selected for testing, we noted that no bids were performed for one of the vendors who was contracted for projects costing over $5,000, which is the threshold that requires 2 bids per Lincoln Hall’s procurement policy. Questioned Costs: Not determinable. Context: This is a condition identified per our compliance testing of procurement. Repeat Finding: This is not a repeated finding. Cause: Bidding and procurement requirements were not met due to the turnover at Lincoln Hall as well as system limitations on allocations. Effect or Potential Effect: We were unable to identify the procurement transactions that pertain only to the federal program and therefore, we were unable to conclude whether awards for this program were used for purchases subject to the procurement policy in place. We were able to observe and conclude that Lincoln Hall did not comply with the procurement requirements for certain vendors contracted during the year. Recommendation: The inability to generate financial statements that incorporate the federal and state agency cost allocations prevents Lincoln Hall from presenting functionally accurate interim financial statements. We recommend that these costs be properly allocated on a monthly basis within Lincoln Hall’s general ledger system. Allocating these costs regularly will allow Lincoln Hall to submit accurate and substantiated interim financial data to its funding sources. Additionally, properly tracking and allocating costs on a monthly basis will prevent a material reallocation of costs by function at year-end. Management should comply with the bidding and procurement policies in place for all vendors and contracts conducted. Views of Responsible Official: Lincoln Hall agrees with the finding. Lincoln Hall continues to take steps to improve this process. See Lincoln Hall’s further response to this finding as described in the accompanying management’s planned corrective actions, Appendix A.

Finding Number: 2023-001 Cost Allocations – (Material Weakness) Information on Federal Program: U.S. Department of Health and Human Services Federal Assistance Listing Number (ALN) Number: 93.676 ALN Name: Unaccompanied Alien Children Program Contract Period: July 1, 2022 through June 30, 2023 Criteria: In accordance with U.S. GAAP, if costs benefit multiple programs, the costs should be allocated to the programs based on the proportional benefit. Additionally, direct costs are those costs that can be identified specifically or directly assigned to such activities relatively easily with a high degree of accuracy. Condition: During our audit, we noted that payroll and the related personnel costs are not being charged directly or allocated to the correct cost center in the Serenic Navigator accounting system monthly. The finance team performs manual calculations of all allocations in Excel at the end of the fiscal year to update the allocations. Questioned Costs: None noted. Context: This is a condition identified during the audit of Lincoln Hall’s June 30, 2023, financial statements. Effect or Potential Effect: We observed that Lincoln Hall did not have formal cost allocation processes in place to properly allocate certain expenses throughout the year. As a result, these expenses were manually adjusted by the Finance team at year-end. Repeat Finding: This is a repeated finding from prior year. See Finding No. 2022-001 on the Summary Schedule of Prior Audit Findings. Cause: Certain non-personnel costs rely on the accurate allocation of personnel costs, which in turn depends on how employees are set up or assigned in ADP. However, there is no effectively established periodic review or assessment process to ensure the accuracy of these assignments throughout the year. Recommendation: The inability to generate financial statements that incorporate the federal and state agency cost allocations prevents Lincoln Hall from presenting functionally accurate interim financial statements. We recommend that these costs be properly allocated on a monthly basis within Lincoln Hall’s general ledger system. Regularly allocating these costs will enable Lincoln Hall to submit accurate and substantiated interim financial data to its funding sources. Additionally, properly tracking and allocating costs monthly will help prevent significant year-end cost reallocations by function. Views of Responsible Officials: Lincoln Hall agrees with the finding. Lincoln Hall continues to take steps to improve this process. See Lincoln Hall's further response to this finding as described in the accompanying management’s planned corrective actions, Appendix A.

Finding Number: 2023-002 Closing Process – (Material Weakness) Information on Federal Program: U.S. Department of Health and Human Services Federal Assistance Listing Number (ALN) Number: 93.676 ALN Name: Unaccompanied Alien Children Program Contract Period: July 1, 2022 through June 30, 2023 Criteria: The Uniform Guidance §200.303 requires entities to establish and maintain effective internal controls to provide reasonable assurance that entities are in compliance with Federal statutes, regulations, and terms and conditions of the Federal Award. Additionally, these internal controls should align with the guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control-Integrated Framework” issued by the Committee of Sponsoring Organizations (COSO). Condition: During our audit, we noted issues related to the timeliness of the financial statement close process, the quantity of entries to close the books, the reconciliation of the beginning trial balance to the prior year audited trial balance, and a lack of segregation of duties which led to journal entries being prepared, reviewed and posted by the same person in the general ledger system. Questioned Costs: None noted. Context: This is a condition identified during the audit of Lincoln Hall’s June 30, 2023 financial statements. Effect or Potential Effect: The findings identified impact the risks of fraud and management override. Due to the volume of transactions throughout the year there is a reasonable possibility that a material misstatement of the financial statements will not be prevented or detected and corrected on a timely basis. Repeat Finding: This is a new finding in the current year. Cause: The findings noted surrounding controls for the financial statement closing process is mainly due to the turnover at Lincoln Hall. Recommendation: Untimely recording of journal entries along with inadequate segregation of duties, increases the risk of fraud and management override of controls. We recommend that management implement controls to ensure that the preparation, review and posting of journal entries are performed by separate individuals and that journal entries are timely recorded throughout the year. This will allow management to prevent, detect, and correct any misstatements on a timely basis. Views of Responsible Officials: Lincoln Hall agrees with the finding. Lincoln Hall continues to take steps to improve this process. See Lincoln Hall's further response to this finding as described in the accompanying management’s planned corrective actions, Appendix A.

Finding Number: 2023-003 Allowable Costs; Cash Management – (Material Weakness) Information on Federal Program: U.S. Department of Health and Human Services ALN Number: 93.676 ALN Name: Unaccompanied Alien Children Program Contract Period: 07/01/2022 - 6/30/2023 Criteria: In accordance with the Uniform Guidance §200.405, if costs benefit multiple programs, the costs should be allocated to the programs based on the proportional benefit. Per the Uniform Guidance §200.413, direct costs are those costs that can be identified specifically or directly assigned to such activities relatively easily with a high degree of accuracy. Additionally, Uniform Guidance §200.302 states that the non-federal entity’s financial management systems, including records documenting compliance with federal statutes, regulations, and the terms and conditions of the federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions; and the tracking of expenditures to establish that such funds have been used in accordance to the federal statutes, regulations, and the terms and conditions of the federal award. Condition: During our audit, we noted that certain payroll expenses and other than personnel service expenses are not being charged directly or allocated to the correct cost center in the accounting system monthly. Therefore, the amounts being drawn down during any given month may not be fully supported until the year-end when a reallocation of costs by function occurs. Questioned Costs: None noted. Context: This is a condition identified per review of Lincoln Hall’s compliance with allowable costs and cash management. Effect or Potential Effect: We observed that Lincoln Hall did not have formal cost allocation processes in place to properly allocate certain expenses throughout the year. As a result, these expenses were manually adjusted by the Finance team at year-end. As a result, we were unable to obtain sufficient evidence to verify that certain costs were properly allocated to the program throughout the year to properly support drawdowns during any given month. Furthermore, as awards for this program are funded under the cost reimbursement method, this finding also impacts the cash management requirement to properly support any drawdowns that occur throughout the year. Repeat Finding: This is a repeated finding from prior year. See Finding No. 2022-002 on the Summary Schedule of Prior Audit Findings. Cause: There is no effectively established periodic review or assessment process to ensure the accuracy of employee assignments within ADP throughout the year. Recommendation: The lack of proper monthly federal and state cost allocation prevents Lincoln Hall from presenting functionally accurate interim financial statements. We recommend implementing a process to ensure these costs are allocated correctly within Lincoln Hall’s general ledger monthly. Regular cost allocation will enable Lincoln Hall to submit accurate and substantiated interim financial data to its funding sources. Additionally, proper tracking and allocation of costs monthly will help prevent significant year-end cost reallocations by function. Views of Responsible Officials: Lincoln Hall agrees with the finding. Lincoln Hall continues to take steps to improve this process. See Lincoln Hall’s further response to this finding as described in the accompanying management’s planned corrective actions, Appendix A.

Finding Number: 2023-004 Reporting – (Material Weakness) Information on Federal Program: U.S. Department of Health and Human Services ALN Number: 93.676 ALN Name: Unaccompanied Alien Children Program Contract Period: 07/01/2022 - 6/30/2023 Criteria: In accordance with the Uniform Guidance §200.328 and §200.329, providers must submit Federal Financial Report (SF-425) and Program Progress Reports (SF-PPR) as required by the Federal Award, for which the instructions state that quarterly and semi-annual interim reports shall be submitted no later than 30 days after the end of each reporting period, and annual reports shall be submitted no later than 90 days after the end of each reporting period. Furthermore, all fields in the SF-425 form must be filled out appropriately. Additionally, in accordance with the Uniform Guidance §200.512, the Uniform Guidance report needs to be filed with the Federal Audit Clearinghouse within the earlier of 30 days after receipt of the audit report or 9 months after the end of the audit period. Condition: During our audit, we noted that two SF-PPR quarterly reports and the Uniform Guidance report were not submitted on time. Additionally, for one of the SF-425 submitted during the year, we were unable to trace the amounts reported to accounting records and supporting documentation. Questioned Costs: None noted. Context: This is a condition identified per review of Lincoln Hall’s compliance with reporting requirements. Effect or Potential Effect: We were able to observe and conclude that Lincoln Hall did not comply with certain quarterly and annual reporting requirements. Repeat Finding: This is a repeated finding from prior year. See Finding No. 2022-003 on the Summary Schedule of Prior Audit Findings. Cause: Timing and interpretation of the filing requirements were not met due to the turnover at Lincoln Hall. Recommendation: Management should submit reports timely as required by the Federal Award and the Uniform Guidance. Views of Responsible Officials: Lincoln Hall agrees with the finding. Lincoln Hall continues to take steps to improve this process. See Lincoln Hall’s further response to this finding as described in the accompanying management’s planned corrective actions, Appendix A.

Finding Number: 2023-005 Activities Allowed or Unallowed; Allowable Costs/Cost Principles (Material Weakness) Information on Federal Program: U.S. Department of Health and Human Services ALN Number: 93.676 ALN Name: Unaccompanied Alien Children Program Contract Period: 07/01/2022 - 6/30/2023 Criteria: The Uniform Guidance Section §200.403(g) states that for costs to be allowable under federal awards, they must be adequately documented, and there must be sufficient documentation. Condition: During our testing of personnel costs, we noted that management’s method of allocating shared personnel costs is performed after the fiscal year ended, instead of performing timely allocations throughout the fiscal year. Additionally, out of the 60 payroll samples selected for testing, we were unable to obtain adequate documentation to support the approval of two employees’ pay rates. Questioned Costs: Not determinable. Context: This is a condition identified per our compliance testing of personnel costs. Effect or Potential Effect: We were unable to confirm the allowability, validity, and completeness of the expenses on a monthly basis. Repeat Finding: This is a repeated finding from prior year. See Finding No. 2022-004 on the Summary Schedule of Prior Audit Findings. Cause: There is no effectively established periodic review or assessment process to ensure the accuracy of employee assignments within ADP throughout the year. Recommendation: The lack of proper monthly federal and state cost allocation prevents Lincoln Hall from presenting functionally accurate interim financial statements. We recommend implementing a process to ensure these costs are allocated correctly within Lincoln Hall’s general ledger monthly. Regular cost allocation will enable Lincoln Hall to submit accurate and well-supported interim financial data to its funding sources. Additionally, maintaining proper tracking and allocation throughout the year will help prevent the need for significant cost reallocations by function at year-end. We also recommend that management maintain adequate documentation of employee pay rates to ensure the accuracy of personnel costs and the proper authorization of employee salaries. Views of Responsible Official: Lincoln Hall agrees with the finding. Lincoln Hall continues to take steps to improve this process. See Lincoln Hall’s further response to this finding as described in the accompanying management’s planned corrective actions, Appendix A.

Finding Number: 2023-006 Procurement and Suspension and Debarment (Material Weakness) Information on Federal Program: U.S. Department of Health and Human Services ALN Number: 93.676 ALN Name: Unaccompanied Alien Children Program Contract Period: 07/01/2022 - 6/30/2023 Criteria: The Uniform Guidance Section §200.317 states that the same policies and procedures used for procurements with non-federal funds must be followed when conducting procurement transactions under a federal award. Condition: During our audit, we noted that management’s method of allocating shared costs is performed after the fiscal year has ended, instead of performing timely allocations monthly throughout the fiscal year. Due to this allocation approach we were unable to obtain the procurement transactions that pertain only to the federal program during the year for our procurement policy testing population. Therefore, we selected 10 samples from all transactions during the fiscal year based on Lincoln Hall’s procurement policy thresholds. Additionally, out of the 10 vendors selected for testing, we noted that no bids were performed for one of the vendors who was contracted for projects costing over $5,000, which is the threshold that requires 2 bids per Lincoln Hall’s procurement policy. Questioned Costs: Not determinable. Context: This is a condition identified per our compliance testing of procurement. Repeat Finding: This is not a repeated finding. Cause: Bidding and procurement requirements were not met due to the turnover at Lincoln Hall as well as system limitations on allocations. Effect or Potential Effect: We were unable to identify the procurement transactions that pertain only to the federal program and therefore, we were unable to conclude whether awards for this program were used for purchases subject to the procurement policy in place. We were able to observe and conclude that Lincoln Hall did not comply with the procurement requirements for certain vendors contracted during the year. Recommendation: The inability to generate financial statements that incorporate the federal and state agency cost allocations prevents Lincoln Hall from presenting functionally accurate interim financial statements. We recommend that these costs be properly allocated on a monthly basis within Lincoln Hall’s general ledger system. Allocating these costs regularly will allow Lincoln Hall to submit accurate and substantiated interim financial data to its funding sources. Additionally, properly tracking and allocating costs on a monthly basis will prevent a material reallocation of costs by function at year-end. Management should comply with the bidding and procurement policies in place for all vendors and contracts conducted. Views of Responsible Official: Lincoln Hall agrees with the finding. Lincoln Hall continues to take steps to improve this process. See Lincoln Hall’s further response to this finding as described in the accompanying management’s planned corrective actions, Appendix A.