Audit 361326

Federal Agency: U.S. Department of Veterans Affairs Federal Program Name: Supportive Services for Veteran Families Assistance Listing Number: 64.033 Federal Award Identification Number and Year: 12-NC-050 Award Period: September 30, 2022 through September 30, 2024 - Type of Finding: Material Weakness in Internal Control over Compliance Criteria or specific requirement: The Corporation is required to maintain adequate documentation to support compliance requirements for federal funds. Properly completed forms and appropriately reviewed documentation are essential to ensure compliance requirements of the program. Condition: The Corporation failed to maintain adequate documentation to substantiate compliance requirements for federal funds. Specifically, forms were not properly completed, documentation was not appropriately reviewed, and in certain instances, documentation was unavailable for review. Questioned costs: None Context: During our audit, the Corporation was unable to provide adequate documentation to substantiate compliance requirements for federal funds. Specifically, forms were not properly completed, documentation was not appropriately reviewed and maintained, and in certain instances, documentation was unavailable for review. Cause: The Corporation did not have sufficient controls in place to ensure that all documentation related to federal funds was properly completed, reviewed, and maintained. Effect: Noncompliance with the federal requirements around the management of federal funds. Recommendation: We recommend that the Corporation establish and enforce a standardized process for completing and reviewing forms, provide training to staff on the importance of maintaining proper documentation and the procedures for completing and reviewing compliance requirements, and implement periodic internal audits to ensure compliance with documentation requirements and to identify any areas needing improvement Views of responsible officials: Management agrees with the above finding. During 2024, Passage Home experienced unprecedented change, including extensive staff turnover and extended vacancies in key positions. Of note, the entire leadership team transitioned out, the Supportive Services for Veteran Families Program Manager (SSVF) left, and 4 new SSVF program team members were onboarded within the year. Additionally, the finance department migrated to a new accounting system that ultimately proved to be unsatisfactory for the organization’s needs. Management appreciates and agrees with the auditors’ recommendations and has implemented and/or initiated the indicated operational adjustments.

Federal Agency: U.S. Department of Veterans Affairs Federal Program Name: Supportive Services for Veteran Families Assistance Listing Number: 64.033 Federal Award Identification Number and Year: 12-NC-050 Award Period: September 30, 2022 through September 30, 2024 - Type of Finding: Material Weakness in Internal Control over Compliance Criteria or specific requirement: The Corporation is required to maintain adequate documentation to support the required eligibility determinations and redeterminations were performed for individuals receiving benefits. Properly completed intake forms and appropriately reviewed documentation are essential to ensure compliance requirements of the program. Condition: The corporation failed to maintain adequate documentation to substantiate the eligibility determinations for individuals receiving benefits. Specifically, intake forms were not properly completed, documentation was not appropriately reviewed, and in certain instances, documentation was available for review. Questioned costs: None Context: During our testing of 16 samples related to eligibility determinations for individuals receiving benefits, we identified the following issues: 4 instances where the intake form was not properly completed, 10 instances where the documentation was not appropriately reviewed, and 1 instance where there was no documentation on the individual receiving benefits. Management has asserted that these may not be the only instances of such issues. Cause: The corporation did not have sufficient controls in place to ensure that all eligibility determination documentation was properly completed, reviewed, and maintained. Effect: Noncompliance with the federal requirements around the determination of an eligible individual. Recommendation: We recommend that the Corporation establish and enforce a standardized process for completing and reviewing intake forms, provide training to staff on the importance of maintaining proper documentation and the procedures for completing and reviewing eligibility determinations, and implement periodic internal audits to ensure compliance with documentation requirements and to identify any areas needing improvement. Views of responsible officials: Management agrees with the above finding. In fiscal year 2025, Passage Home implemented new programmatic policies and procedures ensuring that a Program Manager or the Program Director reviews and approves (by signature) all new client enrollments prior to case manager assignment. The Program Director will conduct related training for all program staff and will administer quarterly client record audits (peer or supervisor review) to verify ongoing compliance.

Federal Agency: U.S. Department of Veterans Affairs Federal Program Name: Supportive Services for Veteran Families Assistance Listing Number: 64.033 Federal Award Identification Number and Year: 12-NC-050 Award Period: September 30, 2022 through September 30, 2024 - Type of Finding: Material Weakness in Internal Control over Compliance and Other Matters Criteria or specific requirement: Per 2 CFR Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), §200.403 Factors affecting allowability of costs, costs must be necessary, reasonable, and adequately documented. Condition: During testing of the underlying expenditure details, we noted that the payroll reports provided by the Corporation did not agree with the underlying grant expenditure records. Specifically, the underlying payroll reports were less than what was charged to the grant. Questioned costs: $6,004 Context: During our testing we reviewed the underlying expenditure details. We compared the payroll reports provided by the Corporation to the underlying grant expenditure records. Our review identified a discrepancy where the payroll detail was $6,004 less than the amount charged to the grant. This discrepancy indicates a potential issue with internal controls over the reconciliation process for payroll costs. Cause: The discrepancy was due to inadequate internal controls over the reconciliation of payroll reports to the grant expenditures. The client did not have a process in place to ensure that payroll costs charged to the grant were supported by detailed payroll records. Effect: As a result, there is a risk that unallowable costs were charged to the grant, which could lead to noncompliance with federal requirements and potential disallowance of costs. Recommendation: We recommend that the Corporation implement internal controls over the reconciliation of payroll reports to grant expenditures. This should include regular reconciliations and reviews to ensure that all payroll costs charged to the grant are adequately supported by detailed payroll records. Views of responsible officials: Management agrees with the above finding. A payroll salary reconciliation report will be completed after each payroll issued and will be verified against the grant reports, accounting system class coding and employee-specific payroll file(s). Printed reports will be maintained on file in the Finance Department for historical reference.

Federal Agency: U.S. Department of Veterans Affairs Federal Program Name: Supportive Services for Veteran Families Assistance Listing Number: 64.033 Federal Award Identification Number and Year: 12-NC-050 Award Period: September 30, 2022 through September 30, 2024 - Type of Finding: Material Weakness in Internal Control over Compliance and Other Matters Criteria or specific requirement: Per 2 CFR 200.302(b)(3), non-Federal entities must maintain records that adequately identify the source and application of funds for federally-funded activities. Additionally, 2 CFR 200.403(g) requires that costs must be adequately documented to be allowable under Federal awards. Condition: During testing of allowable costs, we identified cash disbursements that lacked adequate supporting documentation. Specifically, these disbursements were made without proof of payment and corresponding invoice support. Questioned costs: $16,576 Context: As part of our audit procedures, we selected a sample of cash disbursements to ensure compliance with federal regulations. The sample included transactions from various periods within the award year. During the review, it was noted that disbursements totaling $15,754 did not have the required supporting documentation, such as proof of payment and corresponding invoices. This finding indicates potential systemic issues within the accounts payable process that could affect the overall compliance with federal awards. Cause: The lack of supporting documentation appears to be due to weaknesses in the internal controls over the accounts payable process. The Corporation did not have a process in place to ensure that expenditures charged to the grant were supported by proof of payment and corresponding invoice support. Effect: There is a risk that unallowable costs were charged to the grant, which could lead to noncompliance with federal requirements and potential disallowance of costs. Recommendation: We recommend that the Corporation strengthen its internal controls over cash disbursements. This should include retention of payments supported by valid invoices and proof of payment documentation as well as periodic internal audits to ensure compliance with the documentation requirements. Views of responsible officials: Management agrees with the above finding. All purchase-related supporting documentation will be transitioned to paper files to eliminate confusion created by the electronic record-keeping system, and to ensure that all staff requiring access to such documentation can immediately and easily retrieve them. Records will be maintained in the Finance Department office for seven years.

Federal Agency: U.S. Department of Veterans Affairs Federal Program Name: Supportive Services for Veteran Families Assistance Listing Number: 64.033 Federal Award Identification Number and Year: 12-NC-050 Award Period: September 30, 2022 through September 30, 2024 - Type of Finding: Significant Deficiency in Internal Control over Compliance and Other Matters Criteria or specific requirement: Under 2 CRF 200.406, credits accruing to or received by the recipient of federal funding that relate to allowable costs must be credited to the Federal award as either a cost reduction or cash refund. Condition: During our testing, we noted the Corporation received reimbursement for the full amount of an expenditure, which included sales tax which they received a reimbursement for from the State. Questioned costs: $324 Context: During our testing of 60 samples, we noted 6 item for a $324 expenditure that incorrectly charged sales tax the grant. Extrapolated to the entire population, an estimated $4,251 of expenditures would be incorrectly applied to the grant. Management has asserted this is the only instance of this issue. Cause: The Corporation did not have adequate internal controls designed to properly determine the appropriate amounts to be submitted for reimbursement. Effect: Noncompliance with the federal requirements around the determination of an eligible expenditure. Recommendation: We recommend the Corporation review the expenditures submitted to Supportive Services for Veteran Families and ensure that there is no "double dipping” of sales taxes. Views of responsible officials: Management agrees with the above finding. Within 60 days of audit issuance, the Interim CFO will conduct training for finance staff regarding accounts payable invoices and sales tax requirements and coding. Updated accounts payable policies and procedures include a process to ensure that the CFO reviews and codes sales tax when checks are prepared, approved and signed.

Federal Agency: U.S. Department of Veterans Affairs Federal Program Name: Supportive Services for Veteran Families Assistance Listing Number: 64.033 Federal Award Identification Number and Year: 12-NC-050 Award Period: September 30, 2022 through September 30, 2024 - Type of Finding: Material Weakness in Internal Control over Compliance Criteria or specific requirement: The Corporation is required to maintain adequate documentation to support compliance requirements for federal funds. Properly completed forms and appropriately reviewed documentation are essential to ensure compliance requirements of the program. Condition: The Corporation failed to maintain adequate documentation to substantiate compliance requirements for federal funds. Specifically, forms were not properly completed, documentation was not appropriately reviewed, and in certain instances, documentation was unavailable for review. Questioned costs: None Context: During our audit, the Corporation was unable to provide adequate documentation to substantiate compliance requirements for federal funds. Specifically, forms were not properly completed, documentation was not appropriately reviewed and maintained, and in certain instances, documentation was unavailable for review. Cause: The Corporation did not have sufficient controls in place to ensure that all documentation related to federal funds was properly completed, reviewed, and maintained. Effect: Noncompliance with the federal requirements around the management of federal funds. Recommendation: We recommend that the Corporation establish and enforce a standardized process for completing and reviewing forms, provide training to staff on the importance of maintaining proper documentation and the procedures for completing and reviewing compliance requirements, and implement periodic internal audits to ensure compliance with documentation requirements and to identify any areas needing improvement Views of responsible officials: Management agrees with the above finding. During 2024, Passage Home experienced unprecedented change, including extensive staff turnover and extended vacancies in key positions. Of note, the entire leadership team transitioned out, the Supportive Services for Veteran Families Program Manager (SSVF) left, and 4 new SSVF program team members were onboarded within the year. Additionally, the finance department migrated to a new accounting system that ultimately proved to be unsatisfactory for the organization’s needs. Management appreciates and agrees with the auditors’ recommendations and has implemented and/or initiated the indicated operational adjustments.

Federal Agency: U.S. Department of Veterans Affairs Federal Program Name: Supportive Services for Veteran Families Assistance Listing Number: 64.033 Federal Award Identification Number and Year: 12-NC-050 Award Period: September 30, 2022 through September 30, 2024 - Type of Finding: Material Weakness in Internal Control over Compliance Criteria or specific requirement: The Corporation is required to maintain adequate documentation to support the required eligibility determinations and redeterminations were performed for individuals receiving benefits. Properly completed intake forms and appropriately reviewed documentation are essential to ensure compliance requirements of the program. Condition: The corporation failed to maintain adequate documentation to substantiate the eligibility determinations for individuals receiving benefits. Specifically, intake forms were not properly completed, documentation was not appropriately reviewed, and in certain instances, documentation was available for review. Questioned costs: None Context: During our testing of 16 samples related to eligibility determinations for individuals receiving benefits, we identified the following issues: 4 instances where the intake form was not properly completed, 10 instances where the documentation was not appropriately reviewed, and 1 instance where there was no documentation on the individual receiving benefits. Management has asserted that these may not be the only instances of such issues. Cause: The corporation did not have sufficient controls in place to ensure that all eligibility determination documentation was properly completed, reviewed, and maintained. Effect: Noncompliance with the federal requirements around the determination of an eligible individual. Recommendation: We recommend that the Corporation establish and enforce a standardized process for completing and reviewing intake forms, provide training to staff on the importance of maintaining proper documentation and the procedures for completing and reviewing eligibility determinations, and implement periodic internal audits to ensure compliance with documentation requirements and to identify any areas needing improvement. Views of responsible officials: Management agrees with the above finding. In fiscal year 2025, Passage Home implemented new programmatic policies and procedures ensuring that a Program Manager or the Program Director reviews and approves (by signature) all new client enrollments prior to case manager assignment. The Program Director will conduct related training for all program staff and will administer quarterly client record audits (peer or supervisor review) to verify ongoing compliance.

Federal Agency: U.S. Department of Veterans Affairs Federal Program Name: Supportive Services for Veteran Families Assistance Listing Number: 64.033 Federal Award Identification Number and Year: 12-NC-050 Award Period: September 30, 2022 through September 30, 2024 - Type of Finding: Material Weakness in Internal Control over Compliance and Other Matters Criteria or specific requirement: Per 2 CFR Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), §200.403 Factors affecting allowability of costs, costs must be necessary, reasonable, and adequately documented. Condition: During testing of the underlying expenditure details, we noted that the payroll reports provided by the Corporation did not agree with the underlying grant expenditure records. Specifically, the underlying payroll reports were less than what was charged to the grant. Questioned costs: $6,004 Context: During our testing we reviewed the underlying expenditure details. We compared the payroll reports provided by the Corporation to the underlying grant expenditure records. Our review identified a discrepancy where the payroll detail was $6,004 less than the amount charged to the grant. This discrepancy indicates a potential issue with internal controls over the reconciliation process for payroll costs. Cause: The discrepancy was due to inadequate internal controls over the reconciliation of payroll reports to the grant expenditures. The client did not have a process in place to ensure that payroll costs charged to the grant were supported by detailed payroll records. Effect: As a result, there is a risk that unallowable costs were charged to the grant, which could lead to noncompliance with federal requirements and potential disallowance of costs. Recommendation: We recommend that the Corporation implement internal controls over the reconciliation of payroll reports to grant expenditures. This should include regular reconciliations and reviews to ensure that all payroll costs charged to the grant are adequately supported by detailed payroll records. Views of responsible officials: Management agrees with the above finding. A payroll salary reconciliation report will be completed after each payroll issued and will be verified against the grant reports, accounting system class coding and employee-specific payroll file(s). Printed reports will be maintained on file in the Finance Department for historical reference.

Federal Agency: U.S. Department of Veterans Affairs Federal Program Name: Supportive Services for Veteran Families Assistance Listing Number: 64.033 Federal Award Identification Number and Year: 12-NC-050 Award Period: September 30, 2022 through September 30, 2024 - Type of Finding: Material Weakness in Internal Control over Compliance and Other Matters Criteria or specific requirement: Per 2 CFR 200.302(b)(3), non-Federal entities must maintain records that adequately identify the source and application of funds for federally-funded activities. Additionally, 2 CFR 200.403(g) requires that costs must be adequately documented to be allowable under Federal awards. Condition: During testing of allowable costs, we identified cash disbursements that lacked adequate supporting documentation. Specifically, these disbursements were made without proof of payment and corresponding invoice support. Questioned costs: $16,576 Context: As part of our audit procedures, we selected a sample of cash disbursements to ensure compliance with federal regulations. The sample included transactions from various periods within the award year. During the review, it was noted that disbursements totaling $15,754 did not have the required supporting documentation, such as proof of payment and corresponding invoices. This finding indicates potential systemic issues within the accounts payable process that could affect the overall compliance with federal awards. Cause: The lack of supporting documentation appears to be due to weaknesses in the internal controls over the accounts payable process. The Corporation did not have a process in place to ensure that expenditures charged to the grant were supported by proof of payment and corresponding invoice support. Effect: There is a risk that unallowable costs were charged to the grant, which could lead to noncompliance with federal requirements and potential disallowance of costs. Recommendation: We recommend that the Corporation strengthen its internal controls over cash disbursements. This should include retention of payments supported by valid invoices and proof of payment documentation as well as periodic internal audits to ensure compliance with the documentation requirements. Views of responsible officials: Management agrees with the above finding. All purchase-related supporting documentation will be transitioned to paper files to eliminate confusion created by the electronic record-keeping system, and to ensure that all staff requiring access to such documentation can immediately and easily retrieve them. Records will be maintained in the Finance Department office for seven years.

Federal Agency: U.S. Department of Veterans Affairs Federal Program Name: Supportive Services for Veteran Families Assistance Listing Number: 64.033 Federal Award Identification Number and Year: 12-NC-050 Award Period: September 30, 2022 through September 30, 2024 - Type of Finding: Significant Deficiency in Internal Control over Compliance and Other Matters Criteria or specific requirement: Under 2 CRF 200.406, credits accruing to or received by the recipient of federal funding that relate to allowable costs must be credited to the Federal award as either a cost reduction or cash refund. Condition: During our testing, we noted the Corporation received reimbursement for the full amount of an expenditure, which included sales tax which they received a reimbursement for from the State. Questioned costs: $324 Context: During our testing of 60 samples, we noted 6 item for a $324 expenditure that incorrectly charged sales tax the grant. Extrapolated to the entire population, an estimated $4,251 of expenditures would be incorrectly applied to the grant. Management has asserted this is the only instance of this issue. Cause: The Corporation did not have adequate internal controls designed to properly determine the appropriate amounts to be submitted for reimbursement. Effect: Noncompliance with the federal requirements around the determination of an eligible expenditure. Recommendation: We recommend the Corporation review the expenditures submitted to Supportive Services for Veteran Families and ensure that there is no "double dipping” of sales taxes. Views of responsible officials: Management agrees with the above finding. Within 60 days of audit issuance, the Interim CFO will conduct training for finance staff regarding accounts payable invoices and sales tax requirements and coding. Updated accounts payable policies and procedures include a process to ensure that the CFO reviews and codes sales tax when checks are prepared, approved and signed.