Audit 353757

Finding 2023-003: Allowable Costs Information on the Federal Program: 97.024 - Emergency Food and Shelter National Board Program Type of Finding: Significant Deficiency in Internal Control over Compliance and Non-compliance Criteria: According to 2 CFR §200.303, the non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non- Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in Standards for Internal Control in the Federal Government issued by the Comptroller General of the United States or the internal Control Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: During our testing over credit cards, we noted that while there is a documented review and approval process in place over employee charges, there is no evidence to support the date in which the review was performed. Charges on the credit cards include expenditures that are reimbursed on federally funded awards. Cause: SAMU does not have a formal policy in place with respect to credit card receipt retention or review and approval over charges. As such, SAMU did not have effective internal controls in place to ensure that approvals were performed and documented as being performed in a timely manner.Effect or Potential Effect: There is the potential that credit card charges allocated to the Federal award were not properly reviewed in a timely manner, and could have been improperly charged or charged in the incorrect period, thereby creating a potential for being reimbursed for unallowable costs. Questioned Costs: None. Context: 372 out of 372 samples selected for testing did not have adequate documented review and approval. The sample is deemed representative of the population. Identification of a Repeat Finding: Not applicable. Recommendation: We recommend that SAMU implement a formal credit card policy. This policy should require that management formally review and approve employee credit card transactions and obtain appropriate supporting evidence for the charges on a monthly basis.

Finding 2023-004: Schedule of Expenditures of Federal Awards Presentation Information on the Federal Program: 97.024 - Emergency Food and Shelter National Board Program Type of Finding: Material Weakness in Internal Control over Compliance Criteria: Management is responsible for the complete and fair presentation of the financial statements, including any supplementary information that is presented in relation to the financial statements, such as the Schedule of Expenditures of Federal Awards (SEFA). Also, in accordance with 2 CFR Section 200.510 (b)(2), SAMU is required to include only direct and pass-through Federal awards expended during the fiscal year in the SEFA. Condition: During our audit fieldwork, we noted that the SEFA included expenditures of $4,563,468 that were related to State awards and should not have been included on the SEFA. In addition, we noted that the SEFA included conditional awards that had not yet been earned in the amount of $3,485,473. As a result, an adjustment to the amounts reported on the SEFA was proposed, and accepted by management, to decrease current year expenditures reported on the SEFA by $8,077,689. Cause: SAMU began receiving diversified funding streams for the first time during the year ended December 31, 2023. The misstatements appear to be due to a misunderstanding of what should be included on the SEFA and how support should be recognized and recorded on conditional awards in accordance with ASC 958. Effect or Potential Effect: The SEFA was overstated by $8,077,689. When the SEFA is not prepared properly, it could have an effect on the auditor's determination of major programs or the auditor's sample selections. Questioned Costs: None. Identification of a Repeat Finding: Not applicable. Context: The SEFA prepared by SAMU was not representative of actual Federal expenditures that were incurred during the year ended December 31, 2023. Recommendation: We recommend that SAMU ensure it has an understanding of what expenditures are to be presented on the SEFA, particularly in connection with conditional awards, in accordance with 2 CFR § 200.

Finding 2023-005: Cash Management Information on the Federal Program: 97.024 - Emergency Food and Shelter National Board Program Type of Finding: Significant Deficiency in Internal Control over Compliance and Material Noncompliance Criteria: Under 2 CFR § 200.303, organizations that receive Federal funding are required to “establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: During the audit process, we noted 4 instances in which drawdown requests were submitted late, and outside of the time frame stipulated in the award agreement. Cause: It is our understanding that the delayed submissions were approved and discussed with the funder verbally. The approvals for delayed submission, since done verbally, were not adequately documented for review during the audit.Effect or Potential Effect: Without documented approvals for delayed submission of drawdown requests, SAMU risks being noncompliant with award terms and conditions. Questioned Costs: None. Context: 4 of 8 drawdown requests tested were not submitted timely as outlined in the agreement. The sample is representative of the population. Identification as a Repeat Finding, if Applicable: 2022-005 Recommendation: It is recommended that SAMU implement policies requiring that all verbal discussions with funders are supported by official documentation.

Finding 2023-006: Procurement Information on the Federal Program: 97.024 - Emergency Food and Shelter National Board Program Type of Finding: Material Weakness in Internal Control over Compliance and Material Noncompliance Criteria: According to 2 CFR §200.303, the non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non- Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in Standards for Internal Control in the Federal Government issued by the Comptroller General of the United States or the internal Control Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Additionally, according to 2 CFR §200.318 Procurement standards, the non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Title 2, Subtitle A Chapter II Part 200 Subpart D 200.319 Procurement Standards. All procurement transactions for the acquisition of property or services required under a Federal award must be conducted in a manner providing full and open competition consistent with the standards of this section and §200.320. The non-Federal entity must have written procedures for procurement transactions. These procedures must ensure that all solicitations incorporate a clear and accurate description of the technical requirements for the material, product, or service to be procured. Such description must not, in competitive procurements, contain features which unduly restrict competition. The description may include a statement of the qualitative nature of the material, product or service to be procured and, when necessary, must set forth those minimum essential characteristics and standards to which it must conform if it is to satisfy its intended use. Noncompetitive procurements can only be awarded in accordance with §200.320(c). According to 2 CFR §200.320 Procurement Standards, there are specific circumstances in which noncompetitive procurement can be used. Noncompetitive procurement can only be awarded if one or more of the following circumstances apply: 1. The acquisition of property or services, the aggregate dollar amount of which does not exceed the micro-purchase threshold, 2. The item is available only from a single source; 3. The public exigency or emergency for the requirement will not permit a delay resulting from publicizing a competitive solicitation; 4. The Federal awarding agency or pass-through entity expressly authorizes a noncompetitive procurement in response to a written request from the non-Federal entity; or 5. After solicitation of a number of sources, competition is determined inadequate. Condition: During our testing over procurement, we determined that SAMU did not clearly document the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. In addition, we noted that while SAMU does have a procurement policy in place, the policy does not include requirements for re-procuring long-term contracts that continuously re-new. Cause: Management did not have effective internal controls in place to ensure that procurement requirements were adequately documented and retained. Effect or Potential Effect: Procurement records were insufficient to meet the requirements noted in the Criteria section above, as well as SAMU's internal procurement policy. Questioned Costs: $75,000 Context: 2 of 4 samples selected for testing did not have adequate documentation for the rationale related to the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. The sample is representative of the population. Identification as a Repeat Finding, if Applicable: 2022-006 Recommendation: We recommend SAMU retain sufficient procurement documentation to meet the requirements noted in the Criteria section above.

Finding 2023-007: Suspension and Debarment Information on the Federal Program: 97.024 - Emergency Food and Shelter National Board Program Type of Finding: Material Weakness in Internal Control over Compliance and Material NoncomplianceCriteria: Under 2 CFR §200.213, non-Federal entities are subject to the non-procurement debarment and suspension regulations implementing Executive Orders 12549 and 12689, 2 CFR part 180. These regulations restrict awards, subawards, and contracts with certain parties that are debarred, suspended, or otherwise excluded from or ineligible for participation in Federal assistance programs or activities. The non-Federal entity must verify that the person with whom you intend to do business is not excluded or disqualified, by (a) Checking SAM Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person. Condition: During our testing over Suspension and Debarment, we determined that SAMU either did not perform screenings, or did not document the screening date on potential or current vendors, suppliers, contractors or employees that were paid with Federal funds. Cause: SAMU does not have a formal internal policy with respect to screening vendors, suppliers, contractors and employees in order to adhere to compliance over suspension and debarment. Effect or Potential Effect: Failure to screen, in a timely manner (before contract date or payment occurs) potential and current vendors, suppliers, contractors and employees increases the potential that Federal funds be inadvertently provided to parties deemed to be suspended or disbarred by the United States Government. Questioned Costs: $24,000 Context: Out of 4 samples selected for testing, we noted the following: 2 samples did not have evidence of the date of the SAM check being performed; 1 sample had a SAM check date performed after execution of the contract with the vendor; 1 sample did not have a SAM check performed at all. The sample is representative of the population. Identification as a Repeat Finding, if Applicable: 2022-007 Recommendation: We recommend that management develop and implement a formal policy on suspension and debarment. All screenings should be conducted prior to entering into an agreement with a vendor. Additionally, evidence of documentation should include the date of when the SAM check was performed. We recommend that SAMU notify all employees of this policy and ensure that it is enforced during the upcoming year.

Finding 2023-008: Reporting Information on the Federal Program: 97.024 - Emergency Food and Shelter National Board Program Type of Finding: Significant Deficiency in Internal Control over Compliance and Material Noncompliance Criteria: According to 2 CFR §200.303, the non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non- Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in Standards for Internal Control in the Federal Government issued by the Comptroller General of the United States or the internal Control Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: During the audit, we noted that there is no documented review and approval of program reports prior to submission. In addition, we noted that the submission date of reports selected for review was not adequately documented. Cause: Management did not have effective internal controls in place to ensure that a secondary level of review of approval is clearly documented, which indicates who performed the control, and when the control was performed. In addition, program reports were submitted to the funder's online system, which SAMU no longer had access to during the audit. SAMU did not adequately retain internal documentation to support submission date of the reports outside of that system. Effect or Potential Effect: Without established controls over reporting, there is a reasonable possibility that SAMU would not detect noncompliance in the normal course of performing duties and correct them in a timely manner. Questioned Costs: None noted. Context: 4 of the 4 program reports selected for testing did not have documented evidence of review or approval. 4 of the 4 program reports and 1 of 1 final financial report selected for testing did not have documented evidence to support timely submission. Identification as a Repeat Finding, if Applicable: 2022-005 Recommendation: We recommend that management of SAMU implement procedures and control processes to incorporate and document an independent review and approval, evidenced by a signature/initialing and date of the review and approval taking place. In addition, management should ensure that internal documentation is retained to support submission date of reports.

Finding 2023-003: Allowable Costs Information on the Federal Program: 97.024 - Emergency Food and Shelter National Board Program Type of Finding: Significant Deficiency in Internal Control over Compliance and Non-compliance Criteria: According to 2 CFR §200.303, the non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non- Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in Standards for Internal Control in the Federal Government issued by the Comptroller General of the United States or the internal Control Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: During our testing over credit cards, we noted that while there is a documented review and approval process in place over employee charges, there is no evidence to support the date in which the review was performed. Charges on the credit cards include expenditures that are reimbursed on federally funded awards. Cause: SAMU does not have a formal policy in place with respect to credit card receipt retention or review and approval over charges. As such, SAMU did not have effective internal controls in place to ensure that approvals were performed and documented as being performed in a timely manner.Effect or Potential Effect: There is the potential that credit card charges allocated to the Federal award were not properly reviewed in a timely manner, and could have been improperly charged or charged in the incorrect period, thereby creating a potential for being reimbursed for unallowable costs. Questioned Costs: None. Context: 372 out of 372 samples selected for testing did not have adequate documented review and approval. The sample is deemed representative of the population. Identification of a Repeat Finding: Not applicable. Recommendation: We recommend that SAMU implement a formal credit card policy. This policy should require that management formally review and approve employee credit card transactions and obtain appropriate supporting evidence for the charges on a monthly basis.

Finding 2023-004: Schedule of Expenditures of Federal Awards Presentation Information on the Federal Program: 97.024 - Emergency Food and Shelter National Board Program Type of Finding: Material Weakness in Internal Control over Compliance Criteria: Management is responsible for the complete and fair presentation of the financial statements, including any supplementary information that is presented in relation to the financial statements, such as the Schedule of Expenditures of Federal Awards (SEFA). Also, in accordance with 2 CFR Section 200.510 (b)(2), SAMU is required to include only direct and pass-through Federal awards expended during the fiscal year in the SEFA. Condition: During our audit fieldwork, we noted that the SEFA included expenditures of $4,563,468 that were related to State awards and should not have been included on the SEFA. In addition, we noted that the SEFA included conditional awards that had not yet been earned in the amount of $3,485,473. As a result, an adjustment to the amounts reported on the SEFA was proposed, and accepted by management, to decrease current year expenditures reported on the SEFA by $8,077,689. Cause: SAMU began receiving diversified funding streams for the first time during the year ended December 31, 2023. The misstatements appear to be due to a misunderstanding of what should be included on the SEFA and how support should be recognized and recorded on conditional awards in accordance with ASC 958. Effect or Potential Effect: The SEFA was overstated by $8,077,689. When the SEFA is not prepared properly, it could have an effect on the auditor's determination of major programs or the auditor's sample selections. Questioned Costs: None. Identification of a Repeat Finding: Not applicable. Context: The SEFA prepared by SAMU was not representative of actual Federal expenditures that were incurred during the year ended December 31, 2023. Recommendation: We recommend that SAMU ensure it has an understanding of what expenditures are to be presented on the SEFA, particularly in connection with conditional awards, in accordance with 2 CFR § 200.

Finding 2023-005: Cash Management Information on the Federal Program: 97.024 - Emergency Food and Shelter National Board Program Type of Finding: Significant Deficiency in Internal Control over Compliance and Material Noncompliance Criteria: Under 2 CFR § 200.303, organizations that receive Federal funding are required to “establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: During the audit process, we noted 4 instances in which drawdown requests were submitted late, and outside of the time frame stipulated in the award agreement. Cause: It is our understanding that the delayed submissions were approved and discussed with the funder verbally. The approvals for delayed submission, since done verbally, were not adequately documented for review during the audit.Effect or Potential Effect: Without documented approvals for delayed submission of drawdown requests, SAMU risks being noncompliant with award terms and conditions. Questioned Costs: None. Context: 4 of 8 drawdown requests tested were not submitted timely as outlined in the agreement. The sample is representative of the population. Identification as a Repeat Finding, if Applicable: 2022-005 Recommendation: It is recommended that SAMU implement policies requiring that all verbal discussions with funders are supported by official documentation.

Finding 2023-006: Procurement Information on the Federal Program: 97.024 - Emergency Food and Shelter National Board Program Type of Finding: Material Weakness in Internal Control over Compliance and Material Noncompliance Criteria: According to 2 CFR §200.303, the non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non- Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in Standards for Internal Control in the Federal Government issued by the Comptroller General of the United States or the internal Control Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Additionally, according to 2 CFR §200.318 Procurement standards, the non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Title 2, Subtitle A Chapter II Part 200 Subpart D 200.319 Procurement Standards. All procurement transactions for the acquisition of property or services required under a Federal award must be conducted in a manner providing full and open competition consistent with the standards of this section and §200.320. The non-Federal entity must have written procedures for procurement transactions. These procedures must ensure that all solicitations incorporate a clear and accurate description of the technical requirements for the material, product, or service to be procured. Such description must not, in competitive procurements, contain features which unduly restrict competition. The description may include a statement of the qualitative nature of the material, product or service to be procured and, when necessary, must set forth those minimum essential characteristics and standards to which it must conform if it is to satisfy its intended use. Noncompetitive procurements can only be awarded in accordance with §200.320(c). According to 2 CFR §200.320 Procurement Standards, there are specific circumstances in which noncompetitive procurement can be used. Noncompetitive procurement can only be awarded if one or more of the following circumstances apply: 1. The acquisition of property or services, the aggregate dollar amount of which does not exceed the micro-purchase threshold, 2. The item is available only from a single source; 3. The public exigency or emergency for the requirement will not permit a delay resulting from publicizing a competitive solicitation; 4. The Federal awarding agency or pass-through entity expressly authorizes a noncompetitive procurement in response to a written request from the non-Federal entity; or 5. After solicitation of a number of sources, competition is determined inadequate. Condition: During our testing over procurement, we determined that SAMU did not clearly document the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. In addition, we noted that while SAMU does have a procurement policy in place, the policy does not include requirements for re-procuring long-term contracts that continuously re-new. Cause: Management did not have effective internal controls in place to ensure that procurement requirements were adequately documented and retained. Effect or Potential Effect: Procurement records were insufficient to meet the requirements noted in the Criteria section above, as well as SAMU's internal procurement policy. Questioned Costs: $75,000 Context: 2 of 4 samples selected for testing did not have adequate documentation for the rationale related to the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. The sample is representative of the population. Identification as a Repeat Finding, if Applicable: 2022-006 Recommendation: We recommend SAMU retain sufficient procurement documentation to meet the requirements noted in the Criteria section above.

Finding 2023-007: Suspension and Debarment Information on the Federal Program: 97.024 - Emergency Food and Shelter National Board Program Type of Finding: Material Weakness in Internal Control over Compliance and Material NoncomplianceCriteria: Under 2 CFR §200.213, non-Federal entities are subject to the non-procurement debarment and suspension regulations implementing Executive Orders 12549 and 12689, 2 CFR part 180. These regulations restrict awards, subawards, and contracts with certain parties that are debarred, suspended, or otherwise excluded from or ineligible for participation in Federal assistance programs or activities. The non-Federal entity must verify that the person with whom you intend to do business is not excluded or disqualified, by (a) Checking SAM Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person. Condition: During our testing over Suspension and Debarment, we determined that SAMU either did not perform screenings, or did not document the screening date on potential or current vendors, suppliers, contractors or employees that were paid with Federal funds. Cause: SAMU does not have a formal internal policy with respect to screening vendors, suppliers, contractors and employees in order to adhere to compliance over suspension and debarment. Effect or Potential Effect: Failure to screen, in a timely manner (before contract date or payment occurs) potential and current vendors, suppliers, contractors and employees increases the potential that Federal funds be inadvertently provided to parties deemed to be suspended or disbarred by the United States Government. Questioned Costs: $24,000 Context: Out of 4 samples selected for testing, we noted the following: 2 samples did not have evidence of the date of the SAM check being performed; 1 sample had a SAM check date performed after execution of the contract with the vendor; 1 sample did not have a SAM check performed at all. The sample is representative of the population. Identification as a Repeat Finding, if Applicable: 2022-007 Recommendation: We recommend that management develop and implement a formal policy on suspension and debarment. All screenings should be conducted prior to entering into an agreement with a vendor. Additionally, evidence of documentation should include the date of when the SAM check was performed. We recommend that SAMU notify all employees of this policy and ensure that it is enforced during the upcoming year.

Finding 2023-008: Reporting Information on the Federal Program: 97.024 - Emergency Food and Shelter National Board Program Type of Finding: Significant Deficiency in Internal Control over Compliance and Material Noncompliance Criteria: According to 2 CFR §200.303, the non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non- Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in Standards for Internal Control in the Federal Government issued by the Comptroller General of the United States or the internal Control Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: During the audit, we noted that there is no documented review and approval of program reports prior to submission. In addition, we noted that the submission date of reports selected for review was not adequately documented. Cause: Management did not have effective internal controls in place to ensure that a secondary level of review of approval is clearly documented, which indicates who performed the control, and when the control was performed. In addition, program reports were submitted to the funder's online system, which SAMU no longer had access to during the audit. SAMU did not adequately retain internal documentation to support submission date of the reports outside of that system. Effect or Potential Effect: Without established controls over reporting, there is a reasonable possibility that SAMU would not detect noncompliance in the normal course of performing duties and correct them in a timely manner. Questioned Costs: None noted. Context: 4 of the 4 program reports selected for testing did not have documented evidence of review or approval. 4 of the 4 program reports and 1 of 1 final financial report selected for testing did not have documented evidence to support timely submission. Identification as a Repeat Finding, if Applicable: 2022-005 Recommendation: We recommend that management of SAMU implement procedures and control processes to incorporate and document an independent review and approval, evidenced by a signature/initialing and date of the review and approval taking place. In addition, management should ensure that internal documentation is retained to support submission date of reports.